Madison Financial Services Reports 20% Rise in Net Profit for FY 2014

Madison Financial Services (LUSE: MFIN) reported a 20% year-on-year increase in net profit to K36 million in financial year (FY) 2014. Earnings per Share (EPS) came in at K0.66 (K0.52 in 2013):

The increase in net profits was driven by:

• 15% growth in net insurance premiums
  
• 9% growth in interest and similar income
  
• 104% growth in fee and commission income
  
• 68% growth in investment income
  

Operating income was up 30% year-on-year to K89 million in FY 2014. Madison incurred K7.7 million in exceptional losses, which included foreign exchange losses and back-duty charges.

Madison experienced revenue growth of 23% year-on-year to K406 million in FY 2014:

Growth in the revenue lines was driven by increased business activity, increased capital raising activity and consequent growth in the revenue generating asset portfolio. Increased financing towards the micro-finance loan book which generated a significant increase interest and fee income. Competition continued to be very strong in the insurance sector with premium rate under-cutting a prevalent tactic.

Madison’s stock price closed the year at K3.5, up 12.9% from its Initial Public Offering (IPO) price in 2014.

Dividend

A final dividend of K0.20 per share was recommended for FY 2014.

Outlook

In their outlook for 2015, the company said:

The penetration of financial services in Zambia is still low and the Group has set itself a strategic direction built on innovation, responsiveness and discipline to attain by optimizing on the available opportunities. Consequently we are confident of delivering continued growth and improved results for our shareholders.