Madison Financial Services Posts K100M Loss Despite Revenue Growth
Madison Financial Services Plc (MFS) has reported a loss after tax of K100.4 million for the financial year ended 31 December 2023, compared to a profit of K6.2 million in 2022. This decline comes despite the Group posting a 20% growth in revenue, which reached K680.6 million, largely driven by strong performance in gross insurance revenue and investment income.
The Group attributed the significant loss primarily to a sharp rise in finance costs, which increased by 454% due to foreign exchange losses on USD-denominated obligations. The impact of the kwacha’s depreciation against major currencies created additional pressure on the Group’s financial position.
According to the audited financial statements, gross insurance revenue grew by 28% to K479.7 million, while investment income rose by 8% to K85.2 million. However, these gains were outweighed by the growing cost of finance and other operational challenges. As a result, earnings per share dropped from K0.04 in 2022 to -K2.07 in 2023. Total assets increased by 20% to K1.38 billion, while total liabilities grew by 24% to K1.32 billion.
The Group’s financial results were issued with a qualified audit opinion, citing several issues. Notably, MFS did not consolidate the operations of Madison Asset Management Company Limited (MAMCo), which has been under the Securities and Exchange Commission’s (SEC) possession since 2020. Other audit concerns included the recoverability of K10.2 million in tax assets, and the absence of third-party confirmations for investments worth K17.2 million in Shore Cap and the Kibo Fund.
MFS subsidiaries remain under regulatory scrutiny. Madison General Insurance (MGen) is currently subject to restrictions by the Pensions and Insurance Authority (PIA), including a freeze on management fees, dividends, and salary increases. Madison Finance Company (MFinance) is under the Bank of Zambia’s oversight due to a solvency shortfall, with tight controls on executive pay and related-party transactions. MAMCo, meanwhile, remains under curatorship and is not operationally controlled by MFS.
As of 31 December 2023, MGen’s total assets stood at K331 million, while MFinance recorded K247 million in assets. Despite the pressures, both companies remain operational under supervision.
The Group is also managing a court-ordered financial guarantee liability to Atlas Mara, with the Court of Appeal revising monthly repayments from US$40,000 to US$100,000 in December 2023. MFS confirmed it is currently up to date with these payments.
During the year, shareholders approved the transfer of MAMCo’s assets into a Collective Investment Scheme (CIS) to support the Fixed Income Fund’s creditors, a move aimed at preserving investor value and addressing legacy issues.
Looking ahead, the Board has expressed cautious optimism. Strategic efforts are underway to restore profitability, enhance customer service, and regain competitive strength in the financial services sector. MFS plans to release its 2024 audited results by September 2024, following sector-wide delays linked to the implementation of IFRS 17 – Insurance Contracts, which affected the insurance subsidiaries, including MLife.
The financial statements were released after receiving approvals from the Lusaka Securities Exchange (LuSE), Securities and Exchange Commission (SEC), and the MFS Board.
