Buoyed by the robust lending environment, mass-market credit provider, Kagisano Group Holdings, has turned in a solid performance for its first full year as a listed entity, overshooting its prospectus forecasts.
The combined turnover, at R204m, was 33% higher than the previous year, after tax profit was 31% up at R32m and Headline Earnings Per Share at 31.5 cents per share were 30% higher than the previous comparative period.
Kagisano CEO, Eugene van Niekerk, puts the positive results down to the organic growth in infrastructure and clientele and changes in the credit environment brought about by the new National Credit Act.
"The implementation of the National Credit Act has had the anticipated positive effect on our market segment and has added significant impetus to the growth in advances. Further, there are no signs of this trend abating," he says.
Van Niekerk notes that after the implementation of the National Credit Act demand for new advances increased. In the first three months after its implementation, new loans were granted by Kagisano at a rate 67% higher than the corresponding period last year.
As a result, Kagisanos gross advances more than doubled to R146m from R68m the previous year. Its non-performing loans are currently at 28,1%, which is in line with industry norms and within the companys 25 30% target range.
While Kagisano's core business is the provision of short term unsecured credit, it also offers a range of additional financial services to its target market in the 4 7 LSM group. It reaches its customers through its network of 125 outlets and its in-house call centre and website.
Its product offerings include educational, emergency and home improvement loans; cellular contracts; life insurance and funeral insurance policies and a range of other services such as medical insurance, housing and vehicle finance offered in association with other registered financial services providers.
"With the growth of the black middle class, more than 800 000 people have entered this market segment since 2006. This has contributed to increasing the size of the LSM 7 category thus increasing the size of Kagisano's target market," he says.
In order to service the burgeoning market, van Niekerk says Kagisano plans to expand the number of its outlets from 125 to closer to 170 by 2008 with a further expansion to 200 by 2009. It also plans to launch a range of innovative new white label financial services products in association with other financial services providers.
"We continue to believe that the impact of the National Credit Act on our industry segment will create opportunities for robust organic growth as well as consolidation, as smaller lenders are faced with a margin squeeze caused by the rising cost of regulatory compliance on the one hand and lower yields on the other," he says.
Van Niekerk confirms that at this stage Kagisano is on track to meet its prospectus forecasts for 2008.
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