Infrastructure projects bode well for Masimba Holdings
Zimbabwe Stock Exchange (ZSE) listed construction firm Masimba Holdings says sustained funding of major infrastructure projects by the Government and bright prospects for mining could strengthen its order book and financial position.
The Government, under the phased road rehabilitation programme, pledged $33,6 billion for road upgrading and maintenance works while the mining sector in its quest to become a US$12 billion industry by 2023, has several capital projects valued at more than US$2 billion.
In addition, Masimba Holdings is part of a local consortium of companies that were contracted to upgrade and widen the Beitbridge-Masvingo-Harare highway.
Gregory Sebborn, the group’s chairman, in a statement of financials for the half year period to June 30, 2021, said the group had a strong order book that was evenly balanced between the private and public sectors, the effective execution of which was contingent on a stable economic operating environment.
“While the impact of Covid-19 on global economies is unknown, the board remains optimistic, given the Government’s sustained strong performance in funding major infrastructure projects and the growing mining prospects being spurred by firm commodity prices,” he said.
Mr Sebborn said during the period under review, the group expended $7,8 million on various programmes, which included support for the 2021/22 agriculture season, in particular the small scale irrigation schemes in the Manicaland region, among other initiatives.
“Subsequent to the reporting date, the group contributed $8,5 million to the National Development Fund towards the procurement of Covid-19 vaccines.”
During the six months period, the group’s revenue grew by 58 percent to $2,2 billion compared to $1,4 billion in the same period in 2020, mainly attributable to a firm order book in mining, infrastructure, and roads segments.
“In addition, revenue earned in United States Dollars as a proportion to total revenue for theperiod improved to 35 percent from 20 percent in 2020 owing to a diversified project portfolio.
Profit before tax grew at a slower rate of 19 percent to $435 million from $364 million, mainly due to inclement weather in the first quarter, which negatively affected productivity, particularly in the roads segment.
The group’s financial position strengthened to $6,7 million from $5,5 million last year on the back of acquisitions of investment property, plant and equipment, in line with the value preservation strategy.
Mr Sebborn said the capital expenditure was financed through a combination of internal and external resources, resultantly, borrowings increased to $255 million compared to $156 million representing a sustainable debt-to-equity position of 10 percent.
He added that contracts in progress, contracts receivables and other receivables at $3,6 million grew by 9 percent compared to a 39 percent growth in revenue volumes.
Mr Sebborn said the positive performance was due to improved debt collections in the period under review.
“In line with the business strategy of managing credit risk, accounts payable increased to $3,4 million mostly due to advance payments received from clients,” he said.
Mr Sebborn said the Group’s working capital ratios remained satisfactory as cash generated by operating activities improved to $266 million.
He said cash generated was largely expended on capital expenditure of $114 million and investment property of $162 million to support the growing order book and preserve value, respectively.-The Herald
