Masimba records 70% growth in Q1
HARARE- Masimba Holdings has decided to dispose of its 50% shareholding in Reinforcing Steel Contractors of Zimbabwe (RSCZ) to focus on the construction growth prospects currently supported by a $23mln confirmed order book.
Kosto Holdings Limited of Mauritius holds the remainder 50% shareholding, RSCZ net assets position as at April 2017 amounted to $132,000 compared to $71,000 in December 2016.
Group chief executive officer Canada Malunga in a trading update for the four months to April 2017 at the company’s annual general meeting said, profit contribution from RSCZ for the period declined to $25 000 from $48 000 same period last year mainly due to forex shortages on the market.
“Given the construction growth prospects, the Masimba Board has today decided to exit the RSCZ business and will accordingly be appointing a financial advisory firm to handle the transaction,” he added.
During the period under review, the company registered revenue growth of 70% from the prior comparable period and this was mainly driven by the Mining and Housing Infrastructure segments.
Gross profit softened in the period to 9% compared to 15% in 2015 due high rainfalls of 1200mm versus about 700mm recorded in the comparative period which delayed commencement of several construction projects.
Malunga said overheads for the period grew 27% from comparative period, which is below turnover growth of 70%. Overheads to turnover ratio, which improved to 11%, compared to 16%.
“Apart from the disruptions caused by the rains at the beginning of the year all construction projects are on program and scheduled to achieve budgeted margins”
Malunga highlighted that, while the economic outlook in the short to medium term remains uncertain, the Company is cautiously optimistic on: Government’s renewed focus to rebuild infrastructure, the successful 2016-17 Agricultural season and the stable commodity prices.
He stated that the recent ground breaking ceremony to mark to the start of the Harare Beitbridge highway is cause of excitement and optimism to the construction industry in general and Masimba in particular.
The company’s confirmed order book of $23 million is spread across the various economic segments.
Buildings have an order value of $10.20mln with tenor of 2-12 months, Roads and water projects are at $6.5mln on tenor of 18 months and Housing infrastructure is at $647,000 with 2 months tenure. Mining has order value of $5.73mln with tenor of 12 months.
The company has near orders for Industrial buildings and Housing infrastructure projects estimated at $15,500,000, which are at advanced stages of financial close and these projects have a tenor of 8 – 24 months.
Capital expenditure for the year is estimated at $2,3mln compared to $1,97mln in 2016 of which
$805,000 has been incurred in the first four months of 2017.
“This Capex will be financed through a combination of internal resources and external debt,”
Malunga said Masimba capabilities have been significantly strengthened in the last 3 years and is well positioned for opportunities that may arise.
The company continued to review its human resource capability in line with the growth strategy.
The overall strategy for the rest of the year will be focused on revenue growth in the company’s niche markets, resource optimization & cash generation, risk and Innovation as well as safety and healthy.
At the AGM Directors and Audit fees were approved at $62 500 and $39 245 respectively.