Zimpapers Logo

Nqobile Bhebhe, [email protected]

Construction firm Masimba Holdings Limited, says the execution of its firm order book of US$248 million could be negatively impacted by the effects of the El Nino weather phenomenon and the declining mineral prices.

The firm said the factors could lead to the Government prioritising food relief over infrastructure development and may result in capital expenditure budget cuts, in the private sector.
President Mnangagwa has since declared a nationwide State of Disaster, due to the severe drought caused by the El Niño weather phenomenon.

Due to the above, the Group’s key focus area will be cost containment and unlocking value from its land bank, it said.
In its abridged audited financial results for the year ended December 31, 2023, the group’s chairman, Mr Gregory Sebborn noted that the contracting business commenced the financial period with a solid order book, comprising roads and earthworks, water, housing, mining and energy infrastructure projects.

The Group has a firm order book valued at US$248 million (2022: US$104 million), with tenures of between three months to three years.

The order book remained fairly balanced between the public and private sectors, for the period under review.“We applaud the Government and the private sector’s continued investment in infrastructure development, being the key enabler to economic development. Performance in the Property portfolio was firm, and the business unit contributed positively to the Group’s performance.”

He said revenues for the year were at US$53,8 million (2022: US$49,8 million) representing a growth of eight percent from the comparative period.
“The growth in revenue volumes was attributable to a strong and firm order book at the beginning of the year. However, growth declined in the fourth quarter, as a conservative approach was taken by the Group to align work execution in line with clients’ payment patterns,” said Mr Sebborn.
However, he noted that the execution of this order book may be negatively impacted by the effects of the El Nino weather phenomenon and the declining mineral prices.

“These factors could lead to the Government prioritising food relief over infrastructure development and may result in capital expenditure budget cuts in the private sector. Due to the above, the Group’s key focus area will be cost containment and unlocking value from its land bank.”

Total assets of the Group improved to US$85,8 million (2022: US$63,3 million), mainly driven by growth in contracts in progress and contracts receivables.

The growth in contracts in progress and contracts receivables was attributable to growth in revenues, coupled with the impact of delayed payments from clients on the back of liquidity constraints, he added.

The decline of the current ratio to 1,01 (2022: 1,31) was attributable to a strategic decision to purchase property, plant and equipment with short-term facilities, in order to capacitate the execution of long-term projects.

He said that, based on the forecast cash flows, this position should improve in the second half of the 2024 financial year.

Cash generated from operating activities increased to US$5 million (2022: US$0,8 million) and this was largely applied to capital expenditure of US$4,2 million (2022: US$4,7 million).