28 March 2014

Zimbabwe: Masimba Holdings' Revenues Rise

LISTED contracting firm Masimba Holdings sees revenues rising in the current year buoyed by a growth in its telecommunications business and new manufacturing varieties, CEO Canada Malunga says.

The company's order book currently sits at US$45 million, compared to turnover of US$40 million in the previous year.

Malunga this week told analysts and journalists at a briefing held in the capital for the 18 months to December 2013. The group changed its financial year following a change in the company's shareholding structure.

The order book comprises US$20 million from the telecommunications sector and US$15 million from the education sector where the company provides services to the Bindura State University and National University of Science and Technology.

Malunga said under the telecommunications business, Masimba offers civil work for base stations that support infrastructure for telecommunications companies.

"It's a very fragmented business and revenues you get per tower is between US$100 000 and US$200 000," Malunga said. He indicated at least 100 new base stations would be constructed under the project.

He said the company also plans to expand infrastructure material business in 2014 to expand revenues.

"We are taking deliberate strategies to grow mining and infrastructure business particularly at a time government is in this current state," he said.

He said the company has purchased a new manufacturing machine to produce bigger varieties of high density polyethylene pipes that are set to drive mining revenues.

"We have got a land bank and regulatory approvals from the city council and the environmental management agency have been secured so we will start development in 2014," he said.

Malunga said the group is optimistic it would secure new contracts as a number of tenders from non - governmental organisations near adjudication while new opportunities continue to come in.

In the period under review, Masimba reported a US$60, 412 loss after tax for the 18 months ended December 2013 from a US$502, 634 profit in the 12 months ended June 2012.

According to the group, the poor performance was owing to liquidity challenges that resulted in depressed demand for the company's products and services in the period under review.

Group revenue for the 18 months was US$62,3 million, 45% up from the 12 month period ended June 2012.

Construction accounted for US$40 million or 64% of revenue, while manufacturing revenues were US$22,3 million or 36% in the previous period, construction revenues were 63% while manufacturing revenues were 37%.

Malunga said declining revenue was a result of liquidity challenges around elections and post the polls, lack of funding for government projects and reduced aid funding for water and sanitation projects.

He said the manufacturing unit, Proplastics, had restricted revenues mainly as a result of subdued economic activity he said local authorities are largely inactive.

"This customer base lost donor support during the period and factory efficiencies offset by stagnant to negative pricing growth in market," Malunga said.

Masimba spent US$1,344 million capital expenditure in a difficult environment and generated US$850, 000 from property disposal.

To manage costs, Masimba retrenched 115 employees between June 2012 and December 2013, with a few more expected to be laid off going forward.

"The impact will not be as much as we have done before and we will not retrench people to the extent we compromise on quality delivery," Malunga said.

The contracting firm collapsed its head office and that of the construction unit into one to manage staff costs.

Group realignment resulted in a once off charge of US$1, 3 million and an additional US$357, 000 fair value adjustment to property.

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