Masimba to dispose of Steel Contractors stake

MASIMBA Holdings will dispose of its 50 percent shareholding in Reinforcing Steel Contractors of Zimbabwe (RSCZ) to focus on construction growth prospects which are currently supported by a $23 million confirmed order book.

Kosto Holdings Limited of Mauritius holds the remaining 50 percent shareholding.

Group chief executive officer Canada Malunga in a trading update for the four months to April 2017 at the company’s annual general meeting on Wednesday said, profit contribution from RSCZ for the period declined to $25 000 from $48 000 same period last year.

The reformed bar company’s RSCZ net asset position as at April 2017 amounted to $132 000 compared to $71 000 in December 2016.

“Given construction growth prospects, the Masimba Board made a decision 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 percent 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 percent compared to 15 percent in 2015 due to high rainfalls which delayed commencement of several construction projects.

Mr Malunga said overheads for the period grew 27 percent from comparative period, which is below turnover growth of 70 percent. Overheads to turnover ratio, which improved to 11 percent compared to 16 percent last year.

“Apart from the disruptions caused by the rains at the beginning of the year all construction projects are on programme and scheduled to achieve budgeted margins.”

Mr 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 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 $10,20 million, Roads and water projects are at $6,5 million and Housing infrastructure is at $647 000. Mining has order value of $5,73 million.

The company has near orders for Industrial buildings and Housing infrastructure projects estimated at $15,5 million, which are at advanced stages of financial close and these projects have a tenure of 8 – 24 months. Capital expenditure for the year is estimated at $2,3 million compared to $1,97 million in 2016 of which $805,000 was incurred in the first four months of 2017.

“This capex will be financed through a combination of internal resources and external debt,”

Mr Malunga said Masimba capabilities have been significantly strengthened in the last three years and is well positioned for opportunities that may arise. Meanwhile the group said paying a dividend was a good way to preserve shareholder value. Chairman Greg Selbourne said the company was “preserving shareholder value while at the same time remaining adequately capitalised should any big project or opportunity come up.” —