Masimba profit up 272,8%, wary of COVID-19 impact

LISTED Construction concern, Masimba Holdings' inflation adjusted profit after tax surged 272,8% to $34,3 million for the year ended December 2019, but the firm remains worried about the impact of COVID-19 and weakened economic environment on its operations.

The company's profit grew from $9,2 million prior year.

“Subsequent to the reporting period, there has been a worldwide COVID-19 pandemic and it is forecast that world economies will go into recession. The board continues to assess the impact of this virus on its business operations and its human resource. While we will remain guided by the government of Zimbabwe on the course of action, the company has put in place a raft of best practice measures to mitigate the potential effects of this deadly virus,” the group's chairman Gregory Sebborn said in a statement accompanying the results.

“Considering the above and the impact of drought and Cyclone Idai, the operating environment is likely to remain constrained as characterised by continued foreign currency, power, fuel shortages and inflationary pressures.”

Sebborn pointed out that COVID 19 is envisaged to have an adverse impact on the company's operations.

“The board believes that the coronavirus is likely to negatively impact on the business performance. However its impact is likely dependent on certain developments which include, duration and spread of the outbreak, impact on our customers, suppliers and employees. The related financial impact cannot be reasonably estimated at this time," he said.

Companies are using the IAS 29 — a hyperinflation accounting standard to factor in the impact of inflation on their financials. Hence all the figures are inflation adjusted.

The group's revenue surged by 34% to $334 085 086 from $248 549 590 on the back of a solid order book.

The roads, mining, retail and commercial buildings and housing infrastructure segments were the key revenue drivers for the period under review.

“The group, as at reporting date, had a solid order book that included roads, housing and mining infrastructure. The continued economic headwinds are likely to impact negatively on the execution of the order book. The board remains alive to the current risks and opportunities and will maintain its value and growth strategy,” Sebborn said.

The group's net working capital improved to $70,65 million from $20,95 million comparative period, mainly driven by growth in business.

The company's total assets firmed to $459 201 060 from $261 218 084 prior year where as current liabilities grew to $142 300 247 from $140 240 986 during the period.

The group said the Reserve Bank of Zimbabwe approved the group's blocked funds application in the amount of US$231 293,11 and these liabilities have been retranslated to Zimbabwe dollars based on closing interbank as at December 31, 2019.

The group continues to prepare a set of financials in United States dollars for internal measurement purposes only and the company's performance in US$ terms marginally improved from the comparative period

“As part of the strategy to preserve value, capital expenditure and work in progress for the year amounted to US$3 017 325, bringing the three-year cumulative capital expenditure to US$7 406 892,” said Sebborn.