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, 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.