Masimba half-year revenue up 20pc

Revenue in the construction unit went up 30 percent on prior year while the manufacturing unit recorded a 5 percent growth.
Volumes in the manufacturing unit were 13 percent up but low prices in the market resulted in a decline in gross margins compared to the prior period.

The manufacturing division produces and distributes a wide range of plastic piping systems for different market niches, locally and regionally. 
The increase in construction revenue improved gross margins on the construction unit notwithstanding the fact that utilisation of plant and human resources remained below budget.

The cash flow statement is showing a much healthier position for the company with operating cash flow declining slightly to US$557 000 compared to the same period last year.
Capital expenditure was kept at a minimum in  the aftermath of significant investments last year of US$2,9 million to restructure the manufacturing unit.

An amount of US$659 518 was invested in capital expenditure to support the business. The company managed to convert US$2,5 million short-term borrowing to long term at an annual interest rate of 12,05 percent.
On the balance sheet, the group managed to reduce contracts in progress and accounts receivables by 8 percent at the same time increasing accounts payables by 3,2 percent.

The company is also sitting on significant investment properties worth US$6 million that can be leveraged on to unlock value for the business. The major                                                                                                                                        assets in the portfolio are industrial properties and land that the company can dispose off to capitalise the business.
The restructuring of Masimba is nearing completion and the lean structure emerging looks flexible and experienced in the construction and manufacturing sector.

The company is sitting on a confirmed order book of US$33 million and the figure is expected to rise going forward.
Some analysts, however, said one of the major risks in the construction business is the tendering process which is riddled with “corruption”, but believes Masimba had “built relations and capacity to stake its own”.