Shareholders of contracting and industrial group, Masimba Holdings Limited will have to wait longer before getting earnings after the board announced it will withhold the interim dividend as the company seeks to strengthen its financial position and maintain a healthy liquidity position amid a menacing Covid-19 pandemic.
The Group posted an impressive 108 percent revenue growth thanks to roads and civil projects but future uncertainties arising from the economic slowdown as a result of the Covid-19 pandemic informed the Group’s decision to withhold the dividend.
In its earnings update for the half year period ended June 30, 2020 the Group outlined a business continuity plan meant to hedge against a bleak outlook.
“The Board, having evaluated the cash flows associated with the growing order book, the potential negative impact of the COVID-19 pandemic and guided by the Group’s value and growth, has resolved not to declare an interim dividend,” the Group said.
Most listed companies have been withholding dividends to preserve healthy liquidity positions in anticipation of a tough second half of 2020.
According to the Finance department, the economy is set to contract by 4.5 percent while the International Monetary Fund foresees a much bleaker outlook for the country, predicting the economy to shrink by 7.5 percent in 2020.
However, Masimba Holdings revenue for the period grew to ZWL$ 666,130,525 from ZWL$ 320,682,914 recorded same period last year mainly driven by roads and civil projects.
“The increase in operating profit to ZWL$ 404,704,273 (2019: ZWL$ 126,802,626) was attributable to production efficiencies and fair value adjustments of investment properties. Non-current assets grew to ZWL$ 1,010,067,903 (2019: ZWL$ 645,141,261), largely driven by a Directors’ revaluation of property, plant and equipment that was performed at the reporting date. The revaluation resulted in a surplus and fair value adjustment of ZWL$ 195,259,214 and ZWL$ 93,397,843, respectively,” said the company.
Cash generated by operations improved to ZWL$ 127,553,422, largely due to growth in business and improved profitability.
The cash generated from operations and financing activities was in the main deployed to capital expenditure in line with the Board’s value preservation strategy.
