GOVERNMENT has only paid a fractional figure of the $5,7 million it owes construction concern, Masimba Holdings, as the State continues to struggle to raise revenue.
The continued underperformance of fiscal revenues has in the main been applied to recurrent expenditure at the expense of gross capital formation, with a consequent knock-on effect on companies providing services to government in Zimbabwe.
Speaking at an analysts briefing yesterday while presenting the group’s unaudited half-year results for the period ended June 30 2014, group finance director Michael Tapera said the group was previously owed $5,7 million by government, but close to $1 million had been paid to date.
“We are continually working with government to reduce exposure. We have collected almost $1 million from government as it is struggling to raise revenue,” he said, adding that after paying off, government owes the remaining $4,4 million.
He said there were no plans on writing off the debt while the group also has adequate capacity to continue operations despite delayed payment of the debt.
The group’s borrowing went down from $3,6 million as at 31 December 2013 to $3,4 million as at the end of June 2014, while further reductions are anticipated by the end of December this year.
Group revenue for the six months period fell by 22% to $13,5 million, in a development attributed to the depressed economic activity experienced in the period.
Contracting turnover fell by 32% reflecting the continued slowdown experienced in project revenues owing to the absence of large-scale projects in the country due to the liquidity crunch prevailing.
The currently active order book to December 2014 stands at $8,6 million driven by small to medium size projects in mining, agriculture and telecommunications among others.
The active order book for 2015 and beyond stands at $21 800 000 while the inactive book, representing debt, stands at $19 million.
Tapera said property disposals had been driven more by poor returnsthan cash flow management.
“There has been a drop in fixed assets due to property disposals. We feel some properties are not worth holding onto if we have tenants not paying,” he said.
During the period under review, low-yielding investment properties with a book value of $470 000 were disposed of and the proceeds applied towards reducing the group’s borrowings.
Masimba Holdings chief executive officer Canada Malunga said there had been a continual slowdown in contracting as contracting turnover fell by 32%.
This is reflective of the slowdown experienced in project revenues owing to the absence of large-scale projects in the country due to the liquidity crisis.
“Revenue growth was deliberately restrained by management strategies to manage credit risk given deteriorating liquidity constraints. More customers are being placed on cash basis particularly at Proplastics,” Malunga said.
He expressed optimism that the infrastructure backlog presented revenuegrowth opportunities as shown by resumption of works at Tokwe Mukosi, Bulawayo airport, Victoria Falls airport and change from voice to data in the telecommunications which requires a different set of infrastructure.
Turning to the order book, he said the group has been evaluating the inactive order book, but was encouraged with the conversations with clients and alternative suppliers of funding.
“Our forecast is that the next six months between June and December (2014) will be very harsh. Our focus will be on order book growth,working capital, group borrowings, capacity growth and retention, cost containment and alternative sources of funding for infrastructure projects,” he said.