• Masimba Holdings posted a 9.6% revenue increase to ZWG1.6 billion, but EBITDFVA margin compressed from 24% to 20%, indicating cost pressures and margin erosion
•  Private sector contribution rose from 46% to 56% of revenue, improving cash quality with better-paying clients, mainly in mining, and driving a 68% increase in operating cashflows
• The Board increased the dividend by 30% to 0.61 US cents per share, signaling confidence in USD cash generation, despite declining margins and rising debt

 Harare- Masimba Holdings, the ZSE-listed civil engineering and contracting group entering its 75th year, posted revenue of ZWG1.6 billion for the year ended 31 December 2025, a clean 9.6% advance on the prior year. Net profit grew, and the dividend was raised 30%. The order book closed at USD278 million, and by the metrics most investors see first, this reads as a solid result from a company navigating one of the world's more challenging operating environments.

However, costs rose faster than revenue, and the company earned less from every job it completed.

Earnings before interest, tax, depreciation and fair value adjustments, the group's own preferred measure of underlying performance  fell to ZWG319 million from ZWG354 million. That is a 10% decline in core operating earnings in the same year that revenue grew 10%. The EBITDFVA margin compressed from 24% to 20%, a four-percentage-point deterioration that the results table discloses but the Chairman's statement does not substantively address.

The chart above makes the compression visible at a glance. Revenue bars rise left to right. EBITDFVA bars fall. The gold margin line drops from 24% to 20% in a single year. The inset confirms that basic earnings per share,  the cleanest measure, barely moved, growing just 2% from 69 to 71 cents. This is what margin erosion looks like from the outside.

Staff costs of ZWG416 million consumed 26% of revenue, the single largest cost line. Depreciation was flat, interest charges rose modestly with borrowings and the logical conclusion is that operating costs, subcontractor payments, materials, site overheads grew faster than the revenue they supported. In a contracting business where profit lives in the gap between contract price and cost of delivery, that is not a peripheral concern. It is the business.

A property revaluation kept profits green, but it cannot be booked again next year.

Masimba's reported profit before tax grew from ZWG218 million to ZWG220 million. The bridge between a falling EBITDFVA and a rising PBT is a single line, a ZWG39 million fair value gain on investment properties, booked in 2025 against a nil adjustment in 2024. The group's rental portfolio, managed through Masimba Properties, was independently revalued upward by ZWG39 million, from ZWG203 million to ZWG242 million. This is a non-cash accounting entry, a legitimate reflection of property market appreciation, but it is not operational income.

Strip it out, and profit before tax on a like-for-like basis falls from ZWG218 million to ZWG181 million, a 17% decline. The reported profit growth is almost entirely a function of property valuation, not construction performance.

Headline earnings per share rose a striking 33%, from 61 to 81 cents. This apparent contradiction, headline EPS surging while EBITDFVA falls, reflects the asymmetry in how adjustments are applied between years rather than a genuine operational acceleration. Basic EPS at 71 cents, up 2%, is the number that most honestly reflects what the business achieved on its own terms.

The USD278 million order book is Masimba's most prominent forward indicator, and it is genuinely substantial,  representing multiple years of current revenue, spread across mining, roads, housing, and building construction. The recent addition of a new asphalt manufacturing plant, acquired to support road sector operations, signals that management is investing for that pipeline.

But the going concern note carries an admission that reframes the headline number. The Directors explicitly warn that "project execution timelines may be affected by limited funding and liquidity in the domestic financial market." Translation,  a meaningful portion of that order book will execute more slowly than the number suggests, because government clients cannot always fund what they have contracted.

The response to this risk is instructive. Masimba says it has been "engaging key clients to negotiate payment plans", which is corporate language for the fact that debtors are not paying on schedule. Contract receivables and work in progress closed at ZWG1.4 billion, representing 88 cents of uncollected revenue for every ZWG1 earned in the year. That ratio is uncomfortably high. The ZWG9.8 million credit loss allowance against a receivables book of that size is thin protection.

The private sector pivot is the most important strategic development in years

Against that backdrop, the shift in revenue mix deserves more attention than it has received. Private sector contribution rose from 46% to 56% of total revenue in a single year, a ten-percentage-point rebalancing that the group attributes to deliberate diversification strategy. Mining clients, commercial developers, and housing project sponsors now account for the majority of Masimba's work.

This is not only strategic aspiration, but is a cash quality improvement. The 20% increase in net working capital, from ZWG303 million to ZWG500 million, and the 68% improvement in operating cashflows, from ZWG77 million to ZWG129 million, are the fingerprints of better-paying private clients replacing slower-paying government ones. If mining drives the bulk of private sector growth, this is a high-quality shift: mining companies pay in USD, on time, and do not negotiate payment plans.

The challenge is whether private sector volumes can absorb what government infrastructure programmes previously provided at scale, and at what margin. The 2025 results suggest the transition is underway but incomplete. Revenue growth is healthy; margin recovery has not yet arrived, debt is rising as margins fall, and a 15% interest rate makes the maths tight.

Masimba invested ZWG109 million in capital expenditure in 2025, the centrepiece being the asphalt plant. The backward integration logic is sound, owning asphalt production reduces input costs on road contracts and creates a third-party revenue stream. Combined with Stermrich's quarry and the new precast concrete machine, the group is building real self-sufficiency in key construction materials.

But this capex was funded by medium-term bank borrowings at an effective rate of 15% per annum, lifting total borrowings 30% to ZWG107 million. Interest coverage, measured against EBITDFVA, remains comfortable at roughly 29 times. The trajectory, however, is in the wrong direction: EBITDFVA is falling and debt is rising, compressing coverage. If margins do not recover in 2026, the arithmetic tightens further.

The deferred tax liability of ZWG306 million, up 19% from ZWG257 million, adds a longer-dated financial obligation that will crystallise in cash as timing differences unwind. In a business with USD functional currency presenting ZWG results, deferred tax liabilities of this scale carry embedded exchange rate risk that is easy to discount in a stable year and painful to confront in a volatile one.

The Board raised the total dividend 30%, to 0.61 US cents per share, denominated in USD and payable from a business that is increasingly being paid in ZWG. That commitment signals genuine confidence in the USD cash generation of the underlying operations, and the cashflow statement, the healthiest part of these results, supports it. Operating cashflows nearly doubled. Net working capital improved sharply. These are real improvements.

The honest summary of Masimba's 2025 results is this: the business is growing, the private sector pivot is working at the cash level, and the capex programme is strategically sensible. But the EBITDFVA margin,  the single number that determines long-term value creation in a contracting business, fell four points in a year of 10% revenue growth, was masked by a non-recurring property gain, and has not yet been adequately explained. Until that margin recovers, the growth story is incomplete.

Masimba enters its 75th year doing more work than ever before. The question for 2026 is whether it can do that work profitably enough to justify the investment it is making.

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