Currency Crisis Plunges Cassava Into Losses

Tech giant, Cassava Smartech has announced $ 4.6 billion foreign exchange losses mainly in payment to debentures quoted in USD as the local currency continued to lose ground against the greenback.

During the period under review, the Zimbabwe dollar continued to depreciate as authorities grappled with taming the exchange rates.

Cassava has significant foreign exposure with net foreign liabilities amounting to US$45 million, with US$30 million comprising the Group’s 50 percent portion of the debentures issued when the Group was still part of Econet Wireless Zimbabwe Limited.

In its Full Year (FY) 2021 financial statement released this morning, the Group lamented the exchange rate movement which has eroded local currency value.

“The obligation is denominated in the United States dollar and as such subject to exchange rate revaluation. The economy experienced significant exchange rate movements during the financial year and as at 28 February 2021 the Group recorded exchange losses amounting to ZW$4.6 billion (2020: ZW$8.4 billion),” said Cassava.

The group recorded a loss for the year of $ 1.042 billion as a result.

“Foreign exchange losses decreased by 45%, to close the year at ZW$4.6 billion (2020: ZW$8.4 billion). Foreign exchange losses mainly relate to USD denominated debenture balances,” said Cassava.

Group revenues closed the year at ZW$14 billion compared to ZW$19 billion in the prior year, due to the impact of regulatory changes and the Covid-19 pandemic.

High operational costs resulted in the group recording a loss of ZW$ 481 million.

As a result, EBITDA margin closed the year at 15% (2020:26%).

“The focus, therefore, remains on innovatively driving growth, consolidating the gains of the cost-cutting measures, and further reducing operating costs in FY22,” said the company.

The Group’s biggest revenue contributor, Ecocash suffered 22 percent decline in mobile money subscription to 8.4 million resulting in its share of revenue contribution retreating to 60 percent from 75 percent in 2020.

The growth of Insurtech and Vaya Technologies businesses also affected Ecocash contribution share to Group revenue.

The year saw a growth in the Insurtech contribution from 9 percent in the financial year ended 29 February 2020 (FY20) to 15 percent in the financial year ended 28 February 2021 (FY21), largely attributed to the growth of the short-term non-motor insurance business.

The Vaya Technologies business also uplifted its performance contribution from 2 percent in FY20 to 7 percent in FY21.


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