- Cassava records ZWL506 mill foreign exchange losses
- Firm struggles to meet foreign debt obligations
- Ecocash contributes 76% to Cassava’s revenue
- ZWL$3.2 mill marginal profit HY 19
ZSE’s tech heavyweight Cassava Smartech suffered ZWL506 million foreign exchange losses in the 6 months to 31 August 2019, the latest financials reveal. This translation loss was aggravated by the group’s decision to account for all debentures as though they were all US Dollar-denominated instruments.
Cassava, Econet’s off-shoot, has significant foreign exposure with net foreign liabilities amounting to US$45 million, of which US$30 million comprise the Group’s 50% portion of the debentures issued when the Group was still part of Econet Wireless Zimbabwe Limited.
Group Chairman Sherree Shereni lamented the effect of a weakening exchange on their ability to meet the foreign commitments:
“The operating environment is characterized by a rapidly weakening Zimbabwe dollar, the re-emergence of hyperinflation and foreign currency shortages which have made it almost impossible to settle our critical foreign obligations.”
Comparatively, the entity has cash and cash equivalents plus advances to the tune of US$85 million at the prevailing interbank rate.
Over the half-year, Revenue came in at ZWL946 million over the period bolstered by the market-dominant mobile money platform which contributed ZWL723 million which is a 76.4% contribution to revenue. The digital banking segment which houses Stewart bank contributed 20% to the group’s revenue.
In the last quarter of 2019, Ecocash suffered technical challenges in its service delivery disrupting the normal course of business across the country due to power challenges and internal systems upgrades. Resultantly, Ecocash suffered a marginal Ecocash’s market share dropped in market share to 93.3% from 94.4% in the second quarter of 2019 whereas OneMoney’s share improved by 1.2% to 6% from 4.8% recorded in the second quarter.
Cassava continues to innovate in the digital space having launched the Ecocash Bureau De Change platform, VAYA Tractor Services – a platform linking farmers to agricultural mechanisation equipment for smart farming solutions and Vaya Logistics and Vaya Shuttle Services among other innovations over the period.
With several products and services launched by the tech company, It remains to be seen if these innovations will create value in terms of revenue and profits for the group going forward.
The Group recognized a profit of ZWL3.2 million in the financial statements for the six months ended 31 August 2019 on a hyperinflation adjusted basis, the results reveal.
An Investment Analyst and Business Anchor for Equity Axis. Eben is passionate about the innovative digital space on the continent, tourism trends, and real estate developments in Zimbabwe. He also has a comprehensive understanding of the operations of listed companies on the Zimbabwe Stock Exchange- across all sectors. Eben is an award winner of “The Vice-chancellor’s Inno-preneur Award,” an accolade in innovation and business entrepreneurship from the Vice-chancellor of the University of Johannesburg.