Cassava posts FY revenue of ZW$14.3 billion, with a mobile subscribers decline of 22% as regulatory headwinds, Covid-19 takes toll

The good news for Cassava is that it’s positioned to do better. Q2'FY22 indicates that the business is on a positive trajectory.

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Key Highlights:

  • Inflation-adjusted revenue totaled ZW$14.3b, reflecting 26% decline due to headwinds caused by regulatory changes and COVID-19
  • Foreign exchange losses decreased by 45% to close at ZW$4.6b
  • Narrowed loses from ZW$1.3b last year to ZW$1b
  • EcoCash revenue contribution at 60% lower came in lower than 75% in FY20
  • Rosy outlook

HARARE – After a lengthy period delaying the publication of its full-year financial statements ended 28 February 2021 which ultimately resulted in the ZSE sanctioning a halt in the trading of its shares, Cassava Smartech Zimbabwe Limited (trading as Ecocash Holdings Limited) has finally released the financial statements.

The delay according to notices issued by the tech-focused firm was due to delays in the auditing processes, a phenomenon that was experienced around the globe as one of the notable impacts of the COVID-19 pandemic on business operations. For others, however, like Cassava, the process took longer than what the authorities could bear with.

Revenue performance subdued due to the impact of regulatory changes and the COVID-19 pandemic.

Group revenues closed the year at ZW$14 billion, 26% lower than ZW$19 billion recorded in the prior year.

Significantly for the Group, this was mitigated by a “rigorous cost-cutting drive.”

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

EcoCash revenue contribution declines.

EcoCash, which is the country’s leading mobile money operator and accounts for about 80% of transactions saw its revenue contribution to the Group at 60% during the period under review come in lower than 75% in the prior year.

The decline, according to the Group, is a result of revenue diversification strategy that saw growth in the Insurtech and VAYA Technologies business.

Insurtech contribution grew from 9% in the financial year ended 29 February 2020 to 15% in the financial year ended 28 February 2021, largely attributed to the growth of the short-term non-motor insurance business. The Vaya Technologies business also uplifted its performance contribution from 2% in FY20 to 7% in FY21.

The Group managed to narrow its losses to close the period under review with an inflation-adjusted loss of ZW$1 billion, 23% lower than the ZW$1.3 billion loss recorded in the prior year.

Sherree Shereni, Board Chairperson:

“The Group’s revenue diversification strategy is paying off, as evidenced by the exponential revenue growth in the Insurtech and the Vaya Technologies business units.

“As part of its revenue growth strategy, the Group will continue its focus on revenue diversification and innovation into the future.”

Meanwhile, Steward Bank’s contribution remained stable and is expected to continue on the upward trend, on the back of the system upgrade completed in April 2021.

Reducing operating costs key target for the current financial year (FY22).

Group EBITDA margin closed the fiscal year 2021 at 15% (2020:26%).

Shereni said that the focus remains on innovatively driving growth, consolidating the gains of the cost-cutting measures, and further reducing operating costs in FY22.

Total assets base reduces value whilst digital banking account holders records 20% growth.

Total assets at ZW$25.8 billion closed the year under review at 5% lower compared to ZW$27.1 billion in the previous year.  In a key development amidst global digital revolution trends, digital banking account holders closed the year at 1.9 million, 20% above the prior year.

Cassava is getting better.

The good news for Cassava is that it’s positioned to do better. The Group posted inflation-adjusted revenue growth of over 70% in the second quarter of the 2022 financial year driven by growth in transaction activity. Notably, EcoCash revenues increased by 63% during that period compared to the same period last year, an indication that the Group is improving from the FY21 subdued performance.

Other segments including Steward Bank, Insurtech business and VAYA Technologies also recorded significant growth in the second quarter.

Looking ahead.

“The strength and agility of our business, combined with the professionalism, resilience, and innovative foresight of our teams, are expected to carry our business into the future, resplendent with digital opportunities,” said Shereni.

“Our technology-driven platforms and processes offer significant advantages, and we continue to drive innovations and deploy them where the need is greatest.”

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