Cassava generates $946m

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© ZIMBABWE Stock Exchange-listed entity Cassava Smartech Zimbabwe Limited (CSZL), which has interests in mobile money, digital banking, insurtech and on demand services, reported revenue of $946 million for the half year ended August 31, 2019.

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The published results were inflation adjusted in line with International Accounting Standard 29 on Financial Reporting in Hyperinflationary Economies as recommended by the Public Accountants and Auditors Board.
The results were the group’s first interim ones as a stand-alone company, following its demerger from Econet Wireless Zimbabwe in December 2018. 

The bulk of the revenue reported, amounting to $723 million, came from its flagship mobile money business EcoCash, which has a subscriber base of 10,6 million. 

The digital banking business under Steward Bank contributed $181 million of the revenue while InsurTech contributed $76 million.

A record 2,8 million people are covered by insurance under one of the Insurtech businesses, EcoSure.

Despite operating in a “challenging environment” the group’s earnings were positive, with EBITDA at $28 million, while profit for the six months amounted to $3,2 million on a hyperinflation adjusted basis. 

In a statement accompanying the results, company chairperson Sherree Shereni said the re-emergence of hyperinflation and foreign currency shortages made it difficult to settle critical foreign obligations.

“This, together with incessant power cuts and fuel shortages, have negatively impacted the group’s performance,” Shereni said.
She said the continued depreciation of the Zimbabwe dollar against the United States dollar had a significant impact on the group’s financial performance.

As a result of the weakening of the local currency, the company was forced to recognise foreign exchange losses amounting to $506 million.

“This translation loss was exacerbated by the decision in the financial year ended February 28, 2019 to account for all debentures as though they were all US dollar denominated instruments,” reads the statement.

The group has net foreign liabilities amounting to US$45 million, of which US$30 million comprises the group’s 50 percent portion of the debentures issued when the group was still part of Econet Wireless Zimbabwe Limited.

Despite the economic headwinds, the group maintained its growth trajectory and experienced a rapid increase in the volume and value of transactions processed on mobile and digital banking platforms “as more customers continued to favour these channels due to their convenience and availability”.

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