Chairperson’s Statement
INTRODUCTION
The year under review saw an acceleration in our digital transformation journey as we responded to the challenges that were brought about by the Covid-19 pandemic. The Group remains focused on providing innovative digital solutions that meet the demands of our customers. The business continues to leverage on digital solutions to increase operational and cost efficiencies. Whilst the year was challenging, the business responded with agility and proved to be resilient in the face of change. We therefore continue to be driven by our vision of providing a digitally connected future that leaves no Zimbabwean behind.
Business and Regulatory Environment
The business responded to several regulatory directives issued by the Reserve Bank of Zimbabwe that affected mainly the Fintech business. We complied with all directives while simultaneously driving growth and innovations in all our strategic areas to regain lost revenues.
Financial Performance Overview
The report of the Directors is based on inflation-adjusted financial statements, which are the primary financial statements. Historical financial statements have been presented as supplementary information. The Directors caution users of the financial statements on the usefulness of these reported inflation-adjusted financial results, in light of distortions that arise when reporting in a hyperinflationary economy.
The year saw a growth in the Insurtech contribution from 9% in the financial year ended 29 February 2020 (FY20) to 15% 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% in FY20 to 7% in FY21. 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.
EcoCash revenue contribution at 60% (2020:75%), declined as a result of our revenue diversification strategy that saw growth in the Insurtech and VAYA Technologies business. 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.
Although 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, this was mitigated by a rigorous cost-cutting drive. 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.
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.
The auditors issued an adverse audit opinion in respect to the valuation of property, equipment and intangible assets, the application of International Accounting Standard 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ (“IAS 8”) on comparative information and the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Details of the modification are provided in Note 4. The basis of the opinion is common with what is prevalent in the market.
Social Investment
The Group continued to be involved in the community, in line with our ethos of doing well by doing good.
Through our partners such as Higher Life Foundation, we supported the national initiatives to combat the effects of the COVID-19 pandemic. We provided test kits and personal protective equipment for frontline workers. We further provided free water deliveries to council clinics as well as participated in handwashing and soap distribution campaigns. Through our partners, we supported a low cost, low input, climate-smart conservation farming approach called “Pfumvudza” in order to complement Government efforts towards a resurgence in agriculture and food security.
Our Future
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. Our technology-driven platforms and processes offer significant advantages, and we continue to drive innovations and deploy them where the need is greatest. Consistent with that, the Group has continued to take advantage of this accelerated digital thrust to come up with new products and services that better respond to the evolving needs of our customers, guaranteeing a strong business that is transforming and is well placed to deliver sustainable growth into the future. We, therefore, continue to leverage our robust business model to innovate around on-demand technology platforms, creating customer convenience and maximising value for our shareholders.
Appreciation
On behalf of my fellow Board members, I would like to conclude by extending my heartfelt gratitude to all our customers, business partners, and to you our valued shareholders, for your unwavering support as we continue to chart our course through these most unusual times. I would also like to acknowledge management and employees within the Cassava Smartech Group for their remarkable commitment, adaptability, and resilience in a challenging environment.
On behalf of the Board
Mrs. Sherree Shereni
CHAIRPERSON OF THE BOARD
15 October 2021
