Cassava Smartech Zimbabwe Limited (CSZL) recorded a forex exchange loss of US$506-million for the half-year ended 31 August 2019 and cited the depreciation of the local Zimbabwe currency as the main reason.

In a press statement released last week, the digital services provider said: "The continued depreciation of the Zimbabwe dollar against the United States dollar had a significant impact on our financial performance as we had to recognise losses amounting to the US$506 million."

In the statement CSZL's board chairperson Sherree Shereni added that the depreciation was exacerbated by lack of adequate foreign currency reserves.

"This translation loss was exacerbated by the decision in the financial year ended 28 February 2019 to account for all debentures as though they were all US dollar-denominated instruments," said Shereni. "The group has 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."

According to its latest results, CSZL posted a profit of ZWL$3,2-million with revenue of ZWL$946-million for the half-year.

It recorded earnings before interest, tax, depreciation and amortisation (EBITDA) of ZWL$28-million.

The company did not present the comparative 2018 financial results for the period under review because CSZL only came into existence in November 2018 following its unbundling from Econet.

Shereni said: "The operating environment is characterised 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."