Notes on the Suspension of Cassava Smartech (CSZL.zw)
Market Cap = ZWL 81 bn
= USD 500m
The fellas at Cassava have failed to publish annual financial statements in time, for the 2021 FY. The law says they have to be suspended.
They sought an extension of the deadline. The ZSE approved an extended deadline of 30 Sep 2021 (yesterday). They failed to meet the extended deadline.
The fellas will probably release financials later this week.
If they cannot release financials in the next two weeks, we can deduce two things:
there might be some serious 'money creation' issues there.
they might want to take the firm private via the backdoor
Some perspective as to how big Cassava is: At USD500m, which is half a billion, the firm makes up 8% of the ZSE market cap (USD 6.4 bn). It is significant enough to matter. Ecocash (the sister) comes in at USD842m...close to a billion...makes up 13% of the ZSE market cap.
Taken together, these two companies make up 21% of the ZSE. They are big. The suspension of Old Mutual last year showed us there is nothing as 'too-big-to-be-suspended" in Zim.
Back to what we can deduce from the failure to publish results, the COVID-19 cited is a lame excuse. The "need to resolve certain technical accounting matters" is the real reason. Which accounting matters can be so complicated? We can speculate.
Suspense Accounts
Clearing Accounts
Mirror Accounts
Trust Accounts
Bank Accounts
whichever name you prefer using, ZETTS, RTGS, PERAGO.
Every dollar on the Ecocash system is supposed to be mirrored elsewhere by a dollar in the banking system.
ELSE: it can be viewed by authorities as money creation.
ELSE IF: it can be viewed as running a '"tether (USDT) type of scheme".
The good thing for Cassava is that the "tethering" of the "EcoCash dollars" to the "banking system dollars" can be done internally within companies under the Cassava Umbrella. ..but the books have to balance. ..the "funds-in-transit" reported on the AFS has to be reasonable.
RBZ alleged Ecocash to be conducting some "money-creation". The published financials should not corroborate that story, i.e. should disprove the theory. The financials should not allow RBZ to poke holes into the "we are not printing money" story.
I do not think the shareholders highlighted below, making up 67% of the shareholding, would oppose a move to delist the company. Delisting would remove the onerous reporting standards that are brought by being listed. Delisting takes half a billion off the ZSE
An involuntary delisting, e.g. as a result of failure to meet ZSE requirements, might not trigger a Mandatory Offer. If it triggers, then the fair value will be established by an independent valuer. This could be a price below the last trading price.
Massive delisting is a risk with ZSE listed shares. Fidelity Life Assurance Limited could be next on the delisting table, voluntarily ...by the majority shareholder ZIMRE.
Ciao!