Currency volatility behind Ecsponent’s loss in financial year
Just over 48% of Ecsponent’s total assets are held in hard-currency-listed investments, which exposes it to currency volatility
Niche financial services group Ecsponent slipped into a loss in its year to end-June, having experienced currency volatility as it considers new acquisitions.
Just under half of the group's total assets of R3.17bn are held in hard-currency-listed investments, providing a hedge against a weaker rand, but also exposing the group to short-term volatility.
Management was considering further hedging instruments to mitigate against short-term earnings volatility related to this, the group said.
Headline earnings per share (HEPS) fell 280.76%, resulting in a headline loss per share of 12.6c.
Operating profits from continuing operations fell 76.5% to R96.9m. Finance costs rose 33% to R346m.
The results were affected by the reduction of the interest-bearing credit loan book during the book build process, in the run-up to taking an increased stake in Frankfurt-listed fintech business MyBucks, the group said.
Ecsponent said earlier in September it wanted to convert loans it gave to MyBucks into equity, at a subscription price of €1/share in a transaction worth R450m (€27.8m). This is still subject to approval by shareholders, with a vote set for November 20.
After the subscription, and a third-party capitalisation, it is expected that Ecsponent will hold a 49.96% interest in MyBucks, the company said at the time.