Somers Limited Announces Financial Results
In a filing with the Bermuda Stock Exchange [BSX], Somers Limited announced its results for the nine months ended June 30, 2016, recording an operating profit both on a quarterly and year to date basis.
The filing stated:
Somers Limited, a financial services investment holding company, is pleased to announce its results for the quarter and nine months ended June 30, 2016.
Overview of the quarter ended June 30, 2016:
- Diluted net asset value [NAV] per share of $16.71 as at June 30, 2016 [March 31, 2016: $17.03], down 1.9% principally due to Sterling’s 7.3% depreciation against the US Dollar following Brexit;
- Shareholders’ equity of $199.9 million as at June 30, 2016 [March 31, 2015: $203.8 million]; and
- Breakeven for the quarter [June 30, 2015: net income of $8.6 million].
Investment highlights for the nine months ended June 30, 2016:
- Waverton Investment Management Limited [Waverton] records pre-tax income of £5.5 million [2015: £6.3 million];
- Waverton Assets under Management [AuM] at June 30, 2016 of £4.6 billion [September 30, 2015: £4.3 billion];
- Ascot Lloyd Holdings Limited [Ascot Lloyd] recurring revenues increase to £14 million on an annualised basis;
- Bermuda Commercial Bank Limited [BCB] maintains a high capital ratio of 19.5% and a highly liquid balance sheet with 36% in cash and high quality liquid assets;
- BCB total revenue of $17.6 million [2015: $24.2 million];
- Private & Commercial Finance Group plc [PCFG] reports record profit and a 12% increase in business originations for fiscal March 2016 to £63 million from £56 million last year; and
- PCFG lodge a formal application for a banking licence with the UK regulators.
Commenting on the financial results, Warren McLeland, Chairman of Somers said: “Excluding the impact of currencies, Somers recorded an operating profit both on a quarterly and year to date basis following modest gains on the investment portfolio.
“Sterling’s decline against the Dollar has been the main driver of the year to date loss of $1.7 million. The Brexit foreign exchange losses resulted in a decline in the Somers’ NAV to $16.71 from $17.03 at March 31, 2016. Subsequent to the quarter-end we have seen a rebound in our UK assets resulting in our July 31 NAV increasing to $17.76.
“A number of our larger investments, in particular Waverton, PCFG and Ascot Lloyd, are denominated in Sterling and during the nine month period ended June 30, 2016 Sterling declined by 12.0% versus the Dollar. The direct impact of currencies was a 5% reduction to our NAV over the period.
“As of today, the UK economy appears to have weathered the initial shock of the Brexit referendum vote and, stimulated by a rate cut and additional measures by the Bank of England including government bond purchases, the FTSE 100 is currently trading higher than before the referendum. These measures have had a positive impact on the value of our UK investments and valuation increases post the quarter end have offset the negative currency movements.
Transactional activity in the June quarter was modest as the Company’s capital remains fully invested. In May we invested £1.0 million to acquire a minority interest in MJ Hudson, a UK based specialist law firm and asset management services provider.
“It is anticipated that there will be revenue synergies in both directions between MJ Hudson and Somers’ other investee companies. We invested an additional £1.0 million in Ascot Lloyd at the end of June via a convertible loan note representing the first drawdown of a new £2.5 million loan and convertible loan note facility provided to Ascot Lloyd.
“We continue to carry a low level of debt on our balance sheet and we expect to maintain this position at least in the short term. All new borrowing for investment purposes are currency matched with the related investment to minimise currency exposures. As capital grows and our profitable investments return cash, we will look to use these funds to diversify our portfolio.”
