LOM first-half profits climb to $0.94m
Bermudian-based financial services company LOM Financial Ltd has reported that profits for the first half of 2019 are up year-on-year, despite a slowdown in the growth of the company.
LOM’s group profit rose 16 per cent year-on-year to $944,235 or 16 cents per share, as compared to a profit of $809,021, or 14 cents per share, for the same period in 2018.
However, the company reported that its expansion in the Cayman Islands and the United Kingdom, along with a decline on its highly volatile brokerage revenues, created a drag on profitability.
A positive for the group, the company said, was that asset management revenues continued to rise along with an increase in assets under management.
LOM said it has focused on hiring new financial advisers in order to enable it to broaden its reach to new customers. Led by the efforts of its human resources department in Bristol, England it has recruited three new advisers, two of whom will be joining the company’s Bermuda office while the third person is to join the company’s Cayman office, the company said.
Scott Lines, the company’s chief executive officer, said: “Though we spend considerable time and efforts in vetting our new advisers, we cannot always be sure of their success and timing in onboarding new assets. As a result, their costs will add to a drag on our earnings going forward over the next year.”
He added. in reference to the half-year results: “Our performance has been constrained by the decline in our brokerage revenues due to volatile markets in the first half of the year.
“Global trade tensions and concerns about economic growth caused clients to become more cautious in their trading activities over the period. Looking out over the rest of the year, though we expect to see the interest rate cuts in the US to be supportive of financial markets, we need to see a de-escalation of trade tensions in order for markets to make substantial gains.
“Therefore, we remain cautious on the outlook for our brokerage revenues over the remainder of the year.”
LOM’s overall revenues fell 3.2 per cent, the company said.
Year-over-year, management and advisory fee revenues rose 10 per cent to $2.57 million (39 per cent of revenues), while broking fee income fell 29 per cent to $1.91 million (29 per cent of revenues), and revenues from corporate finance activity were $76,924 (1.2 per cent of revenues).
Foreign exchange income rose 16 per cent to $221,187 (3.4 per cent of revenues), while net interest income rose 12 per cent to $804,510 (14 per cent of revenues), and the gain on securities held in inventory was $350,951.
Costs for the group fell 5.9 per cent. Year-over-year, total operating expenses, ex commission and jitney fee payments, fell 4 per cent, while employee compensation expenses were unchanged.
LOM’s assets under administration were $1.103 billion as of June 30, as compared to $957 million in assets at December 31, 2018. LOM has net equity of $20.8 million as of June 30, and holds cash and equivalents of $5.7 million, representing 27 per cent of net equity.
LOM took out a mortgage to partially facilitate the purchase of its office building in Nassau. During the first half of the year, the company said it partially paid down that mortgage, and its loan on the building stands at $372,500 as of June 30. The company said it will continue to monitor its business over the remainder of the year and, if prudent, pay the loan off.
The company’s board of directors has given approval for LOM to continue to buy back shares for cancellation for a total not to exceed 500,000 shares. Over the first half of 2019, the company said it purchased for cancellation 136,250 shares at an average price of $2.77. As at the end of June, the company reported having 5,751,028 shares issued and outstanding.
LOM’s share price on the Bermuda Stock Exchange is $2.77, and its current market capitalisation is $15.9 million. As of June 30, LOM’s book value was $3.61 per share, the company said.
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