Growing LOM seeks to increase returns
The Bermuda Stock Exchange has launched its “Own Your Share of Bermuda” campaign to raise awareness of opportunities to invest in the island's public companies. The Royal Gazette is supporting the effort by publishing weekly features on each of the 13 domestic companies listed on the BSX.
Financial services firm LOM has a history dating back nearly 50 years — but it has its eyes firmly fixed on the future.
From its early beginnings as the Lines' family office in the 1970s, LOM Financial Ltd in its present form dates to 1992, becoming a publicly-held company when it listed on the Bermuda Stock Exchange 16 years ago.
And from its Bermuda beginnings, it now has offices in the Bahamas, the Philippines and the UK — with plans to buy a new office and expand staffing in the Bahamas operation in the works.
The company also announced it was “very close” to opening a branch office of LOM Financial Bermuda Ltd in another Caribbean jurisdiction.
Scott Lines, chairman and chief executive officer of LOM, said: “LOM trades on the market at a discount to the company's very conservative book value.
“Additionally after several years of rapid decline in our brokerage business that caused us to fall into losses, that line of revenue has now stabilised while the asset management business has continued to grow.
“We are profitable and our profits are growing as we raise new assets. The business is very scalable in that as assets and revenue grow, a lot of the incremental revenue flows through to the bottom line.” He added: “Our expectation is that our operations in the Bahamas and our other planned Caribbean jurisdiction will see strong growth in assets this year which will mostly be of benefit to our asset management division.”
LOM provides a full range of private investment services and products, including brokerage, custody, asset management and corporate finance services to wealthy individual clients and institutional customers worldwide.
The company says it is “a high service alternative to the world's largest private banks and brokerages”.
The firm's annual report, issued in April, recorded profits of more than $553,000, a 291 per cent increase on the previous year's $141,528.
The report added that LOM had won new clients over the year ended last December, raised additional assets and improved its financial performance.
Assets under administration at the firm went up $49 million to $684 million at year end — but Mr Lines said that figure had gone up to nearly $770 million by the time the report was issued. In asset management, revenues went up by 7.5 per cent, with the performance of mutual funds and investment management rated “very good”.
Total revenues at LOM went up 8.5 per cent to nearly $8 million last year, while management and advisory fees rose 7.5 per cent to more than $3.1 million.
Broking fees dropped 8.8 per cent to $2.06 million.
Net earnings from interest jumped 45 per cent to $990,981, while gain on securities held in inventory was $279,636 and fees from corporate finance work went up 22 per cent to $92,656.
The firm's net return on equity stood at 3.2 per cent at year end.
Mr Lines said at the time: “Though our return on equity is not yet at the level we would like, we feel that we are moving towards that target in a sustainable manner.”
He added yesterday: “We would like to see the return on equity of the company to be over ten per cent.
“To achieve that will require us to continue to increase the asset base while holding costs down and allowing the increased revenue to flow through to the bottom line.”
And he said: “It is not something we are expecting to achieve in the very short term as we are going to face additional costs in our international operations, however it is a target we are moving towards.”
Mr Lines added that the global recession had hit business — with a knock-on effect of caution by investors.
He explained: “The global recession certainly did affect business and the volatility in the markets created a significant amount of risk aversion in investors which we believe will continue.
“Additionally the global push for greater transparency and regulation including Fatca and the Common Reporting Standard has required significant enhancements to compliance and corporate governance and raised the cost of doing business.”
But he said: “We are expecting our assets under administration to continue to grow and assets today are very close to the $800 million mark. With the new financial advisers we are bringing into the company's international operations we believe that growth will accelerate.”
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