Stronger pound boosts Somers’ profit
Somers Ltd generated net income of $15.5 million in the last three months of last year, helped by a strengthening of the UK pound.
The Bermudian-based financial-services holding company, which owns Bermuda Commercial Bank, reported strong results across all its major investments.
In what was the first quarter of Somers' fiscal year, earnings were 80 cents per share, compared to a 63-cent loss in the same period in 2016.
Warren McLeland, chairman of Somers, said: “The first quarter of the year has been positive for our major investments with the majority recording strong financial performances.
“Our portfolio valuations were supported by favourable currency movements with positive sterling currency gains offsetting a weaker Australian dollar. In particular, we recorded a 10.2 per cent increase in our Homeloans valuation following continued solid mortgage settlement flow during the quarter.
“Recent volatility in the capital markets and the resultant fall in global stock indices and increases in bond yields post quarter-end ensures that we will remain cautious on the outlook for the remainder of the financial year.”
The company's net asset value per share ended the quarter at $19.29, up from $18.55 at the end of September. During the quarter there was a $14.5 million valuation gain on Somers' investment portfolio.
The gain was principally due to increases in the value of Australian lender Homeloans, in which Somers holds a 62 per cent stake, and Stockdale Securities, a stockbroking firm, thanks to strong financial performance at those companies.
However, Somers added there was also a slight fall in the valuations of both BCB and PCF, a UK specialist bank in which Somers has a near two-thirds stake.
Somers also has a 62.5 per cent holding in Waverton Investment Management, a UK wealth manager with £5.5 billion ($7.7 billion) of assets under management. Somers received dividend income of $1.3 million from Waverton during the quarter.
Within its $374 million investment portfolio, three holdings represent 83 per cent of the total. Homeloans is valued at $125.3 million, BCB at $100.8 million and Waverton at $86.1 million.
Net foreign exchange gains for the quarter were $500,000.
Shareholders' equity was $375.5 million at the end of last year, up from $361.2 million at the end of September.
Somers' share price ended the year at $14.25 — where it remained yesterday on the Bermuda Stock Exchange — a discount of 26.1 per cent to the company's net asset value per share.