Somers reports full-year profit of $4.2m
Financial services investment holding company Somers Limited has made a full-year profit of $4.2 million, or 21 cents per share, which is down on the $19.4 million it reported in 2017.
The end-of-year results were affected by a $13.6 million net loss in the fourth quarter, which ended on September 30.
About 70 per cent of Somers' net assets are exposed to foreign currencies, primarily the British pound and Australian dollar. Last year it reported net foreign exchange gains of $3.3 million, however this year it had net foreign exchange losses of $9.9 million. The exchange losses were primarily unrealised, the company said in a statement.
Resimac Group Limited, which was formerly Homeloans Limited, is Somers' largest investment with a holding of 62.3 per cent, valued at $129.7 million. Resimac is a nonbank Australian financial institution. During the financial year Somers received dividend income of $3.3 million from Resimac.
Somers owns Bermuda Commercial Bank Limited, and has a 62.5 per cent holding in UK wealth manager Waverton Investment Management Limited, from which it received $4.1 million in dividends during the year. Somers also has a 55 per cent direct holding of UK specialist bank PCF Group.
Warren McLeland, chairman of Somers, said: “Valuations at Resimac and PCF increased over the course of the year and despite more volatile capital markets our investments have grown their assets under management.
“Unlike last year, the US dollar value of our investments was adversely impacted by falls in both Sterling and the Australian dollar.”
He added: “During the year, Somers acquired 94.5 million shares in PCF from BCB for $38.7 million, and the company's direct holding in PCF is now 55 per cent. Due to the growth in the loan book at PCF, and the introduction of new capital adequacy rules, it was more suitable that the investment was held directly in Somers.”
The company entered into a new $25 million bank loan facility to part fund the acquisition of the PCF shares. Somers' borrowings increased to $41.5 million as of September 30, from $4.5 million a year earlier.
Post the end of its financial year, Somers sold its investment in Merrion Group and the proceeds will be reinvested in “a number of new opportunities”.
Mr McLeland also said: “For the last few years, investors have become used to rising markets in a benign environment. This year has ushered in a new period of volatility which we believe is likely to continue as global growth starts to weaken and global interest rates continue to diverge. However, we believe our investments are well placed to withstand a more difficult economic and interest rate environment and continue their progress and growth, and this allows us to look forward with cautious optimism.”
Bermuda Commercial Bank has a capital ratio of 41.3 per cent and a balance sheet with 59 per cent cash and “high quality liquid assets”. The bank made a $7.2 million profit for the year.
Waverton Investment Management had pre-tax income of $7.6 million and assets under management of $5.9 million; while PCF Group had pre-tax profit of $5.2 million.
Somers noted that the value of its investment in West Hamilton and BCB decreased during the year.
The company's total assets increased during the year to $407.3 million, up from $368.1 million. Its investment portfolio was $403 million at the end of September, with equity investments accounting for 99 per cent of the total.
During the financial year, Somers bought back 31,376 shares at a cost of $500,000. The company has announced a final 2018 dividend of 29 cents per share, bringing the total dividend for the year to 50 cents.
Somers' share price was $16 at the end of September, up from $14 year-on-year.