Commercial Bank sales pays dividends for Somers investors
The net asset value per share of the financial services investment holding company, Somers Limited, has climbed from $19.78 at September 30 to $31.18 in the nine months to June 30.
Shareholders’ equity improved a staggering 60.9 per cent from $422.1 million in September to $679.4 million at June 30.
Total borrowings increased to $92.7 million from $76.0 million in September, but the gearing ratio remains modest at 13.6 per cent.
Following the record net income of $203.1 million for the first half of the year, the company added to that in the third quarter with net income of $59.6 million.
Chairman Peter Durhager commented on the continuing superior investment performance and strong operating results. The company’s net asset value per share has increased by 57.6 per cent.
He said: “These results have been principally driven by the growth in the share price of our largest investment, Resimac, but were assisted by improved results from a number of our other investee companies.
“Following the completion of the sale of BCB (Bermuda Commercial Bank) we are pleased to announce a special dividend of $0.24 per share to Somers shareholders.
“Since Somers major shareholders acquired a majority shareholding in BCB in 2010, shareholders in BCB who became shareholders in Somers in 2021 will have received income, including this special dividend, of $5.00 per share which combined with significant share price appreciation over the last decade has, we believe, represented an attractive return.”
During the quarter, Somers recorded a $66.7 million gain on its investment portfolio ($21.4 million for the same quarter in 2020).
The majority of the company’s investments increased in value during the quarter although the gain was driven principally by an increase in the value of the Resimac holding, following a 13 per cent increase in its share price during the quarter, and an 11 per cent increase in the value of its holding in Waverton whose AuM and net income both improved over the quarter.
In addition, there were valuation increases at Thorn Group Limited, MJ Hudson and AssetCo which offset a reduction in the value of PCF where Somers has marked down the value of its PCF holding to reflect that company’s shares are currently suspended from trading.
Net foreign exchange losses were $3.7 million for the quarter (2020: gain of $19.0 million). As of June 30 of this year, 87.2 per cent of Somers' investment portfolio was exposed to foreign currencies, primarily the Australian Dollar and Sterling.
Over the course of the quarter, the Australian Dollar decreased in value versus the US Dollar by 1.3 per cent which more than offset a 0.3 per cent increase in Sterling.
These exchange losses were primarily unrealised.
Somers’ total assets increased to $794.4 million (September 30: $508.6 million) due to the valuation uplift outlined above. The investment portfolio was $791.8 million as at June 30 (September 30, 2020: $500.9 million), with equity investments ($782.9 million) accounting for almost 99 per cent of this total. The remaining portfolio investments consisted of other financial investments.
Within investments, Resimac at $465.4 million, Waverton at $109.8 million, and BCB at $72.8 million together represent 81.8 per cent of total investments.
Total borrowings have increased during the year to $92.7 million as at June 30, 2021 (September 30, 2020: $76.0 million) but the gearing ratio reduced to 13.6% (September 30, 2020: 18.0 per cent) on account of the growth in shareholders’ equity.
Shareholders’ equity increased to $679.4 million as at June 30, 2021 (September 30, 2020: $422.1 million). During the quarter Somers bought back 1,026 shares at an average price of $17.00 and the number of shares in issue as at June 30, 2021 was 21,785,126.
The special dividend of $0.24 a share will be paid on September 13 to shareholders of record August 27.