LOM first-half loss narrows – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

Log In

Reset Password
BERMUDA | RSS PODCAST

LOM first-half loss narrows

LOM suffered a loss of $1,220 during the first half of 2011 as its broking fees dropped by 6.5 percent to $1.76 million.

That compares to a loss of a loss of $357,286 in the first six months of 2010. The company’s assets under administration also dropped to $823 million at June 30, 2011 from $876 million during the same period in 2010.

Elsewhere, however, other revenues rose across the board.

In his letter to shareholders, LOM CEO Scott Lines said the company believed that equity markets would rally strongly for the remainder of the year, in turn helping to improve revenues in its broking operations.

Mr Lines said that while staff costs had remained relatively stable, development costs had been higher than normal as the company built its new in-house and online brokerage trading system called OPUS with plans to launch OPUS to its external customers in the last quarter of the year.

“The first half of 2011 initially was characterised by a stabilisation of economic activity in the west, continued growth in Asia and a general return of market confidence,” he said.

“Global equity markets generally rallied for the first two months and then came under increasing volatility as Greek and European debt woes returned to centre stage of the markets’ collective attention in the spring. These fears were compounded by economic statistics over the summer indicating that the US economy was slowing.

“Additionally, significant fears have emerged that the monetary authorities in China have been too aggressive in tightening in order to contain Chinese domestic inflation, and there will be a resultant hard landing for economic growth in Asia. Expectations of a global double dip recession have become widespread and resulted in heavy selling pressure in the global equity markets during the summer.

“Global bond yields have fallen sharply with a resultant rise in bond prices; this rally has been underpinned by the recent US Federal Reserve’s signal to the markets that interest rates will not start to rise until at least 2013. However, the overall weakness in the global equity markets negatively impacted volumes and revenues in our brokerage operations.”

Management and advisory fee revenues climbed 26 percent to $911,069 (21 percent of revenues), however fees from corporate finance work fell 71 percent to $32,668 (under one percent).

Foreign exchange revenues increased 33 percent to $601,597 (14 percent of revenues), while net interest earnings advanced 26 percent to $408,719 (9.2 percent), and investment services income was up 30 percent to $709,229 (16 percent).

Loss on securities held in inventory was $47,053, as operating costs, excluding commission payments, rose five percent, as did overall operating expenses (3.6 percent) and employee expenses (1.8 percent).

LOM currently remains in a strong financial position with a net equity of $18.4 million and no debt, as well as holding cash and equivalents of $3.44 million, representing 19 percent of its net equity.

As of the end of June 2011, LOM’s book value was $2.98 per share and the company paid a dividend of one cent per share on June 1 to shareholders of record May 16. Its current market capitalisation is $17.87 million.

Mr Lines said that LOM would continue to buy back shares for cancellation to a total not exceeding $500,000. Over the first half of 2011, the company purchased 59,576 shares for cancellation at an average price of $3.05.

LOM CEO Scott Lines

You must be Registered or to post comment or to vote.

Published August 18, 2011 at 2:00 am (Updated August 18, 2011 at 9:32 am)

LOM first-half loss narrows

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon