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LOM (Holdings) Ltd. Announces 2005 Half Year Financial Results
On a year on year comparison, first half net broking revenues fell 36% (to represent 67% of net revenues). Less demand for margin loans resulted in a 10% fall in net interest earnings, while lower deal flow resulted in a 44% decline in corporate finance revenue. Other divisions of the group also suffered. Asset management fees fell 6% year on year, however, leasing activity continued to grow with lease income revenues rising 19%. Overall net revenues for the group fell 28%.
Operating costs for the group, ex-commission payments and jitney fees, which are directly related to brokerage revenue, increased 3% year on year. Costs rose primarily due to a 65% increase in professional fees, the bulk of which were legal expenses. Excluding these costs, overall operating expenses fell 5% year on year due to a reduction in staff numbers. Management has set targets for further cost cuts by year-end and therefore, we expect staff costs will again decline during the second half of the year.
LOM's first half net earnings were $251,139 versus $2,085,554 for the same period in 2004. Post these results we have experienced a normal summer slowdown in business activity in July and August. We expect that activities will pick up in the last four months of the year, however, this outlook is very much dependant on the financial markets. Furthermore, the adverse publicity generated by the SEC investigation and the loss of revenue from withdrawing from the US Bulletin Board market will continue to present serious challenges to the group winning new business.
On 1st July 2005, Brian Lines, the President of LOM since 1992 and a co-founder of the company, retired as an officer and director of the group. Mr. Lines felt that his resignation would be in the best interest of LOM in helping facilitate a settlement in an ongoing and unresolved SEC investigation. LOM would like to thank him for the enormous contribution he made to the company over the years.
LOM's assets under administration fell 2.2% year on year to total $842 million as of 30th June. LOM's balance sheet remains very healthy with net equity of $25.3 million. The group carries no debt and holds cash and equivalents of $14.9 million or 59% of total assets. As of 30th June 2005 LOM's book value was $4 per share.
In June LOM paid its regular dividend of 5 cents per share to shareholders of record on the 18th May 2005. Our stock on the Bermuda Stock Exchange is trading at $3.00. Given the disparity between LOM's current share price and our current and conservative book value the company will continue to buy back shares for cancellation in an amount not exceeding $1,000,000. From the beginning of the year to date the company has purchased for cancellation 94,550 shares.
Despite the reduction in brokerage activity and burdensome legal costs, the group remains profitable and other divisions are seeing increases in activity. At a Board Meeting today the Directors of the Company confirmed the payment of our regular semi-annual dividend of $0.05 per share payable on 1st December 2005 to shareholders of record 18th November 2005.
We would like to thank our customers for their support and our staff for all of the hard work and dedication they continue to exhibit.
Signed by:
Scott Lines
Managing Director