Bermuda Securities Firm Sees Dramatic Revenue Slump

by Carla Johnson, Investors Offshore, London

07 November 2001

LOM (Holdings) Limited, which floated successfully on the Bermuda Stock Exchange earlier this year, recently issued dramatically lower interim figures for the six months ending 30 June 2001.

Scott Lines, Managing Director, announced net revenue for the period of $6,110,625 compared to $16, 649,250 in the same six month period last year. Net earnings for the 2001 period were $337,192 compared to $6,090,635 for the 2000 period. Total operating expenses were $5,773,432 for the six months ending 30 June 2001 versus $10,558,614 for the same period last year.

Mr Lines said that weakness in global equity markets over the first six months of 2001 was reflected in a substantial decline in the Company’s primary revenue source, broking fees, which were down 66% over same period last year. Net interest revenue fell by 36% due to continued interest rate cuts and lower margin borrowing by customers. He said that LOM continues to invest heavily in technology despite the slowdown, and expects that when global equity markets recover the group will substantially increase net earnings.

The group, with offices in the Bahamas, the Cayman Islands and Guernsey in addition to Bermuda, describes itself as being one of Bermuda's largest independent financial services firms, offering personalised service and products including full service securities brokerage, asset management, mutual funds, money market access, custody and corporate finance to institutional and retail customers.

With a strong balance sheet, LOM is able to ride out the storm in securities markets, but its figures give a graphic demonstration of what the high-tech meltdown and this year's bear market have done to the offshore securities business. Falls in turnover of this magnitude have more in common with those suffered by on-line brokerages than by the mainstream 'bricks' brokerages.

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