Somers Limited, the Bermudian-based investment holding company, has reported a net loss of $210.3 million for the 2022 fiscal year.

That compares with net income of $197.8 million in 2021.

Chairman Peter Durhager said: “It is important to note that the majority of this loss is unrealised and relates to mark to market movements on our investment portfolio.

“In fact, post the year end, we have seen a pleasing rebound in some of the values of our investments.”

Releasing its annual report to the market, Somers said the year to September 30, 2022 “was very disappointing for shareholders”.

The company said it gave up all the gains of the prior year, ending the year with an NAV per share of $13.82 which is after a special dividend in August of $4.55 per share (September 30, 2021: $27.70).

Most of this drop was caused by a decrease in the share price of Resimac, a residential mortgage lender and multi-channel distribution business that operates in Australia and New Zealand, with the share price of PCF, parent of the specialist bank PCF Bank Limited, also materially reduced.

Compounding this, Somers said, it incurred large foreign exchange losses following weakness in its main portfolio currencies, the Australian dollar and sterling.

Both sterling and the Australian dollar, which together represented 87.4 per cent of the value of Somers’s investments as at year-end (September 30, 2022), weakened materially against the US dollar.

Shareholders’ equity ended the year at $337.4 million (2021: $617.8 million).

Basic loss per share was $9.27 ($9.26 on a fully diluted basis) compared with basic and diluted earnings of $9.11 in the previous year.

The annualised total return on shareholders’ equity, including dividends, was negative 32.3 per cent.

Total assets fell to $422.16 million from $715.42 million at fiscal year-end in 2021.

Somers recorded a $171.1 million loss on its investment portfolio for 2022 (2021: gain of $201.4 million).

This loss comprised both realised and unrealised losses of $70 million and $101.1 million respectively (2021: gains of $8.2 million and $193.2 million respectively).

Investment gains and losses result from changes in the valuations of Somers’s investments.

The investment portfolio was $376.7 million at year end (2021: $660.7 million) with equity investments of $369.4 million accounting for 98.1 per cent of this total. The remaining 1.9 per cent ($7.3 million) consisted of other financial investments.

Looking ahead, Mr Durhager said: “It is very clear that we are now in a new era with an increasing cost of capital and the days of ‘free’ money and low interest rates are behind us.

“With the world dealing with high inflation, it is not surprising that asset prices have been under pressure as investors seek to re-price assets.

“While we anticipate that market volatility will remain well into 2023, we believe that we are near the end of the interest-rate rising cycle.

“Importantly, we have confidence that our investee companies can continue to perform well in this market and even flourish going forward.

“We anticipate that there will be a number of interesting investment opportunities over the coming year across the financial services sector, and therefore we are optimistic about Somers’s future.”