Peter Durhager is to stand down as the chairman of Bermudian-based financial services company Somers Ltd at the annual meeting March 12.

Mr Durhager became chairman in 2021, succeeding Warren McLeland, who had served as chairman since the firm’s incorporation in 2012.

In the company’s 2023 annual report, Mr Durhager said that central banks across the world had significantly raised interest rates over the past 12 months to combat inflation that arose following Covid-19 and the initial impact of the war in Ukraine.

He said: “This has caused investors and businesses to re-evaluate what return they require from their investments.

“For the first time in over a decade, cash became an asset class that was investable. As such, equity markets, while rising in 2023 have been driven by a small number of large-cap technology stocks.”

He added: “Our investments have continued to produce strong operating results but this has not been reflected in the share prices of our listed investments.”

As a result, he said, Somers’s net asset value per share as at September 30, 2023, was £11.10, with a loss for the year of £32 million (about $41 million).

“It is important to note that the majority of this loss is unrealised and relates to mark-to-market movements on our investment portfolio. Post the year end, we have seen an increase in the value of a number of our investments,“ Mr Durhager wrote.

He added: “Overall the underlying operating performances of our investments continued to be positive in 2023.”

During the year, Somers made a number of small asset realisations and a number of investments in existing and new investee companies. It sold its entire holding in Terra Firma, a TSX-listed property financing company, as part of a full sale of the business.

Mr Durhager wrote that the level of borrowings at Somers increased during the year to £84 million primarily due to increased related party borrowings which were used to fund investments and general working capital.

“Long-term bank debt decreased during the year in line with scheduled loan repayments,” he said.

“While the level of gearing has increased during the year, due to a combination of increased borrowings and the fall in the value of Somers’s investments, an external gearing level of 31.9 per cent as at September 30, 2023, remains low and within the company’s risk parameters.

“While Somers remains fully invested, the income that Somers has received from its investee companies in 2023 should continue, and therefore the company is well positioned to support its existing investments and make new investments in the coming year.”

Somers did not pay a dividend during the year as it focused on supporting its investee companies.

Mr Durhager added: “We believe that we are approaching the top of this current interest-rate cycle. However, there remains uncertainty as to the full impact of the interest rate increases on the global economy and how long rates will stay at these levels.

“Our investments have adjusted to the current higher cost of capital and we expect them to emerge stronger when rates are eventually reduced. The outlook for markets in 2024 is uncertain and there remains a significant geopolitical and economic risk that may have a material impact on market volatility.

“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 compelling investment opportunities over the coming year across the financial services sector, and therefore we are optimistic about Somers’s future.”

• For the full 2023 annual report, see Related Media

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