LOM 2023 Annual Report - Report - Page 38
LOM
2021 ANNUAL REPORT
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
Broking Fee Income and Jitney Fees
Broking fee income represents amounts charged to clients
for brokerage services and related jitney fees are amounts
charged to the Company by the executing broker. Revenue and
expenses related to brokerage services is recognized when the
customer obtains the benefit of such services, at the time of
trade execution.
Management and Investment Advisory Fees
The LOM Group of Companies receives management fees
and investment advisory fees for managing assets on a
discretionary basis for both private and institutional clients.
Revenue from contracts with customers related to management
fee, is recognized over time as customers benefit from the
services as they are performed.
Substantially all investment management fees are determined
by the value of assets under management. At contract
inception, no revenue is estimated as the fees are dependent
on assets under management which are susceptible to market
factors outside of the Company’s control.
Therefore, substantially all Investment Management services
revenue is recognized using a time- based output method as
the customers benefit from the services over time and as the
assets under management are known or determinable during
each reporting period based on contractual fee schedules.
The LOM Group of Companies also earns management fees
from the following mutual funds (collectively referred to as the
LOM Sponsored Funds), which are recorded on an accrual basis
and recognized on a monthly basis, based on the net asset
values:
•
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LOM Funds SAC Limited (listed on the Bermuda Stock
Exchange)
a. LOM Money Market Fund (USD, CAD, GBP)
b. LOM Fixed Income Fund (USD, CAD, EUR, GBP)
c. LOM Equity Growth Fund
d. LOM Balanced Fund
e. LOM Stable Income Fund
f. LOM Emerging Market Fund
g. LOM Innovation and Opportunity Fund
Burnaby Special Funds SAC Ltd.
a. Burnaby QGF Fund
Foreign Exchange Income, net
Foreign exchange income represents income earned from
foreign currency transactions facilitated for customers and
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are based on the current foreign exchange rates and is net of
foreign exchange fees charged by external brokers. Electronic
foreign exchange (FX) services are dependent on the volume of
actual transactions initiated through the Company’s electronic
exchange platforms. Revenue is recognized over time using a
time-based measure as access to, and use of, the electronic
exchange platforms is made available to the customer and the
activity is determinable. A spread is captured by the Company
at the time of an FX execution and a gain/loss is then booked
monthly based on the market movement of those positions.
Corporate Finance Income
Corporate finance income consists of fees earned from clients
participating in private placements of securities, generally for
privately held companies, and is received in the form of cash,
securities or warrants from its underlying investments. When
corporate finance income is received in the form of securities,
the Company records income based on the fair value of the
securities received as of the date of the transaction. Fair value
is the last reported sales price on the main market in which
the investments trade on the date of valuation. Where there
are no sales on that day, the mid-market prices are used.
Where income is received in the form of warrants, the Board
of Directors determines a price based on the fair value of the
warrant.
Administration and Custody Fees
Administration fees, charged for the administrative and
custodial services provided to the LOM Sponsored Funds, are
recorded on an accrual basis over the period during which the
service is provided. Revenue from contracts with customers
related to custody fee revenue, is recognized over time as
customers benefit from the services as they are performed.
Substantially all custody fee revenue fees are determined by
the value of assets under management. At contract inception,
no revenue is estimated as the fees are dependent on assets
under management which are susceptible to market factors
outside of the Company’s control.
Net Interest Income
Net interest income is a combination of interest earned on or
paid to clients based on their daily cash balances and interest
received or paid on the Company’s cash balances from and to
brokers, custodians and related parties (see Note 8). Revenue
related to interest income is recognized over time as customers
benefit from the services as they are performed. All interest
revenue fees earned from customers are determined by the
value of the customers overdrawn cash positions with the daily
interest calculated on that daily balance. Interest amounts are
charged to clients on a monthly basis. At contract inception, no
revenue is estimated as the fees are dependent on the client’s
cash balance.
