Durrant Pate/Contributor

Investment company QWI Investments Limited has seen a continued deterioration in business, as the firm suffered an astounding drop in net profits for its year-to-date.

During the combined nine-month performance ended June 30, net profit amounted to J$11.12 million after a tax credit of J$4.20 million relative to the J$334.43 million booked in 2021. For the June third quarter, QWI chalked up a net loss of J$110.60 million relative to a net profit of J$163.71 million in 2021.

Total loss for the quarter amounted to J$132.27 million relative to income of J$235.23 million a year prior. During the year-to-date period, QWI also witnessed a more than five-fold decline in total income of J$93.88 million down from J$500.56 million booked in the corresponding period last year. 

The Jamaica Teas Group investment subsidiary ended the combined three quarters with a profit before taxation of J$6.93 million, relative to J$442.65 million last year. QWI recorded gains from investment activities of J$31.43 million relative to gains from investment activities of J$476.98 million last year.

Losses posted for 2022

For the June quarter, QWI posted losses from investment activities amounted to J$152.57 million versus gains of J$217.70 million in the prior comparable quarter. The management has explained that, “QWI’s Jamaican investments, which now represent 83 per cent of the company’s portfolio, produced J$38 million in unrealised losses and $6 million in realised losses in the quarter.”

Management further explained, “The latter resulted from the realignment of some of the stocks in the portfolio. The net asset value (NAV) of the company’s shares declined 5.7 per cent from J$1.39 in March 2022 to J$1.31 at the end of June 2022. The relative underperformance against the Jamaican indices reflects QWI’s exposure to the US market, which experienced a sharp decline in the June quarter.”

QWI recorded J$93.6 million in unrealised losses in its overseas portfolio and an additional J$13.8 million in realised losses. Unrealised exchange gains totalled J$10 million versus $11 million a year ago.

In addition, dividend and interest income amounted to J$28.14 million as at June 2022 (2021: J$23.97 million). However, for the June quarter, this amounted to J$10.01 million (2021: J$6.43 million), up 56% year over year. 

Unrealised currency gain amounted to J$34.31 million compared to a loss of J$388,333 last year.

Expenses almost doubled

Administrative expenses for the period amounted to J$63.89 million (2021: J$36.94 million), while interest expense amounted to J$23.07 million (2021: J$20.98 million).

The NAV of the company’s shares fell two per cent from J$1.34 at the end of September 2021 to J$1.31 at the end of June 2022. The NAV was reduced by the dividend of 3.5 cents per share declared in March and paid in April 2022.

After adjusting for the dividend payment, the NAV actually increased 0.5 cent, or 0.3 per cent, in the year to date. The management reports that this performance compares favourably with the seven per cent decline in the main JSE index and the 12 per cent drop in the S&P 500.

QWI’s Jamaican portfolio produced J$118 million in unrealised gains in the year to date. Unrealised losses of J$104 million in the overseas portfolio offset much of the gain in Jamaican portfolio.

Net total investment gain for the year to date was J$31 million versus J$477 million in the prior year. Unrealized exchange gains amounted to J$34 million versus a J$0.4 million loss a year ago.

Administration costs were J$64 million compared with J$37 million in 2021, due in the main to accruals for higher investment management expenses this year.

QWI balance sheet at a glance:

As at June 30, 2022, QWI’s total assets closed at J$2.23 billion (2021: J$2.28 billion), a two per cent decrease. This was mainly attributable to ‘Quoted investments-overseas’ which contracted by 40 per cent closing at J$361.13 million (2021: J$602.70 million).

This was however tempered by amounts due from brokers and receivables’ which had an increase of J$125.20 million to J$131.51 million (2021: J$6.30 million). Additionally, ‘Quoted investments (local)’ grew by three per cent closing at J$1.71 billion (2021: J$1.66 billion).

The total equity as at June 30, 2022 amounted to J$1.79 billion (2021: J$1.81 billion). This resulted in a net asset value per share of J$1.31 (2021: J$1.33).