Results for the first half of its financial have eliminated the deficit in retained earnings of $145.7 million

QWI Investments has continued the recovery in net asset value that began in the second half of the 2020 calendar year, resulting in another profit in the second quarter ending in March 2021.

For the quarter, the company achieved profit before tax of $112.6 million compared with a loss of $535 million in the year-ago quarter. For the six months to March 2021, QWI reports a profit before tax of $228.6 million compared with a loss of $655 million in the prior year.

The results for the first half have gone a far way in recovering the loss of $394 million for the 2020 financial year and have eliminated the deficit in retained earnings of $145.7 million at the end of September last year. Market conditions during the quarter and the financial year to date were favourable and resulted in the realisation of gains from some of the investments during the periods.

Given that 75 per cent of QWI’s investments continue to be invested in Jamaica, this performance compares favourably with the 4.77 per cent decline in the All Jamaica Composite Index (AJI) during the quarter. QWI’s Jamaican portfolio produced $127 million of unrealised gains in the quarter as a number of the local stocks in which the company invested in performed well.

QWI benefitted from favourable market conditions in America

In addition, QWI took advantage of the favourable conditions in the United States (US) and realised $21.8 million of gains in the overseas portfolio. This was partly offset by unrealised overseas losses of $11.8 million.

The total investment gains for the quarter represent a $657-million swing from the $530 million of net unrealised losses in the year-ago period when COVID-19 was having its greatest impact on economies in Jamaica and overseas. The company’s US investment portfolio produced a total return of 4.5 per cent in US currency, which largely matched the movements in the S&P 500 index and the MSCI World Index, QWI’s main benchmark.

Administration costs were little changed at almost $13 million (2020-$12 million). This quarter the company’s tax expense mainly comprised provisions for deferred tax and totaled $33.6 million versus a tax credit of $52.7 million a year ago.

The Net Asset Value of the company’s shares increased 12 per cent from $1.08 on September 30, 2020 to $1.21 in March 2021. This performance compares favourably with the one per cent decrease in the AJI and the 11.1 per cent increase in the S&P 500 Index but was not as dramatic as the growth in the Junior Market index or other overseas markets during the period.

QWI’s Jamaican portfolio produced $191 million of unrealised gains in the half year while the investment outfit realised gains of $56 million in the US portfolio. The total investment gain for the half year was $259 million, which represents an $881-million swing from the $622 million of net losses in the year-ago period.

QWI gains out performs S&P 500 and MSCI World Indices

The company’s US investment portfolio produced a total return of 27.5 per cent in US dollars, representing a significant outperformance of the 11 per cent growth in the S&P 500 Index and the 19 per cent growth in the MSCI World Index. QWI incurred unrealised exchange losses of $11 million for the half year versus $15 million a year ago with unrealised exchange losses this quarter of less than $1 million versus a $5-million gain a year ago.

Administration costs were little changed at almost $23 million, versus $21 million in 2020. For the half year the company’s tax expense mainly comprised provisions for deferred tax of $57.8 million vs a tax credit of $79.2 million a year ago.