May 1, 2023

QWI Investments Limited (QWI), for the six months ended March 31, 2023, reported total losses of $62.57 million relative to total income of $226.15 million booked in the corresponding period last year. Of this:

• • QWI recorded losses from investment activities of $77.03 million for the period ended March 2023 relative to gains of $184 million for the comparable period in 2022. While for the quarter, losses from investment activities amounted to $325,153 versus gains of $70.60 million in the prior comparable quarter. “Market conditions during the quarter locally were generally unfavourable. This resulted in unrealised losses on the Jamaican portfolio. Higher interest rates since April 2022 have been the primary cause of falling share prices locally. In the USA, interest rates actually declined in both the quarter and the half year,” as per QWI.
  • In addition, dividend and interest income amounted to $21.09 million as at March 2023 relative to income of $18.14 million in 2022. However, for the quarter, income amounted to $8.15 million (2022: $5.54 million), up 47% year over year.
  • Unrealized currency loss amounted to $6.63 million compared to a gain of $24.01 million in 2022.

Administrative expenses for the period amounted to $38 million (2022: $56.89 million), while interest expenses amounted to $18.14 million (2022: $15.22 million).

As such, QWI ended the period with a loss before taxation of $118.72 million versus a profit before taxation of $154.04 million booked for the six months ended March 31, 2022.

Consequently, following a tax credit of $59.59 million (2022 tax charges: $32.32 million), net loss for the period amounted to $59.12 million relative to a profit of $121.72 million booked for the six months ended March 31, 2022. The second quarter booked net profit of $5.80 million relative to a net profit of $38.68 million documented in the same period last quarter.

Loss per share (LPS) for the period amounted to $0.04 for the six months ended March 31, 2023 relative to earnings per share of $0.09 for the comparable period in 2022. While the EPS for the second quarter was $0.004 (2022 EPS: $0.03). The trailing LPS amounted to $0.15. The total shares outstanding used for this calculation was 1,365,000,015. Additionally, QWI last traded on May 1, 2023 at a price of $0.70.

Notably, Management stated that, “The Company’s Investment Committee actively monitors QWI’s investment portfolio and the markets in which we operate. The rate of USA inflation is clearly in decline, and ongoing reductions in USA home price and home rental inflation will soon add to these changes, resulting in even lower rates. The cost of services in the USA, which largely reflects trends in wages, has not yet shown the declines seen in the prices of some goods and commodities. This is one source of future market uncertainty. Opinions also differ concerning the extent to which interest rates will follow the downward trend of inflation rates and whether commodity prices will increase again later in 2023. In the first half, QWI’s USA share portfolio benefitted from the trend towards lower USA inflation and interest rates which, together with improved profit performance at several of the companies in which we invest, resulted in higher share prices in the quarter.”

Balance Sheet at a Glance:

As at March 31, 2023, total assets closed at $1.96 billion (2022: $2.41 billion), a 19% decline. Of this decline, ‘Quoted Investments (local) fell by 20% closing at $1.44 billion (2022: $1.81 billion). Additionally, ‘Due from Brokers and Receivables’ fell to $20.76 million (2022: $128.73 million).

The total equity as at March 31, 2023 amounted to $1.67 billion (2022: $1.90 billion). This resulted in a net asset value per share of $1.22 (2022: $1.39).

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