NATIONAL Investments Company (NICOL) has posted a pretax profit increase by 29 6 per cent to 4 .18 bn/- backed by other income that recorded a drastic jump last year.
The group results were boosted by other income, which recorded a drastic jump by 2,243 per cent increase to 4 .24 bn/- from last year from merely 18 1m/- recorded in previous year.
However, the year-on-year increase in profit before tax was before accounting for changes in the fair value of listed shares held. Tanzania Securities that analysed NICOL financial statement said the main reason for the increase in profit was a jump in other income.
NICOL recorded improved profitability in 2018 , whereas its investments in securities depreciated in value by 14 per cent.
It remains unclear whether this income source/magnitude is sustainable, Tanzania Securities said in a statement issued over the weekend.
The future performance of NICOL is directly related to the performance of its investments, most of which are companies listed on the Dar es Salaam Stock Exchange (DSE).
Tanzania Securities said it should be noted that in a portfolio of 8 4 bn/- worth of shares listed on the DSE, NMB constitutes about 9 1 per cent at 7 7 bn/-.
This poses a big risk because if NMB shares fall in price, the impact will be felt directly by NICOL, Tanzania Securities said and called for diversification strategies.
Further, the stock brokerage firm said the mutual fund, NICOL itself, accounted for 1.26bn/- which was 30 per cent of the other income, the rest being attributable to the subsidiaries.
Investment income which is the main source of income for the company decreased by 34 per cent to 1.35bn/-, the statement showed.
The net change in fair value of investments recorded a loss of 13.63bn/- leading to a total comprehensive loss of 9 .5 2bn/- from a profit of 1.8 6bn/-.
Thus, before providing for the loss in fair value of investments, earnings per share increased by 145 per cent to 8 1/-