About €104 million (R2.1 billion) has been wiped off Reinet’s net asset value in the half year period to September 2023, the company, which has a secondary listing on the JSE, said yesterday, highlighting though that it had committed €39m in investment commitments during the same period.
Reinet’s net asset value, which measures the value of the company’s total assets less its liabilities, has declined by 1.8% from the previous €5.7 billion as at March 2023. Its current nest asset value of €5.6bn, however, “reflects a compound growth rate of 8.5% per annum since March 2009” including dividends paid.
“The decrease in the NAV of € 104 million during the period reflects decreases in the estimated fair value of certain investments including British American Tobacco (BAT), Pension Insurance Corporation Group Limited and Prescient China funds, together with the dividend paid by the company,” Reinet CEO Wilhelm van Zyl said yesterday.
Dividends received from BAT and Pension Corporation together with increases in the fair value of investments in Trilantic Capital Partners, TruArc Partners and NanoDimension funds helped to partly offset the lowering in the net asset value of the company.
Reinet, which has investments in BAT, Pension Corporation and Trilantic Capital Partners among others paid a dividend of € 0.30 per share in September 2023 compared to € 0.28 per share the previous year. Headline earnings per share for the half year period under review amounted to €0.27 compared to €2.80 in the previous contrasting period.
The company has nonetheless made commitments totalling €39m “in respect of new and existing” investments. Dividends received from British American Tobacco during the period amounted to €65m, while an inaugural dividend of €57m had been received from Pension Insurance Corporation.
“Since its formation in 2008, Reinet has invested some €3.6 billion, and at 30 September 2023 committed to provide further funding of €630 million to its current investments. New commitments during the period under review amounted to €39 million, with a net total of €51 million funded during the period,” the company said.
It explained that it did not have direct exposure to Russia, Ukraine or the Middle East hence it had not experienced any significant direct impact in respect of fall-outs in those markets as well as interest rate increases or rising inflation. Shares in Reinet traded nearly 1% stronger at R442.2 on the JSE yesterday.
Reinet’s investment in BAT remains one of its “largest investments,” the company said. The value of its investment in BAT amounted to €1.4m as at the end of the interim reporting period, a decline from €1.5m a year ago.
Further to this, the BAT share price on the London Stock Exchange had decreased from £28.405 at end March £25.765 at the end of September. However, this had been offset by “the effect of sterling strengthening against the euro in the period, resulting in a net decrease in value” of €125m.
BAT is expecting constant currency revenue growth of 3% to 5%, Reinet said as it looked up to continued strong progress by the cigarette company towards £5 billion new category revenue in 2025.
In terms of borrowings, Reinet has a fixed-rate £100m margin loan due to Citibank in August 2024. It said the estimated fair value of the loan amounted to €111m as at end of reporting period. The company also has a fixed-rate £100m margin loan due to Bank of America in March 2025.
With the estimated fair value on both loans increasing as a reflection of the strengthening of the pound sterling against the euro in the period, Reinet has collaterised shares in BAT.
“Some 15 million BAT shares have been pledged to collateralise these two loans. In addition, Reinet has a facility agreement in place with Citibank N.A. up to August 2024 and with Bank of America up to March 2025. These facilities allow Reinet to draw-down the equivalent of up to €231 million in a combination of currencies to fund further investment commitments,” the company said.
Although the company did not make any draw-downs on these funds this year, its operating expenses for the half year period amounted to €4m, including €1m related to charges from Reinet Investments Manager. Other expenses such as legal and other fees amounted to about €3m.