After receiving €32 million in dividends from British American Tobacco (BAT) for the quarter to the end of December, Reinet invested €6m into its businesses, leaving its net asset value (NAV) per share marginally lower at €31.5 compared with €31.8 a year earlier.
The NAV measure determines an investment company’s total assets less its total liabilities and equates to a firm’s total equity.
With Reinet recording its assets and liabilities in the euro, a weakening in the sterling pound, US dollar and South African rand against the euro during the quarter “resulted in an overall decrease in the value of certain assets and liabilities” in euro terms.
NAV amounted to €5.7 billion as at the end of December, increasing 2.1% from €5.6bn calculated for the previous quarter ending September 2023.
As much as €104m was wiped off Reinet’s NAV in the half-year period to September 2023, attributable to “decreases in the estimated fair value of certain investments including BAT, Pension Insurance Corporation Group and Prescient China funds, together with the dividend paid” by the company.
But Reinet continuously committed to investing further in its operations. A further €561m would be invested in its current investments.
During the quarter to the end-December, new commitments amounted to €6m, with a total of €50m already funded during the quarter under review.
Although Reinet had received €32m in dividend income from BAT for the December quarterly period, its value of investment in the cigarette manufacturer declined from €1.4bn as at end September to €1.2bn as at end period under review.
“The decrease reflects the decrease in the BAT share price on the London Stock Exchange from £25.765 at 30 September 2023 to £22.945 at 31 December 2023.”
During the December quarter, Reinet operated against a backdrop of global markets that were suffering from the effects of the Ukraine war crisis, the Middle East crisis, higher interest rates and elevated inflation.
“Whilst inflation has started to fall, high prices continue to put significant pressure on households and consumers as many central banks hold interest rates at current levels to mitigate the inflation concerns. The extent and impact of these factors remain uncertain,” the company said.
To its advantage though, Reinet has no direct exposure to Russia, Ukraine or the Middle East through its underlying investments or banking relationships and had not experienced any significant direct impacts from these hot spots.
Cash and liquid funds closed the period higher at €331m compared with €301m at the end of the September quarter, including the dividend from BAT.
Distributions from the group’s other investments amounted to €86m.
Reinet currently cash on deposit with European-based banks and in liquidity funds holding highly rated short-term instruments. It made payments of €62m in respect of underlying investments,€18m to Reinet Investment Advisors and €1m in tax payments.
In terms of bank borrowings, Reinet has a fixed-rate £100m margin loan from Citibank. The fair value on the loan amounted to €112m by the end of December.
The company additionally has a £100m margin loan due to Bank of America by March 2025, with a fair value of €113m.
“The increase in the estimated fair value of both loans reflects the decrease in time to maturity and a decrease in the discount rates used,” it said.
Reinet had now pledged 15 million shares in BAT “to collateralise” the two loans.
The company also had capital facilities with Citibank and Bank of America that allow it to “draw-down the equivalent of up to €230m in a combination of currencies” to fund further investment commitments.