DURBAN - REINET Investments yesterday reported a 3.4 percent increase in its net asset value (NAV) for the six months to end September despite significant market uncertainty created by the Covid-19 outbreak, currency and commodity volatility.
Reinet said it expected its fair value of its investments to continue to be knocked by these factors going forward. The group’s NAV rose by €148 million (about R2.71 billion) to €4.6bn compared to €4.4bn reported at the end of March despite the negative sentiments in the economy and the Covid-19 related disruptions.
“The increase in the NAV of €148m during the period reflects dividends received from British American Tobacco (BAT) together with increases in the estimated fair value of certain investments including other listed investments, Pension Insurance Corporation Group and Prescient China funds. Offsetting these increases are decreases in the fair value of BAT, derivative assets and diamond interests,” the group said. At the end of September 2019, the group’s net asset value amounted to €4.7bn.
Reinet received a dividend income of €34 million from BAT during the period and the investment holding company holds 58.1 million shares in BAT, which represented 2.53 percent of BAT’s issued share capital.
The group said its investment in BAT amounted to €1.78bn at the end of September, which was 39 percent of its net asset value. BAT’s performance during the period was flat with its share price increasing to £27.77 (R567.36) a share on the London Stock Exchange compared to £27.57 at the end of March, which was offset by the effect of sterling weakening against the euro resulting in a decrease in value of €25m.
This comes after BAT reported improved earnings for the six months to end June, with revenues up and Reinet expects similar performance in the second half of the year from BAT.
“BAT estimated that Covid-19 had a negative 4 percent impact on revenues but remains committed to a 65 percent dividend payout ratio. The risk relating to the adverse consequences of the UK’s potential exit from the EU (Brexit) is not deemed to be a principal risk for the BAT group,” Reinet said.
Reinet has also invested in Soho China, a Chinese office developer focused on developing and leasing properties in the central business districts of Beijing and Shanghai.
Reinet said the company has developed more than five million square metres of commercial properties in China and it holds 47 million shares with a market value of €11m at the end of September, down from €22m at the end of March.
“The decrease in market value reflects the decrease in the share price during the period, which has been influenced by lower occupancy levels in the Chinese property market as a result of Covid-19,” Reinet said.
Reinet shares closed 0.36 percent lower at R287.25 on the JSE yesterday.
BUSINESS REPORT