Reinet records marginal decline in net asset value

Reinet records marginal decline in net asset value

JOHANNESBURG – Reinet Investments on Tuesday reported a marginal decline in its net asset value (NAV) during the six months to September on the lower value of its investment in British American Tobacco (BAT), attributed to euro weakness.

Reinet, which is chaired by billionaire Johann Rupert, said that the group’s NAV had dropped by 1.8 percent in September or €85 million (R1.39 billion) to €4.8bn, while the NAV per share was €25.44 from €25.30 in March of this year.

The group’s investment in BAT, the world’s second-biggest cigarette maker after Philip Morris, had marginally dropped to €2.30bn from  €2.52bn in March due to the weaker euro.

“The BAT share price on the London Stock Exchange decreased from £31.94 (R610.20) at March 31, 2019, to £30.08 at September 30, 2019, resulting in a decrease in value of €140m; the carrying value is also impacted by the weakening of sterling against the euro during the period, the effect of which amounts to some €77m,” said Reinet. 

BAT, the London headquartered tobacco giant, accounted for 48.6 percent of Reinet’s NAV, said Reinet.

Reinet said the group held 68 million BAT shares, representing some 2.96 percent of BAT’s issued share capital.

“The investment in BAT remains Reinet’s single largest investment position and is kept under constant review, considering the company's performance, the industry outlook, cash flows from dividends, stock market performance, volatility and liquidity,” Reinet said. 

In September BAT announced that it planned to cut 2 300 senior roles globally by next January, as it grappled with mounting debt and the looming ban of vaping and e-cigarettes in the US, which is expected to weigh heavily on the prospects of the tobacco industry.

Reinet said that the tobacco industry continued to be impacted by the US Food and Drug Administration regulation.

However, Reinet said that it was encouraged that in its half-year report BAT reported an increased focus on new product launches and was expected to produce accelerated revenue growth in the second half of the year.

In terms of dividends, Reinet said that the dividend income from BAT amounted to €39m  from €37m in 2018. 

Reinet declared a dividend of some €36m or €0.19 per share.

Reinet said that 9.4 million shares had been repurchased as of September 30, 2019, since the commencement of the first programme for  €135m.

The company announced its share buyback strategy in June, saying that it aimed at returning value to shareholders by boosting metrics such as dividends per share.