Reinet posts interim profit of R4.5bn
November 18, 2009
By Florence de Vries
Reinet made an interim profit of e406 million (R4.5 billion) based on the dividend flows from its main underlying investment, British American Tobacco (BAT), the investment group said yesterday.
The group was created a year ago to hold the non-luxury assets formerly held by Richemont.
In the six months to September the group's net asset value rose 22 percent to e2.25bn, but basic and diluted earnings a share fell to e2.08 from e2.39 a year ago.
In the review period Reinet, controlled by South African tycoon Johann Rupert, acquired an interest in the fund management business formerly known as Lehman Brothers, with an initial investment of $10m (R74m).
The group then made investments of e2.1m to acquire limited partner interests in Trilantic Capital. It will gain access to a team of experienced asset managers and has committed itself to invest alongside the current limited partners in new investments to be made.
Reinet is a top shareholder in BAT with 4.2 percent. For the review period its investment in BAT was worth e1.81bn, representing 80 percent of the group's net asset value. The group got dividends from BAT of e84m in the review period. In the comparative period to March, its results were affected by deals on Richemont's restructuring, including a one-off holding gain realised when 90 percent of Reinet's BAT holding was distributed to shareholders a year ago.
Reinet's cash is held on deposit at banks in Luxembourg and the UK. Analyst Mark Ansley said Trilantic was a small contributor to the group's net asset value, comprising just 5 percent.
"This is almost insignificant in the total scheme of things," he said, adding: "Reinet is all about net asset valuation and earnings generation at this stage does not play a big role in valuing the firm.
"The net asset value is dominated by BAT and the dividend that flows to the group from this shareholding." The second-largest contributor to Reinet's net asset value was cash at 17 percent.
"Reinet is liable to pay a performance fee on its net asset value performance and has raised a liability of just more than e50m, which dwarfs the Trilantic investment," he concluded.
Reinet added 0.35 percent to R11.58 on the JSE yesterday.
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