Reinet on track to deliver long term security and growth

From SENS

Reinet Investments has released its year end results, making strong gains in the markets today, trading up 2.5%.

• Net asset value at 31 March 2014: Euro 4 115 million, an increase of 2 per cent from 31 March 2013
• Net asset value per ordinary share at 31 March 2014: Euro 21.00 (31 March 2013: Euro 20.53)
• Profit for the year: Euro 92 million
• New investments with overall funding commitments of Euro 176 million closed during the year
• Additional investment of Euro 262 million in Pension Corporation Group Limited made during the year
• Dividends received from BAT during the year amounted to Euro 126 million
• Proposed initial dividend of Euro 0.153 per share

Chairman, Johann Rupert had this to say to shareholders, “We have used the past year to continue the planned diversification of the Reinet Fund portfolio, using the proceeds of sales of British American Tobacco shares to extend the Fund’s participation in, most notably, Pension Corporation and Renshaw Bay.

At 31 March 2014, the Company’s net asset value amounted to Euro 4 115 million, some 2 per cent above the comparable figure last year. The investment in British American Tobacco represented 72.8 per cent of the total net asset value, down from 82.5 per cent the previous year. The reduction in the weighting of the British American Tobacco shares as a part of the Company’s net asset value reflects the sale of a further 5 million shares during the year, the re-allocation of those funds to other investment areas and a decline in the market price of the remaining 74.3 million shares held over the year. The closing price of British American Tobacco shares at 31 March 2014 was GBP 33.35 compared to GBP 35.27 twelve months earlier.

We continue to explore avenues for further diversification, whilst recognising that the investment in British American Tobacco continues to be a cornerstone of Reinet, both in terms of value and cash flow.

At 31 March 2014, Reinet had cash on hand of Euro 223 million and saw a further inflow of Euro 87 million this month when the final British American Tobacco dividend for 2013 was received. Although there are significant investment commitments to be funded in the coming year, Reinet’s cash position and credit facilities are adequate.

During the year, Reinet invested a further GBP 225 million in Pension Corporation. This was linked to a pension insurance transaction in July 2013 which significantly increased the size of Pension Corporation’s business, fully justifying our faith in that investment. Pension Corporation is one of very few companies focused on the pension insurance sector in the United Kingdom and is well positioned to be a leader in what we consider to be a market with major growth opportunities. In March this year, the insurance market generally in the United Kingdom saw the valuations of listed insurance companies significantly impacted by two specific announcements – one changing the rules on annuity purchases and another proposing an inquiry into insurance selling. We believe neither initiative will impact directly on Pension Corporation. Nevertheless, we took a cautious view when determining the fair value of our investment as at 31 March, even if we have no intention to be sellers at this time and are confident that the long-term value of Pension Corporation will be significantly above where it stands today.

I am pleased to announce Reinet’s proposed initial dividend of Euro 0.153 per share or some Euro 30 million in total. This represents just over one third of realised net investment income, excluding the significant gain realised on the sale of British American Tobacco shares. We consider the current value of Reinet’s British American Tobacco holding to be Reinet’s reserve for diversification into other investments and it would make no sense to pay this out, even in part, by way of dividends if it would restrict Reinet’s ability to invest elsewhere.

I believe that Reinet is soundly established and on track to deliver on its objective of providing long-term security and growth. There are challenges ahead but Reinet should be well positioned to take advantage of opportunities as they present themselves.”

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