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Cape Town - Reinet, the Rupert family-controlled investment vehicle, anticipates paying regular dividends despite not proposing a payout to shareholders in the year to end-March 2009.
According to Reinet's maiden results released on Wednesday, the accounting treatment of dividends meant that the group did not accrue any dividend receivable from British American Tobacco (BAT) - its biggest investment - in the reporting period.
Reinet chairperson Johann Rupert pointed out that BAT declared a dividend in March 2009, which resulted in Reinet receiving about €60m in May.
He explained, though, that international accounting standards required Reinet to recognise dividend income only when it was approved by the shareholders of the paying company.
"Since the BAT annual general meeting was held at the end of April, that dividend income accrues to Reinet only in the first half of the current financial year."
Rupert said that in future the group anticipated paying regular dividends out of Reinet's realised investment income in each financial year.
He noted this was the first year of activity for Reinet. "We consider it premature to pay a dividend at a time when the portfolio has lost value as a consequence of the fall in sterling and the BAT share price."
Reinet's stake in BAT, which carries a value of nearly €1.5bn, comprises about 80% of the group's investment portfolio.
The first moves to lessen reliance on BAT have already taken place; Reinet recently concluded its first transaction with the acquisition of Lehman Brothers' fund management businesses in New York and London (now renamed Trilantic Partners).
The only other significant investment development was that Reinet invested €100m in euro-denominated government bonds.
Rupert reiterated that Reinet's goal was to build long-term wealth, with the aim of creating enduring shareholder value.
"We aim to invest prudently and to work with professional partners such that you as investors and we as managers and investors do not need to lose sleep over the decisions that we take."
- Fin24.com
