Investment company Reinet saw a 2.9% decrease in net asset value in the last financial year, offset by a dividend income of R2.5 billion from British American Tobacco (BAT).
In its annual report for the year ended 31 March 2023, Luxembourg-based Reinet reported a net asset value of €5.7 billion (R117.71 billion) – a decrease of €170 million (R3.51 billion) from 31 March 2022.
The company attributed this drop to the decrease in value of “certain underlying investments; in particular, the decrease in the share price of British American Tobacco over the year and the weakening of sterling against the euro”.
Over the past year, BAT has seen a 23.68% drop in its share price on the London Stock Exchange.
This share price decline is attributable to several investor concerns over BAT, including general sentiment due to a volatile market and increasing regulatory scrutiny in several countries.
Investors were also disappointed when, in February 2023, British American Tobacco announced that it would not launch a new share buyback program.
The company is one of Reinet’s largest holdings, second only to the Pension Insurance Corporation Group. Reinet holds 48.3 million shares in BAT, representing some 2.16% of BAT’s issued share capital.
The value of Reinet’s investment in BAT amounted to €1.56 billion (R32.21 billion) at the end of the reported period, constituting around 27.3% of Reinet’s net asset value.
This is a decrease from the year prior when the value of Reinet’s BAT investment totalled €1.83 billion (R37.77 billion), or 31.1% of Reinet’s net asset value.
While BAT’s share price decline dented Reinet’s net asset value, the company said this was offset by dividend income from BAT, “together with increases in the value of the fund investments in Trilantic Capital Partners and TruArc Partners”.
“During the year under review, dividend income recorded from BAT amounted to €122 million (R2.52 billion),” Reinet reported.
This amount was BAT’s second, third and fourth 2022 quarterly dividends, together with the first 2023 quarterly dividend of some €31 million (R639.81 million) with a record date of 24 March 2023.
According to Reinet, BAT’s first 2023 quarterly dividend was paid on 3 May 2023 and has been included as a receivable in the NAV as at 31 March 2023 due to the record date falling within the financial year.
BAT is known for its high and consistent dividends and currently offers a dividend yield of over 8%.