Wrap Text
REI - Reinet Investments S.C.A. Depositary Receipts - Consolidated audited
financial results for the year ended 31 March 2012
Reinet Investments S.C.A. Depositary Receipts
issued by Reinet Securities SA
(Incorporated in Switzerland)
ISIN: CH0045793657
Depositary Receipt Code: REI
CONSOLIDATED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2012
The Board of Reinet Investments Manager S.A. announces the results of Reinet
Investments S.C.A. for the year ended 31 March 2012.
Key financial data
Net asset value at 31 March 2012: Euro 3 649 million, an increase of 31 per cent
from 31 March 2011
Net asset value per ordinary share at 31 March 2012: Euro 18.62 (31 March 2011:
Euro 14.21)
British American Tobacco p.l.c.: fair value increased by Euro 803 million during
the year, reflecting strong growth in the underlying share price
Profit for the year: Euro 865 million
Pound 300 million medium-term borrowing facility linked to options over BAT
shares entered into
New investments with funding commitments of Euro 248 million closed during the
year
Reinet Investments S.C.A. (the `Company`) is a partnership limited by shares
incorporated in the Grand Duchy of Luxembourg and having its registered office
at 35, boulevard Prince Henri, L-1724 Luxembourg. It is governed by the
Luxembourg law on securitisation and in this capacity allows its shareholders to
participate indirectly in the portfolio of assets held by its wholly-owned
subsidiary Reinet Fund S.C.A., F.I.S. (`Reinet Fund` or `the Fund`), a
specialised investment fund also incorporated in Luxembourg. The Company`s
shares are listed on the Luxembourg Stock Exchange, the primary listing, and its
South African Depository Receipts are listed in Johannesburg, the secondary
listing. The Company`s shares are included in the `LuxX` index of the principal
shares traded on the Luxembourg exchange. The Company and the Fund together with
the Fund`s subsidiaries are referred to as `Reinet`.
CHAIRMAN`S COMMENTARY
OVERVIEW
We are still facing uncertainty in global financial markets. It is impossible to
predict what the outcome of the euro crisis may mean for investors.
Against this background, Reinet will continue to invest prudently. Under the
continuing uncertain economic scenario the very significant interest in British
American Tobacco (`BAT`) is an excellent protector of value for Reinet
shareholders.
FINANCIAL PERFORMANCE
Reinet Investments` consolidated profit for the year under review amounted to
Euro 865 million, reflecting net realised income of Euro 38 million and net
unrealised gains of Euro 827 million. Net asset value at 31 March 2012 was Euro
3 649 million, an increase of some 31 per cent over the prior year`s level,
reflecting the strong growth in the value of Reinet`s holding in BAT. Net asset
value per share increased from Euro 14.21 to Euro 18.62 over the year.
As well as the substantial increase in the value of the holding, Reinet`s
interest in BAT generated dividend income of Euro 114 million during the year
under review. In May 2012, Reinet received the BAT final dividend for its
financial year ended 31 December 2011, which amounted to Pound 75 million.
The General Partner does not propose any dividend payment at this time. Reinet
is still in the process of building its investment portfolio and the Board of
Reinet Investments Manager SA believes that it is more appropriate to retain
funds within the organisation at this stage.
DEVELOPMENTS DURING THE YEAR
As mentioned last year, Reinet has entered into a very significant partnership
with Mr Bill Winters and RIT Capital Partners Limited to create Renshaw Bay, an
alternative asset management and advisory firm. We have invested a small amount
in the firm to date but have already made a significant co-investment with our
partners in the JPS Credit Opportunities Fund, which focuses on trading
opportunities in credit markets. We expect other opportunities to follow,
drawing on Mr Winters` in-depth knowledge of and excellent contacts in the
banking world.
Reinet has also extended its interest in the natural resources sector with the
acquisition of diamond extraction rights on a property in South Africa. This
will be operated by the same partners who have identified and started work on
the Jagersfontein mine tailings project. In both cases, Reinet will be a
minority, financial investor in the project. We see these investments as
opportunities for Reinet to benefit from the increasing global demand for both
gemstones and industrial diamonds whilst supporting the local communities.
During the year under review, Reinet has built on its relationship with the
management team of Milestone Capital, which manages funds investing primarily in
established high-growth companies seeking expansion or acquisition capital in
China. Milestone has a proven track record of investment in Chinese businesses,
seeking out proprietary deals and applying stringent due diligence, creative
structuring and proactive monitoring with a focus on value creation. In addition
to its existing investment in Milestone, Reinet has committed to invest a total
of $ 152 million in the Milestone China Opportunities Fund III LP, its
management company and co-investment opportunities.
We are in discussions with our colleagues at Trilantic Capital Partners to
invest a further $ 100 million in Trilantic. As an investor in the Trilantic
management companies as well as its Fund IV funds, Reinet effectively pays no
management fees or carried interest on its LP investments in Trilantic funds - a
valuable asset. Reinet is also entitled to share in any carried interest gains
arising on the disposal of Trilantic funds` underlying investments. During the
year under review, Reinet received carried interest of Euro 7 million linked to
the realisation of investments held by the Trilantic funds.
At an EGM held in January this year, shareholders approved the proposal that the
specific terms of the Reinet prospectus which related to risk diversification
policy should be amended. The previous policy indicated that Reinet would seek
to diversify its interests such that no one investment represented more than 30
per cent of the overall portfolio within a period of four years from the date of
formation of Reinet. The amendment removed the arbitrary timeframe for
broadening the investment portfolio.
In February 2012, Reinet took advantage of the strong performance of the BAT
share price to put in place a 5-year, Pound 300 million financing package, which
will be used to fund forthcoming investments. The financing involves the use of
put and call options over approximately 13.7 million BAT shares. The options
guarantee a minimum value for the shares and allow Reinet to retain any increase
in value up to a level significantly above the current share price. The annual
cost of the facility will be broadly in line with the expected dividend income
on the relevant number of BAT shares.
OUTLOOK
Reinet`s cautious approach to diversification has proved to be a sound policy to
date. BAT shares have been amongst those which offered the highest risk-adjusted
returns of all European stocks over the period since Reinet was established in
2008.
We see a number of interesting investment opportunities opening up to Reinet. In
evaluating the many proposals put before us each year, we will continue to be
conservative in our investment philosophy; working with partners we know and
trust to build value for our shareholders over the medium to long term.
Johann Rupert
Chairman
Reinet Investments Manager S.A.
Luxembourg, 23 May 2012
BUSINESS REVIEW
Consolidated Net Asset Value (`NAV`)
The NAV of Reinet Investments S.C.A. at 31 March 2012 comprised:
31 March 2012 31 March 2011
Euro m % Euro m %
Listed investments
British American Tobacco 3 190 87.4 2 387 85.7
p.l.c.
Other 2 0.1 7 0.2
Cash and liquid funds 368 10.1 236 8.5
Unlisted investments
Trilantic Capital 149 4.1 72 2.6
Partners (1)
US land development and 95 2.6 53 1.9
mortgages(1)
36 South 90 2.5 88 3.2
Jagersfontein and 82 2.2 49 1.8
other diamond
interests
JPS Credit Opportunities 54 1.5 - -
Vanterra Flex 29 0.8 13 0.5
Investments
Vanterra C Change TEM 24 0.6 10 0.4
Milestone China 10 0.3 - -
Opportunities
Renshaw Bay 3 0.1 - -
Other 82 2.2 42 1.5
618 16.9 327 11.9
Bank borrowings and
collar financing
Borrowings (445) (12.2) (46) (1.7)
Derivative asset - put 30 0.8 - -
and call options
Other liabilities
Fees payable and other (70) (1.9) (102) (3.7)
liabilities, net of
other assets
Funding by minority (32) (0.9) (21) (0.8)
partners
3 661 100.3 2 788 100.1
Minority interest (12) (0.3) (4) (0.1)
3 649 100.0 2 784 100.0
(1)This amount represents the 100 per cent investment, whereas the comments
below use figures which represent Reinet`s 80 per cent investment.
All of the underlying assets are held by Reinet Fund S.C.A., F.I.S. (`Reinet
Fund` or `the Fund`).
LISTED INVESTMENT IN BRITISH AMERICAN TOBACCO P.L.C. (`BAT`)
Reinet remains one of the largest shareholders in BAT, holding some 84 million
shares representing 4.3 per cent of BAT`s capital. At 31 March 2012, the
value of the investment in BAT in the balance sheet of Reinet was Euro 3 190
million, being 87 per cent of Reinet`s NAV. The BAT share price on the London
Stock Exchange increased over the year under review from Pound 25.02 to Pound
31.51.
Reinet received dividends from BAT during the year amounting to Euro 114 million
(Pound 100 million), being BAT`s final 2010 dividend and its 2011 interim
dividend. In May 2012, after the end of the financial year, Reinet received
BAT`s final dividend in respect of its 2011 financial year; this amounted to
Pound 75 million.
CASH AND LIQUID FUNDS
Reinet holds cash on deposit principally in European banks. Reinet has also
invested Euro 18 million in a euro-denominated government bond fund and Pound 84
million (Euro 101 million) in a sterling liquidity fund. Both funds have short-
term AAA credit ratings. The government bond fund holds exclusively short-dated
bonds issued by western European (principally French and German) governments and
short-term loans backed by government bonds, the sterling liquidity fund holds
highly rated short-term commercial paper.
UNLISTED INVESTMENTS
Reinet seeks, through a range of investment structures, to build partnerships
with other investors, specialised fund managers and entrepreneurs to find and
develop opportunities for long-term value creation for its investors. In
evaluating these opportunities, Reinet applies a minimum hurdle rate of return,
taking into account the performance of the investment in BAT.
To date, funding commitments in the amount of Euro 859 million have been entered
into in respect of the businesses detailed below, excluding the smaller
investments transferred from Richemont when Reinet was established in 2008.
Trilantic Capital Partners
Original commitments: Euro 146 million
Trilantic Capital Partners (`Trilantic`) is the private equity management
business formerly owned by Lehman Brothers. Reinet bought its interest, in
conjunction with the management team, from the Lehman Brothers bankruptcy estate
for Euro 8 million in 2009.
Reinet has an 80 per cent interest in the Trilantic investment, with two
partners holding the balance and sharing in the investment commitments. The
investment comprises an interest in the Trilantic management company and a
commitment to invest in Trilantic`s Fund IV Global and Fund IV Europe funds.
The investment in the Trilantic management company provides that Reinet and its
partners will not pay any management fees or carried interest cost on
substantially all of its investments in funds under Trilantic management. In
addition, the agreement provides for Reinet and its partners to receive a share
of the carried interest payable to the Trilantic management company on the
realisation of investments held in the funds, once a hurdle rate has been
achieved. This applies to the existing funds and to any future funds to be
launched by Trilantic. Reinet`s share of any carried interest earned by the
Trilantic management company is 10 per cent, after the minority partners` share.
Reinet and its partners have invested the equivalent of Euro 109 million net of
capital repayments in the initial Trilantic management company investment and
the funds under Trilantic management. The investment in Trilantic is carried at
the estimated fair value of Euro 149 million at 31 March 2012, based on recent
valuations provided by Trilantic. Of the Euro 149 million, some Euro 30 million
is attributable to Reinet`s partners.
At 31 March 2012, Reinet had remaining commitments of Euro 62 million to invest
in funds under Trilantic management, after taking into account the amounts
payable by Reinet`s minority partners.
During the year under review, Reinet and its partners earned net carried
interest of Euro 7 million and realised gains of Euro 7 million before tax on
their share of the investments realised by the Trilantic funds. Of these
amounts, in aggregate, Euro 11 million was attributable to Reinet and Euro 3
million to the minority partners.
In May 2012, Reinet approved an incremental commitment of some Euro 75 million
to Trilantic. Under the terms of the original strategic agreement, no management
fee or carried interest will be payable to Trilantic in respect of the
additional commitment.
United States land development and mortgages
Original commitment: Euro 75 million
Reinet has co-invested with partners to acquire interests in real estate
development projects, usually properties where infrastructure services have been
laid but where construction of properties has not yet commenced. It has also
invested in mortgage debt on such developments and in specific properties. The
investments are principally in Florida, Colorado and North and South Carolina..
At 31 March 2012, Reinet had invested a total of Euro 68 million in these
projects. The investment is carried at the estimated fair value of Euro 95
million of which Euro 79 million is attributable to Reinet and Euro 16 million
to its partners.
Reinet is committed to invest a further Euro 7 million to acquire further
mortgage debt, to fund development projects and acquire additional land and
properties.
36 South global macro/volatility funds
Original commitment: Euro 88 million
Reinet has co-invested with the 36 South management team in the 36 South fund
management and distribution companies. It is also an investor in the funds under
management. These funds are established through an Irish-registered investment
fund - 36 South Funds PLC.
36 South is an absolute return fund manager which specialises in managing global
macro/volatility funds. The fund management philosophy is to invest when market
estimates of volatility are mis-priced. The volatility may apply to a wide range
of underlying asset classes ranging from currencies and interest rates to
equities.
Reinet invested its full commitment of Euro 88 million in 36 South. Of this,
Euro 15 million represented the initial investment in and loans to the jointly-
held fund management activities; the balance of Euro 73 million being Reinet`s
investment in the funds under management. During the year Euro 3 million of the
loan was repaid. The investment in 36 South Funds PLC is carried at its fair
value of Euro 78 million at 31 March 2012, together with the fair value of the
loan of Euro 12 million, for a total of Euro 90 million.
Jagersfontein and other diamond interests
Project cost: Euro 105 million
Reinet is an investor in an entity which extracts diamonds from the waste
tailings from mining operations which began over a century ago. The tailings
are located at Jagersfontein in South Africa. Developments in terms of gemstone
extraction technology since the mines were first excavated mean that there is
now the potential to recover stones which were previously treated as waste. In
addition, Reinet has invested in a separate company which owns assets pertaining
to mining rights and related activities to source diamonds on another property
in South Africa.
As anticipated at the time of making the investment, subsequent to the end of
the year under review, Reinet has entered into agreements to sell a substantial
part of its holdings in these projects to third parties, including local Black
Economic Empowerment organisations. The contracts are subject to certain
regulatory approvals being obtained and conditions precedent being met. Upon
completion of the transactions, Reinet will have an equity interest of between
45 to 49 per cent in each of the ventures.
As at 31 March 2012, Reinet had provided loans of Euro 47 million and acquired
preferred shares of Euro 26 million in the above operations.
The two investments are carried at their estimated aggregate fair value of Euro
82 million at 31 March 2012. Reinet is committed to invest a further Euro 32
million. The exposure to the South African rand has been substantially hedged by
borrowings in that currency.
JPS Credit Opportunities Fund (Cayman) Ltd. (`JPS Credit Fund`)
Original commitment: Euro 52 million
The investment in JPS Credit Fund, which was the first transaction introduced to
Reinet by Renshaw Bay, focuses on liquid opportunities in the credit markets.
JPS Credit Fund is managed by a team from JP Morgan Asset Management, largely
based in London.
JPS Credit Fund`s investment objective is to achieve attractive risk-adjusted
returns through both capital appreciation and current income by taking positions
in publicly traded and privately held securities, derivatives and other
instruments (including bonds, credit default swaps and index options), primarily
in credit and credit-related markets.
During the year, Reinet invested its full commitment of Euro 52 million in JPS
Credit Fund. This investment is carried at the estimated fair value of Euro 54
million at 31 March 2012.
Vanterra Flex Investments L.P. (`Vanterra`)
Original commitment: Euro 75 million
Reinet is an investor in Vanterra and in its general partner.
Vanterra was established in March 2010 to invest in listed and unlisted funds
and to make direct investments in the United States and emerging markets.
Vanterra has invested alongside Reinet in Trilantic and in the United States
land development and mortgages. It is also an investor in Vanterra C Change
Transformative Energy & Materials I, L.P. Vanterra seeks to construct a globally
diversified private equity portfolio providing investors with long-term capital
appreciation.
As at 31 March 2012, Euro 28 million of committed funds plus an additional Euro
2 million in respect of expenses had been invested in the fund. This investment
is carried at the estimated fair value of Euro 29 million at 31 March 2012.
Reinet is committed to invest a further Euro 47 million in Vanterra.
Vanterra C Change Transformative Energy & Materials I, L.P. (`TEM`)
Original commitment: Euro 49 million
Reinet is an investor in TEM and in its general partner.
TEM was established in July 2010 to invest in companies and projects providing
products or services that supply cleaner energy; create a more cost effective
building environment through the use of energy efficient technologies; and
develop renewable resources as a substitute for fossil and other traditional
fuels.
As at 31 March 2012, capital contributions of Euro 26 million had been made to
the fund. This investment is carried at the estimated fair value of Euro 24
million at 31 March 2012.
Reinet is committed to invest a further Euro 23 million in TEM.
Milestone China Opportunities Fund III L.P. (`Milestone III`)
Original commitment: Euro 113 million
Reinet is an investor in Milestone III and in its general partner.
In June 2011, Reinet entered into an agreement to invest in Milestone III, its
general partner and to co-invest in certain of Milestone III`s investments.
Milestone III is a fund, established to invest in high-growth companies with
unique products and market positioning seeking expansion or acquisition capital
in China.
As at 31 March 2012, capital contributions of Euro 3 million had been made to
the fund and Euro 7 million was invested in the general partner. This investment
is carried at the aggregate estimated fair value of Euro 10 million at 31 March
2012.
Reinet is committed to invest a further US$ 138 million (Euro 103 million) in
Milestone III and co-investment opportunities that it may present.
Renshaw Bay
Original commitment: Euro 12 million
In February 2011, Reinet announced plans for a co-investment with Mr William T.
Winters and RIT Capital Partners to establish an investment advisory and
management business to be known as Renshaw Bay. This business is managed by Mr
Winters, a former Co-Chief Executive Officer of JP Morgan Investment Bank.
Reinet owns 25.01 per cent of the business alongside Mr Winters, who holds 50
per cent, and RIT Capital Partners, which holds 24.99 per cent. Reinet has
invested Euro 3 million to date in Renshaw Bay and has committed to invest an
additional Euro 9 million. In addition to its involvement in the advisory and
management company itself, Reinet will also co-invest in future opportunities to
be determined by the partners. During the year under review, Reinet invested in
the JPS Credit Opportunities Fund, an opportunity identified by Renshaw Bay.
Further details are given above.
Other unlisted investments
This portfolio includes small businesses with growth potential as well as
investments in specialised investment funds focused on developing markets and
niche sectors. The portfolio is valued at its fair value of Euro 82 million in
the balance sheet at 31 March 2012, based on a detailed evaluation of each of
the investments.
Committed Funds
The table below summarises Reinet`s outstanding investment commitments as at 31
March 2012.
Commitments Change in New Funded Remaining
as at 31 commitment commitment in commitment
March 2011 s in year s in year current s
Euro m (2) Euro m year Euro m
Euro m Euro m
Trilantic Capital 100 3 - (41) 62
Partners (1)
US land development 26 2 - (21) 7
and mortgages
Vanterra Flex 58 4 - (15) 47
Investments
Vanterra C Change 36 1 - (14) 23
TEM
Jagersfontein and 15 - 47 (30) 32
other diamond
interests
Renshaw Bay (3) 11 1 - (3) 9
Milestone China - - 113 (10) 103
Opportunities
JPS Credit - - 52 (52) -
Opportunities
Smaller commitments 29 1 36 (41) 25
275 12 248 (227) 308
Other investments 13 - 12 (15) 10
(4)
288 12 260 (242) 318
(1) The remaining amount represents 80 per cent of the initial commitment
assumed by Reinet, 20 per cent having been sold to co-investors. Reinet has
committed to a further investment of some Euro 75 million.
(2) The change in the year reflects exchange rate fluctuations.
(3) Reflects advisory and management company only.
(4) Represents portfolio of investments transferred from Richemont in 2008.
BANK BORROWINGS AND COLLAR FINANCING
Borrowings
Reinet has borrowed ZAR 443 million to fund its investments in South African
projects. At 31 March 2012, the fair value of the borrowing was Euro 43 million.
In 2012, in order to meet its on-going commitments, Reinet entered into a Pound
300 million medium-term financing facility. At 31 March 2012, the fair value of
the borrowing was Euro 350 million. The transaction incorporates the purchase
by Reinet of put options and the sale by Reinet of call options over
approximately 13.7 million BAT shares. The net premium cost of some Pound 44
million in respect of the options is payable to the counterparty over the life
of the transactions, which run to 2017. The premium is carried as a liability at
its fair value of Pound 43 million (Euro 52 million) as at 31 March 2012.
Derivative asset - put and call options
As part of the Pound 300 million financing facility, Reinet has purchased put
options which provide protection should the value of the BAT shares used to
secure the borrowings fall below a certain amount. Proceeds received as a result
of the put option being exercised would be used to repay the amounts borrowed.
Reinet has also sold call options over an equal number of BAT shares. Both the
put options and the call options are carried at their respective fair values at
the balance sheet date. The net derivative asset is carried at its fair value of
Euro 30 million at 31 March 2012.
OTHER LIABILITIES
Fees payable and other liabilities, net of other assets
Fees payable and other liabilities comprise principally Euro 38 million in
respect of the performance fee payable as at 31 March 2012, together with the
management fee and other operating expenses currently payable. The performance
fee and management fee are payable to Reinet Investment Advisors Limited.
The management fee for the year under review amounted to Euro 26 million (31
March 2011: Euro 23 million), of which Euro 13 million was payable at 31 March
2012.
Funding by minority partners
Reinet invests in certain investments, principally Trilantic Capital Partners
and US land and developments, along with minority partners. As capital calls
are received, minority partners fund their share by advancing funds to Reinet;
as distributions are received from investees, Reinet refunds their pro-rata
share to the minority partners. The net amounts received are shown as "funding
by minority partners` in the table above.
SUMMARISED CONSOLIDATED INCOME STATEMENT
Year ended Year ended
31 March 2012 31 March 2011
Euro m Euro m Euro m Euro m
INCOME
BAT dividends 114 103
Interest income 11 4
Realised gains on investments 9 4
Carried interest earned on 7 141 - 111
investments
EXPENSES
Performance fee (38) (46)
Operating expenses, foreign exchange (35) (30)
and transaction-related costs
Interest expense (4) (77) - (76)
64 35
FAIR VALUE ADJUSTMENTS
BAT 803 228
Other investments 31 (11)
Derivative asset (10) -
Borrowings 3 827 - 217
891 252
OTHER CHARGES
Tax expense (19) (3)
Minority interest (7) -
Profit attributable to the 865 249
shareholders of the Company
INCOME
Dividends received from BAT increased by 11 per cent from Euro 103 million
(Pound 88 million) to Euro 114 million (Pound 100 million) during the year under
review. The increase is due to an increase of Pound 0.14 per share in the
underlying dividends paid by BAT, offset by a weakening in the sterling / euro
exchange rate. The dividends received from BAT represent the final 2010
dividend, paid in May 2011 as well as the interim 2011 dividend paid in
September 2011. The BAT final 2011 dividend was approved at the BAT AGM held in
April 2012 and was paid on 3 May 2012. That dividend has not been accrued at 31
March 2012 and does not form part of the income received during the year under
review.
Interest income is earned on bank deposits and loans made to underlying
investments.
Realised gains on investments include Euro 7 million in relation to investments
realised by the Trilantic funds. Of this, Reinet`s share amounts to Euro 6
million with Euro 1 million being due to the minority partners.
Carried interest of Euro 7 million was earned in respect of investments realised
by the Trilantic funds. Of this, Reinet`s share amounts to Euro 6 million with
Euro 1 million being due to the minority partners.
EXPENSES
The performance fee for the year ended 31 March 2012 amounts to Euro 38 million.
The performance fee is calculated as 10 per cent of the increase in the
aggregate market value of Reinet Investments S.C.A. over the period since
completion of the rights issue in December 2008 up to 31 March 2012, less the
sum of all performance fees paid in respect of previous periods.
Operating expenses include Euro 26 million in respect of the management fee for
the year ended 31 March 2012 (2011 Euro 23 million). Also included are Euro 1
million in charges from Reinet Investments Manager S.A. (the `General Partner`)
and transaction-related expenses, including legal and other fees, which amounted
to Euro 4 million.
Interest expense relates to rand and sterling borrowings.
FAIR VALUE ADJUSTMENTS
The investment in BAT increased in value by Euro 803 million during the year
under review. Of this, Euro 619 million was attributable to the increase in
value of the underlying BAT shares in sterling terms and Euro 184 million arose
due to the appreciation of sterling against the euro over the course of the
year.
The unrealised fair value adjustment of Euro 31 million reflects increases, for
the most part, in the value of investments in Trilantic, US land development and
the 36 South funds, offset by decreases in other investments and the decrease in
fair value of certain small investments.
The fair value of the derivative asset decreased by Euro 10 million in the
period due to the increase in the price of the BAT shares underlying the put and
call options in the period since the options were issued.
An unrealised gain of Euro 3 million arose in respect of the rand borrowing due
to the weakening of the South African rand during the year.
OTHER CHARGES
The tax expense of Euro 19 million includes corporate and withholding taxes paid
in respect of realised gains on Trilantic investments as well as a deferred tax
provision in respect of unrealised gains on Trilantic and other US investments.
The minority interest expense arises in respect of the 20 per cent minority
partners` share in the earnings of the Reinet entities which hold the Trilantic
and US land and development interests as described above.
Profit attributable to shareholders of the Company for the year amounted to Euro
865 million.
CASH FLOW
Year ended Year ended
31 March 2012 31 March 2011
Euro m Euro m Euro m Euro m
INVESTING ACTIVITIES
Proceeds from government bond and 64 17
sterling liquidity funds
Investments made (256) (266)
Proceeds from sale of investments 19 (173) 18 (231)
FINANCING ACTIVITIES
Funding from minority partners 11 21
Bank borrowings 358 369 46 67
OPERATING ACTIVITIES
Dividends, interest and other 115 104
income received
Carried interest received 7 -
Interest expense (3) -
Operating and related expenses (32) (27)
Performance fee paid (86) -
Taxes paid (4) (3) (1) 76
Net cash inflow / (outflow) 193 (88)
Opening cash position 53 143
Effect of exchange rate changes on 3 (2)
cash balances
Closing cash position 249 53
Liquid funds were held as follows:
Cash 249 53
Sterling liquidity fund 101 -
Government bond fund 18 183
Total 368 236
INVESTING ACTIVITIES
Euro 165 million was redeemed from the euro-denominated government bond fund
during the year and Euro 101 million (Pound 84 million) invested in a sterling
liquidity fund, which holds short-term sterling denominated commercial paper. In
accordance with International Financial Reporting Standards (`IFRS`), these
funds are shown as financial assets rather than liquid funds in the balance
sheet, notwithstanding that the funds are readily realisable and short-term in
nature. In addition to bank deposits of Euro 249 million, Reinet held Euro 18
million in the government bond fund and Euro 101 million in the sterling
liquidity fund at 31 March 2012. In total, available liquid funds therefore
amounted to Euro 368 million at the balance sheet date.
Investments totalling Euro 256 million were made during the year, including Euro
23 million in respect of US real estate related opportunities, Euro 50 million
in respect of investments in Trilantic, Euro 30 million in respect of
Jagersfontein and other diamond interests, and Euro 53 million in respect of
JPS. The balance relates to other unlisted investments. Proceeds from sale of
investments include Euro 10 million in respect of Trilantic.
FINANCING ACTIVITIES
Funding in respect of 20 per cent of investments made in Trilantic and US land
and development net of sales proceeds received was funded by the minority
partners.
Borrowings from banks amounted to Pound 300 million (Euro 358 million) during
the year (2011: ZAR 443 million, or Euro 46 million).
OPERATING ACTIVITIES
Dividends received from BAT increased by 11 per cent from Euro 103 million
(Pound 88 million) to Euro 114 million (Pound 100 million) during the year under
review. The increase is due to an increase of Pound 0.14 per share in the
underlying dividends paid by BAT, offset by a weakening in the sterling / euro
exchange rate. The dividends received from BAT represent the final 2010
dividend, paid in May 2011 as well as the interim 2011 dividend paid in
September 2011.
Carried interest of Euro 7 million was received in respect of the investment in
Trilantic.
Interest of Euro 3 million was paid in respect of the ZAR denominated loan in
the year. Interest payments in respect of the sterling borrowing will only
commence in May 2012.
The performance fee of Euro 86 million was paid in respect of the period ending
31 March 2011. The performance fee payable in respect of the current year will
be paid in May 2012.
US taxes of Euro 4 million were paid in the year under review, this amount
comprises taxes withheld by Trilantic in respect of gains and carried interest
received, together with estimated US taxes paid on gains and income which are
expected to be taxable.
Liquid funds increased by Euro 196 million over the year to Euro 249 million as
borrowings and the inflow of dividends received from BAT exceeded amounts
invested in new investments together with payment of the performance fee and
operating expenses.
DIVIDEND
The Board of the General Partner believes it prudent not to propose any dividend
at this time, recognising that Reinet is currently in an investing phase;
building a broader-based equity portfolio.
SHARES IN ISSUE
The number of shares in issue remained unchanged during the period at 195 942
286. This figure includes 1 000 management shares held by the General Partner.
FINANCIAL STATEMENTS
The consolidated financial statements at 31 March 2012, on which this
announcement is based, have been audited and approved by the Board of the
General Partner on 15 May 2012 and are subject to shareholder approval at the
annual general meeting to be held in September 2012. The printed Reinet Annual
Report and Accounts will be available upon request from mid-July 2012.
Notes for South African editors
Acknowledging the interest in Reinet`s results on the part of South African
investors, set out below are key figures from the results expressed in rand.
Using the closing euro/rand exchange rate prevailing as at 31 March 2012 of
10.2282, and a rate of 9.5936 as at 31 March 2011.
31 March 2012 31 March 2011
Net asset value ZAR 37 323 m ZAR 26 709 m
Net asset value per ordinary share ZAR 190.45 ZAR 136.33
Using the average euro/rand exchange rate for the year ended 31 March 2012 of
10.2374 and an average rate of 9.4991 for the year ended 31 March 2011.
31 March 2012 31 March 2011
Profit for the year ZAR 8 855 m ZAR 2 365 m
Reinet Securities SA Depository Receipts are issued subject to the terms of the
Deposit Agreement entered into on 18 December 1992, most recently amended on 16
December 2010. By holding Depository Receipts, investors acknowledge that they
are bound by the terms of the Deposit Agreement. Copies of the Deposit Agreement
may be obtained by investors from Reinet Securities SA or Computershare Limited.
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
23 May 2012
Date: 23/05/2012 07:30:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
