To view the PDF file, sign up for a MySharenet subscription.

REINET INVESTMENTS S.C.A - Consolidated Unaudited Financial Results For The Six-Month Period Ended 30 September 2012

Release Date: 13/11/2012 08:00
Code(s): REI     PDF:  
Wrap Text
Consolidated Unaudited Financial Results For The Six-Month Period Ended 30 September 2012

Reinet Investments S.C.A. Depositary Receipts
issued by Reinet Securities SA
(Incorporated in Switzerland)
ISIN: CH0045793657
Depositary Receipt Code: REI


COMPANY ANNOUNCEMENT FOR IMMEDIATE RELEASE
 

CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 2012


The Board of Reinet Investments Manager S.A. announces the results of Reinet Investments S.C.A. for the six-month period ended 30 September 2012.


Key financial data
 Net asset value at 30 September 2012: Euro 3 938 million, an increase of 8 per cent from 31 March 2012
 Net asset value per ordinary share at 30 September 2012: Euro 20.10 (31 March 2012: Euro 18.62)
 Reinets investment in British American Tobacco increased in value by Euro 178 million during the period
 Profit for the period: Euro 290 million
 Transaction with Pension Corporation Group Limited announced on 4 July 2012 and closed on 22 October 2012; funding commitment of Euro 503 million
 Other new investments with funding commitments of Euro 132 million closed during the period


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 Companys 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 Companys shares are included in the 'LuxX' index of the principal shares traded on the Luxembourg exchange. The Company and the Fund together with the Funds subsidiaries are referred to as Reinet.


BUSINESS REVIEW

CONSOLIDATED NET ASSET VALUE (NAV)
The NAV of Reinet Investments S.C.A. at 30 September 2012 comprised:

+-----------------+-----------------+------+-------------+------+------+
|                 |30 September 2012|      |31 March 2012|      |      |
+-----------------+-----------------+------+-------------+------+------+
|                 |           Euro m|     %|             |Euro m|     %|
+-----------------+-----------------+------+-------------+------+------+
|Listed           |                 |      |             |      |      |
|investments      |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|British American |            3 368|  85.5|             | 3 190|  87.4|
|Tobacco p.l.c.   |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Other            |                1|     -|             |     2|   0.1|
+-----------------+-----------------+------+-------------+------+------+
|Cash and         |              347|   8.8|             |   368|  10.1|
|liquid funds     |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Unlisted         |                 |      |             |      |      |
|investments      |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Trilantic Capital|              189|   4.8|             |   149|   4.1|
|Partners (1)     |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|US land          |              105|   2.7|             |    95|   2.6|
|development and  |                 |      |             |      |      |
|mortgages(1)     |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|36 South         |               94|   2.4|             |    90|   2.5|
+-----------------+-----------------+------+-------------+------+------+
|Jagersfontein and|               90|   2.3|             |    82|   2.2|
|other diamond    |                 |      |             |      |      |
|interests        |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|JPS Credit       |               59|   1.5|             |    54|   1.5|
|Opportunities    |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Vanterra Flex    |               40|   1.0|             |    29|   0.8|
|Investments      |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Vanterra C       |               32|   0.8|             |    24|   0.6|
|Change TEM       |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Milestone China  |               13|   0.3|             |    10|   0.3|
|Opportunities III|                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Renshaw Bay      |                8|   0.2|             |     3|   0.1|
+-----------------+-----------------+------+-------------+------+------+
|Other            |              116|   2.9|             |    82|   2.2|
+-----------------+-----------------+------+-------------+------+------+
|                 |              746|  18.9|             |   618|  16.9|
+-----------------+-----------------+------+-------------+------+------+
|Bank borrowings  |                 |      |             |      |      |
|and collar       |                 |      |             |      |      |
|financing        |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Borrowings       |            (469)|(11.9)|             | (445)|(12.2)|
+-----------------+-----------------+------+-------------+------+------+
|Derivative assets|               27|   0.7|             |    30|   0.8|
+-----------------+-----------------+------+-------------+------+------+
|Other liabilities|                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Fees payable and |             (46)| (1.2)|             |  (70)| (1.9)|
|other            |                 |      |             |      |      |
|liabilities, net |                 |      |             |      |      |
|of other assets  |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|Funding by       |             (26)| (0.6)|             |  (32)| (0.9)|
|minority partners|                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+
|                 |            3 948| 100.2|             | 3 661| 100.3|
+-----------------+-----------------+------+-------------+------+------+
|Minority interest|             (10)| (0.2)|             |  (12)| (0.3)|
+-----------------+-----------------+------+-------------+------+------+
|                 |            3 938| 100.0|             | 3 649| 100.0|
+-----------------+-----------------+------+-------------+------+------+
|                 |                 |      |             |      |      |
+-----------------+-----------------+------+-------------+------+------+

(1)This amount represents the 100 per cent investment, whereas the comments below use figures which represent Reinets actual share of the 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 BATs capital. At 30 September 2012, the value of the investment in BAT in the balance sheet of Reinet was Euro 3 368 million, being 86 per cent of Reinets NAV. The BAT share price on the London Stock Exchange increased over the period under review from Pound 31.51 to Pound 31.78.

Reinet received dividends from BAT during the period amounting to Euro 136 million (Pound 110 million), being BATs final 2011 dividend and its 2012 interim dividend.

CASH AND LIQUID FUNDS
Reinet holds cash on deposit principally in European banks and in liquidity funds holding 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.

Funding commitments are entered into in various currencies including pounds sterling, US dollars and South African rand and are converted into euro below using 30 September 2012 exchange rates.

To date, funding commitments in the amount of Euro 1 445 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 - Fund IV
Original commitment: Euro 167 million (including additional interest acquired during the period)

Trilantic Capital Partners (Trilantic Management) is the private equity management business formerly owned by Lehman Brothers. Reinet bought its interest in Trilantic Management, in conjunction with the management team, from the Lehman Brothers bankruptcy estate for Euro 8 million in 2009.

In 2009, Reinet also committed to invest in two funds managed by Trilantic Management, Trilantic Capital Partners Fund IV Global L.P., which invests primarily in the United States, and Trilantic Capital Partners Fund IV (Europe) L.P. (together Fund IV). Reinet acquired an 80 per cent interest in Trilantic Management and invested in Fund IV, with two partners holding the balance and sharing in the investment commitments. During the period under review Reinet repurchased a 10 per cent interest from one of its partners, bringing its ownership to 90 per cent and increasing its remaining commitment by 12.5 per cent.

The investment in Trilantic Management provides that Reinet and its partner will not pay any management fees or carried interest cost on substantially all of the investments in funds under Trilantic management. In addition, the agreement provides for Reinet and its partner to receive a share of the carried interest payable to Trilantic Management 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. Reinets share of any carried interest earned by Trilantic Management is 11.25 per cent.

Reinet and its partner have invested the equivalent of Euro 131 million (31 March 2012: Euro 109 million), net of capital repayments, in Trilantic Management and Fund IV. The investment is carried at the estimated fair value of Euro 189 million at 30 September 2012 (31 March 2012: Euro 149 million). The investment in Fund IV is based on recent valuations provided by Trilantic Management. The increase in the valuation is due to the positive performance of the underlying investments and the strengthening of the US dollar against the euro during the period. Of the Euro 189 million, some Euro 19 million is attributable to Reinets minority partner.

At 30 September 2012, Reinet had remaining commitments of Euro 52 million to invest in Fund IV, after taking into account the amounts payable by Reinets minority partner.

During the period under review, Reinet and its partner realised gains totalling Euro 3 million before tax on their share of the investments realised by Fund IV.

Trilantic Capital Partners - Fund V
Original commitment: Euro 78 million  

In May 2012, Reinet approved a commitment of some Euro 78 million to Trilantic Capital Partners V (North America) L.P. (Fund V). Fund V will invest principally in North America. Reinet may increase its commitment up to 10 per cent of aggregate investors commitments to Fund V and it is anticipated that Reinets partner in Fund IV will co-invest in Fund V.

Under the terms of the original strategic agreement, no management fee or carried interest will be payable to Trilantic Management in respect of the commitment to invest in Fund V. In addition, Reinet will receive a share of the carried interest earned by Trilantic Management.

Drawdowns of the investment commitments in respect of Fund V are expected to commence in 2013.

United States land development and mortgages
Original commitment: Euro 78 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 30 September 2012, Reinet had invested a total of Euro 76 million in these projects (31 March 2012: Euro 68 million).  The investment is carried at the estimated fair value of Euro 105 million (31 March 2012: Euro 95 million) of which Euro 88 million is attributable to Reinet and Euro 17 million to its partners. The increase in the valuation is due to increases in the value of the underlying assets, as provided by a third party US real estate expert, and the strengthening of the US dollar against the euro during the period.

Reinet is committed to invest a further Euro 2 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 Reinets investment in the funds under management. During the year ended 31 March 2012 Euro 3 million of the loan was repaid. The investment in 36 South Funds PLC is carried at its fair value of Euro 82 million at 30 September 2012 (31 March 2012: Euro 78 million), together with the fair value of the loan of Euro 12 million (31 March 2012: Euro 12 million), for a total of Euro 94 million (31 March 2012: Euro 90 million).

Jagersfontein and other diamond interests
Project cost: Euro 101 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, Reinet has entered into agreements to sell a substantial part of its equity holdings in these projects to third parties, including local Black Economic Empowerment organisations. Certain sales were completed during the period under review and other contracts are subject to regulatory approvals being obtained and conditions precedent being met. Upon completion of the transactions, Reinet will have an equity interest of 48 per cent in each of the ventures.

As at 30 September 2012, Reinet held equity interests of Euro 17 million (31 March 2012: Euro 26 million) in the underlying investments and had provided loans of Euro 55 million (31 March 2012: Euro 47 million). In addition, Euro 8 million is receivable from third parties in respect of sales of part of the equity investments and Reinet has accrued income of Euro 10 million in respect of the loans and equity investments.

In aggregate, these investments are carried at their estimated fair value of Euro 90 million at 30 September 2012 (31 March 2012: Euro 82 million). Reinet is committed to invest a further Euro 21 million in these projects. The exposure to the South African rand has been substantially hedged by borrowings in that currency and through forward exchange contracts.

JPS Credit Opportunities Fund (Cayman) Ltd. (JPS Credit Fund)
Original commitment: Euro 54 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 Funds 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.

Reinet invested its full commitment in JPS Credit Fund in the year ended 31 March 2012. This investment is carried at the estimated fair value of Euro 59 million at 30 September 2012 (31 March 2012: Euro 54 million).

Vanterra Flex Investments L.P. (Vanterra)
Original commitment: Euro 78 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 30 September 2012, Euro 36 million of committed funds (31 March 2012: Euro 28 million), plus an additional Euro 3 million in respect of expenses (31 March 2012: Euro 2 million), had been invested in the fund. This investment is carried at the estimated fair value of Euro 40 million at 30 September 2012 (31 March 2012: Euro 29 million), based on recent valuations provided by Vanterras general partner. The increase in the valuation is due to the positive performance of the underlying investments and the strengthening of the US dollar against the euro during the period.

Reinet is committed to invest a further Euro 42 million in Vanterra.

Vanterra C Change Transformative Energy & Materials I, L.P. (TEM)
Original commitment: Euro 51 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 30 September 2012, capital contributions of Euro 34 million had been made to the fund (31 March 2012:  Euro 27 million). This investment is carried at the estimated fair value of Euro 32 million at 30 September 2012 (31 March 2012: Euro 24 million).

Reinet is committed to invest a further Euro 17 million in TEM.

Milestone China Opportunities Fund III L.P. (Milestone III)
Original commitment: Euro 118 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 IIIs 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 30 September 2012, capital contributions of Euro 10 million had been made to Milestone III (31 March 2012:  Euro 3 million). The investment is carried at the estimated fair value of Euro 6 million at 30 September 2012 (31 March 2012: Euro 3 million). The current valuation is based on an independent valuation of Milestone III, reflecting in part the mark-to-market adjustment in respect of a listed investment.

Reinet has invested Euro 7 million in the general partner (31 March 2012: Euro 7 million). The investment is carried at the estimated fair value of Euro 7 million at 30 September 2012 (31 March 2012: Euro 7 million).

As at 30 September 2012, Reinet is committed to invest a further Euro 101 million in Milestone III and co-investment opportunities that it may present.

In October 2012, Reinet invested in a long-term investment vehicle in partnership with certain of the Milestone general partner principals and other partners to co-invest in opportunities identified by Milestone. Reinet has invested Euro 17 million in the new holding company, thereby reducing the outstanding aggregate commitment to Euro 84 million.

Renshaw Bay
Original commitment: Euro 13 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.

Initially Reinet held 25.01 per cent of the business alongside Mr Winters, who held 50 per cent, and RIT Capital Partners, which held 24.99 per cent.  During the period under review, Reinet purchased an additional 7.7 per cent of the business from RIT Capital Partners and thereby increased its remaining commitment to Renshaw Bay by an additional Euro 2 million.

Reinet has invested Euro 8 million to date in Renshaw Bay (31 March 2012: Euro 3 million). The investment is carried at the estimated fair value of Euro 8 million at 30 September 2012 (31 March 2012: Euro 3 million).  Reinet has committed to invest an additional Euro 8 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 ended 31 March 2012 Reinet invested in the JPS Credit 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 estimated fair value of Euro 116 million at 30 September 2012 (31 March 2012: Euro 82 million), based on a detailed evaluation of each of the investments.

OTHER DEVELOPMENTS
In October 2012, Reinet announced the completion of its investment in Pension Corporation Group Limited.

Reinet has subscribed for an initial 16 per cent ordinary shareholding in Pension Corporation Group Limited, the newly established group holding company.

Pension Corporation Group Limiteds wholly owned subsidiary, Pension Insurance Corporation is one of the UKs leading providers of risk management solutions to defined benefit pension funds. Reinet has committed to invest up to Euro 503 million in the pension insurance business of Pension Corporation Group Limited.  Of the Euro 503 million commitment, Euro 126 million was contributed in October 2012; the remainder is expected to be drawn down in one or several tranches to finance new business over the next five years.

Pension Insurance Corporation is authorised and regulated as an insurance company by the Financial Services Authority in the United Kingdom. It has approximately Pound 6 billion in assets and has insured almost 60 000 pension fund members. Clients include FTSE 100 companies, multinationals and the public sector.


Committed Funds
The table below summarises Reinets outstanding investment commitments as at 30 September 2012.

+-------------+------------+------------+-----------+-----------+----------+
|             |Commitment  |Change in   |New        |Funded in  |Remaining |
|             |as at 31    |commitment  |commitments|current    |commitment|
|             |March       |in period(2)|in period  |period     |Euro m    |
|             |2012(1)     |Euro m      |Euro m     |Euro m     |          |
|             |Euro m      |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|             |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Trilantic    |          62|           1|          7|       (18)|        52|
|Capital      |            |            |           |           |          |
|Partners    |            |            |           |           |          |
|Fund IV (3)  |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Trilantic    |           -|           -|         78|          -|        78|
|Capital      |            |            |           |           |          |
|Partners    |            |            |           |           |          |
|Fund V       |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|US land      |           7|           -|          -|        (5)|         2|
|development  |            |            |           |           |          |
|and          |            |            |           |           |          |
|mortgages    |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Vanterra     |          47|           2|          -|        (7)|        42|
|Flex         |            |            |           |           |          |
|Investments  |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Vanterra C   |          23|           1|          -|        (7)|        17|
|Change TEM   |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Jagersfontein|          32|         (2)|          -|        (9)|        21|
|and other    |            |            |           |           |          |
|diamond      |            |            |           |           |          |
|interests    |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Renshaw      |           9|           -|          4|        (5)|         8|
|Bay(4)       |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Milestone    |         103|           4|          -|        (6)|       101|
|China        |            |            |           |           |          |
|Opportunities|            |            |           |           |          |
|III          |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Pension      |           -|           -|        503|          -|       503|
|Corporation  |            |            |           |           |          |
|Group        |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|Smaller      |          25|           2|         43|       (32)|        38|
|commitments  |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|             |         308|           8|        635|       (89)|       862|
+-------------+------------+------------+-----------+-----------+----------+
|Other        |          10|           -|          -|        (4)|         6|
|investments  |            |            |           |           |          |
|(5)          |            |            |           |           |          |
+-------------+------------+------------+-----------+-----------+----------+
|             |         318|           8|        635|       (93)|       868|
+-------------+------------+------------+-----------+-----------+----------+

(1) Commitments are calculated using March 2012 exchange rates.
(2) The change in the period reflects exchange rate fluctuations.
(3) The new commitment reflects the 10 per cent interest purchased from a minority partner during the period.
(4) Reflects advisory and management company only.
(5) Represents portfolio of investments transferred from Richemont in 2008.


BANK BORROWINGS AND COLLAR FINANCING
Borrowings
In February 2012, in order to meet its on-going commitments, Reinet entered into a Pound 300 million medium-term financing facility. At 30 September 2012, the fair value of the borrowing was Euro 377 million (31 March 2012: 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 in respect of the options is payable to the counterparty over the life of the transactions, which run to 2017. The unpaid premium is carried as a liability at its fair value of Euro 50 million as at 30 September 2012 (31 March 2012: Euro 52 million).

Reinet has also borrowed ZAR 443 million to fund its investments in South African projects. At 30 September 2012, the fair value of the borrowing was Euro 42 million (31 March 2012: Euro 43 million).

Derivative assets
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 options 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 27 million at 30 September 2012 (31 March 2012: Euro 30 million).


OTHER LIABILITIES
Fees payable and other liabilities, net of other assets
Fees payable and other liabilities comprise principally a provision of Euro 9 million in respect of the proportionate accrual of the performance fee payable, an accrual of Euro 13 million in respect of the management fee payable at 30 September 2012, together with a provision for deferred taxes of Euro 23 million related to the investment in Trilantic Capital Partners, and other operating expenses currently payable. The performance fee and management fee are payable to Reinet Investment Advisors Limited.

The management fee for the period under review amounted to Euro 16 million (30 September 2011: Euro 12 million), of which Euro 13 million was payable at 30 September 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 purchase of 10 per cent of the investment in Trilantic Capital Partners from a minority partner in the period included the repayment of funding previously received and resulted in a reduction in the amount due to minority partners. The net amounts received are shown as Funding by minority partners in the table on page 2.


SUMMARISED CONSOLIDATED INCOME STATEMENT

+-------------------+-----------------+------+------+-----------------+------+
|                   |30 September 2012|      |      |30 September 2011|      |
+-------------------+-----------------+------+------+-----------------+------+
|                   |           Euro m|Euro m|      |           Euro m|Euro m|
+-------------------+-----------------+------+------+-----------------+------+
|INCOME             |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|BAT dividends      |              136|      |      |              114|      |
+-------------------+-----------------+------+------+-----------------+------+
|Interest and other |                8|      |      |                4|      |
|investment income  |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|Realised gains     |                3|   147|      |               15|   133|
|on investments     |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|                   |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|EXPENSES           |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|Performance fee    |              (9)|      |      |              (2)|      |
+-------------------+-----------------+------+------+-----------------+------+
|Management fee     |             (16)|      |      |             (12)|      |
+-------------------+-----------------+------+------+-----------------+------+
|Operating expenses |              (2)|      |      |              (6)|      |
|and                |                 |      |      |                 |      |
|transaction-related|                 |      |      |                 |      |
|costs              |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|Interest expense   |              (6)|  (33)|      |              (2)|  (22)|
+-------------------+-----------------+------+------+-----------------+------+
|                   |                 |   114|      |                 |   111|
+-------------------+-----------------+------+------+-----------------+------+
|FAIR VALUE         |                 |      |      |                 |      |
|ADJUSTMENTS        |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|BAT                |             178 |      |      |              291|      |
|Other investments  |              23 |      |      |              (7)|      |
|Derivative assets  |              (3)|      |      |               - |      |
|Borrowings         |             (27)|   171|      |               5 |   289|
+-------------------+-----------------+------+------+-----------------+------+
|                   |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|Effect of          |                 |    14|      |                 |     3|
|exchange rate      |                 |      |      |                 |      |
|changes on         |                 |      |      |                 |      |
|cash balances      |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|                   |                 |   299|      |                 |   403|
+-------------------+-----------------+------+------+-----------------+------+
|OTHER CHARGES      |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+
|Tax expense        |                 |   (7)|      |                 |   (8)|
+-------------------+-----------------+------+------+-----------------+------+
|Minority interest  |                 |   (2)|      |                 |   (2)|
+-------------------+-----------------+------+------+-----------------+------+
|Profit attributable|                 |   290|      |                 |   393|
|to the             |                 |      |      |                 |      |
|shareholders of    |                 |      |      |                 |      |
|the Company        |                 |      |      |                 |      |
+-------------------+-----------------+------+------+-----------------+------+



INCOME
Dividends received from BAT increased by 20 per cent from Euro 114 million (Pound 100 million) to Euro 136 million (Pound 110 million) during the period under review. The increase is due to an increase of Pound 0.12 per share in the underlying dividends paid by BAT, and a strengthening in the sterling / euro exchange rate. The dividends received from BAT represent the final 2011 dividend, paid in May 2012, as well as the interim 2012 dividend paid in September 2012.

Realised gains on investments include Euro 3 million in relation to investments realised by the Trilantic funds.

EXPENSES
A performance fee may be payable on 31 March 2013 if certain conditions are met. As detailed above, a provision of Euro 9 million has been made in the period under review (30 September 2011: Euro 2 million).

The management fee amounts to Euro 16 million for the six-month period ended 30 September 2012 (30 September 2011: Euro 12 million).

FAIR VALUE ADJUSTMENTS
The investment in BAT increased in value by Euro 178 million during the period under review. Of this, Euro 28 million was attributable to the increase in value of the underlying BAT shares in sterling terms and Euro 150 million arose due to the appreciation of sterling against the euro over the period.

The unrealised fair value adjustment of Euro 23 million in respect of other investments 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, smaller investments.

The fair value of the derivative asset decreased by Euro 3 million in the period due to the increase in the price of the BAT shares underlying the put and call options, offset by the effect of lower interest rates and the strengthening of the sterling / euro exchange rate.

Borrowings are carried at fair value reflecting the discounted cash flow value of future principal and interest payments taking into account prevailing interest rates.  An unrealised gain of Euro 2 million arose in respect of the rand borrowing due to the weakening of the South African rand during the period. An unrealised loss of Euro 29 million arose in respect of the sterling borrowing. Of this, Euro 19 million is due to the strengthening of the sterling / euro exchange rate during the period and Euro 10 million arose due to the effect of lower interest rates used in discounting future cash flows.

OTHER CHARGES
The tax expense of Euro 7 million principally reflects a deferred tax provision in respect of unrealised gains on Trilantic and other US investments.

The minority interest expense arises in respect of the minority partners shares in the earnings of the Reinet entities which hold the Trilantic and US land and development interests, respectively.

Profit attributable to shareholders of the Company for the period amounted to Euro 290 million.


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 unaudited interim consolidated financial statements at 30 September 2012, on which this announcement is based, were approved by the Board of the General Partner on 8 November 2012. The printed Reinet Interim Report will be available upon request from early December 2012.

Statutory information

Primary listing
Reinet Investments S.C.A. shares are listed on the Luxembourg Stock Exchange with the ISIN number LU0383812293. Thomson Reuters code REIT.LU and Bloomberg code REIN.LX. Reinet shares are included in the 'LuxX' index of the principal shares traded on the Luxembourg exchange.

Secondary listing
Reinet Investments S.C.A. South African Depository Receipts are traded on the stock exchange in Johannesburg under the ISIN number CH 0045793657. Thomson Reuters code REIJ.J and Bloomberg code REI.SJ.


Website: www.reinet.com (http://www.reinet.com/)


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. (the Fund), a specialised investment fund also incorporated in Luxembourg.



Notes for South African editors

Acknowledging the interest in Reinets 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 30 September 2012 of 10.6800, and a rate of 10.2282 as at 31 March 2012.

+----------------------------------+-----------------+-------------+
|                                  |30 September 2012|31 March 2012|
+----------------------------------+-----------------+-------------+
|                                  |                 |             |
+----------------------------------+-----------------+-------------+
|Net asset value                   |     ZAR 42 058 m| ZAR 37 323 m|
+----------------------------------+-----------------+-------------+
|                                  |                 |             |
+----------------------------------+-----------------+-------------+
|Net asset value per ordinary share|       ZAR 214.67|   ZAR 190.45|
+----------------------------------+-----------------+-------------+
|                                  |                 |             |
+----------------------------------+-----------------+-------------+


Using the average euro/rand exchange rate for the six-month period ended 30 September 2012 of 10.3770 and an average rate of 9.9377 for the six-month period ended 30 September 2011.

+---------------------+-----------------+-----------------+
|                     |30 September 2012|30 September 2011|
+---------------------+-----------------+-----------------+
|                     |                 |                 |
+---------------------+-----------------+-----------------+
|Profit for the period|      ZAR 3 009 m|      ZAR 3 906 m|
+---------------------+-----------------+-----------------+


Headline earnings per share
To comply with the South African practice of providing Headline earnings per share data, the relevant data is as follows:

+-----------------------------+-----------------+-----------------+
|                             |30 September 2012|30 September 2011|
+-----------------------------+-----------------+-----------------+
|                             |                 |                 |
+-----------------------------+-----------------+-----------------+
|Unadjusted earnings per share|        Euro 1.48|        Euro 2.01|
+-----------------------------+-----------------+-----------------+
|Headline earnings per share* |        Euro 1.48|        Euro 2.01|
+-----------------------------+-----------------+-----------------+

*There are no diluting instruments.


13 November 2012


Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 13/11/2012 08:00:00 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.

Share This Story