Wrap Text
Management statement for the first quarter ended 30 June 2013
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
23 JULY 2013
MANAGEMENT STATEMENT FOR THE FIRST QUARTER ENDED 30 JUNE 2013
The Board of Reinet Investments Manager S.A. announces the results of Reinet Investments S.C.A. for the first quarter ended 30 June 2013.
Key financial data
- Net asset value at 30 June 2013: EUR 3 922 million, a decrease of 2.5 per cent from 31 March 2013
- Net asset value per ordinary share at 30 June 2013: EUR 20.01 (31 March 2013: EUR 20.53)
- Sale of 5 million British American Tobacco (BAT) shares in the quarter under review realised proceeds of EUR 212 million
- Value of remaining 74 million BAT shares: EUR 2 924 million
- Additional investment of EUR 59 million in Pension Corporation during the quarter under review; a further EUR 203 million invested in July 2013
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 June 2013 comprised: |
+---------------++-----+------------+------++-----+-------------+------++
| || |30 June 2013| || |31 March 2013| ||
+---------------++-----+------------+------++-----+-------------+------++
| ||EUR m| | %||EUR m| | %||
+---------------++-----+------------+------++-----+-------------+------++
|Listed || | | || | | ||
|investments || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|British ||2 924| | 74.6||3 317| | 82.5||
|American || | | || | | ||
|Tobacco p.l.c. || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Unlisted || | | || | | ||
|investments || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Private equity || 578| | 14.7|| 549| | 13.7||
|and related || | | || | | ||
|partnerships || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Trilantic || 187| | 4.8|| 163| | 4.0||
|Capital || | | || | | ||
|Partners || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Fund IV, Fund V|| | | || | | ||
|and related || | | || | | ||
|management || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|companies || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Renshaw Bay and|| 83| | 2.1|| 75| | 1.9||
|related || | | || | | ||
|investments || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Renshaw Bay || | | || | | ||
|advisory and || | | || | | ||
|investment || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|management || 15| | || 14| | ||
|company || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|JPS Credit || 61| | || 61| | ||
|Opportunities || | | || | | ||
|Fund || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Renshaw Bay || 7| | || -| | ||
|Real Estate || | | || | | ||
|Finance Fund || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|36 South macro || 87| | 2.2|| 83| | 2.1||
|/ volatility || | | || | | ||
|funds || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Asian private || 83| | 2.1|| 92| | 2.3||
|equity and || | | || | | ||
|portfolio funds|| | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Milestone China|| | | || | | ||
|Opportunities || | | || | | ||
|funds, || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|co-investment || 55| | || 61| | ||
|and related || | | || | | ||
|opportunities || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|GEMS || 8| | || 8| | ||
+---------------++-----+------------+------++-----+-------------+------++
|Prescient China|| 20| | || 23| | ||
|Balanced Fund || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Specialised || 138| | 3.5|| 136| | 3.4||
|private equity || | | || | | ||
|funds || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Vanterra Flex || 45| | || 47| | ||
|Investments || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Vanterra C || 41| | || 37| | ||
|Change TEM || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|NanoDimension || 25| | || | | ||
|Funds and || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|co-investment || | | || 25| | ||
|opportunities || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Fountainhead || 21| | || 21| | ||
|Expert Fund || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Other fund || 6| | || 6| | ||
|investments || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Pension || 212| | 5.4|| 134| | 3.3||
|Corporation || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|US land || 100| | 2.5|| 105| | 2.6||
|development and|| | | || | | ||
|mortgages || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Jagersfontein || | | || | | ||
|and other || | | || | | ||
|diamond || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|exploration || 100| | 2.5|| 102| | 2.5||
|interests || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Other || 30| | 0.8|| 30| | 0.7||
|investments || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| ||3 944| | 100.5||4 237| | 105.3||
+---------------++-----+------------+------++-----+-------------+------++
|Cash and || 464| | 11.8|| 326| | 8.1||
|liquid funds || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Bank borrowings|| | | || | | ||
|and collar || | | || | | ||
|financing || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Borrowings ||(420)| |(10.7)||(435)| |(10.8)||
+---------------++-----+------------+------++-----+-------------+------++
|Derivative || -| | -|| (11)| | (0.3)||
|assets / || | | || | | ||
|(liabilities) || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Other || | | || | | ||
|liabilities || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|Fees payable || | | || | | ||
|and other || | | || | | ||
|liabilities, || | | || | | ||
|net of other || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
|assets || (33)| | (0.8)|| (60)| | (1.5)||
+---------------++-----+------------+------++-----+-------------+------++
|Funding by || (21)| | (0.5)|| (21)| | (0.5)||
|minority || | | || | | ||
|partners || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| ||3 934| | 100.3||4 036| | 100.3||
+---------------++-----+------------+------++-----+-------------+------++
|Minority || (12)| | (0.3)|| (13)| | (0.3)||
|interests || | | || | | ||
+---------------++-----+------------+------++-----+-------------+------++
| ||3 922| | 100.0||4 023| | 100.0||
+---------------++-----+------------+------++-----+-------------+------++
All of the underlying assets are held by Reinet Fund S.C.A., F.I.S. ('Reinet Fund' or the Fund). Reinet Investments S.C.A. and the Fund together with the Funds subsidiaries are referred to as Reinet.
LISTED INVESTMENT IN BRITISH AMERICAN TOBACCO P.L.C. (BAT)
British American Tobacco p.l.c. (BAT) is a leading tobacco group, employing more than 55 000 people and selling over 200 brands in 180 markets globally.
The investment in BAT is Reinets single largest investment position; is kept under constant review, considering the companys performance, the industry outlook, cash flows from dividends, stock market performance, volatility and liquidity. The share price of BAT has increased significantly from around GBP 17.00 in October 2008 to GBP 33.68 at 30 June 2013, largely driving the growth in Reinets NAV over that period.
During April and May 2013, 5 million BAT shares were sold to fund Reinets continuing investment and diversification programme. The shares were sold at an average price of GBP 35.88; the sales proceeds totalling some EUR 212 million.
Reinet continues to hold 74.3 million shares in BAT, representing 3.9 per cent of BATs issued share capital at 30 June 2013. The value of the investment in BAT in the balance sheet of Reinet was EUR 2 924 million, being 74.6 per cent of Reinets NAV. The BAT share price on the London Stock Exchange decreased from GBP 35.27 at 31 March 2013 to GBP 33.68 at 30 June 2013.
Reinet received dividends from BAT during the period amounting to EUR 87 million, in respect of BATs final 2012 dividend.
Further information on BAT is available at www.bat.com.
UNLISTED INVESTMENTS
PRIVATE EQUITY AND RELATED PARTNERSHIPS
Where Reinet invests in funds managed by third parties its philosophy is to partner with the managers of such funds and to share in fees generated by funds under management. This is the case with funds managed by Trilantic, 36 South, Milestone, Prescient, Renshaw Bay and Vanterra. Under the terms of the Investment Advisory Agreement, Reinet pays no management fee to Reinet Investment Advisors Limited on such investments except in the case where no fee or a reduced fee below one per cent is paid to the third party manager. In such cases, the aggregate fee payable to RIAL and the third party manager is capped at one per cent.
TRILANTIC CAPITAL PARTNERS
The table above shows the value of the 100 per cent investment in Trilantic Capital Partners and United States land development and mortgages. In each case, Reinet co-invests with minority parties. Amounts attributable to minority parties are shown in the table either as 'funding by minority partners' or 'minority interests'.
Fund IV
Trilantic Capital Partners (Trilantic) is a global private equity firm focused on controlling and significant minority interest investments in North America and Europe. Trilantic employs flexible transaction structures and has a strong record of partnering with family-owned businesses and providing growth capital to management teams.
As at 30 June 2013, Reinet and its partner have invested the equivalent of EUR 114 million (31 March 2013: EUR 113 million), net of capital repayments, in Trilantic Management and Fund IV.
The investment is carried at the estimated fair value of EUR 176 million at 30 June 2013 (31 March 2013: EUR 163 million). The investment in Fund IV is based on unaudited valuation data provided by Trilantic Management as at 31 March 2013. The increase in the valuation is due to increases in unrealised gains on underlying investments offset by the weakening of the US dollar against the euro during the quarter. Of the EUR 176 million carrying value, some EUR 158 million is attributable to Reinet, with the balance being attributable to its minority partner.
At 30 June 2013, Reinet had remaining commitments of EUR 40 million to invest in Fund IV.
Fund V
In May 2012, Reinet approved a commitment of some EUR 78 million to Trilantic Capital Partners V (North America) L.P. (Fund V) together with a commitment of some EUR 2 million to Fund Vs general partner. Fund V will invest principally in North America. Fund V has completed its fundraising activities and will now roll-out its investment activities in line with the philosophy applied to earlier funds.
During the period Reinet made investments totalling EUR 11 million in Fund V. The investment is carried at the estimated fair value of EUR 11 million at 30 June 2013.
At 30 June 2013, Reinet had remaining commitments of EUR 68 million to invest in Fund V.
Further information on Trilantic is available at www.trilanticpartners.com.
RENSHAW BAY AND RELATED INVESTMENTS
Renshaw Bay advisory and investment management entity
Renshaw Bay is focused on investment opportunities resulting from dislocations and structural changes in capital markets.
Currently, Reinet holds 32.7 per cent of the business alongside RIT Capital Partners, which holds 17.3 per cent. Mr William T. Winters and senior management hold 50 per cent of the entity.
Reinet has invested EUR 15 million to date in Renshaw Bay (31 March 2013: EUR 14 million). The investment is carried at the estimated fair value of EUR 15 million at 30 June 2013 (31 March 2013: EUR 14 million). The current carrying value is based on a recent independent valuation of Renshaw Bay together with the amount of the capital call paid during the current period.
At 30 June 2013, Reinet had invested its full commitment in Renshaw Bay.
To date, Reinet has also invested in the JPS Credit Opportunities Fund and the Renshaw Bay Real Estate Finance Fund, both opportunities identified and developed by Renshaw Bay.
JPS Credit Opportunities Fund (Cayman) Ltd. (JPS Credit Fund)
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.
The investment is carried at the estimated fair value of EUR 61 million at 30 June 2013 (31 March 2013: EUR 61 million) based on the valuation at that date provided by the fund manager.
At 30 June 2013, Reinet had invested its full commitment to the JPS Credit Fund.
Renshaw Bay Real Estate Finance Fund
The Renshaw Bay Real Estate Finance Fund was created to take advantage of opportunities resulting from a funding gap between the expected demand for commercial real estate finance and its availability from banks, other traditional lenders and equity investors.
Reinet has invested EUR 9 million to date. The fair value at 30 June 2013 is EUR 7 million based on unaudited capital statements at 31 March 2013.
Reinet is committed to invest a further EUR 108 million in the fund. Of this commitment, EUR 58 million was invested in July 2013.
Further information on Renshaw Bay may be found at www.renshawbay.com.
36 SOUTH GLOBAL MACRO/VOLATILITY FUNDS
36 South is an absolute return fund manager that specialises in managing global macro/volatility funds. The fund management philosophy is to invest when market estimates of volatility are mis-priced.
Reinet has invested its full commitment of EUR 88 million to 36 South. Of this, EUR 15 million represented its initial investment in and loans to the jointly-held fund management companies; EUR 3 million of the loan has been repaid to date.
The balance of EUR 73 million is Reinets investment in the 36 South Funds plc. This investment is carried at its estimated fair value of EUR 76 million based on unaudited capital statements received from the fund manager as at 30 June 2013 (31 March 2013: EUR 71 million), together with the fair value of the short-term loan of EUR 11 million (31 March 2013: EUR 12 million), for a total of EUR 87 million (31 March 2013: EUR 83 million). The change in valuation reflects the movement in the value of the underlying funds.
Further information on 36 South may be found at www.36south.com.
ASIAN PRIVATE EQUITY AND PORTFOLIO FUNDS
Milestone China Opportunities Funds (Milestone), co-investments and management company participation
The Milestone China Opportunities Fund II L.P. (Milestone II) and Fund III L.P. (Milestone III) invest primarily in domestic Chinese high-growth companies seeking expansion or acquisition capital. Milestone funds seek to maximise medium to long-term capital appreciation.
As at 30 June 2013 the investment in Milestone II had an estimated fair value of EUR 6 million based on unaudited capital statements received from the fund manager as at 31 March 2013 (31 March 2013: EUR 6 million). The fund is at a mature stage and assets are being realised over the remaining life of the fund.
As at 30 June 2013, capital contributions of EUR 22 million had been made to Milestone III (31 March 2013: EUR 22 million). The investment is carried at the estimated fair value of EUR 17 million at 30 June 2013 based on unaudited capital statements received from the fund manager as at 31 March 2013 (31 March 2013: EUR 19 million).
Reinet has also invested EUR 7 million in the general partner of Milestone III. The investment is carried at managements estimated fair value of EUR 7 million at 30 June 2013 taking into account the cost of the investment and the performance to date (31 March 2013: EUR 7 million).
As at 30 June 2013, Reinet had invested EUR 27 million in a long-term investment vehicle in partnership with certain of the Milestone general partner principals and other partners, including Remgro Limited. The investment is carried at the estimated fair value of EUR 24 million at 30 June 2013 (31 March 2013: EUR 28 million) based on unaudited financial statements at that date.
The investments in the Milestone funds, the general partner and co-investments are carried at a total estimated fair value of EUR 55 million as at 30 June 2013, (31 March 2013: EUR 61 million).
At 30 June 2013, Reinets remaining commitment to the Milestone funds and co-investment opportunities amounts to EUR 63 million.
Further information in respect of the Milestone Funds can be found at www.mcmchina.com.
General Enterprise Management Services International Limited (GEMS)
Based in Hong Kong, GEMS operates investment funds focused on the natural resources sector and on growth opportunities.
At 30 June 2013, the aggregate investment in the GEMS funds is carried at the estimated fair value of EUR 8 million based on a recent independent valuation (31 March 2013: EUR 8 million).
Further information on GEMS can be found at www.gems.com.hk.
Prescient China Balanced Fund (Prescient China)
Prescient China is a fund managed by a subsidiary of Prescient Holdings Limited, a South African-listed fund manager. It invests principally in equities and other instruments listed on the Shanghai and Shenzhen Stock Exchanges.
This investment is carried at the estimated fair value of EUR 20 million (31 March 2013: EUR 23 million) based on unaudited valuation statements provided by the fund manager at 30 June 2013. The decrease in value reflects movements in the underlying listed investments together with the weakening of the US dollar against the euro during the quarter.
Reinets commitment to invest EUR 2 million in the management company structure remained uncalled at 30 June 2013.
Further information on Prescient may be found at www.prescient.co.za.
SPECIALISED PRIVATE EQUITY FUNDS
Vanterra Flex Investments L.P. (Vanterra)
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.
Reinet is an investor in both Vanterra and in its general partner.
As at 30 June 2013, EUR 43 million of committed funds (31 March 2013: EUR 43 million), together with EUR 3 million in respect of expenses (31 March 2013: EUR 3 million) had been invested in the fund. This investment is carried at the estimated fair value of EUR 45 million at 30 June 2013 (31 March 2013: EUR 47 million), based on the latest unaudited financial information received from the fund manager.
Reinet is committed to invest a further EUR 34 million in Vanterra.
Vanterra C Change Transformative Energy & Materials I, L.P. (Vanterra C Change TEM)
Vanterra C Change TEM invests in companies and projects providing products or services that supply cleaner energy; creating a more cost-effective building environment through the use of energy efficient technologies; and developing renewable resources as a substitute for fossil and other traditional fuels.
Reinet is an investor in Vanterra C Change TEM and in its general partner.
As at 30 June 2013, capital contributions of EUR 45 million had been made to the fund (31 March 2013: EUR 41 million). This investment is carried at the estimated fair value of EUR 41 million (31 March 2013: EUR 37 million), based on the latest unaudited financial information received from the fund manager.
Reinet is committed to invest a further EUR 5 million in Vanterra C Change TEM.
Further information on Vanterra may be found at www.vanterra.com.
NanoDimension funds and co-investment opportunities
NanoDimension Management Limited has established two funds in which Reinet is an investor. The focus of each fund is to invest in and support the growth and commercialisation of nanotechnology.
At 30 June 2013, the estimated fair value of Reinets investment in the two funds and a co-investment amounted to EUR 25 million (31 March 2013: EUR 25 million). The estimate of fair value is based on unaudited valuation statements received from the fund manager as at 31 March 2013 together with a recent independent valuation of the co-investment. Reinets remaining commitments to the funds amounted to EUR 19 million at 31 March 2013.
Further information on NanoDimension may be found at www.nanodimension.com.
Fountainhead Expert Fund
Fountainhead Expert Fund (Fountainhead) is an absolute return fund investing in a concentrated manner in global equities offering superior potential for capital appreciation and value realisation.
In February 2012, Reinet invested EUR 16 million in Fountainhead. The amount invested represents Reinets full commitment to the fund.
As at 30 June 2013, the fair value of the investment was EUR 21 million (31 March 2013: EUR 21 million), based on the valuation at that date provided by the fund manager.
Further information on Fountainhead may be found at www.fountainheadpartners.co.za.
Other fund investments
This includes small, specialist funds investing in private equity businesses, start-up ventures and listed securities. These investments are valued at their fair value of EUR 6 million at 30 June 2013 (31 March 2013: EUR 6 million), based on recent valuation statements received from the fund managers.
PENSION CORPORATION GROUP LIMITED
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. Pension Insurance Corporation is authorised and regulated as an insurance company by the Prudential Regulation Authority in the United Kingdom. It has almost GBP 9 billion in assets and has insured more than 85 000 pension fund members.
During the period under review Reinet invested an additional GBP 50 million (EUR 59 million) in Pension Corporation Group Limited bringing the total amount invested to GBP 150 million (EUR 175 million) at 30 June 2013. The investment in the period increased Reinets interest in Pension Corporation Group Limited to 22 per cent. Reinet is committed to invest a further GBP 250 million (EUR 292 million) in one or several tranches over the period to 2017. Such investment would result in Reinet ultimately having an equity position of 43 per cent in the company. Reinets shareholding in Pension Corporation Group Limited carries at all times voting rights commensurate with its ultimate 43 per cent shareholding.
Reinets holding in Pension Corporation Group Limited as at 30 June 2013 is carried at a fair value of EUR 212 million (31 March 2013: EUR 134 million) estimated on the basis of Pension Insurance Corporations embedded value, multiples drawn from industry data and current exchange rates. The increase in value during the period reflects the additional investment, together with an increase in the embedded value of Pension Insurance Corporation compared to 31 March 2013.
In July 2013, Reinet invested a further GBP 175 million (EUR 203 million) in Pension Corporation Group Limited bringing its equity holding to 38 per cent.
Further information in respect of Pension Corporation is available at www.pensioncorporation.com.
UNITED STATES LAND DEVELOPMENT AND MORTGAGES
Reinet has co-invested with partners to acquire interests in real estate development projects. It has also invested in mortgage debt on such developments and in specific properties.
During the period under review, Reinet agreed to make a short-term loan of EUR 3 million to this investment of which EUR 2 million was drawn down as at 30 June 2013.
The investment is carried at the estimated fair value of EUR 100 million (31 March 2013: EUR 105 million) of which EUR 84 million is attributable to Reinet and EUR 16 million to its partners.
The current valuation is based on independent valuations of underlying assets as at 31 December 2012 adjusted for known changes in values of underlying assets since that date. The decrease in value in the period reflects adjustments to the underlying asset values together with the weakening of the US dollar against the euro during the period.
Reinet has an undrawn commitment of EUR 1 million to invest in these investments as of 30 June 2013.
JAGERSFONTEIN AND OTHER DIAMOND EXPLORATION INTERESTS
Reinet is an investor in an entity which extracts diamonds from the waste tailings of mining operations which began over a century ago. The tailings are located at Jagersfontein in South Africa.
Reinet has also invested in a separate project, which is in the process of acquiring rights to source diamonds on an as yet unexploited site near Kimberley in South Africa.
During the period under review Reinet advanced additional loans totalling EUR 10 million to these entities. As at 30 June 2013, Reinet held equity interests of EUR 14 million (31 March 2013: EUR 15 million) in the above investments and had provided loans of EUR 65 million (31 March 2013: EUR 60 million). In addition, EUR 7 million (31 March 2013: EUR 7 million) is receivable from third parties in respect of sales of part of the equity investments, Reinet has accrued income of EUR 14 million (31 March 2013: EUR 13 million) in respect of the funding it has provided in connection with the projects to date.
In aggregate, these investments are carried at their estimated fair value of EUR 100 million at 30 June 2013 (31 March 2013: EUR 102 million). The current valuations are based on discounted cash flow analyses. The decrease in value, after taking into account the additional funding in the period, is due to the weakening of the South African rand and an increase in discount rates.
Reinet is committed to invest a further EUR 10 million in these projects as at 30 June 2013.
The exposure to the South African rand has been substantially hedged by borrowings in that currency and through forward exchange contracts.
OTHER INVESTMENTS
This portfolio includes small businesses with significant growth potential as well as interests in businesses which require assistance in restructuring their activities before value can be realised. Also included is one small position in a listed security. These assets are valued at their aggregate fair value of EUR 30 million at 30 June 2013 (31 March 2013: EUR 30 million), based on an analysis of each of the investments.
Other information on Reinets investments may be found in the Reinet 2013 annual report which is available at www.reinet.com
CASH AND LIQUID FUNDS
Reinet holds cash on deposit principally in European banks and in a sterling liquidity fund holding highly rated short-term commercial paper. Interest rates remain exceptionally low in respect of both euro and sterling deposits, the currencies in which the bulk of funds are held.
BANK BORROWINGS AND RELATED DERIVATIVE CONTRACTS
Borrowings
In February 2012, Reinet entered into a GBP 300 million medium-term financing facility. At 30 June 2013, the fair value of the borrowing was EUR 347 million (31 March 2013: EUR 356 million). The transaction incorporates the purchase by Reinet of put options and the sale by Reinet of call options over 13.7 million BAT shares. The unpaid net option premium is payable over the period to 2017 and is carried as a liability at its fair value of EUR 39 million as at 30 June 2013 (31 March 2013: EUR 42 million). The decrease in fair values reflects an increase in market interest rates in the period under review.
Reinet has also borrowed ZAR 443 million to fund its investments in South African projects. At 30 June 2013, the fair value of the borrowing was EUR 34 million (31 March 2013: EUR 37 million). The decrease in the fair value reflects the weakening in the South African rand in the period under review.
Derivative assets / (liabilities) put and call options and forward exchange contracts
As part of the GBP 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. 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 liability is carried at its fair value of EUR 7 million at 30 June 2013 (31 March 2013: net liability value of EUR 15 million). The decrease in the value of the derivative liability is mostly due to the decrease in the market value of BAT shares, offset by the effect of increased interest rates during the period under review.
Reinet has also entered into forward exchange contracts to sell 600 million South African rand. The net asset in respect of the forward contracts is carried at its fair value of EUR 7 million at 30 June 2013 (31 March 2013: EUR 4 million). The change in value reflects the weakening of the South African rand over the period since 31 March 2013.
OTHER LIABILITIES
Fees payable and other liabilities, net of other assets
Fees payable and other liabilities comprise principally EUR 7 million (31 March 2013: EUR 15 million) in respect of the management fee payable, a net provision for deferred taxes of EUR 13 million (31 March 2013: EUR 10 million) relating to gains arising from the investments in Trilantic Capital Partners, withholding taxes relating to the investment in US land and mortgages and other provisions, together with other operating expenses currently payable of EUR 4 million (31 March 2013: EUR 3 million).
A performance fee of EUR 32 million was paid during the period in respect of the year ended 31 March 2013. No performance fee was recorded for the period under review due to a fall in the market price of Reinet shares between March 2013 and 30 June 2013. The reference market price per share used at 31 March 2013 was EUR 15.1931, only if the price per share rises above this level will a performance fee become payable.
The management fee for the period under review amounted to EUR 9 million (31 March 2013: EUR 33 million).
The performance fee and management fee are payable to Reinet Investment Advisors Limited.
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 of EUR 21 million (31 March 2013: EUR 21 million) are shown as Funding by minority partners in the table above.
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.
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.
Reinet Investments Manager S.A.
General Partner
For and on behalf of Reinet Investments S.C.A.
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
23 July 2013
Reinet Investments S.C.A.
Registered office: 35, boulevard Prince Henri, L-1724 Luxembourg, Tel. (+352) 22 42 10, Fax (+352) 22 72 53,
Email: info@reinet.com, website: www.reinet.com
Website: www.reinet.com
Reinet Investments S.C.A. 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., a specialised investment fund also incorporated in Luxembourg. Reinet Investments shares are listed on the Luxembourg Stock Exchange, its primary listing, and Reinet Investments South African Depository Receipts are listed in Johannesburg, its secondary listing.
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 June 2013 of 12.8388, and a rate of 11 8408 as at 31 March 2013.
30 June 2013 31 March 2013
Net asset value ZAR 50 354 m ZAR 47 636 m
Net asset value per ordinary share ZAR 256.90 ZAR 243.09
Date: 23/07/2013 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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