Wrap Text
Management statement for the third quarter ended 31 December 2014
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
26 January 2015
MANAGEMENT STATEMENT FOR THE THIRD QUARTER ENDED 31 DECEMBER 2014
The Board of Reinet Investments Manager S.A. announces the results of Reinet Investments S.C.A. for the quarter ended 31 December 2014.
Key financial data
- Net asset value at 31 December 2014: EUR 4 647 million, an increase of 2.3 per cent from 30 September 2014
- Net asset value per ordinary share at 31 December 2014: EUR 23.72 (30 September 2014: EUR 23.18)
- Total investments of EUR 58 million made during the quarter under review.
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'.
Cautionary statement regarding forward-looking statements
This document contains forward-looking statements as that term is defined in the United States Private Securities Litigation Reform Act of 1995. Words such as 'may', 'should', 'estimate', 'project', 'plan', 'believe', 'expect', 'anticipate', 'intend', 'potential', 'goal', 'strategy', 'target', 'will', 'seek' and similar expressions may identify forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside Reinet's control. Reinet does not undertake to update, nor does it have any obligation to provide updates or to revise, any forward-looking statements.
BUSINESS REVIEW
+----------------------------------------------------------------------++
|Consolidated Net Asset Value ('NAV') ||
|The NAV of Reinet Investments S.C.A. at ||
|31 December 2014 comprised: ||
+----------------------------------------------------------------------++
| ||31 December ||30 September||
| ||2014 ||2014 ||
+------------------------------------------++-----++-----++-----++-----++
| ||EUR m|| %||EUR m|| %||
+------------------------------------------++-----++-----++-----++-----++
|Listed investments || || || || ||
+------------------------------------------++-----++-----++-----++-----++
|British American Tobacco p.l.c. ||3 350|| 72.1||3 321|| 73.1||
+------------------------------------------++-----++-----++-----++-----++
|Unlisted investments || || || || ||
+------------------------------------------++-----++-----++-----++-----++
|Pension Corporation || 735|| 15.8|| 665|| 14.6||
+------------------------------------------++-----++-----++-----++-----++
| || || || || ||
+------------------------------------------++-----++-----++-----++-----++
|Private equity and related partnerships || 787|| 16.9|| 712|| 15.7||
+------------------------------------------++-----++-----++-----++-----++
|Trilantic Capital Partners || 233|| 5.0|| 229|| 5.1||
+------------------------------------------++-----++-----++-----++-----++
|Fund IV, Fund V, TEP and related || || || || ||
|management companies || || || || ||
+------------------------------------------++-----++-----++-----++-----++
| || || || || ||
+------------------------------------------++-----++-----++-----++-----++
|Renshaw Bay and related investments || 193|| 4.2|| 152|| 3.3||
+------------------------------------------++-----++-----++-----++-----++
|Renshaw Bay advisory and investment || || || || ||
|management company || 31|| || 28|| ||
+------------------------------------------++-----++-----++-----++-----++
|JPS Credit Opportunities Fund || 74|| || 70|| ||
+------------------------------------------++-----++-----++-----++-----++
|Renshaw Bay Real Estate Finance Fund || 42|| || 33|| ||
+------------------------------------------++-----++-----++-----++-----++
|Renshaw Bay Structured Finance || || || || ||
|Opportunity Fund || 46|| || 21|| ||
+------------------------------------------++-----++-----++-----++-----++
|36 South macro/volatility funds || 76|| 1.6|| 67|| 1.5||
+------------------------------------------++-----++-----++-----++-----++
|Asian private equity and portfolio funds || 141|| 3.0|| 127|| 2.8||
+------------------------------------------++-----++-----++-----++-----++
|Milestone China Opportunities funds, || || || || ||
|investment holdings and management || || || || ||
|company participation || 103|| || 97|| ||
+------------------------------------------++-----++-----++-----++-----++
|GEMS || 5|| || 5|| ||
+------------------------------------------++-----++-----++-----++-----++
|Prescient China Balanced Fund || 33|| || 25|| ||
+------------------------------------------++-----++-----++-----++-----++
|Specialised private equity funds || 144|| 3.1|| 137|| 3.0||
+------------------------------------------++-----++-----++-----++-----++
|Vanterra Flex Investments || 44|| || 44|| ||
+------------------------------------------++-----++-----++-----++-----++
|Vanterra C Change TEM || 28|| || 28|| ||
+------------------------------------------++-----++-----++-----++-----++
|NanoDimension Funds and || || || || ||
|co-investment opportunities || 35|| || 33|| ||
+------------------------------------------++-----++-----++-----++-----++
|Fountainhead Expert Fund || 28|| || 26|| ||
+------------------------------------------++-----++-----++-----++-----++
|Other fund investments || 9|| || 6|| ||
+------------------------------------------++-----++-----++-----++-----++
|United States land development and || || || || ||
|mortgages || 170|| 3.7|| 157|| 3.5||
+------------------------------------------++-----++-----++-----++-----++
|Diamond interests || 83|| 1.8|| 83|| 1.8||
+------------------------------------------++-----++-----++-----++-----++
|Other investments || 11|| 0.2|| 9|| 0.2||
+------------------------------------------++-----++-----++-----++-----++
| ||5 136||110.5||4 947||108.9||
+------------------------------------------++-----++-----++-----++-----++
|Cash and liquid funds || 89|| 1.9|| 152|| 3.3||
+------------------------------------------++-----++-----++-----++-----++
|Bank borrowings and derivative contracts || || || || ||
+------------------------------------------++-----++-----++-----++-----++
|Borrowings ||(444)||(9.5)||(442)||(9.7)||
+------------------------------------------++-----++-----++-----++-----++
|Derivative assets/(liabilities) || (23)||(0.5)|| (23)||(0.5)||
+------------------------------------------++-----++-----++-----++-----++
|Other liabilities || || || || ||
+------------------------------------------++-----++-----++-----++-----++
|Fees payable and other liabilities, net of|| || || || ||
|other assets || (82)||(1.8)|| (63)||(1.4)||
+------------------------------------------++-----++-----++-----++-----++
|Funding by minority partners || (6)||(0.1)|| (6)||(0.1)||
+------------------------------------------++-----++-----++-----++-----++
| ||4 670||100.5||4 565||100.5||
+------------------------------------------++-----++-----++-----++-----++
|Minority interests || (23)||(0.5)|| (23)||(0.5)||
+------------------------------------------++-----++-----++-----++-----++
|Consolidated net asset value ||4 647||100.0||4 542||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 Fund's subsidiaries are referred to as 'Reinet'.
Full information on Reinet's investments may be found in the Reinet 2014 annual report which is available at www.reinet.com
Major items impacting the consolidated net asset value during the quarter under review are described below.
LISTED INVESTMENT IN BRITISH AMERICAN TOBACCO P.L.C. ('BAT')
The investment in BAT remains Reinet's single largest investment position and is kept under constant review, considering the company's performance, the industry outlook, cash flows from dividends, stock market performance, volatility and liquidity.
Reinet holds 74.3 million shares in BAT, representing some 4.0 per cent of BAT's issued share capital. The value of the investment in BAT at 31 December 2014 was EUR 3 350 million (30 September 2014: EUR 3 321 million), being 72 per cent of Reinet's NAV. The BAT share price on the London Stock Exchange increased from GBP 34.82 at 30 September 2014 to GBP 35.00 at 31 December 2014. BAT's share price reached a high of GBP 37.94 during the quarter ended 31 December 2014.
Further information on BAT is available at www.bat.com.
UNLISTED INVESTMENTS
PENSION CORPORATION GROUP LIMITED
The total capital invested to date is GBP 400 million, which constitutes Reinet's full capital commitment to Pension Corporation Group Limited. Reinet's equity holding is 43 per cent.
The investment is carried at an estimated fair value of EUR 735 million at 31 December 2014 (30 September 2014: EUR 665 million), taking into account the unaudited embedded value of Pension Corporation Group Limited at 30 September 2014, which increased during the quarter, and valuation multiples drawn from industry data.
Further information in respect of Pension Corporation is available at www.pensioncorporation.com.
PRIVATE EQUITY AND RELATED PARTNERSHIPS
RENSHAW BAY AND RELATED INVESTMENTS
Renshaw Bay advisory and investment management company (Renshaw Bay')
During the quarter under review, Reinet committed to invest an additional EUR 5 million in Renshaw Bay; of this amount EUR 3 million was invested by Reinet in respect of a capital increase, bringing Reinet's total holding to 43.8 per cent
Reinet has invested EUR 31 million to date in Renshaw Bay (30 September 2014: EUR 28 million). The investment is carried at the estimated fair value of EUR 31 million at 31 December 2014 (30 September 2014: EUR 28 million). The current carrying value is based on a recent independent valuation of Renshaw Bay along with the cost of the additional investment in the current quarter.
Renshaw Bay Real Estate Finance Fund
Reinet has invested EUR 43 million to date in the Renshaw Bay Real Estate Finance Fund (30 September 2014: EUR 33 million), of which EUR 10 million was invested in the current quarter. The investment is carried at the estimated fair value of EUR 42 million at 31 December 2014 (30 September 2014: EUR 33 million), based on unaudited valuation data provided by Renshaw Bay at 30 September 2014 along with the cost of the additional investment in the current quarter.
Reinet is committed to invest a further EUR 86 million in the fund.
Renshaw Bay Structured Finance Opportunity Fund
Reinet has invested EUR 50 million to date in the Renshaw Bay Structured Finance Opportunity Fund (30 September 2014: EUR 25 million), of which EUR 25 million was invested in the current quarter. The investment is carried at the estimated fair value of EUR 46 million at 31 December 2014 (30 September 2014: EUR 21 million), based on unaudited valuation data provided by Renshaw Bay at 30 September 2014 along with the cost of the additional investment in the current quarter.
Reinet is committed to invest a further EUR 75 million in the fund.
Further information on Renshaw Bay and related investments may be found at www.renshawbay.com.
36 SOUTH MACRO/VOLATILITY FUNDS
Reinet has invested its full commitment of EUR 88 million in the 36 South fund management and distribution companies together with the 36 South funds.
The investment in the funds is carried at its estimated fair value of EUR 68 million, based on unaudited capital statements received from the fund manager as at 31 December 2014 (30 September 2014: EUR 59 million); and the fair value of the short-term loan and investment in the fund management companies amounted to EUR 8 million (30 September 2014: EUR 8 million). The investments in total have a fair value of EUR 76 million (30 September 2014: EUR 67 million). The change in valuation reflects the movement in the value of the underlying funds during the quarter. The increase in value is due primarily to increased implied volatility in the market leading to increased values of the funds' underlying derivative assets.
Further information on 36 South may be found at www.36south.com.
ASIAN PRIVATE EQUITY AND PORTFOLIO FUNDS
Milestone China Opportunities Funds, investment holdings and management company participation ('Milestone entities')
As at 31 December 2014, capital contributions of EUR 131 million had been made to the Milestone entities, (30 September 2014: EUR 119 million), of which EUR 7 million was invested in the current quarter. The further increase in amounts invested includes some EUR 5 million in respect of foreign exchange gains due to the strengthening of the US dollar against the euro during the quarter. These investments are carried at the estimated fair value of EUR 103 million at 31 December 2014 (30 September 2014: EUR 97 million), based on unaudited valuation data provided by the fund manager at 30 September 2014 adjusted for amounts invested in the quarter and changes in the value of listed securities. The increase in fair value in the quarter is mainly the result of the additional capital invested, the strengthening of the US dollar against the euro, offset by changes in underlying asset values.
Prescient China Balanced Fund ('Prescient China')
In March 2013, Reinet committed to invest in Prescient China and in its management company. Reinet invested its full capital commitment of EUR 22 million in the fund in March 2013. The investment is carried at the estimated fair value of EUR 33 million at 31 December 2014 (30 September 2014: EUR 25 million), based on unaudited valuation data provided by the fund manager at 31 December 2014. The increase in value during the quarter is due to increased values of the fund's underlying listed investments.
Further information on Prescient China may be found at www.prescient.co.za.
UNITED STATES LAND DEVELOPMENT AND MORTGAGES
The table on page 2 shows the value of the 100 per cent invested to date by Reinet and its partners in United States land development and mortgages. Where Reinet co-invests with minority partners, amounts attributable to minority partners are shown in the table either as 'funding by minority partners' or 'minority interests'.
At 31 December 2014, Reinet had invested EUR 143 million in this investment (30 September 2014: EUR 131 million), of which EUR 6 million was invested in the current quarter. The further increase in amounts invested includes some EUR 6 million in respect of foreign exchange gains due to the strengthening of the US dollar against the euro during the quarter.
The investment is carried at the estimated fair value of EUR 170 million (30 September 2014: EUR 157 million) of which EUR 161 million is attributable to Reinet and EUR 9 million to its partners.
The current valuation is based on independent valuations of underlying assets as at 30 June 2014 adjusted for cash receipts and payments in the period to 31 December 2014. The increase in the value for the current quarter reflects the strengthening of the US dollar against the euro during the quarter.
CASH AND LIQUID FUNDS
Cash and liquid funds at 31 December 2014 amounted to EUR 89 million (30 September 2014: EUR 152 million).
During the quarter under review Reinet invested some EUR 58 million in underlying investments, including EUR 38 million in the Renshaw Bay entities, EUR 7 million in the Milestone funds and EUR 6 million in United States land development and mortgages. Management fees of EUR 13 million accrued at 30 September 2014 were paid to Reinet Investment Advisor Limited (the 'Investment Advisor').
Reinet has in place borrowing facilities which will permit it to drawdown the equivalent of up to GBP 300 million in a combination of currencies to fund further investment commitment. The borrowing facilities comprise a facility with Bank of America for GBP 150 million and a facility with Morgan Stanley of GBP 150 million. As at 31 December 2014, these facilities had not been drawn upon.
BANK BORROWINGS AND DERIVATIVE CONTRACTS
Borrowings
In February 2012, Reinet entered into a GBP 300 million medium-term collar financing arrangement. At 31 December 2014, the fair value of the borrowing was EUR 386 million (30 September 2014: EUR 383 million). The increase in fair value reflects lower market interest rates and the strengthening of sterling against the euro during the quarter. The collar financing arrangement involves the purchase by Reinet of put options and the sale by Reinet of call options over 13.7 million BAT shares. The remaining unpaid net option premium is payable over the period to 2017 and is carried as a liability at its fair value of EUR 26 million as at 31 December 2014 (30 September 2014: EUR 28 million).
Reinet has also borrowed ZAR 443 million to fund its investments in South African projects. At 31 December 2014, the fair value of the borrowing was EUR 32 million (30 September 2014: EUR 31 million).
Derivative assets / (liabilities) - put and call options and forward exchange contracts
Put and call options in respect of the GBP 300 million medium-term collar financing facility noted above are carried at their respective fair values at the balance sheet date. The net derivative liability is carried at its fair value of EUR 21 million at 31 December 2014 (30 September 2014: EUR 23 million).
Reinet has entered into forward exchange contracts to sell ZAR 715 million (30 September 2014: ZAR 715 million). The net derivative liability in respect of the forward exchange contracts is carried at its fair value of EUR 2 million at 31 December 2014 (30 September 2014: EUR nil).
OTHER LIABILITIES
Fees payable and other liabilities, net of other assets
Fees payable and other liabilities comprise principally an accrual of EUR 28 million in respect of the performance fee accrued at 31 December 2014, together with the management fee payable of EUR 9 million. The performance fee and management fee are payable to the Investment Advisor. The management fee for the current quarter amounted to EUR 10 million (6 months to 30 September 2014: EUR 18 million).
In addition, a provision for deferred taxes of EUR 30 million relating to gains arising from the investments in the Trilantic Capital Partners funds has been made (30 September 2014: EUR 25 million). Withholding taxes of EUR 11 million (30 September 2014: EUR 10 million) relating to the investment in United States land development and mortgages have also been provided for, together with other operating expenses currently payable.
Funding by minority partners
Reinet invests in certain investments, principally Trilantic Capital Partners and US land development and mortgages, 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 6 million (30 September 2014: EUR 6 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.
26 January 2015
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 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 December 2014 of 13.9986, and a rate of 14.2542 as at 30 September 2014.
31 December 2014 30 September 2014
Net asset value ZAR 65 051 m ZAR 64 743 m
Net asset value per ordinary share ZAR 332.05 ZAR 330.41
Reinet Investments S.C.A.
R.C.S. Luxembourg B 16.576
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
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 26/01/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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