Wrap Text
Management statement for the third quarter ended 31 December 2016
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
MANAGEMENT STATEMENT FOR THE THIRD QUARTER ENDED 31 DECEMBER 2016
The Board of Reinet Investments Manager S.A. announces the results of Reinet Investments S.C.A. for the quarter ended 31 December 2016.
Key financial data
• Net asset value at 31 December 2016: EUR 5 480 million, a decrease of EUR 30 million from 30 September 2016
• Net asset value per share at 31 December 2016: EUR 27.97 (30 September 2016: EUR 28.12)
• Repayment of borrowings and derivative liabilities of EUR 108 million during the quarter
• Commitments amounting to EUR 27 million were funded during the quarter
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'), a specialised investment fund also incorporated in Luxembourg. The Company's ordinary shares are listed on the Luxembourg Stock Exchange, the primary listing, and the depository receipts issued by Reinet Securities SA in respect of the Company's ordinary shares are listed on the Johannesburg Stock Exchange, the secondary listing. The Company's ordinary shares are included in the 'LuxX' index of the principal shares traded on the Luxembourg Stock Exchange. The Company and Reinet Fund together with Reinet 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 OVERVIEW
Consolidated net asset value
The consolidated net asset value ('NAV') at 31 December 2016 comprised:
+------------------------+-----------------+-----+-----------------+-----+
| | 31 December 2016| |30 September 2016| |
+------------------------+-----------------+-----+-----------------+-----+
| | EUR m| %| EUR m| %|
+------------------------+-----------------+-----+-----------------+-----+
|Listed investments | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|British American | 3 690| 67.3| 3 874| 70.3|
|Tobacco p.l.c. | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|SPDR Gold shares | 24| 0.4| 26| 0.5|
+------------------------+-----------------+-----+-----------------+-----+
|Selecta Biosciences, | 6| 0.1| 4| 0.1|
|Inc. | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Unlisted investments | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Pension Insurance | 1 122| 20.5| 1 070| 19.4|
|Corporation Group | | | | |
|Limited | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Private equity and | 781| 14.3| 711| 12.9|
|related partnerships | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Trilantic Capital | 186| 3.4| 161| 2.9|
|Partners | | | | |
|Fund IV, Fund | | | | |
|V, TEP, related | | | | |
|general partners and | | | | |
|management companies | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Renshaw Bay and | 181| 3.3| 169| 3.0|
|related investments | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Advisory and investment | 10| | 10| |
|management company | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|JPS Credit | 94| | 86| |
|Opportunities Fund | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Real Estate Finance Fund| 77| | 73| |
+------------------------+-----------------+-----+-----------------+-----+
|36 South | 53| 1.0| 53| 1.0|
|macro/volatility funds | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Asian private equity | 182| 3.3| 175| 3.2|
|and portfolio funds | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Milestone China | 137| | 132| |
|Opportunities funds, | | | | |
|investment holdings and | | | | |
|management company | | | | |
|participation | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Prescient China | 45| | 43| |
|Balanced Fund | | | | |
|and investment | | | | |
|management company | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Specialised private | 179| 3.3| 153| 2.8|
|equity funds | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Vanterra Flex | 29| | 28| |
|Investments | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Vanterra C Change TEM | 24| | 22| |
+------------------------+-----------------+-----+-----------------+-----+
|NanoDimension funds and | 44| | 41| |
|co-investment | | | | |
|opportunities | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Fountainhead Expert Fund| 27| | 20| |
+------------------------+-----------------+-----+-----------------+-----+
|Snow Phipps funds | 50| | 37| |
|and co-investment | | | | |
|opportunities | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Other fund investments | 5| | 5| |
|United States land | 158| 2.9| 149| 2.7|
|development and | | | | |
|mortgages | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Diamond interests | 60| 1.1| 61| 1.1|
+------------------------+-----------------+-----+-----------------+-----+
|Other investments | 61| 1.1| 60| 1.1|
+------------------------+-----------------+-----+-----------------+-----+
|Total investments | 5 902|107.7| 5 955|108.1|
+------------------------+-----------------+-----+-----------------+-----+
|Cash and liquid funds | 46| 0.8| 194| 3.5|
+------------------------+-----------------+-----+-----------------+-----+
|Bank borrowings | | | | |
|and derivatives | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Borrowings | (327)|(5.9)| (381)|(6.9)|
+------------------------+-----------------+-----+-----------------+-----+
|Net derivative | (70)|(1.3)| (182)|(3.3)|
|assets/(liabilities) | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Other liabilities | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Minority interest, fees | (71)|(1.3)| (76)|(1.4)|
|payable and | | | | |
|other liabilities, net | | | | |
|of other assets | | | | |
+------------------------+-----------------+-----+-----------------+-----+
|Consolidated net | 5 480|100.0| 5 510|100.0|
|asset value | | | | |
+------------------------+-----------------+-----+-----------------+-----+
All investments are held, either directly or indirectly, by Reinet Fund S.C.A., F.I.S. ('Reinet Fund'). Reinet Investments S.C.A. (the 'Company') and Reinet Fund together with Reinet Fund's subsidiaries are referred to as 'Reinet'.
INFORMATION RELATING TO CURRENT KEY INVESTMENTS
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| | | | | | | |Total realised|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| | | | Remaining| | | | and|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| | | Committed| committed| Invested| Realised|Current fair| unrealised|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| | | amount (1)| amount(1)| amount(2)|proceeds(2)| value(1)| value(3)|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| | |in millions|in millions|in millions|in millions| in millions| in millions|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Listed investments | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|British American Tobacco |EUR| -| -| 1 739| 1 692| 3 690| 5 382|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|p.l.c. |GBP| -| -| 1 418| 1 383| 3 144| 4 527|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|SPDR Gold shares |EUR| 24| -| 22| -| 24| 24|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| |USD| 25| -| 25| -| 25| 25|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Selecta Biosciences, Inc. |EUR| 5| -| 4| -| 6| 6|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| |USD| 5| -| 5| -| 6| 6|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Unlisted investments | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Pension Insurance |EUR| 633| -| 656| -| 1 122| 1 122|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Corporation Group Limited |GBP| 539| -| 539| -| 956| 956|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Trilantic Capital Partners |EUR| 348| 103| 229| 261| 186| 447|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Euro investment |EUR| 86| 20| 66| 110| 69| 179|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|US dollar investment(4) |USD| 275| 87| 198| 190| 122| 312|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Renshaw Bay and related | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|investments | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Advisory and | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|investment management |EUR| 29| 2| 29| -| 10| 10|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|company |GBP| 25| 1| 24| -| 8| 8|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|JPS Credit Opportunities |EUR| 67| -| 54| -| 94| 94|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Fund |USD| 70| -| 70| -| 99| 99|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Real Estate Finance Fund |EUR| 117| 35| 84| 15| 77| 92|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| |GBP| 100| 30| 70| 12| 65| 77|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|36 South macro/volatility | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Funds |EUR| 88| -| 88| 6| 53| 59|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Asian private equity and | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|portfolio funds | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Milestone China | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Opportunities funds, | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|investment holdings and | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|management company |EUR| 161| 9| 124| 18| 137| 155|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|participation |USD| 169| 9| 160| 22| 143| 165|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Prescient China Balanced | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Fund and investment |EUR| 31| -| 25| -| 45| 45|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|management company |USD| 32| -| 32| -| 47| 47|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Specialised private equity | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|funds | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Vanterra Flex Investments |EUR| 99| 38| 49| 23| 29| 52|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| |USD| 104| 40| 64| 27| 31| 58|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Vanterra C Change TEM |EUR| 62| 6| 43| 1| 24| 25|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| |USD| 65| 6| 59| 1| 25| 26|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|NanoDimension funds and | | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|co-investment opportunities |EUR| 58| 9| 41| 1| 44| 45|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Euro investment |EUR| 4| -| 4| 1| 5| 6|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|US dollar investment |USD| 56| 10| 46| -| 41| 41|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Fountainhead Expert Fund |EUR| 38| 19| 15| -| 27| 27|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| |USD| 40| 20| 20| -| 29| 29|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Snow Phipps funds and |EUR| 124| 73| 47| 4| 50| 54|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|co-investment opportunities |USD| 130| 77| 53| 5| 52| 57|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|United States land development and mortgages| | | | | | | |
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|development and |EUR| 203| 5| 158| -| 158| 158|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|mortgages |USD| 213| 5| 208| -| 166| 166|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
|Diamond interests(5) |EUR| 85| 3| 116| 67| 60| 127|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
| |ZAR| 1 230| 40| 1 190| 938| 870| 1 808|
+--------------------------------------------+---+-----------+-----------+-----------+-----------+------------+--------------+
(1) Calculated using quarter end foreign exchange rates.
(2) Calculated using actual foreign exchange rates at transaction date.
(3) Total of realised proceeds and current fair value.
(4) The invested amount for Trilantic Capital Partners includes an initial payment of USD 10 million.
(5) The exposure to the South African rand has been partially hedged by a forward exchange contract and borrowings in this currency.
PERFORMANCE
NET ASSET VALUE
The decrease in the NAV of EUR 30 million during the quarter is largely a result of movements in the fair value of British American Tobacco p.l.c. ('BAT') and increases in the estimated fair value of loans payable. Partially offsetting these decreases in NAV are the increase in the estimated fair value of Pension Insurance Corporation Group Limited, a decrease in the estimated fair value of derivative liabilities associated with the collar financing due to a decrease in the BAT share price, and the effect of the strengthening of sterling and the US dollar against the euro in the quarter.
The Company records its assets and liabilities in euro; the appreciation of other currencies against the euro has resulted in an increase in the value of certain assets and liabilities in euro terms. Applying current quarter end exchange rates to the September 2016 assets and liabilities would have resulted in an increase in value of some EUR 127 million.
Major items impacting the NAV and significant changes in carrying value during the quarter under review are described below.
LISTED INVESTMENTS
BRITISH AMERICAN TOBACCO P.L.C.
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 68.1 million shares in BAT, representing some 3.7 per cent of BAT's issued share capital. The value of Reinet's investment in BAT amounted to EUR 3 690 million at 31 December 2016, being 67 per cent of Reinet's NAV (30 September 2016: EUR 3 874 million). The BAT share price on the London Stock Exchange decreased from GBP 49.30 at 30 September 2016 to GBP 46.20 at 31 December 2016. This decrease in value is offset to some extent by the strengthening of sterling against the euro during the quarter.
Further information on BAT is available at www.bat.com/annualreport.
UNLISTED INVESTMENTS
PENSION INSURANCE CORPORATION GROUP LIMITED
In November 2016, Pension Insurance Corporation ('PIC') raised GBP 250 million by the issuance of subordinated debt capital with an annual coupon of 8 per cent and a maturity of 10 years. The proceeds are to be used to meet projected demand from trustees of defined benefit pension funds for wholesale insurance annuity products. The bonds have been admitted to trading on the London Stock Exchange's regulated market.
Reinet's investment in Pension Insurance Corporation Group Limited ('Pension Corporation') is carried at an estimated fair value of EUR 1 122 million at 31 December 2016 (30 September 2016: EUR 1 070 million). This value takes into account Reinet's estimate of Pension Corporation's embedded value at 30 September 2016 and valuation multiples drawn from industry data at 31 December 2016.
The increase in estimated fair value at 31 December 2016 reflects increases over the quarter under review in comparable valuation multiples being applied by the market in valuing listed companies in the UK insurance sector. The estimated fair value is further increased by the strengthening of sterling against the euro in the quarter. Reinet retained the 10 per cent additional valuation adjustment previously applied largely allowing for the lack of ready liquidity for this investment.
Of interest, in the final six months of the 2016 calendar year, PIC insured GBP 140 million of the ICI Specialty Chemicals Pension Fund, GBP 250 million of the Smiths Industries Pension Scheme and GBP 230 million of the Pilkington Scheme. It also completed a GBP 150 million pensioner buy-in and invested in Hertfordshire Housing. In January 2017, PIC signed a GBP 190 million pensioner buyout of the GKN Group Pension Scheme and a GBP 90 million Civil Aviation Authority Pension Scheme buy-in. The new business pipeline remains encouraging.
Further information on Pension Corporation is available at www.pensioncorporation.com.
PRIVATE EQUITY AND RELATED PARTNERSHIPS
TRILANTIC CAPITAL PARTNERS
Reinet's and its minority partners' investment in Trilantic Management and related funds is carried at the estimated fair value of EUR 186 million at 31 December 2016 (30 September 2016: EUR 161 million) of which EUR 9 million (30 September 2016: EUR 9 million) is attributable to minority partners. The estimated fair value is based on unaudited valuation data provided by Trilantic Management at 30 September 2016 adjusted for changes in the value of listed investments included in the portfolios. The increase in the estimated fair value is due to capital contributions of EUR 10 million, increases in the estimated fair value of underlying investments and the strengthening of the US dollar against the euro during the quarter.
Further information on Trilantic is available at www.trilantic.com.
SPECIALISED PRIVATE EQUITY FUNDS
SNOW PHIPPS FUNDS AND CO-INVESTMENT OPPORTUNITIES
In 2011, Reinet committed to invest up to USD 10 million (EUR 10 million) in Snow Phipps II, L.P. In the year ended 31 March 2016, Reinet made a commitment of USD 100 million (EUR 95 million) to Snow Phipps III, L.P. the successor fund to Snow Phipps II, L.P. In addition, in the current year Reinet committed USD 20 million (EUR 19 million) to two co-investment opportunities.
Reinet's investment in the two funds and associated co-investments is carried at an estimated fair value of EUR 50 million at 31 December 2016 (30 September 2016: EUR 37 million), the increase in value being due to additional capital invested of EUR 10 million, and the strengthening of the US dollar against the euro during the quarter.
Further information on Snow Phipps is available at www.snowphipps.com.
UNITED STATES LAND DEVELOPMENT AND MORTGAGES
The investment is carried at the estimated fair value of EUR 158 million (30 September 2016: EUR 149 million), of which EUR 3 million is attributable to minority partners (30 September 2016: EUR 2 million).
The current valuation is based on unaudited financial statements as at 30 June 2016 adjusted for cash movements up to 31 December 2016. The increase in the valuation reflects additional net capital contributions of EUR 3 million in the quarter along with the strengthening of the US dollar against the euro, offset by provisions against certain estimated land values.
Further information on Arendale, which holds the residential golf community assets, may be found at www.arendale.com.
Further information on Reinet's investments may be found in the Reinet 2016 annual report which is available at www.reinet.com.
CASH AND LIQUID FUNDS
Reinet holds cash on deposit principally in European banks.
Reinet's cash and liquid funds decreased from EUR 194 million at 30 September 2016 to EUR 46 million at 31 December 2016. Reinet invested some EUR 27 million in underlying investments, including EUR 10 million in Trilantic Capital Partners and EUR 10 million in Snow Phipps III, L.P. Management fees of EUR 21 million, accrued as at 30 September 2016, were paid to Reinet Investment Advisors Limited (the 'Investment Advisor'). Amounts paid to settle bank borrowings and related call options totalled EUR 108 million, distributions from investments amounted to EUR 11 million and other disbursements including interest paid amounted to EUR 3 million.
In December 2016, Reinet entered into borrowing facilities with Bank of America N.A which permit it to drawdown the equivalent of up to GBP 250 million in a combination of currencies to fund further investment commitments. At 31 December 2016, these facilities had not been drawn upon. In January 2017 GBP 35 million was drawn with repayment due after 6 months.
BANK BORROWINGS AND DERIVATIVES
Borrowings
In February 2012, in order to meet its ongoing commitments, Reinet entered into a GBP 300 million, medium-term collar financing arrangement. At 31 December 2016, the estimated fair value of the borrowing was EUR 294 million (30 September 2016: EUR 347 million). The decrease in estimated fair value reflects the repayment of GBP 50 million offset by the strengthening of sterling against the euro during the quarter. As at 31 December 2016, 11.4 million BAT shares were pledged as security in respect of the remaining loan and related put and call options (30 September 2016: 13.7 million BAT shares).
The remaining bank borrowings under the medium-term collar financing arrangements noted above will be settled either by the delivery of BAT shares pursuant to the put and call options in place, by existing liquid funds or the proceeds of the sale of BAT shares, or may be rolled over and be replaced by other borrowings.
The collar financing arrangement involves the purchase by Reinet of put options and the sale by Reinet of call options. The remaining unpaid net option premium is payable over the period to March 2017 and is carried as a liability at its estimated fair value of EUR 2 million as at 31 December 2016 (30 September 2016: EUR 5 million). Some 0.3 million BAT shares remain pledged to guarantee the balance of the net option premium and a portion of the interest payments.
Reinet has also borrowed ZAR 443 million to fund its investments in South African projects. At 31 December 2016, the estimated fair value of the borrowing was EUR 31 million (30 September 2016: EUR 29 million), the increase reflects the strengthening of the South African rand against the euro in the quarter.
Derivative assets/(liabilities) – put and call options and forward exchange contracts
Put and call options in respect of the aforementioned medium-term collar financing arrangement are carried at their respective fair values at the balance sheet date. The net derivative liability is carried at its estimated fair value of EUR 68 million at 31 December 2016 (30 September 2016: EUR 183 million). The decrease in the value of the liability is due to the settlement of part of the liability in December 2016 amounting to EUR 49 million (GBP 41 million), together with a decrease in the BAT share price of some GBP 3 per share, offset by the strengthening of sterling against the euro in the quarter. The remaining options expire or alternatively will be settled before 31 March 2017.
Reinet has entered into a forward exchange contract to sell ZAR 480 million (30 September 2016: ZAR 480 million). The derivative liability in respect of the forward exchange contract is carried at its estimated fair value of EUR 2 million at 31 December 2016 (30 September 2016: asset of EUR 1 million).
OTHER LIABILITIES
Minority interest, fees payable and other liabilities, net of other assets
The minority interest liability amounts to EUR 16 million (30 September 2016: EUR 15 million) and is in respect of minority partners' share in the gains and losses not yet distributed to them arising from the estimated fair value movement of investments in which they have interests.
Fees payable and other liabilities comprise principally an accrual of EUR 11 million in respect of the management fee payable at 31 December 2016 (30 September 2016: EUR 21 million) a provision for deferred taxes of EUR 12 million (30 September 2016: EUR 11 million) relating to gains arising from the investments in Trilantic Capital Partners and withholding and corporate taxes of EUR 24 million (30 September 2016: EUR 21 million) relating to the investment in United States land development and mortgages. Accruals and other payables amount to some EUR 8 million (30 September 2016: EUR 8 million).
No provision has been made in respect of a performance fee as at 31 December 2016 (30 September 2016: EUR nil) as the conditions required to pay a fee had not been met at that date.
The performance fee, if applicable, and management fee are payable to the Investment Advisor.
SHARES IN ISSUE
The number of shares in issue remained unchanged during the quarter at 195 942 286. This figure includes 1 000 management shares held by the General Partner.
SHARE INFORMATION
Primary Listing
The Company's ordinary shares are listed and traded on the Luxembourg Stock Exchange with the ISIN number LU0383812293 (symbol 'ReinetInvest'). Thomson Reuters code REIT.LU. The Company's ordinary shares are included in the 'LuxX' index of the principal shares traded on the Luxembourg Stock Exchange.
The Company's share price decreased by 5 per cent in the quarter from EUR 18.51 at 30 September 2016 to EUR 17.51 at 31 December 2016, with the highest trade being at EUR 18.99 during the quarter.
Secondary Listing
The depository receipts issued by Reinet Securities SA in respect of the Company's ordinary shares are traded on the Johannesburg Stock Exchange under the ISIN number CH0045793657 (symbol 'REI'). Thomson Reuters code REIJ.J. One depository receipt issued by Reinet Securities SA represents one-tenth of one ordinary share in the Company.
The price of depository receipts issued by Reinet Securities SA in respect of the Company's ordinary shares decreased from ZAR 29.92 at 30 September 2016 to ZAR 26.80 at 31 December 2016, the decrease of 10 per cent reflects in part the weakening of the euro against the South African rand in the quarter.
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Reinet Investments Manager S.A.
General Partner
For and on behalf of Reinet Investments S.C.A.
24 JANUARY 2017
Website: www.reinet.com
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
Notes for South African editors
One Depository Receipt represents one-tenth of one ordinary share in Reinet.
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 2016 of 14.4531, and a rate of 15.4296 as at 30 September 2016.
31 December 2016 30 September 2016
Net asset value ZAR 79 203 m ZAR 85 017 m
Net asset value per ordinary share ZAR 404.25 ZAR 433.88
Date: 24/01/2017 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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