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Management statement for the third quarter ended 31 December 2017
Reinet Investments S.C.A.
(Incorporated in Luxembourg)
ISIN: LU0383812293
Code: RNI
COMPANY ANNOUNCEMENT FOR IMMEDIATE RELEASE
MANAGEMENT STATEMENT FOR THE THIRD QUARTER ENDED 31 DECEMBER 2017
The Board of Reinet Investments Manager S.A. announces the results of Reinet Investments S.C.A. for the quarter ended 31 December 2017.
Key financial data
* Net asset value at 31 December 2017: EUR 5 693 million, an increase of EUR 295 million from 30 September 2017
* Net asset value per share at 31 December 2017: EUR 29.06 (30 September 2017: EUR 27.55)
* Commitments increased by EUR 127 million during the quarter, and a total of EUR 28 million were funded during the quarter
* On 14 November 2017, Reinet's ordinary shares were listed on Euronext Amsterdam
* On 29 November 2017, Reinet's ordinary shares were listed on the Johannesburg Stock Exchange and the depository receipts subsequently cancelled
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, Euronext Amsterdam and the Johannesburg Stock Exchange, the listing on the Johannesburg Stock Exchange is a 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. Certain information included in the Management Report is text attributed to the management of investee entities. While no facts have come to our attention that lead us to conclude that any such information is inaccurate, we have not independently verified such information and do not assume any responsibility for the accuracy or completeness of such information.
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
BUSINESS OVERVIEW
Net asset value
The net asset value at 31 December 2017 comprised:
+---------------------+-----------------------+------------------------+
| | 31 December 2017 | 30 September 2017 |
+---------------------+----------------+------+-----------------+------+
| | EUR m| %| EUR m| %|
+---------------------+----------------+------+-----------------+------+
|Listed investments | | | | |
+---------------------+----------------+------+-----------------+------+
|British American | 3 836| 67.3| 3 606| 66.8|
|Tobacco p.l.c. | | | | |
+---------------------+----------------+------+-----------------+------+
|SPDR Gold shares | 24| 0.4| 24| 0.4|
+---------------------+----------------+------+-----------------+------+
|Selecta Biosciences, | 3| -| 5| -|
|Inc. | | | | |
+---------------------+----------------+------+-----------------+------+
|Unlisted investments | | | | |
+---------------------+----------------+------+-----------------+------+
|Pension Insurance | 1 286| 22.6| 1 206| 22.4|
|Corporation Group | | | | |
|Limited | | | | |
+---------------------+----------------+------+-----------------+------+
| | | | | |
+---------------------+----------------+------+-----------------+------+
|Private equity and | 748| 13.2| 779| 14.4|
|related partnerships | | | | |
+---------------------+----------------+------+-----------------+------+
|Trilantic Capital | 197| 3.5| 214| 4.0|
|Partners | | | | |
+---------------------+----------------+------+-----------------+------+
|Fund IV, Fund | | | | |
|V, TEP, related | | | | |
|general partners and | | | | |
|management companies | | | | |
+---------------------+----------------+------+-----------------+------+
|36 South | 40| 0.7| 44| 0.8|
|macro/volatility | | | | |
|funds | | | | |
+---------------------+----------------+------+-----------------+------+
|Asian private equity | 177| 3.1| 184| 3.4|
|and portfolio funds | | | | |
+---------------------+----------------+------+-----------------+------+
|Milestone China | 128| | 136| |
|Opportunities funds, | | | | |
|investment holdings | | | | |
|and management | | | | |
|company | | | | |
|participation | | | | |
+---------------------+----------------+------+-----------------+------+
|Prescient China | 49| | 48| |
|Balanced Fund | | | | |
|and investment | | | | |
|management company | | | | |
+---------------------+----------------+------+-----------------+------+
|Specialised | 334| 5.9| 337| 6.2|
|investment funds | | | | |
+---------------------+----------------+------+-----------------+------+
|Vanterra Flex | 13| | 26| |
|Investments (1) | | | | |
+---------------------+----------------+------+-----------------+------+
|Vanterra C | 24| | 20| |
|Change TEM and | | | | |
|holding companies | | | | |
+---------------------+----------------+------+-----------------+------+
|NanoDimension funds | 47| | 47| |
|and co-investment | | | | |
|opportunities | | | | |
+---------------------+----------------+------+-----------------+------+
|Fountainhead Expert | 21| | 24| |
|Fund | | | | |
+---------------------+----------------+------+-----------------+------+
|Snow Phipps funds | 86| | 72| |
|and co-investment | | | | |
|opportunities | | | | |
+---------------------+----------------+------+-----------------+------+
|Palm Lane Credit | 87| | 87| |
|Opportunities Fund | | | | |
+---------------------+----------------+------+-----------------+------+
|GAM Real Estate | 53| | 58| |
|Finance Fund | | | | |
+---------------------+----------------+------+-----------------+------+
|Other fund | 3| | 3| |
|investments | | | | |
+---------------------+----------------+------+-----------------+------+
|United States land | 100| 1.8| 100| 1.9|
|development and | | | | |
|mortgages | | | | |
+---------------------+----------------+------+-----------------+------+
|Diamond interests | 44| 0.8| 43| 0.8|
+---------------------+----------------+------+-----------------+------+
|Other investments | 52| 0.9| 56| 1.1|
+---------------------+----------------+------+-----------------+------+
|Total investments | 6 093| 107.0| 5 819| 107.8|
+---------------------+----------------+------+-----------------+------+
|Cash and | 281| 4.9| 313| 5.8|
|liquid funds | | | | |
+---------------------+----------------+------+-----------------+------+
|Bank borrowings | | | | |
|and derivatives | | | | |
+---------------------+----------------+------+-----------------+------+
|Borrowings | (664)|(11.6)| (670)|(12.4)|
+---------------------+----------------+------+-----------------+------+
|Net derivative | 25| 0.4| 38| 0.7|
|assets/(liabilities) | | | | |
+---------------------+----------------+------+-----------------+------+
|Other liabilities | | | | |
+---------------------+----------------+------+-----------------+------+
|Minority interest, | (42)| (0.7)| (102)| (1.9)|
|fees payable and | | | | |
|other liabilities, | | | | |
|net of other assets | | | | |
+---------------------+----------------+------+-----------------+------+
|Net asset value | 5 693| 100.0| 5 398| 100.0|
+---------------------+----------------+------+-----------------+------+
(1) Certain assets previously included in the investment in Vanterra Flex have been distributed to Reinet Fund and are now included in Vanterra C Change TEM and holding companies. The liability for minority interest was also reduced in respect of certain assets.
All investments are held, either directly or indirectly, by Reinet Fund S.C.A., F.I.S. ('Reinet Fund'). The Company and Reinet Fund together with Reinet Fund's subsidiaries are referred to as 'Reinet'.
INFORMATION RELATING TO CURRENT KEY INVESTMENTS
+-----------------------------------+---------+------------+---------+------------+-----------+-----------+
| |Committed| Remaining| Invested| Realised| Current| Total|
| |amount(1)| committed|amount(2)| proceeds(2)| fair| realised|
| | in| amount(1)| in| in millions|value(1) in| and|
| | millions| in millions| millions| | millions| unrealised|
| | | | | | |value(3) in|
| | | | | | | millions|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Listed investments | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|British American Tobacco p.l.c.|EUR| -| -| 1 739| 1 830| 3 836| 5 666|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
| |GBP| -| -| 1 418| 1 502| 3 408| 4 910|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|SPDR Gold shares |EUR| 21| -| 22| -| 24| 24|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
| |USD| 25| -| 25| -| 28| 28|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Selecta Biosciences, Inc. |EUR| 4| -| 4| -| 3| 3|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
| |USD| 5| -| 5| -| 3| 3|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Unlisted investments | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Pension Insurance | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Corporation Group |EUR| 607| -| 656| -| 1 286| 1 286|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Limited |GBP| 539| -| 539| -| 1 143| 1 143|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Trilantic Capital Partners |EUR| 416| 168| 265| 323| 197| 520|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Euro investment |EUR| 86| 20| 66| 111| 67| 178|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|US dollar investment(4) |USD| 394| 177| 227| 263| 155| 418|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|36 South macro/volatility |EUR| 93| -| 93| 11| 40| 51|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|funds |EUR| 88| -| 88| 11| 36| 47|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
| |USD| 6| -| 6| -| 5| 5|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Asian private equity | | | | | | | |
|and portfolio funds | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Milestone China | | | | | | | |
|Opportunities funds, investment| | | | | | | |
|holdings and | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|management company |EUR| 141| 7| 124| 21| 128| 149|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|participation |USD| 169| 8| 161| 25| 154| 179|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Prescient China Balanced | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Fund and investment |EUR| 27| -| 25| -| 49| 49|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|management company |USD| 32| -| 32| -| 59| 59|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Specialised investment funds | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Vanterra Flex |EUR| 87| 33| 49| 36| 13| 49|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Investments(5) |USD| 104| 40| 64| 42| 16| 58|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Vanterra C Change TEM |EUR| 59| 6| 52| 1| 24| 25|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|and holding companies |USD| 71| 7| 64| 1| 29| 30|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|NanoDimension funds | | | | | | | |
|and co-investment | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|opportunities |EUR| 84| 32| 51| 1| 47| 48|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Euro investment |EUR| 4| -| 4| 1| 3| 4|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|US dollar investment |USD| 96| 38| 58| -| 52| 52|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Fountainhead Expert |EUR| 33| 17| 15| -| 21| 21|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Fund |USD| 40| 20| 20| -| 25| 25|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Snow Phipps funds | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|and co-investment |EUR| 126| 49| 79| 4| 86| 90|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|opportunities |USD| 151| 60| 91| 5| 103| 108|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Palm Lane Credit |EUR| 58| -| 54| -| 87| 87|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Opportunities Fund |USD| 70| -| 70| -| 104| 104|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|GAM Real Estate |EUR| 113| 34| 54| 36| 53| 89|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Finance Fund |GBP| 100| 30| 70| 29| 47| 76|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|United States land | | | | | | | |
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|development and |EUR| 180| 3| 161| -| 100| 100|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|mortgages |USD| 215| 3| 212| -| 120| 120|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
|Diamond interests(6) |EUR| 83| 3| 116| 76| 44| 120|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
| |ZAR| 1 230| 40| 1 190| 1 108| 651| 1 759|
+-------------------------------+---+---------+------------+---------+------------+-----------+-----------+
(1) Calculated using period 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) Certain assets have been distributed and are now included in 'Vanterra C Change TEM and holding companies' and in 'United States land development and mortgages'.
(6) 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 increase in the net asset value ('NAV') of EUR 295 million during the quarter is largely a result of movements in the fair value of British American Tobacco p.l.c. ('BAT') and Pension Insurance Corporation Group Limited, together with the BAT dividend receivable of EUR 32 million. Partially offsetting these increases in NAV are decreases in the estimated fair value of derivative assets associated with put options related to borrowings due to an increase in the BAT share price, and the effect of the weakening of sterling and the US dollar against the euro in the quarter.
The Company records its assets and liabilities in euro; the depreciation of other currencies against the euro has resulted in a decrease in the value of certain assets and liabilities in euro terms. Applying current quarter end exchange rates to the September 2017 assets and liabilities would have resulted in a decrease in value of some EUR 48 million.
Major items impacting the net asset value, significant changes in carrying value and new investments during the period 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 2.97 per cent of BAT's issued share capital. The value of Reinet's investment in BAT amounted to EUR 3 836 million at 31 December 2017, being 67 per cent of Reinet's NAV (30 September 2017: EUR 3 606 million). The BAT share price on the London Stock Exchange increased from GBP 46.72 at 30 September 2017 to GBP 50.08 at 31 December 2017. This increase in value is offset to some extent by the weakening of sterling against the euro during the quarter.
BAT declared a dividend of 43.6 p per share for holders on record at 28 December 2017. The dividend of some EUR 32 million will be paid on 8 February 2018 and has been included in the NAV as at 31 December 2017.
Further information on BAT is available at www.bat.com/annualreport.
UNLISTED INVESTMENTS
PENSION INSURANCE CORPORATION GROUP LIMITED
During the current quarter, Pension Insurance Corporation Group Limited ('Pension Corporation') completed a GBP 115 million investment in the Walney Extension Offshore Wind Farm Project; concluded a pension insurance buy-in with the trustees of the Wolsley Group Retirements Benefits Plan for a premium of some GBP 600 million; concluded a pension insurance buy-in with the trustees of the Former Registered Dock Workers Pension Fund for a premium of some GBP 725 million and concluded a pension insurance buy-in with the trustees of three defined benefit pension schemes sponsored by Pirelli UK Limited and Pirelli Tyres Limited for a premium of some GBP 100 million. Pension Corporation also entered into its fifth longevity reinsurance transaction since 2015 with Prudential Insurance Company of America who will reinsure and additional GBP 0.9 billion of longevity risk.
Reinet's investment in Pension Insurance Corporation Group Limited ('Pension Corporation') is carried at an estimated fair value of EUR 1 286 million at 31 December 2017 (30 September 2017: EUR 1 206 million). This value takes into account Reinet's estimate of Pension Corporation's embedded value at 30 September 2017 and valuation multiples drawn from industry data at 31 December 2017.
The increase in estimated fair value at 31 December 2017 reflects an estimated increase in Pension Corporation's embedded value and increases in comparable valuation multiples being applied by the market in valuing listed companies in the UK insurance sector, offset by the weakening 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.
Further information on Pension Corporation is available at www.pensioncorporation.com.
PRIVATE EQUITY AND RELATED PARTNERSHIPS
TRILANTIC CAPITAL PARTNERS
Reinet's and its minority partner's investment in Trilantic Management and related funds is carried at the estimated fair value of EUR 197 million at 31 December 2017 (30 September 2017: EUR 214 million) of which EUR 5 million (30 September 2017: EUR 9 million) is attributable to the minority partner. The estimated fair value is based on unaudited valuation data provided by Trilantic Management at 30 September 2017 adjusted for changes in the value of listed investments included in the portfolios and cash movements in the quarter. The decrease in the estimated fair value is due to capital distributions received in the quarter of EUR 8 million and the weakening of the US dollar against the euro, offset by capital contributions of EUR 2 million and increases in the estimated fair value of underlying investments.
As at 31 December 2017, Reinet has committed an amount of some EUR 22 million (USD 26 million) to Trilantic Energy Partners II (North America) L.P. ('TEP II') and its general partner. In addition, in the current quarter Reinet committed EUR 79 million (USD 94 million) to Trilantic Capital Partners VI North America ('Fund VI') and its general partner. TEP II had its first closing in August 2017 and Fund VI had its first closing in December 2017; each fund expects further closings in the coming months, at which time Reinet's commitment will increase in line with the overall fund size. As at 31 December 2017, TEP II and Fund VI had no investments and no capital contributions have been made.
During the period under review, gains of EUR 3 million were realised and carried interest of EUR 10 million received.
Further information on Trilantic is available at www.trilantic.com.
SPECIALISED PRIVATE EQUITY FUNDS
VANTERRA FLEX INVESTMENTS L.P.
Reinet's investment in Vanterra Flex Investments L.P. ('Vanterra Flex') decreased in value from EUR 26 million at 30 September 2017 to EUR 13 million at 31 December 2017 due to a distribution of assets in the period under review amounting to some EUR 13 million. Certain of the distributed assets are now included in the caption 'Vanterra C Change TEM and holding companies' (EUR 4 million) and 'United States land development and mortgages' (EUR 1 million); other distributions resulted in a reduction in the minority interest liability (EUR 8 million).
The remaining investment in Vanterra Flex is carried at the estimated fair value of EUR 13 million at 31 December 2017 (30 September 2017: EUR 26 million). The estimated fair value is based on unaudited valuation data provided by the fund manager at 30 September 2017.
The remaining assets held by Vanterra Flex are expected to be distributed directly to Reinet Fund or its subsidiaries before the end of March 2018; at which time all the assets acquired will be reallocated to the appropriate asset category which will include 'Other fund investments' and 'Other investments' as shown in the net asset value table above.
Further information on Vanterra Flex is available at www.vanterra.com.
SNOW PHIPPS FUNDS AND CO-INVESTMENT OPPORTUNITIES
In 2011, Reinet committed to invest in Snow Phipps II, L.P. In the year ended 31 March 2016, Reinet made a commitment to Snow Phipps III, L.P., the successor fund to Snow Phipps II, L.P. Reinet has also invested in four co-investment opportunities alongside Snow Phipps III, L.P.
Reinet's investment in the two funds and associated co-investments is carried at an estimated fair value of EUR 86 million at 31 December 2017 (30 September 2017: EUR 72 million), based on unaudited valuation data provided by Snow Phipps at 30 September 2017 adjusted for cash invested in the current quarter. The movement in value is due to additional capital invested, together with an increase in the estimated fair value of underlying investments, offset by the weakening of the US dollar against the euro in the quarter.
Further information on Snow Phipps is available at www.snowphipps.com.
Further information on Reinet's investments may be found in the Reinet 2017 annual report which is available at www.reinet.com.
CASH AND LIQUID FUNDS
Reinet holds cash on deposit principally in European-based banks and in liquidity funds holding highly rated short-term commercial paper.
Reinet's cash and liquid funds decreased from EUR 313 million at 30 September 2017 to EUR 281 million at 31 December 2017. Reinet invested some EUR 28 million in underlying investments, including EUR 15 million in Snow Phipps III, L.P. Management fees of EUR 25 million, accrued as at 30 September 2017, were paid to Reinet Investment Advisors Limited (the 'Investment Advisor'). US taxes paid amounted to EUR 11 million and payments of loans and interest amounted to EUR 7 million. Distributions from investments amounted to some EUR 41 million and other expenses amounted to EUR 2 million.
BANK BORROWINGS AND DERIVATIVES
Borrowings
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 2017, these facilities had not been drawn upon.
During early 2017, Reinet entered into a GBP 500 million, medium-term financing arrangement with Merrill Lynch International, which runs to 2022. At 31 December 2017, the estimated fair value of the borrowing was EUR 561 million (GBP 499 million) (30 September 2017: EUR 564 million (GBP 497 million)). The GBP 500 million financing transaction includes the purchase by Reinet of put options over approximately 15.5 million BAT shares for a premium of some EUR 92 million (GBP 79 million) payable over the life of the transaction (the 'Premium loan'). As at 31 December 2017, the Premium loan is carried as a liability at an estimated fair value of EUR 73 million (GBP 65 million) (30 September 2017: EUR 78 million (GBP 69 million)). Some 4.1 million BAT shares have also been pledged to collateralise the Premium loan and future interest payments. As part of the medium-term financing arrangement and Premium loan a portion of BAT shares are on loan to Merrill Lynch International. The Company retains the economic benefit of all shares on loan.
Reinet has also borrowed ZAR 443 million to fund its investments in South African projects. At 31 December 2017, the estimated fair value of the borrowing was EUR 30 million (30 September 2017: EUR 28 million), the increase reflects the strengthening of the South African rand against the euro in the period. This loan matures in March 2018.
Derivative assets/(liabilities) – put and call options and forward exchange contracts
As part of the aforementioned GBP 500 million medium-term financing arrangement, Reinet 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 could be used to repay the amounts borrowed in full. The put options are carried at their estimated fair value of EUR 26 million at 31 December 2017 (30 September 2017: EUR 38 million). The decrease in the carrying value of the put options reflects the increase in value of the underlying BAT shares together with the decrease in the time to maturity and the weakening of sterling against the euro in the period.
Reinet has entered into a forward exchange contract to sell ZAR 230 million (30 September 2017: ZAR 230 million). The derivative liability in respect of the forward exchange contract is carried at its estimated fair value of EUR 1 million at 31 December 2017 (30 September 2017: nil).
OTHER LIABILITIES
Minority interest, fees payable and other liabilities, net of other assets
The minority interest liability amounts to EUR 7 million (30 September 2017: EUR 16 million) and is in respect of a minority partner's share in the gains and losses not yet distributed arising from the estimated fair value movement of investments in which it has an interest. The decrease in value during the period reflects Reinet's acquisition following the distribution of certain interests in Trilantic and United States land development and mortgages previously held in Vanterra Flex (see explanation above), along with a dividend of EUR 1 million paid to a minority partner.
Fees payable and other liabilities comprise principally an accrual of EUR 12 million in respect of the management fee payable at 31 December 2017 (30 September 2017: EUR 25 million) a provision for deferred taxes of EUR 20 million (30 September 2017: EUR 27 million) relating to realised and unrealised gains arising from the investments in Trilantic and Snow Phipps, and withholding and corporate taxes of EUR 26 million (30 September 2017: EUR 26 million) relating to the investment in United States land development and mortgages. Accruals and other payables amount to some EUR 9 million (30 September 2017: EUR 8 million).
No provision has been made in respect of a performance fee as at 31 December 2017 (30 September 2017: 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 Reinet Investment Advisors Limited.
Other assets comprise the dividend receivable from BAT of some EUR 32 million. BAT declared a dividend of 43.6 p per share for holders on record at 28 December 2017, this will be paid on 8 February 2018. The dividend has been recorded as a receivable as at 31 December 2017.
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
Reinet Investments S.C.A. ordinary shares are listed and traded on the Luxembourg Stock Exchange (symbol 'REINI', Thomson Reuters code REIT.LU), on Euronext Amsterdam (symbol 'REINA', Thomson Reuters code REINA.AS) and on the Johannesburg Stock Exchange (symbol 'RNI', Thomson Reuters code RNIJ.J) with the ISIN number LU0383812293. The Company's ordinary shares are included in the 'LuxX' index of the principal shares traded on the Luxembourg Stock Exchange.
With effect from 14 November 2017, the Company's ordinary shares were listed on Euronext Amsterdam.
With effect from 29 November 2017, the depository receipts issued by Reinet Securities SA in respect of the Company's ordinary shares which traded as a secondary listing on the Johannesburg Stock Exchange were suspended from trading at which time the Company's ordinary shares were listed.
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Reinet Investments Manager S.A.
for and on behalf of Reinet Investments S.C.A
24 JANUARY 2018
Website: www.reinet.com
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 2017 of 14.8438, and a rate of 16.0366 as at 30 September 2017.
31 December 2017 30 September 2017
Net asset value ZAR 84 506 m ZAR 86 566 m
Net asset value per ordinary share ZAR 431.36 ZAR 441.81
The decrease in the net asset value reflects the strengthening of the South African rand against the euro, offset by an increase in the net asset value in euro terms.
Date: 24/01/2018 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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