| Mon 19 Jul 2010, 7:30 | | REI - Reinet Investments S.C.A. Depositary Receipts - Management statement for |
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REI
REI
REI - Reinet Investments S.C.A. Depositary Receipts - Management statement for
the quarter ended 30 June 2010
Reinet Investments S.C.A. Depositary Receipts
issued by Richemont Securities AG
(Incorporated in Switzerland)
ISIN: CH0045793657
Depositary Receipt Code: REI
MANAGEMENT STATEMENT FOR THE QUARTER ENDED 30 JUNE 2010
The Board of Reinet Investments Manager S.A. announces the results of Reinet
Investments S.C.A. for the first quarter ended 30 June 2010.
Key financial data
Net asset value at 30 June 2010: EUR 2 648 million, an increase of 4 per
cent from 31 March 2010
Net asset value per ordinary share at 30 June 2010: EUR 13.51 (31 March
2010: EUR 12.95)
Consolidated Net Asset Value (`NAV`)
30 June 2010 31 March 2010
EUR m % EUR m %
Listed investments
- British American Tobacco p.l.c. 2 200 83.1 2 159 85.1
- Other 4 0.1 5 0.2
2 204 83.2 2 164 85.3
Cash and liquid funds 384 14.5 343 13.5
Unlisted investments
- Trilantic Capital Partners funds 42 1.6 29 1.1
- US land development and mortgages 28 1.1 23 0.9
- Vanterra 3 0.1 - -
- Other 38 1.4 35 1.4
Fees payable and other liabilities, net of (49) (1.9) (55) (2.2)
other assets
2 650 100.0 2 539 100.0
Minority interest (2) - (2) -
2 648 100.0 2 537 100.0
All of the underlying assets are held by Reinet Fund S.C.A., F.I.S. (`Reinet
Fund`).
A provision of EUR 40 million is included in this NAV calculation in respect of
the potential performance fee, which may become payable after 31 March 2011 if
certain conditions are met. This provision is unchanged from that made in the
financial statements at 31 March 2010; no additional provision has been made in
the quarter to 30 June 2010.
Listed investment in British American Tobacco p.l.c. (`BAT`)
Reinet remains one of the largest shareholders in BAT, holding some 84 million
shares representing 4.2 per cent of BAT`s capital. At 30 June 2010, the value of
the investment in BAT in the balance sheet of Reinet was EUR 2 200 million,
being 83 per cent of Reinet`s net asset value.
Reinet Fund`s NAV has been positively impacted by the increase in value in euro
terms of the BAT shares of EUR 41 million. Although the BAT share price
decreased from GBP 22.72 to GBP 21.37, sterling appreciated against the euro
during the quarter from 0.8870 to 0.8186. BAT shares are listed principally on
the London Stock Exchange and are denominated in pounds sterling.
Reinet received a dividend from BAT during the quarter amounting to EUR 70
million.
Other listed investments are small portfolio investments, previously reported
under `other investments`
Cash and liquid funds
Reinet Fund`s cash is held on deposit with banks in Luxembourg and the United
Kingdom. In addition, Reinet Fund has invested EUR 269 million in a euro-
denominated government bond fund. This holds exclusively short-dated bonds
issued by western European governments and short-term loans backed by government
bonds.
Unlisted investments:
Trilantic Capital Partners
As at 30 June 2010, Reinet Fund and its 10% minority partner had invested the
equivalent of EUR 7.6 million in the initial Trilantic management company
investment, EUR 2.1 million to acquire an interest in Trilantic Fund IV Europe
and a further EUR 24 million in the funds under Trilantic management. The
investment in Trilantic is carried at the estimated fair value of EUR 42 million
at 30 June 2010, based on valuations prepared by Trilantic. Accordingly, of the
quarter-end valuation of EUR 42 million, some EUR 4 million is attributable to
the minority partner, being shown as EUR 2 million in respect of the minority
equity interest and EUR 2 million under other liabilities.
As previously announced, other funds will, during the coming quarter, purchase a
10% interest (initially expected to be a 15% interest) in the Reinet subsidiary
company which holds the Trilantic investment.
Reinet is committed to invest a further USD 114 million plus EUR 74 million (EUR
167 million in total) in the Trilantic funds, 10% of these commitments will be
funded by the minority partner and a further 10% will be funded by the future
minority partner.
United States land development and mortgages
As at 30 June 2010, Reinet Fund has invested USD 39 million (EUR 32 million) in
property-related investments located mainly in Florida and North and South
Carolina. This was principally mortgage debt in respect of land held for future
development. The debts were acquired from local lenders at substantial discounts
to nominal value, reflecting the depressed economic situation in the United
States and the risk that the development companies may not be able to meet their
obligations. Alongside its partners, Reinet is committed to invest a further USD
61 million (EUR 50 million) to acquire further mortgage debt and to fund
development projects. Reinet is working closely with its partners and co-
investors in the United States, who have considerable experience in managing
such projects, recognising that this is an area where industry knowledge is
critical to making the right investment decisions.
Vanterra Flex Investments L.P.
In March 2010, Reinet entered into an agreement with Vanterra Flex Investments
L.P. (`Vanterra`), a newly created fund which was established for the purpose of
investing in other listed and unlisted funds and direct investments in the
United States and emerging markets. Reinet`s commitment is to invest up to USD
100 million over the life of the fund. As at 30 June 2010, Reinet has invested
USD 5 million (EUR 4 million) in Vanterra. The investment in Vanterra is carried
at the estimated fair value of EUR 3 million at 30 June 2010
Reinet is committed to invest a further USD 95 million (EUR 78 million) in
Vanterra.
Vanterra will seek to construct a globally diversified private equity portfolio
providing investors with long-term capital appreciation through private equity
investment funds investments and direct investments.
Other unlisted investments
In addition, Reinet continues to hold the small portfolio of unlisted
investments that it acquired as a consequence of the Richemont restructuring.
The portfolio includes small businesses with growth potential as well as
investments in specialised investment funds focused on developing markets and
niche sectors. This portfolio is valued at its fair value of EUR 38 million in
the balance sheet at 30 June 2010, based on a detailed independent evaluation of
each of the investments carried out at 31 March 2010 and updated for additional
investments in the quarter. Given the difficult economic conditions and the
difficulties in raising supplementary funding for development capital
investments, Reinet has aggressively marked down the valuations of certain of
these investments.
Fees payable and other liabilities, net of other assets
Fees payable and other liabilities comprise principally a provision of EUR 40
million in respect of the potential performance fee payable after 31 March 2011,
together with the management fee and other operating expenses currently payable.
The performance fee is only payable if certain conditions are met. The
calculation of the fee is based on the increase in the volume weighted average
market price of the Reinet Investments S.C.A. share as quoted on the Luxembourg
Stock Exchange over the last 20 trading days prior to 31 March 2011 compared to
the Initial Price, calculated over the trading period from 22 December 2008 to
19 March 2009, of EUR 7.1945. For illustrative purposes only, assuming a market
price of the Reinet shares of EUR 11.61 (the market price on 30 June 2010) and
applying the Initial Price, the performance fee payable on 31 March 2011 would
be some EUR 86.5 million. The volume weighted average market price of the Reinet
Investments S.C.A. share over the last 20 trading days prior to 31 March 2011
may differ significantly from the market price at 30 June 2010 and may result in
a higher or lower performance fee being payable at that time. No fee will be
payable if the volume weighted average market price in March 2011 would be below
the Initial Price.
The management fee for the quarter under review amounted to EUR 5 million.
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.
Reinet Investments Manager S.A.
for and on behalf of Reinet Investments S.C.A.
Website: www.reinet.com
Reinet Investments S.C.A. (the `Company`) is a partnership limited by shares
incorporated in the Grand Duchy of Luxembourg and having its registered office
at 35, boulevard Prince Henri, L-1724 Luxembourg. It is governed by the
Luxembourg law on securitisation and in this capacity allows its shareholders to
participate indirectly in the portfolio of assets held by its wholly-owned
subsidiary Reinet Fund S.C.A., F.I.S. (the `Fund`), a specialised investment
fund also incorporated in Luxembourg. Reinet shares are listed on the
Luxembourg Stock Exchange and Reinet South African Depository Receipts are
listed in Johannesburg. Reinet shares are included in the `LuxX` index of the
principal shares traded on the Luxembourg exchange and the South African
Depository Receipts are included in the JSE `Top 40` Share Index.
19 July 2010
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 19/07/2010 07:30:03 Produced by the JSE SENS Department.
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