| Mon 15 Nov 2010, 8:00 | | REI - Reinet Investments S.C.A. Depositary Receipts - Consolidated unaudited |
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REI
REI
REI - Reinet Investments S.C.A. Depositary Receipts - Consolidated unaudited
financial results for the six-month period ended 30 September 2010
Reinet Investments S.C.A. Depositary Receipts
issued by Richemont Securities AG
(Incorporated in Switzerland)
ISIN: CH0045793657
Depositary Receipt Code: REI
PRESS RELEASE FOR IMMEDIATE RELEASE
15 NOVEMBER 2010
CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDED 30
SEPTEMBER 2010
The Board of Reinet Investments Manager S.A. announces the results of Reinet
Investments S.C.A. for the six-month period ended 30 September 2010.
Key financial data
-Net asset value at 30 September 2010: Euro 2 738 million, an increase of 8 per
cent from 31 March 2010
-Net asset value per ordinary share at 30 September 2010: Euro 13.97 (31 March
2010: Euro 12.95)
-Continued strong performance of Reinet`s investment in British American Tobacco
p.l.c.
-Consolidated profit for the period: Euro 201 million
-New investments with funding commitments of Euro 127 million closed during the
period
Consolidated Net Asset Value (`NAV`)
30 September 31 March 2010
2010
Euro m % Euro m %
Listed investments
2 308 84.3 2 159 85.1
- British American
Tobacco p.l.c.
- Other 6 0.2 5 0.2
2 314 84.5 2 164 85.3
Cash and liquid funds 371 13.6 343 13.5
Unlisted investments
- Trilantic Capital 42 1.5 29 1.1
Partners funds (1)
- US land development 26 0.9 23 0.9
and mortgages
- Vanterra Flex 6 0.2 - -
Investments fund
- Other 83 3.1 35 1.4
Fees payable and other (100) (3.7) (55) (2.2)
liabilities, net of
other assets
2 742 100.1 2 539 100.0
Minority interest (4) (0.1) (2) -
2 738 100.0 2 537 100.0
(1) This amount includes the full investment in Trilantic, whereas the
discussion below refers to figures which represent Reinet`s 80 per cent
interest.
All of the underlying assets are held by Reinet Fund S.C.A. F.I.S. (`Reinet
Fund`).
The summary information contained in this announcement has been extracted from
the unaudited interim consolidated financial statements prepared in accordance
with International Financial Reporting Standards.
BUSINESS REVIEW
DEVELOPMENTS DURING THE PERIOD UNDER REVIEW
Reinet`s net asset value grew by Euro 201 million over the six-month period
ended 30 September 2010. This largely reflects the increase in value of its
principal investment, British American Tobacco p.l.c. Cash and liquid funds
increased by Euro 28 million, as investment income was utilised to fund new
investments and meet commitments in respect of existing investments. Since its
creation in October 2008, Reinet has entered into funding commitments of Euro
403 million and has remaining commitments of Euro 335 million in entities held
in its portfolio.
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 September 2010, the
value of the investment in BAT in the balance sheet of Reinet was Euro 2 308
million, being 84 per cent of Reinet`s net asset value.
Reinet Fund`s NAV has been positively impacted by the strengthening of the BAT
share price from Pound 22.72 to Pound 23.75 during the period. BAT shares are
listed principally on the London Stock Exchange and are denominated in pounds
sterling.
Reinet received dividends from BAT during the period amounting to Euro 103
million (Pound 88 million), being BAT`s final 2009 dividend and its 2010 interim
dividend.
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 Euro 269.5 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
During the period under review, Reinet has considered several potential
investment opportunities. In evaluating these opportunities, Reinet applies a
minimum hurdle rate of return, recognising the performance target set by the
investment in BAT.
To date funding commitments in the amount of Euro 403 million have been entered
into in respect of the businesses detailed below, excluding the smaller
investments acquired when Reinet was established.
Trilantic Capital Partners funds
Original commitment: USDollar 104 million plus Euro 68 million
Reinet has invested both in the Trilantic management companies and as a partner
in the underlying funds. As at 30 September 2010, Reinet and its 20 per cent
minority partners in Trilantic had invested the equivalent of Euro 7.6 million
in the initial Trilantic management company investment, Euro 2.1 million to
acquire an interest in Trilantic Fund IV Europe and a further Euro 23.2 million
in the funds under Trilantic management. The investment in Trilantic is carried
at the estimated fair value of Euro 42 million at 30 September 2010, based on
recent valuations prepared by Trilantic. Of the 30 September 2010 valuation of
Euro 42 million, some Euro 8.4 million is attributable to Reinet`s minority co-
investors in Trilantic, being shown as Euro 3.6 million in respect of minority
interest and Euro 4.8 million as liabilities in respect of funding provided by
the minority partners.
At 30 September 2010 Reinet Fund had remaining commitments of Euro 126 million,
being USDollar 91 million and Euro 59 million to invest in these funds, after
taking into account the amounts payable by the minority partners.
United States land development and mortgages
Original commitment: USDollar 100 million
Reinet has invested in real estate development projects and has acquired
mortgage debt at distressed prices from lenders. As at 30 September 2010, Reinet
had invested Euro 26 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 Euro 48 million in total 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 fund
Original commitment: USDollar 100 million
Reinet is a partner in both the Vanterra Flex Investments fund and in its
management company. 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. Vanterra will seek
to construct a globally diversified private equity portfolio providing investors
with long-term capital appreciation through private equity funds investments and
direct investments. As at 30 September 2010, capital contributions of Euro 6
million had been made to the fund in respect of this commitment. Reinet is
committed to invest a further Euro 67 million in Vanterra.
Vanterra C Change Transformative Energy & Materials I, L.P. (`Vanterra C Change
TEM`)
Original commitment: USDollar 65 million
Reinet is a partner in both the Vanterra C Change TEM fund and in its management
company. In July 2010, Reinet entered into an agreement with Vanterra C Change
TEM, a newly created fund which was established for the purpose of investing in
companies and projects providing products or services that supply cleaner
energy, create a more cost effective building environment through the use of
energy efficient technologies and sustainable materials and develop renewable
resources as a substitute for fossil and other traditional fuels to meet global
demand. As at 30 September 2010, no capital contributions had been made to the
fund in respect of this commitment. However, in October 2010, capital
contributions totalling USDollar 2 million were made.
Other investments
This portfolio includes small businesses with growth potential as well as
investments in specialised investment funds focused on developing markets and
niche sectors. The portfolio is valued at its fair value of Euro 83 million in
the balance sheet at 30 September 2010, based on a detailed evaluation of each
of the investments.
Committed Funds
The table below summarises Reinet`s outstanding investment commitments as at 30
September 2010.
Commitment Change in New Funded in
as at 31 commitments commitments current Remaining
March 2010 in period in period period commitment
Euro m Euro m Euro m Euro m Euro m
Trilantic 153 (19) - (8) 126
Capital
Partners
funds(1)
US land 49 - - (1) 48
development
and mortgages
Vanterra Flex 74 (1) - (6) 67
Investments
L.P. (2)
Vanterra C - - 48 - 48
Change TEM
276 (20) 48 (15) 289
Other 15 - 79 (48) 46
investments
291 (20) 127 (63) 335
(1) The remaining amount represents 80 per cent of the initial commitment
assumed by Reinet, 10 per cent having been sold during the period and 10 per
cent in the prior period. The change in the period represents the 10 per cent
sold plus the effect of exchange rate fluctuations.
(2) The change in the period reflects exchange rate fluctuations.
FEES PAYABLE AND OTHER LIABILITIES, NET OF OTHER ASSETS
Fees payable and other liabilities comprise principally a provision of Euro 75
million in respect of the potential performance fee payable after 31 March 2011,
together with the management fee payable of Euro 9 million, funding provided by
minority partners of Euro 11 million and other operating expenses currently
payable.
The performance fee is only payable if certain conditions are met. Specifically
the volume weighted average closing market price of the Company`s share on the
Luxembourg Stock Exchange over the last 20 trading days prior to 31 March 2011
must exceed Euro 7.1945. Whilst no performance fee is currently payable and no
fee will be payable if the market price would fall below Euro 7.1945, it is
considered prudent to make a pro rata provision at this time based on the latest
available share price information.
The management fee for the period under review amounted to Euro 11 million, of
which Euro 9 million remained payable at 30 September 2010.
SUMMARISED CONSOLIDATED INCOME STATEMENT
30 September 30 September
2010 2009
Euro m Euro m
BAT dividends received 103 84
Interest income - 1
Operating expenses, foreign (15) (11)
exchange and transaction-
related costs
88 74
Share of associate`s results (2) -
Unrealised fair value
adjustments
BAT 149 337
Other investments 2 (5)
Provision for performance fee (35) -
Minority interest (1) -
Profit attributable to the 201 406
shareholders of the Company
Operating expenses include Euro 11 million in respect of the management fee for
the period ended 30 September 2010.
The investment in BAT increased in value by Euro 149 million during the period
under review. Of this, Euro 98 million was attributable to the increase in value
of the underlying BAT shares in sterling terms and Euro 51 million arose due to
the appreciation of sterling against the euro over the course of the period.
A performance fee may become payable after 31 March 2011, if certain conditions
are met. As detailed above, a further provision of Euro 35 million has been
made during the period under review.
The minority interest arises in respect of third party interests which hold 20
per cent of the Reinet vehicle which owns the Trilantic interests and other
third party interests in respect of 20 per cent of the investments in US land
developments and mortgages, as described above.
Dividends
Recognising the need to accumulate retained earnings within Reinet Fund and
taking into account the uncertain economic environment, the Board of the General
Partner believes it prudent not to propose any dividend at this time.
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.
Financial statements
The unaudited interim consolidated financial statements at 30 September 2010, on
which this announcement is based, were approved by the Board of the General
Partner on 11 November 2010 and will be available on the Reinet website from 15
November 2010. The printed Reinet Interim Report and Accounts will be available
upon request from early December 2010.
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.
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 15/11/2010 08:00:13 Produced by the JSE SENS Department.
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