| Thu 19 Jan 2012, 7:30 | | REI - Reinet Investments S.C.A. Depositary Receipts - Management statement |
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REI
REI
REI - Reinet Investments S.C.A. Depositary Receipts - Management statement
for the third quarter ended 31 December 2011
Reinet Investments S.C.A. Depositary Receipts
issued by Reinet Securities SA
(Incorporated in Switzerland)
ISIN: CH0045793657
Depositary Receipt Code: REI
PRESS RELEASE FOR IMMEDIATE RELEASE
MANAGEMENT STATEMENT FOR THE THIRD QUARTER ENDED 31 DECEMBER 2011
The Board of Reinet Investments Manager S.A. announces the results of Reinet
Investments S.C.A. for the third quarter ended 31 December 2011.
Key financial data
- Net asset value at 31 December 2011: Euro 3 569 million,
an increase of 12 per cent from 30 September 2011
- Net asset value per ordinary share at 31 December 2011:
Euro 18.21 (30 September 2011: Euro 16.23)
- Reinet`s investment in British American Tobacco increased
in value by Euro 414 million during the quarter
Consolidated Net Asset Value (`NAV`)
31 December 2011 30 September 2011
Euro m % Euro m %
Listed investments
3 092 86.6 2 678 84.2
British American
Tobacco p.l.c.
Other 2 - 2 -
Cash and liquid funds 113 3.2 157 4.9
Unlisted investments
Trilantic Capital 126 3.5 102 3.2
Partners funds (1)
US land development and 84 2.4 76 2.4
mortgages(1)
Vanterra Flex 24 0.7 23 0.7
Investments
Vanterra C Change TEM 27 0.8 21 0.7
Jagersfontein and other 74 2.1 69 2.2
diamond interests
36 South 104 2.9 100 3.1
Other 65 1.8 53 1.7
504 14.2 444 14.0
Funding by minority (33) (0.9) (30) (0.9)
partners
Borrowings (50) (1.4) (49) (1.5)
Fees payable and other (53) (1.5) (17) (0.5)
liabilities, net of other
assets
3 575 100.2 3 185 100.2
Minority interest (6) (0.2) (6) (0.2)
3 569 100.0 3 179 100.0
(1)This amount represents the 100 per cent investment, whereas the comments
below use figures which represent Reinet`s 80 per cent investment.
All of the underlying assets are held by Reinet Fund S.C.A., F.I.S. (`Reinet`
or `the Fund`), directly or indirectly.
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 4.3 per cent of BAT`s capital. At 31 December
2011, the value of the investment in BAT in the balance sheet of Reinet was
Euro 3 092 million, being 87 per cent of Reinet`s NAV. The BAT share price on
the London Stock Exchange increased from Pound 27.29 to Pound 30.56 during
the quarter ended 31 December 2011.
CASH AND LIQUID FUNDS
Reinet has invested Euro 56 million in a euro-denominated government bond
fund. This holds exclusively short-dated bonds issued by western European
(principally French and German) governments and short-term loans backed by
government bonds. Reinet also holds cash on deposit principally in European
banks.
UNLISTED INVESTMENTS
Trilantic Capital Partners funds
Reinet has invested both in the Trilantic management companies and as a
partner in the underlying funds. As at 31 December 2011, 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
91 million, net of capital repayments, in the funds under Trilantic
management. The investment in Trilantic is carried at the estimated fair
value of Euro 126 million at 31 December 2011, based on recent valuations
prepared by Trilantic. Of the 31 December 2011 valuation of Euro 126
million, some Euro 25 million is attributable to Reinet`s minority co-
investors in Trilantic.
At 31 December 2011 Reinet had remaining commitments of Euro 73 million to
invest in these funds, after taking into account the amounts payable by the
minority partners.
United States land development and mortgages
Reinet has co-invested with partners in acquiring real estate development
projects - usually properties where infrastructure services have been laid
but where construction of properties has not yet commenced - and mortgage
debt on such developments and undeveloped sites. The investments are
principally in Florida, Colorado, Georgia and the North and South Carolinas.
The mortgage debts were acquired from local lenders at substantial discounts
to nominal value, reflecting the economic situation and the risk that the
development companies may not be able to meet their obligations. During 2011
certain assets were acquired, which were already encumbered with mortgages
totalling US$ 10 million. These mortgages payable are included in borrowings
in the balance sheet. At 31 December 2011, Reinet had invested a total of
US$ 86 million (Euro 67 million) in these projects. At that date, these were
valued at Euro 84 million of which Euro 67 million is attributable to Reinet
and Euro 17 million to its partners.
Reinet is committed to invest a further US$ 14 million (Euro 11 million) to
acquire further mortgage debt and to fund development projects.
Vanterra Flex Investments L.P.
Reinet is an investor in Vanterra and in its general partner.
Vanterra was established in March 2010 to invest in listed and unlisted funds
and to make direct investments in the United States and emerging markets.
Vanterra has invested alongside Reinet in Trilantic and in the United States
land development and mortgages. It is also an investor in Vanterra C Change
Transformative Energy & Materials I, L.P. Vanterra will seek to construct a
globally diversified private equity portfolio providing investors with long-
term capital appreciation.
As at 31 December 2011, US$ 31 million (Euro 24 million) of committed funds
plus an additional US$ 2 million (Euro 2 million) in respect of expenses had
been invested in the fund. The investment is carried at the estimated fair
value of Euro 24 million at 31 December 2011. Reinet is committed to invest a
further US$ 69 million (Euro 53 million) in Vanterra.
Vanterra C Change Transformative Energy & Materials I, L.P. (`TEM`)
Reinet is an investor in TEM and in its general partner.
In July 2010, Reinet entered into an agreement to invest in TEM. TEM is a
fund, established to invest 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 develop
renewable resources as a substitute for fossil and other traditional fuels.
As at 31 December 2011, capital contributions of US$ 38 million (Euro 29
million) had been made to the fund. The investment is carried at the
estimated fair value of Euro 27 million at 31 December 2011. Reinet is
committed to invest a further US$ 27 million (Euro 21 million) in TEM.
Jagersfontein and other diamond interests
Reinet is an investor in an entity which will process and extract diamonds
from the waste tailings from mining operations carried out up to a century
ago. The tailings are located at Jagersfontein in South Africa. Developments
in terms of gemstone extraction technology since the mines were first
excavated mean that there is now the potential to recover stones which were
previously treated as waste.
As at 31 December 2011, Reinet had provided loans of ZAR 540 million (Euro 52
million) to finance the acquisition of the tailings and plant to process the
tailings. Processing operations reached full capacity by the end of 2011 and
sales of diamonds are expected to commence in the first half of 2012.
Reinet has also invested in a company which has acquired assets and assumed
liabilities pertaining to mining rights and related activities to source
diamonds on another property in South Africa. As at 31 December 2011, Reinet
had provided loans of ZAR 165 million (Euro 16 million) to the company to
finance the acquisition of these rights and the equipment required in respect
of the mining operations.
These investments are carried at the estimated fair value of Euro 74 million
at 31 December 2011. Reinet is committed to invest a further ZAR 262 million
(Euro 25 million). Once the final investment holding structures have been
determined, it is anticipated that Reinet will have an equity interest of
between 40 and 49 per cent in each of the ventures referred to above. The
exposure to the South African rand has been largely hedged by borrowings in
that currency.
36 South global macro/volatility funds
Reinet has co-invested with the 36 South management team in the fund
management and distribution companies. It is also an investor in the funds
under management. These funds are established through an Irish-registered
umbrella fund - 36 South Funds PLC.
36 South is an absolute return fund manager which specialises in managing
global macro/volatility funds. The fund management philosophy is to invest
when market estimates of volatility are mis-priced. The volatility may apply
to a wide range of underlying asset classes ranging from currencies and
interest rates to equities.
Reinet has invested its full commitment of Euro 88 million in 36 South. Of
this, Euro 15 million represented the initial investment in and loans to the
jointly-held fund management activities; the balance of Euro 73 million being
Reinet`s investment in the funds under management. The investment in 36 South
Funds PLC is carried at its fair value of Euro 104 million at 31 December
2011.
Other unlisted 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 65 million
taking into account the detailed evaluation of each of the investments
performed at 30 September 2011 and movements in the quarter to 31 December
2011.
FEES PAYABLE AND OTHER LIABILITIES, NET OF OTHER ASSETS
Fees payable and other liabilities comprise principally a provision of Euro
31 million in respect of the proportionate accrual in respect of the
performance fee payable and an accrual of Euro 6 million in respect of the
management fee payable, together with taxes and other operating expenses
payable. The performance fee and management fee are payable to Reinet
Investment Advisors Limited.
FOREIGN EXCHANGE MOVEMENTS
Movements in foreign exchange rates during the period, in particular the
strengthening of sterling against the euro, gave rise to an increase in the
net asset value of Euro 103 million during the quarter.
Exchange rates against the euro
As at As at
31 December 30 September
2011 2011
Closing - as at the end of the
period
pound sterling 0.833 0.859
U.S. dollar 1.2948 1.3386
Swiss franc 1.2148 1.2158
South African rand 10.4388 10.8421
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 Reinet Investments
Manager S.A.
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 Investments 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. The Reinet Investments South
African Depository Receipts are included in the JSE `Top 40` Share Index.
Reinet Investments Manager S.A.
For and on behalf of Reinet Investments S.C.A.
19 January 2012
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
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 2011
of 10.43875, and a rate of 10.8421 as at 30 September 2011.
31 December 30 September
2011 2011
Net asset value ZAR 37 256 m ZAR 34 469 m
Net asset value per ordinary ZAR 190.09 ZAR 175.92
share
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 19/01/2012 07:30:01 Produced by the JSE SENS Department.
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