XAMS:REINA ESEF Annual Report
REINET INVESTMENTS (XAMS:REINA)
ESEF Annual Report
2023-09-05
For: 2023-03-31
View Original
Added on
September 23, 2026
Reinet Investments S.C.A. Annual Report at 31 March 2023
REINET INVESTMENTS S.C.A.
Annual Report at 31 March 2023
REINET INVESTMENTS S.C.A.
1 Highlights
2 Performance
4 Management report
4 Chairman’s commentary
6 Business overview
29 Corporate governance
37 Sustainability report
43 Report of the Board of Overseers
44 Financial statements
45 Consolidated financial statements
45 Consolidated balance sheet
46 Consolidated statement of comprehensive income
47 Consolidated statement of changes in equity
48 Consolidated cash flow statement
49 Notes to the consolidated financial statements
72 Audit report
75 Company financial statements
75 Balance sheet
76 Profit and loss account
77 Notes to the financial statements
81 Proposed appropriation of retained earnings
82 Audit report
84 Notice of annual general meeting
87 Exchange rates and share information
88 Statutory information
CONTENTS
Cautionary statement regarding forward-looking statements
This document contains forward-looking statements which reflect the current views and beliefs of Reinet Investments S.C.A. (the ‘Company’), as well as assumptions made by
the Company and information currently available. 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 (as defined on page1)
control. The Company 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.
1 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
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,boulevardPrince 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’.
HIGHLIGHTS
The investment objective of Reinet is to achieve long-term capital growth.
Reinet’s strategy is to work with experienced partners to invest in unique opportunities focusing on value creation for
investors.
• Reinet’s net asset value of € 5.7 billion reflects a compound growth rate of 8.8 per cent per annum in euro terms, since March 2009,
including dividends paid
• The net asset value at 31 March 2023 reflects a decrease of € 170 million or 2.9 per cent from € 5 890 million at 31 March 2022
• Net asset value per share at 31 March 2023: € 31.46 (31 March 2022: € 31.99)
• Fifth share buyback programme completed with 2.5 million ordinary shares repurchased for a consideration of some € 49 million,
plus transaction costs
• Commitments totalling € 332 million in respect of new and existing investments were made during the year including a new
commitment of € 278 million in respect of Coatue funds
• Commitments of € 171 million were funded during the year, including € 63 million in respect of TruArc Partners and € 50 million in
respect of Coatue funds
• Dividends from British American Tobacco during the year amounted to € 122 million
• Reinet dividend of some € 51 million, or € 0.28 per share (excluding treasury shares), paid during the year
• Proposed Reinet dividend of € 0.30 per share payable after the 2023 annual general meeting
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
HIGHLIGHTS
PERFORMANCE
NET ASSET VALUE PER SHARE
The NAV per share and the adjusted NAV per share of the
Company are calculated by dividing the NAV and adjusted NAV
by the number of shares outstanding (excluding treasury shares) of
181790 891 (31 March 2022: 184 116 870). The adjusted NAV as
at 31 March 2022 was calculated by reversing the liability in respect
of future repurchases of shares of € 46 million. The adjusted NAV
is considered relevant as it eliminates the timing difference between
the additional liability recorded for future share repurchases and
the actual number of shares repurchased as at 31 March 2022. No
adjustment was made as at 31 March 2023 as there was no share
buyback programme in progress at that date.
31 March
2023
31 March
2022
Shares in issue 195 942 286 195 942 286
Treasury shares (14 151 395) (11 825 416)
Net shares 181 790 891 184 116 870
€ m € m
NAV (see page 6) 5 720 5 890
Reversal of future share
buyback liability – 46
Adjusted NAV 5 720 5 936
€ per share € per share
NAV per share 31.46 31.99
Adjusted NAV per share 31.46 32.24
SHARE PRICE
The Company’s indicative share price as quoted on the Luxembourg
Stock Exchange decreased by 6.0 per cent in the year from € 20.00
at 31 March 2022 to € 18.80 at 31 March 2023, with the highest
trade being at € 19.80 during the year. The total shareholder return
since inception (taking into account the initial price of € 7.1945
and including dividends paid) is 7.7 per cent per annum. The
growth in NAV, including dividends paid, reflects an 8.8 per cent
compounded increase since March 2009. 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.
Share prices as at 31 March 2023 and 31 March 2022 were
asfollows:
31 March 2023 31 March 2022
ZAR EUR ZAR EUR
Luxembourg – 18.80 – 20.00
Amsterdam – 19.00 – 20.00
Johannesburg 365.06 – 327.76 –
NET ASSET VALUE
The net asset value (‘NAV’) comprises total assets less total liabilities,
and equates to total equity under International Financial Reporting
Standards. The decrease in the NAV of € 170 million during the
year reflects decreases in the fair value of British American Tobacco
p.l.c. (‘BAT’), Pension Insurance Corporation Group Limited, and
other listed investments, offset by dividends received from BAT
together with realised gains and increases in the estimated fair value
of certain investments, including Trilantic Capital Partners and
TruArc Partners.
The Company funded the purchase of 2.3 million of its own
ordinary shares through an approved buyback programme, the
amount of which was already accrued at 31 March 2022. Details of
the Company’s NAV and details of movements in key investments
can be found on pages 6 and 7 of this report.
Reinet records its assets and liabilities in euro; the weakening of
sterling against the euro, offset by the strengthening the US dollar
against the euro has resulted in an overall decrease in the value of
certain assets and liabilities in euro terms. Applying current year-end
exchange rates to the March 2022 assets and liabilities would have
resulted in a decrease in the March 2022 NAV of some € 174 million.
SHARE BUYBACK PROGRAMME
The fifth share buyback programme commenced in March 2022
and concluded on 23 May 2022, with 2 500 000 ordinary shares
repurchased for € 49 million, plus transaction costs.
During the year under review, 2 325 979 ordinary shares were
repurchased for some € 45 million, plus transaction costs.
As at 31 March 2023, there was no share buyback programme
inprogress.
The Company repurchased 14 151 395 ordinary shares between
November 2018 and May 2022 under five share buyback
programmes. The cost of the ordinary shares repurchased amounted
to € 222 million, plus transaction costs.
Details of each completed share buyback programme to date can be
found in note 8 to the consolidated financial statements.
All ordinary shares repurchased are held as treasury shares.
REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
DIVIDEND
The Company paid a dividend of € 0.28 per share in September2022
(September 2021: € 0.25 per share). A dividend of € 0.30 per share
is proposed for the current financial year, subject to approval by
shareholders at the annual general meeting in August 2023.
GLOBAL MARKETS BACKDROP
During the year, global markets continued to be impacted by the
effects of the ongoing Ukraine crisis, increasing interest rates and
rising inflation. Whilst the world has made significant progress in
its recovery from the impacts of COVID-19, general economic and
geopolitical concerns remain elevated. The first quarter of 2023 saw
increased market volatility as the collapse of US lender Silicon Valley
Bank triggered concerns over the strength of the global financial
sector; this was followed by UBS stepping in to take over Credit
Suisse to prevent its collapse and JPMorgan Chase acquiring a
substantial majority of assets and assuming the deposits and certain
liabilities of First Republic Bank. These events resulted in creating
further uncertainty in global financial markets. Rising inflation has
resulted in significant pressure on households and consumers as
many central banks continue to increase interest rates to mitigate
the inflation concerns. The extent and impact of these factors
remain uncertain.
Reinet has no direct exposure to Russia or Ukraine through its
underlying investments or banking relationships and has not
experienced any significant direct impacts in respect of interest rate
increases or rising inflation. Reinet has various banking relationships
with highly rated institutions, and a well-diversified approach to
cash and liquidity management.
Reinet continues to value its investments in line with the
International Private Equity and Venture Capital Valuation
(‘IPEV’) guidelines and its approved valuation procedures and
methodologies. All investment valuations have been prepared
using latest available data, including exchange rates and listed share
prices as at 31March2023. Discussions have taken place with fund
managers and investee companies to determine any significant
changes in value and any impacts related to the Ukraine crisis,
volatility in stock and currency markets, interest rates, inflation and
exposure to certain financial institutions. Future valuations will take
into account any new impacts of the above, which could affect the
valuation of underlying investments.
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
CHAIRMAN’S COMMENTARY
Dear Shareholder,
During the past year, the world has seen rapidly increasing interest
rates and rising inflation followed by significant issues in the banking
sector in both the United States and Europe. Combined with
recessionary fears in some of the larger economies, and generally
less capital available for investments, these events have resulted in
creating further uncertainty in global financial markets, the extent
and impact of which remains uncertain.
OVERVIEW
During the year, Reinet completed its fifth share buyback programme
with 2 325 979 ordinary shares being repurchased for some
€ 45 million during April and May 2022. Since November 2018,
a total of 14 151 395 ordinary shares have been repurchased under
five share buyback programmes. The cost of the ordinary shares
repurchased amounts to € 222 million, plus transaction costs; an
average cost of € 15.69 per share. With a net asset value of € 31.46
per share, the share buyback programmes have immediately created
value for shareholders. At the annual general meeting in August 2022,
shareholders renewed their approval for Reinet to buy back its own
shares; future programmes will be considered taking into account
cash resources, other commitments and market conditions.
Reinet was pleased to commit $ 300 million to a new investment in tactical
solutions funds managed by Coatue Management, a global investment
firm focused on technology-related investment opportunities
led by founder and portfolio manager Mr Philippe Laffont.
Mr Laffont and Coatue have an outstanding reputation
as investors in the technology space with Coatue managing some
$ 42 billion in assets. I look forward to working with the team at
Coatue in the years to come.
Capital invested during the year amounted to some € 171 million,
which was mostly in respect of funds managed by Trilantic Capital
Partners, TruArc Partners and Coatue. Capital allocated to private
equity partners over the last few years has resulted in the fair value of
these funds, as a whole, now comprising some 20 per cent of Reinet’s
net asset value.
Reinet has cash resources of some € 288 million and access to
the equivalent of £ 200 million in various currencies by way of
additional borrowing facilities, to meet investment obligations and
opportunities as they arise.
Since its inception in 2008, Reinet has invested some € 3.5 billion
in new investments and generated an annual return of 7.7 per cent
for its investors based on the Reinet share price, with the underlying
net asset value reflecting an 8.8 per cent compounded increase since
March 2009.
RESULTS
At 31 March 2023, Reinet’s net asset value amounted to € 5.7 billion,
a decrease of € 170 million or 2.9 per cent from 31 March 2022.
This primarily reflects the decrease in value of certain underlying
investments; in particular the decrease in the share price of British
American Tobacco over the year and the weakening of sterling against
the euro; this was offset by dividend income from British American
Tobacco, together with increases in the value of the fund investments
in Trilantic Capital Partners and TruArc Partners.
BUSINESS DEVELOPMENTS
During the year, Reinet committed to invest an additional € 332 million,
with € 324 million being in respect of new funds launched by Coatue,
Asia Partners and Prescient, € 6 million in Pension Corporation and
€ 2 million in other smaller investments.
Pension Corporation’s adjusted own funds remained stable at
£ 5.9 billion, premiums were lower than the previous year reflecting
in part the impact of higher interest rates, however profits increased
and the balance sheet and solvency position remained strong. In
February 2023, Pension Corporation announced that it had
concluded a buy-in with the Trustees of two schemes sponsored
by RSA Group, insuring in total some £ 6.5 billion of liabilities
and covering the pensions of 40 000 members. This is the largest
ever UK bulk annuity transaction and paves the way for other
large transactions. The Board of Pension Corporation proposed
an inaugural dividend of 7.5 pence per ordinary share which was
paid to shareholders in May 2023. Reinet’s share of this dividend
amounts to some £ 49.5 million.
The investment in British American Tobacco decreased in value
in the year due to its share price decreasing from £ 31.94 at
31 March 2022 to £ 28.41 at 31 March 2023. At the British American
Tobacco annual general meeting in April 2023, shareholders
approved a dividend increase of 6 per cent to £ 2.31 per share, up
from £ 2.18 per share in 2022. British American Tobacco delivered
strong results in 2022 and continues to follow its strategic path to
‘A Better Tomorrow’. With the appointment of Mr Tadeu Marroco
as the new CEO in May 2023, British American Tobacco continues
to build on its commitment to deliver long-term sustainable value
for its shareholders.
The value of investments in Reinet’s private equity partners increased
by some 26 per cent in the year to € 1 138 million; capital invested
amounted to some € 167 million, distributions to some € 56 million,
realised gains to some € 25 million and fair value increases to some
€ 96 million. The underlying investments are mainly in the United
States and Asia where financial markets have not performed well,
however our partners have been successful at adding value in these
challenging times.
REINET INVESTMENTS S.C.A.
5 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
DIVIDEND
The Board of Directors of Reinet Investments Manager S.A.
proposes a dividend of € 0.30 per share, payable in September 2023.
This represents a 7 per cent increase from last year.
BOARD OF OVERSEERS
Mr Ian Whitecourt passed away in November 2022; Ian was a
former Senior Partner at PricewaterhouseCoopers in Luxembourg
and served on Reinet’s Board of Overseers from September 2009
to December 2014. Ian brought his considerable experience of the
financial world to Reinet, in particular in the Luxembourg banking
and investment fund areas.
OUTLOOK
With continued high interest rates, elevated inflation, the ongoing
Ukraine crisis, and instability in the global financial system the world
economic growth forecast is on the decline with greater volatility
expected. The additional financial sector stresses are already causing
a noticeable slowdown in growth with inflation not expected to
reach central bank target levels for some time to come.
The global banking sector has faced considerable disruption in recent
months; while neither Reinet nor its underlying investments have
been significantly impacted, ongoing vigilance and reviews of banking
relationships are essential. Similarly, Reinet continues to monitor the
situation in Russia and Ukraine; and whilst there is no direct exposure,
it considers any potential impacts on investment values.
Overall, Reinet holds resilient investments and is well positioned to
deal with these challenges.
Environmental, Social and Corporate Governance and Corporate
Social Responsibility will play an ever increasing part in our lives
in the future, with enhanced ESG reporting on our door step, it
continues to be an integral factor when considering new investments.
Reinet considers it imperative for businesses to work responsibly,
recognising that the world’s resources are finite and that everyone
has a role to play in their conservation.
As always, I am grateful to Reinet’s Directors, Overseers, management
and employees for their continued commitment to Reinet over the
past year and going forward.
Johann Rupert
Chairman
Reinet Investments Manager S.A.
Luxembourg, 25 May 2023
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
BUSINESS OVERVIEW
Reinet Investments S.C.A. (the ‘Company’) has determined that it meets the definition of an investment entity in terms of International Financial
Reporting Standards (‘IFRS’) 10. The net asset value, the income statement and the cash flow statement included in this business overview have
however been presented in a more comprehensive format than required by IFRS in order to provide readers with detailed information relating
to the underlying assets and liabilities.
NET ASSET VALUE
The net asset value (‘NAV’) at 31 March 2023 and 2022 comprised:
31 March 2023 31 March 2022
€ m % € m %
Listed investments
British American Tobacco p.l.c. 1 561 27.3 1 832 31.1
Other listed investments 83 1.4 100 1.7
Unlisted investments
Pension Insurance Corporation Group Limited 2 787 48.7 2 796 47.5
Private equity and related partnerships 1 138 19.9 906 15.4
Trilantic Capital Partners 472 8.2 385 6.5
Funds, related general partners and management companies
TruArc Partners 301 5.3 202 3.5
Funds, co-investment opportunities and management company
Coatue funds 50 0.9 – –
Asian private equity companies and portfolio funds 219 3.8 213 3.6
Milestone China Opportunities funds and management company 44 50
Prescient China funds and management company 143 143
Asia Partners funds 32 20
Specialised investment funds 96 1.7 106 1.8
NanoDimension funds and co-investment opportunities 94 98
Other fund investments 2 8
United States land development and mortgages 26 0.5 32 0.5
Diamond interests – – 20 0.3
Other investments 58 1.0 81 1.4
Total investments 5 653 98.8 5 767 97.9
Cash and liquid funds 288 5.1 415 7.0
Bank borrowings and derivatives
Borrowings (217) (3.8) (233) (3.9)
Derivative assets – – 1 –
Other liabilities
Minority interest, fees payable and other liabilities, net of other assets (4) (0.1) (60) (1.0)
Net asset value 5 720 100.0 5 890 100.0
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’.
MANAGEMENT REPORT
REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
INFORMATION RELATING TO CURRENT KEY INVESTMENTS AT 31 MARCH 2023
Committed
amount
(1)
in millions
Remaining
committed
amount
(1)
in millions
Invested
amount
(2)
in millions
Realised
amount
(2)
in millions
Current fair
value
(1)
in millions
Total realised
and
unrealised
value
(3)
in millions
Listed investments
British American Tobacco p.l.c. EUR – – 1 739 3 285 1 561 4 846
GBP – – 1 418 2 754 1 372 4 126
Other listed investments EUR – – 127 68 83 151
USD – – 146 78 91 169
Unlisted investments
Pension Insurance EUR – – 1 315 – 2 787 2 787
Corporation Group Limited GBP – – 1 112 – 2 450 2 450
Trilantic Capital Partners EUR 631 123 494 535 472 1 007
Euro investment EUR 85 19 66 146 36 182
US dollar investment
(4)
USD 591 112 489 460 474 934
TruArc Partners EUR 443 148 284 224 301 525
USD 480 161 319 252 326 578
Coatue funds EUR 276 228 50 – 50 50
USD 300 247 53 – 54 54
Asian private equity companies
and portfolio funds
Milestone China Opportunities
funds and management
company
EUR – – 130 153 44 197
USD – – 169 173 47 220
Prescient China funds and
management company
EUR – – 79 4 143 147
USD – – 94 4 155 159
Asia Partners funds EUR 56 32 24 – 32 32
USD 62 34 28 – 35 35
Specialised investment funds
NanoDimension funds and
co-investment opportunities
EUR 176 60 110 46 94 140
Euro investment EUR 4 – 4 1 2 3
US dollar investment USD 187 65 122 51 100 151
United States land development
and mortgages
EUR 197 5 160 64 26 90
USD 214 5 209 71 28 99
(1) Calculated using year-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 $ 10 million.
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
Reinet seeks, through a range of investment structures, to build partnerships with other investors, specialised fund managers and entrepreneurs
to find and develop opportunities for long-term value creation for its shareholders.
Since its formation in 2008, Reinet has invested some € 3.5 billion and at 31 March 2023 committed to provide further funding of € 627 million
to its current investments. Details of the funding commitments outstanding are given in the table on page 22 of this report. New commitments
during the year under review amounted to € 332 million, and a total of € 171 million was funded during the year.
LISTED INVESTMENTS
BRITISH AMERICAN TOBACCO P.L.C.
The investment in British American Tobacco p.l.c. (‘BAT’) remains one of Reinet’s largest
investments and is kept under constant review, considering the company’s performance, the
industry outlook, cash flows from dividends, stock market performance, volatility and liquidity.
Luc Jobin, Chairman, and Jack Bowles, Chief Executive, writing in the BAT annual report for 2022
commented:
Luc Jobin: ‘2022 marks a year of great progress against the strategy at BAT, given the backdrop of
an increasingly complex external environment. I am proud of the delivery of the business in 2022.
Navigating a new economic cycle characterised by rising inflation, higher interest rates and a tight
labour market, has required the business to be more adaptable than ever. Such complexities have
been exacerbated by international conflict, political instability and supply chain constraints. In
response, BAT has increased its focus on driving both a step change in New Categories and value
from the combustibles business.
Sustainability and ESG have long been an intrinsic part of BAT’s DNA. As part of our
commitment to the UN-backed Race to Zero campaign, BAT published its Low-Carbon
Transition Plan in 2022. This is the latest milestone in BAT’s journey to tackle climate change
and to build ‘A BetterTomorrow’.’
Jack Bowles: ‘During 2022, the business demonstrated once again that it can transform while
also delivering strong results. Revenue was up 7.7 per cent on 2021. New Categories have become
a significant contributor to this, delivering £ 2 894 million in 2022 (up 40.9 per cent). We
remain on track to meet our New Category revenue target of £ 5 billion by 2025, and now
expect profitability by 2024, one year ahead of plan. At the centre of our strategy is our corporate
purpose to build ‘A Better Tomorrow’. This means offering a greater choice of enjoyable and less
risky products for our customers. 2022 shows that our strategy is working. We have strong, global
New Category brands, targeted geographic expansion plans and an unwavering commitment to
innovation that means we are delivering for the consumer.
We have also made great progress on our existing ESG commitments this year and I was delighted
with the appointment of our first Chief Sustainability Officer in August 2022 further embedding
our decades-long commitment to sustainability.’
During the year under review, dividend income recorded from BAT amounted to € 122 million
(£ 107 million), being BAT’s second, third and fourth 2022 quarterly dividends, together
with the first 2023 quarterly dividend of some € 31 million (£ 28 million) with a record date
of 24 March 2023. The first 2023 quarterly dividend was paid on 3 May 2023 and has been
included as a receivable in the NAV as at 31 March 2023, due to the record date falling within
the financial year.
Reinet holds 48.3 million shares in BAT (31 March 2022: 48.3 million), representing some
2.16per cent of BAT’s issued share capital.
The value of Reinet’s investment in BAT amounted to € 1 561 million at 31 March 2023
(31March 2022: € 1 832 million), being some 27.3 per cent of Reinet’s NAV. The decrease in
value reflects the decrease in the BAT share price on the London Stock Exchange from £ 31.94
at 31 March 2022 to £ 28.41 at 31 March 2023 together with the weakening of sterling against
the euro during the year.
Further information on BAT is available at www.bat.com/annualreport
MANAGEMENT REPORT
BUSINESS OVERVIEW
CONTINUED
REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
OTHER LISTED INVESTMENTS
Other listed investments comprised:
31 March
2023
€ m
31 March
2022
€ m
Grab Holdings Limited 29 33
Selecta Biosciences, Inc. 2 2
Soho China Limited 7 8
SPDR Gold shares 39 37
Twist Bioscience Corporation 6 20
83 100
GRAB HOLDINGS LIMITED
Grab Holdings Limited (‘Grab’) is a leading superapp platform in Southeast Asia, providing
everyday services that matter to consumers, including food deliveries, mobility and the e-wallet
segment of financial services. Grab offers a wide range of on-demand services across 480 cities in
eight countries.
Reinet holds 10 573 666 shares in Grab with a market value of € 29 million (31 March 2022:
€33million). The decrease in value reflects the decrease in the share price during the year, offset
by the strengthening of the US dollar against the euro during the year.
Further information on Grab is available at www.grab.com
SELECTA BIOSCIENCES, INC.
Selecta Biosciences, Inc. (‘Selecta’), is a clinical-stage biopharmaceutical company using proprietary
synthetic vaccine particle technology to discover and develop targeted therapies that are designed
to modulate the immune system to effectively and safely treat rare and serious diseases.
Selecta is also a portfolio company of NanoDimension funds, pre and post the initial public
offering.
Reinet holds 1 395 460 shares with a market value of € 2 million as at 31 March 2023
(31March2022: € 2 million).
Further information on Selecta is available at www.selectabio.com
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REINET INVESTMENTS S.C.A.
SOHO CHINA LIMITED
Soho China Limited (‘Soho’) is a Chinese office developer focused on developing and leasing
properties in the central business districts of Beijing and Shanghai. Soho developments are known
for their modern architecture, with designs from architects such as Zaha Hadid and Japanese
architect Kengo Kuma.
Reinet holds 47 million shares with a market value of € 7 million as at 31 March 2023
(31March 2022: € 8 million). The decrease in value reflects the decrease in the share price during
the year, offset by the strengthening of the US dollar against the euro during the year.
Further information on Soho is available at www.sohochina.com
SPDR GOLD SHARES
SPDR Gold shares (‘GLD’) is the largest physically backed gold exchange traded fund in the
world. Over the long term, gold can provide a hedge against inflation and offer some protection
against value changes in turbulent economic and political times.
Reinet holds 230 000 shares with a market value of € 39 million as at 31 March 2023
(31March2022: € 37 million). The increase in value reflects the increase in the value of gold
together with the strengthening of the US dollar against the euro during the year.
Further information on GLD is available at www.spdrgoldshares.com/usa
TWIST BIOSCIENCE CORPORATION
Twist Bioscience Corporation (‘Twist’) is involved in the fields of medicine, agriculture, industrial
chemicals and data storage, by using synthetic DNA tools, and has created a revolutionary silicon-
based DNA synthesis platform that offers precision at a scale otherwise unavailable.
Reinet holds 444 497 shares in Twist with a market value of € 6 million (31 March 2022:
€20million). The decrease in value reflects the decrease in the share price during the year offset
by the strengthening of the US dollar against the euro during the year.
Further information on Twist is available at www.twistbioscience.com
BUSINESS OVERVIEW
CONTINUED
MANAGEMENT REPORT
REINET INVESTMENTS S.C.A.
11 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
UNLISTED INVESTMENTS
Unlisted investments are carried at their estimated fair value. In determining fair value, Reinet Fund Manager S.A. (the ‘Fund Manager’) relies
on audited and unaudited financial statements of investee companies, management reports and valuations provided by third-party experts.
Valuation methodologies applied include the NAV of investment funds, discounted cash flow models and comparable valuation multiples, as
appropriate. The third-party valuation reports and key assumptions used within these reports are reviewed by the external auditors.
PENSION INSURANCE CORPORATION GROUP LIMITED
Pension Insurance Corporation Group Limited’s (‘Pension Corporation’) wholly-owned
subsidiary, Pension Insurance Corporation plc (‘Pension Insurance Corporation’), is a leading
provider in the UK pension risk transfer market.
During 2022, Pension Insurance Corporation concluded new business with premiums of
£ 4.1billion (2021: £ 4.7 billion) including for long-term clients IMI and British American
Tobacco. The reduction in premium levels reflects, in part, the impact of higher interest rates.
At 31 December 2022, Pension Insurance Corporation reported it held £ 41.0 billion in assets
(31 December 2021: £ 51.1 billion). The decrease in value is due to rising yields which lead to
lower asset values and also to lower liability values. As at 31 December 2022, insurance liabilities
declined to £ 33.0 billion (2021: £ 47.0 billion). To date, Pension Insurance Corporation
has insured 302 200 pension fund members (31 December 2021: 282 900). Clients include
FTSE100 companies, multinationals and the public sector.
Pension Insurance Corporation has a total of £ 1.6 billion Tier 2 subordinated notes and
£ 450million Tier 1 restricted notes outstanding. In March 2023, Fitch affirmed its Insurer
Financial Strength rating at A+ (Strong) and Long-Term Issuer Default rating at A. The reported
Solvency II capital ratio as at 31 December 2022 was 225 per cent (31 December 2021:
168percent).
The Board of Pension Corporation proposed an inaugural dividend for 2022 of 7.50 pence per
ordinary share (2021: nil). The dividend was paid on 10 May 2023. Reinet has not recorded a
receivable as at 31 March 2023, as the approval date falls outside this financial year.
Reinet’s shareholding in Pension Corporation increased from 49.4 per cent at 31 March 2022
to 49.5 per cent at 31 March 2023 as a result of a secondary share purchase transaction in the
amount of some £ 4.8 million.
Tracy Blackwell, Chief Executive Officer of Pension Insurance Corporation, commented:
‘We ended the year with a robust balance sheet, very high customer satisfaction levels, and a
huge market opportunity before us. Our purpose, which is to pay the pensions of our current
and future policyholders, ensures that we always protect our balance sheet and prioritise risk
management, as well as helping us evolve our investment strategy as we seek cash flows to
match future pension payments, which stretch decades into the future. As a business with a very
long-term outlook, we seek to develop ongoing relationships with our clients and investment
partners, a theme which is noticeable in this year’s results. The scale of our investments mean
that we are increasingly being recognised for our growing impact across the country, and the
social value these investments generate.
In February 2023, we announced the largest bulk annuity transaction to date. The deal was
driven by the rise in gilt yields during 2022. During the first half of the year this meant that
defined benefit pension schemes were becoming better funded and closer to being able to buy out
even before the Liability Driven Investment crisis.
However, the rapid increase in yields following the ‘mini-budget’, even where they fell back
somewhat in the following weeks, had the overall effect of significantly reducing scheme deficits,
bringing forward by several years trustees’ de-risking plans. This has resulted in an exciting
pipeline of new business for 2023 and beyond.’
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MANAGEMENT REPORT
PENSION INSURANCE CORPORATION GROUP LIMITED
CONTINUED
Dom Veney, Chief Financial Officer of Pension Insurance Corporation, commented:
‘IFRS profit before tax of £ 1 240 million (2021: £ 393 million) benefitted from favourable
investment variances. Our hedging strategy is primarily calibrated to stabilise our solvency
position rather than the IFRS balance sheet. This better reflects how we manage the business
but can cause short-term volatility within the IFRS results. Operating profit remained strong at
£388 million (2021: £ 533 million). Underlying profit grew by 44 per cent to £654 million
(2021: £ 455 million) from higher returns on surplus assets and new business profits, but
this was more than offset by £ 315 million of favourable assumption changes which increased
AOPBT in 2021 but which were not repeated in 2022.
Looking ahead, while the volatile market conditions and evolving regulatory environment
are expected to persist in the short-term, our disciplined approach to underwriting, prudent
investment strategy and robust financial position mean that we are well positioned for the
upcoming market opportunities. We have made a strong start to 2023, having recently
completed the UK’s single largest pension risk transfer deal to date for estimated premiums of
£ 6.5 billion. Following full implementation of the transaction, PIC’s long-term solvency ratio
would remain above 200 per cent, based on economic conditions at 31 December 2022.’
Reinet’s investment in Pension Corporation is carried at an estimated fair value of € 2 787 million
at 31 March 2023 (31 March 2022: € 2 796 million). This value takes into account Pension
Corporation’s audited adjusted equity own funds value at 31 December 2022 of £ 5.9 billion
(31December 2021: £ 5.9 billion), corresponding valuation multiples drawn from industry data
for a selected UK insurance peer group as at 31 March 2023, and a discount of 10 per cent which
takes into account the illiquid nature of Reinet’s investment.
The decrease in Reinet’s estimated fair value of Pension Corporation over the year is mainly
due to the weakening of sterling against the euro in the year, most of which was offset by an
increase in comparable company multiples derived from public information of listed peer group
companies in the UK insurance sector.
The investment in Pension Corporation represents some 48.7 per cent of Reinet’s NAV at
31March 2023, compared to 47.5 per cent at 31 March 2022.
On 27 February 2023, Pension Corporation announced that it had concluded a buy-in with
the Trustees of two schemes sponsored by RSA Group, insuring in total some £ 6.5 billion
of liabilities and covering the pensions of 40 000 members. RSA Group is a wholly-owned
subsidiary of Intact Financial Corporation. This is the largest ever UK bulk annuity transaction
and paves the way for other large transactions as part of the anticipated increase in volumes of
new business coming to market.
Further information on Pension Corporation is available at www.pensioncorporation.com
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PRIVATE EQUITY AND RELATED PARTNERSHIPS
Where Reinet invests in funds managed by third parties, its philosophy is to partner with the managers of such funds and to share in fees
generated by funds under management. This is the case with funds managed by Trilantic Capital Partners, TruArc Partners, Milestone Capital
and Prescient Investment Management China. Under the terms of the investment advisory agreement (the ‘Investment Advisory Agreement’),
entered into by the Fund Manager and Reinet Investment Advisors Limited (the ‘Investment Advisor’), Reinet pays no management fee to the
Investment Advisor on such investments except in the case where no fee or a reduced fee below 1 per cent is paid to the third-party manager. In
such cases, the aggregate fee payable to the Investment Advisor and the third-party manager is capped at 1 per cent.
TRILANTIC CAPITAL PARTNERS
Trilantic Capital Partners (‘Trilantic’) is composed of Trilantic North America and Trilantic
Europe, two separate and independent private equity investment advisors focused on making
controlling and significant minority interest investments in companies in their respective
geographies. Trilantic North America currently targets investments in the business services and
consumer sectors, and currently manages five fund families. Trilantic Europe primarily targets
investments in the industrials, consumer and leisure, telecommunication, media and technology,
business services and healthcare sectors, and currently manages three fund families.
Reinet and its minority partner invest in certain of the Trilantic general partnerships and
management companies (together ‘Trilantic Management’). Reinet and its minority partner,
through Reinet TCP Holdings Limited, invest in two of the current funds under Trilantic’s
management. Reinet also directly invests in four additional funds under Trilantic’s management.
The terms of investment applicable to Reinet’s investment in the Trilantic funds provide that
Reinet will not pay any management fees or carried interest. In addition, Reinet receives a share
of the carried interest payable on the realisation of investments held in the funds, once a hurdle
rate has been achieved.
Reinet TCP Holdings Limited invests in Trilantic Capital Partners IV L.P. (‘Fund IV’) and
Trilantic Capital Partners IV (Europe) L.P.; these funds are in the process of realising the
remaining underlying investments.
In 2012, Reinet invested in Trilantic Capital Partners V (North America) L.P. (‘Fund V’) and
in 2014, in Trilantic Energy Partners (North America) L.P. (‘TEP I’). These US-based funds are
focused on North American opportunities with TEP I being especially focused on the energy
industry sector. Both funds are in the process of realising the remaining underlying investments.
In 2017, Reinet invested in Trilantic Capital Partners VI Parallel (North America) L.P. (collectively
with its parallel vehicles, ‘Fund VI’) and Trilantic Energy Partners II Parallel (North America)
L.P. (collectively with its parallel vehicles, ‘TEP II’). These US-based funds are focused on North
American opportunities with TEP II being especially focused on the energy industry sector.
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TRILANTIC CAPITAL PARTNERS
CONTINUED
Charlie Ayres, Chairman of Trilantic North America and the Executive Committee of Trilantic
Capital Partners, commented:
‘2022 was a difficult year for financial assets, with ‘worst performance since 2008’ pervasive in
describing performance. Many (former) technology darlings lost significant value. The Nasdaq fell
33 per cent on the year, outpacing losses in the S&P 500 Index and Dow Jones Industrial Average,
down 19 per cent and 9 per cent, respectively.
Risk appetite has not completely dried up in the face of uncertainty and volatility. Trends in
earnings and future guidance, as well as messaging from the Fed, will likely shape public market
performance over the coming months. Despite significant losses in public markets in 2022, many
private equity valuations have not yet experienced significant markdowns. Our active companies
remain under-levered with healthy balance sheets and we continue to focus on finding asymmetric
risk/reward opportunities to deploy capital.
Key highlights from the past year include:
• Completed 5 significant realisations with total proceeds of $ 762 million,
• Fund VI North America deployed $ 212 million into 2 new platform investments,
• Experienced aggregate portfolio accretion of $ 878 million during 2022,
• Continued to source attractive add-on investments for our platform companies.
We are on track to publish our 3rd Annual ESG Report in May 2023; this report will provide an
update on our progress both within the Firm and within our portfolio, where we have focused on
key KPIs, influenced by ILPA’s ESG Convergence project; we are proud to be signatories to both the
U.N. Principals for Responsible Investing and ILPA’s diversity in action initiative.
Key 2023 objectives: We aim to monetise 1 to 3 of our current investments during 2023, subject
to market conditions. We remain focused on finding 2 to 5 new investment opportunities per year
at a typical equity check size of $ 100 million to $ 300 million.’
Trilantic North America launched Trilantic Capital Partners VII Parallel (NorthAmerica) L.P.
(collectively with its parallel vehicles, ‘Fund VII’) as a successor fund to Fund IV, Fund V and
Fund VI, and Reinet committed to invest up to 9.9 per cent of total commitments in Fund VII,
with an expected final commitment of some $ 297 million. In April 2022, Fund VII held its first
closing; however, it has not called capital to date. Trilantic North America recently announced
that Fund VII is now expected to be a smaller bridge fund to Fund VIII. In light of this, Reinet
and Trilantic North America agreed that Reinet would not commit capital to Fund VII, however,
Reinet would retain its rights to invest on preferential terms in future funds.
Vittorio Pignatti-Morano, Chairman of Trilantic Europe, commented:
‘2022 was the 15th year of Trilantic Europe as an independent company and it was a year of
change. A dramatic and unexpected full-scale European conflict, the Russian invasion of Ukraine,
created a worldwide escalation of gas and oil prices. The resulting inflationary pressure on energy
was additive to the embedded ‘COVID-19 exit’ inflationary pressure arising from the prior two
years of extensive government subsidies to individuals and companies. It’s not clear for how long
this period of higher interest rates and higher inflation will last but it will be years not months. For
the USA and Europe, 2022 crystallised the end of two decades of growing global trade which were
a great deflator for the western economies which, by outsourcing production to lower-cost emerging
economies, were importing cheaper goods and services. Although already seeing reduced inflation,
all this represents a paradigm change for the world of investments in general and for private equity
in particular. At Trilantic Europe we are dealing with these changes. We have analysed in depth
our existing portfolio, the skills that our portfolio managers need, the new investments we should
consider and those we should de-emphasise. Our ESG focus that has been at the forefront of our
investing for over a decade, is now better channelled into our portfolio companies, making the
impact much greater.’
BUSINESS OVERVIEW
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TRILANTIC CAPITAL PARTNERS
CONTINUED
Reinet’s investment in Trilantic Management and the above funds is carried at the estimated
fair value of € 472 million at 31 March 2023 (31 March 2022: € 385 million) of which
€ 2 million (31 March 2022: € 2 million) is attributable to the minority partner. The estimated fair
value is based on audited valuation data provided by Trilantic Management at 31 December 2022
adjusted for changes in the value of listed investments included in the portfolios and cash movements
up to 31 March 2023.
The increase in the estimated fair value reflects capital contributions of € 22 million and increases
in estimated fair values of underlying investments together with the strengthening of the
US dollar against the euro in the year, offset by distributions of € 44 million.
During the year under review, gains of € 21 million (31 March 2022: € 6 million) and carried
interest of € 6 million (31 March 2022: € 8 million) were realised.
Further information on Trilantic is available at www.trilantic.com
TRUARC PARTNERS FUNDS, CO-INVESTMENT OPPORTUNITIES AND
MANAGEMENT COMPANY
TruArc Partners LP (‘TruArc’) is a private equity firm focused on middle-market control
investments. TruArc focuses on companies that operate in sub-sectors across Specialty
Manufacturing and Business Services. The TruArc investment team collaborates with its
operating partners and portfolio management teams to create value through a transformational
growth strategy led by organic or acquisition-driven growth.
Reinet is invested in Snow Phipps II, Snow Phipps III, TruArc Fund IV, in two co-investment
opportunities alongside Snow Phipps III, and in the management company.
Ogden Phipps, Co-Managing Partner of TruArc Partners, commented:
‘2022 was a year of continued positive momentum for TruArc. We completed the acquisition
of two new platform companies in Fund IV, bringing the total to five platform companies in
that fund. Each company fits well within TruArc’s transformational growth approach, and
multiple growth initiatives are well underway. A key component of our investment approach is to
execute a ‘buy and build’ value creation strategy, and during 2022 we completed 20 strategically
important and financially accretive add-on acquisitions across the TruArc-managed portfolio
companies. TruArc’s active, operational approach has allowed us to strengthen our portfolio
company positions in their respective markets despite the dynamic operating environment driven
by supply chain issues, labour challenges, inflation, and rising interest rates. Despite the continued
market turbulence and challenging operating environment, we are encouraged by how well our
management teams are effectively leading our portfolio companies as they navigate these evolving
markets and execute their growth initiatives. We are working closely with our management teams
to build value through transformational growth across the TruArc portfolio.’
Reinet’s investment is carried at an estimated fair value of € 301 million at 31 March 2023
(31March 2022: € 202 million), based on the audited valuation data provided by TruArc at
31December 2022 adjusted for cash movements up to 31 March 2023.
The increase in the estimated fair value reflects capital contributions of € 66 million, increases in
estimated fair values of underlying investments together with the strengthening of the US dollar
against the euro in the year, offset by distributions of € 3 million.
During the year under review, gains of € 1 million (31 March 2022: € 123 million) wererealised.
Further information on TruArc Partners is available at www.truarcpartners.com
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BUSINESS OVERVIEW
CONTINUED
COATUE FUNDS
Coatue Management L.L.C. (‘Coatue’) is a global investment firm focused on technology-
related investment opportunities led by founder, Mr Philippe Laffont. Coatue invests in public
and private markets with a focus on technology, media, telecommunications, the consumer
and healthcare sectors. Coatue manages some $ 42 billion in assets on behalf of individuals,
endowments, foundations, pension plans, sovereign wealth funds, insurance companies and
other institutional investors and has offices in New York, San Francisco, London, Shanghai and
Hong Kong.
In October 2022, Reinet committed a total of € 278 million ($ 300 million) to two funds
managed by Coatue Management L.L.C., € 139 million ($ 150 million) to Coatue Structured
Offshore Feeder Fund LP and € 139 million ($ 150 million) to Coatue Tactical Solutions
CTOffshore Fund B LP (together the ‘Coatue Structured Funds’). Both funds follow the same
investment strategy.
The Coatue Structured Funds will seek to invest in structured investments in both publicly
listed and privately held technology companies that offer downside protection, while retaining
upside potential. The Coatue Structured Funds will focus on privately negotiated transactions
leveraging Coatue’s sector experience and platform resources to source proprietary transactions.
Coatue will seek to employ a strategy that will opportunistically fund both offensive and defensive
transactions such as M&A, and establishing paths toward accelerating organic growth, among
other paths. Coatue believes there is a substantial universe of potential investment opportunities
and that the market could produce significant structured capital opportunities.
Coatue will typically seek to lead transactions and assert control over deal structure, terms, and
price. The majority of transactions will aim to be proprietary – not through a marketed offering –
and are expected to aim to avoid mark-to-market volatility. Coatue generally intends to focus on
companies that are: 1) powered by a strong underlying trend; 2) established winners or breakout
leaders within a category or trend; 3) pursuing a large total addressable market; 4) operating
business models with strong unit economics; and 5) led by visionary founders and top-notch
management teams. In the approximately nine months since launch, the Coatue Structured
Funds have deployed more than $ 600 million across eight transactions.
Reinet’s investment is carried at an estimated fair value of € 50 million at 31 March 2023
(31 March 2022: € nil), based on the audited valuation data provided by Coatue at
31December2022 adjusted for cash movements up to 31 March 2023.
The increase in the estimated fair value reflects capital contributions of € 50 million during
the year.
Further information on Coatue is available at www.coatue.com
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ASIAN PRIVATE EQUITY COMPANIES AND PORTFOLIO FUNDS
Milestone China Opportunities funds and management company
Reinet has invested along with Milestone Capital in a management company based in Shanghai,
and has also invested in certain funds managed by Milestone Capital (together ‘Milestone’).
Milestone Capital has a strong track record in helping portfolio companies scale their operations
and become listed on either domestic or foreign stock exchanges. Funds under management
invest primarily in domestic Chinese high-growth companies seeking expansion or acquisition
capital. Milestone funds seek to maximise medium to long-term capital appreciation by making
direct investments to acquire minority or majority equity stakes in those companies identified
by Milestone’s investment team. Current areas of investment include: domestic consumer
brands, biopharmaceutical manufacturers, medical device manufacturers, big data services and
e-commerce.
Yunli Lou, Managing Partner of Milestone Capital, commented:
‘During 2022, Milestone Capital continued working closely with our portfolio companies to achieve
exits. We continued selling down our shares in a listed cosmetics e-commerce platform, and also
started the sales process of our stake in a medical consumable company.
In 2022, China’s economy and social activities were negatively impacted by COVID-19. Full year
GDP was $ 17.5 trillion, up by only 3.0 per cent year-on-year, while total retail sales of consumer
goods posted a 0.2 per cent year-on-year decline. Capital markets performance was weak as well,
impacted by the weakened economy and sentiment. Starting in November 2022 after China’s top
leadership reshuffle, China relaxed its zero-COVID policy and started reopening. The number of
COVID-19 infections quickly peaked in late December 2022, and since early 2023, daily life and
social activities have returned to normal. The government has set a 5.0 per cent GDP growth rate
target for 2023, while making economic growth the top priority in setting policies, particularly in
consumption, manufacturing and energy transition sectors.’
The investment in Milestone is held at the estimated fair value of € 44 million (31March2022:
€ 50 million) based on audited financial information provided by Milestone Capital at
31December 2022 adjusted for movements in listed investments and cash movements up to
31March 2023.
The decrease in the estimated fair value reflects distributions of € 9 million and decreases in
estimated fair values of underlying investments, offset by capital contributions of € 1 million
together with the strengthening of the US dollar against the euro in the year.
Further information on Milestone is available at www.mcmchina.com
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CONTINUED
Prescient China funds and management company
Reinet invests in the Prescient China Equity Fund, the Prescient China Balanced Fund, the
Prescient China Growth Enhanced Absolute Return Fund and the management company.
The Prescient China Equity Fund uses a systematic, quantitative approach to seek long-term
capital growth by investing primarily in China ‘A’ shares listed on the Shanghai and Shenzhen
Stock Exchanges by virtue of Prescient’s Qualified Foreign Institutional Investor status granted
by the China Securities Regulatory Commission.
Prescient China Balanced Fund invests in equities following a similar strategy to the Prescient
China Equity Fund and also in bonds, cash and derivatives with the objective of generating
inflation-beating returns at acceptable risk levels.
In May 2022, Reinet committed to invest in the newly launched Prescient China Growth
Enhanced Absolute Return Fund. The fund aims to achieve long-term capital growth at
significantly lower return volatility than conventional multi-asset China investment strategies.
The fund will predominantly invest in mainland Chinese equities, bonds, cash, money market
instruments and derivatives. Reinet invested € 11 million ($ 12 million) during the year.
All funds are managed by a subsidiary of Prescient Limited (‘Prescient’), a South African fund
manager, with the team based in Shanghai.
Liang Du, Portfolio Manager of Prescient, commented:
‘Over the past year China faced its most challenging year yet since the Chinese financial crisis
of 2015. Omicron’s fast transmissibility resulted in COVID-19 being out of control in China
for the first time; zero-COVID policy in major cities combined with extremely cumbersome
COVID-19 controls dramatically dampened economic activity as well as household sentiment
throughout the country. The combination of zero-COVID policy with negative sentiment
would further impact the already slowing property sector, resulting in large property developer
defaults. Geopolitical concerns also remain at the forefront. All of this resulted in Chinese stocks
hitting the 2008 level low, with low single digit PE multiples in October 2022.
President Xi secured his 3rd term and policy movement post event as well as cabinet appointments
surprised many. By and large the majority of new cabinet members are technocrats and historically
business friendly. As Omicron became widespread for the second time in December 2022,
zero-COVID policy was abandoned quickly resulting in the complete dismantling of all
COVID-19 policies in a few weeks. Low inflation, low interest rates as well as the end of
zero-COVID policy saw a strong economic recovery in China in the first quarter of 2023.
Over the past year the Prescient Funds navigated some of the most difficult financial markets
well, both funds were exceedingly competitive against their respective peer group and performed
very well under extremely difficult conditions, with our flagship China Balanced Fund reaching
its 10-year anniversary in March 2023. The fund is comfortably in the top decile in its category
and delivered returns of 8.5 per cent annualised over the past decade. In spite of China’s capital
markets having a pretty tough time, the fund still delivered strong real returns and almost
doubled the return of just a passive fund equivalent. Our Equity Fund will see its 5-year
anniversary in October 2023, it has also beaten more than 80 per cent of its peer group since
inception. We continue to follow our philosophy and process to invest in China and hope that
we will deliver for clients over the next decade what we have done over the last.’
Reinet’s total investment is carried at an estimated fair value of € 143 million based on unaudited
financial information provided by Prescient at 31 March 2023 (31 March 2022: € 143 million).
The estimated fair value reflects capital contributions of € 11 million together with the
strengthening of the US dollar against the euro in the year, offset by decreases in the value of
underlying investments.
Further information on Prescient is available at www.prescient.co.za
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Asia Partners funds
Reinet is invested in Asia Partners I LP and Asia Partners II LP.
Asia Partners I LP is the inaugural fund of Asia Partners Fund Management Pte. Ltd
(‘Asia Partners’), a Singapore-based growth equity investment firm. Asia Partners II LP was
launched in April 2022.
Asia Partners bases its investment strategy on the long-term growth potential of Southeast Asia,
the rapid growth of innovative technology and technology-enabled businesses in the region,
and target investments in the $ 20 million to $ 80 million range, often described as the ‘Series
C/DGap’ between early-stage venture capital and the public capital markets.
Oliver Rippel, Co-Founder and Partner of Asia Partners, commented:
‘We continue to be excited about the Southeast Asia region. Five out of the six key countries in
the region outperformed US equities by at least 800 basis points in 2022. Three out of the six
had higher real GDP growth than inflation in 2022. Demographics favour Southeast Asia,
as well: the total population of 15 to 35-year-olds in Southeast Asia peaks after both China
andIndia.
With this macro backdrop, we have seen a significant number of next generation tech companies
across the region not only scale their business, but most importantly generate strong gross profits
and near-term profitability. Our objective is to support these businesses through our investment
and value-add and ultimately help them transition to become sizeable public companies.’
In April 2022, Reinet committed € 30 million ($ 31 million) to Asia Partners II LP as part of
the first close. This amount increased to € 35 million ($ 37 million) through December 2022
and is expected to increase further at subsequent fund closings. An initial investment of some
€7million ($ 8 million) was made in July 2022.
The investment in Asia Partners funds is held at the estimated fair value of € 32 million
(31March 2022: € 20 million) based on audited financial information provided by the fund
manager at 31 December 2022 adjusted for cash movements up to 31 March 2023.
The increase in the estimated fair value reflects capital contributions of € 10 million, increases
in the value of underlying investments together with the strengthening of the US dollar against
the euro in the year.
Further information on Asia Partners is available at www.asiapartners.com
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BUSINESS OVERVIEW
CONTINUED
SPECIALISED INVESTMENT FUNDS
NanoDimension funds and co-investment opportunities
ND Capital (‘NanoDimension’) is a venture capital firm founded in 2002 that invests in
disruptive technologies in and at the intersection of the life and physical sciences, accelerated
by data sciences. Their core belief is that scientific disciplines will continue to converge, and
that some of the biggest breakthroughs will occur at the intersection of two or more disciplines.
The focus of each fund is to invest in and support the establishment, technology development
and scale up, growth and commercialisation of portfolio companies. They believe that these
disruptive technologies address some of the biggest societal problems. Investments range from
molecular diagnostics, cell and gene therapies, organs on chip, DNA synthesis and DNA
editing, energy storage and electrical propulsion systems for aviation. They invest predominantly
across the United States and Europe with additional investments in Canada, Denmark and the
UnitedKingdom. Their teams are situated in Silicon Valley, Switzerland and the Cayman Islands.
Aymeric Sallin, Founder of NanoDimension, commented:
‘Whilst we presently face tough capital markets our approach to investing is long term, which
requires time, effort, patience and resilience. In some instances, following a decade of investment
and support, we are excited to see certain of our portfolio companies become best in class.
As the organisation continues to grow, we are pleased with the sophisticated investors who have
world class expertise that have invested their own capital alongside us, and who work with us
regularly.
As with every company, the transition from technology to market, production, and operational
excellence, requires new skills. Hence, we feel very privileged to have recently attracted incredible
leadership talent for several of our portfolio companies.’
Reinet is a limited partner in NanoDimension L.P., NanoDimension II L.P., NanoDimension
IIIL.P., NanoDimension IV L.P. and ND Capital Opportunity Fund I L.P., and is invested in
one co-investment opportunity alongside NanoDimension II L.P.
At 31 March 2023, the estimated fair value of Reinet’s investment amounted to € 94 million
(31 March 2022: € 98 million) based on audited valuation data provided by NanoDimension
as at 31 December 2022 adjusted for movements in listed investments and cash movements up
to 31 March 2023.
The decrease in the estimated fair value reflects distributions of € 6 million together with
decreases in the value of underlying investments, offset by capital contributions of € 7 million
together with the strengthening of the US dollar against the euro in the year.
Further information on NanoDimension is available at www.nd.capital
Other fund investments
This includes small, specialist funds investing in private equity businesses and start-up ventures.
Other fund investments are valued in total at their estimated fair value of € 2 million
at 31 March 2023 (31 March 2022: € 8 million) based on the latest available valuation
statements received from the fund managers.
The decrease in the estimated fair value principally reflects decreases in the value of underlying
investments.
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UNITED STATES LAND DEVELOPMENT AND MORTGAGES
Reinet has invested in certain real estate development projects and related businesses located
in the United States (including Florida, North Carolina and South Carolina). Reinet has also
purchased mortgage debt associated with such developments from financial institutions, usually
at significant discounts to face value.
The core land development process encompasses land planning, attaining entitlements from
governmental bodies and installation of community infrastructure. Other investments in
mitigation banks facilitate the preservation of land to offset the loss of wetlands necessitated
by public improvements, such as highway construction, and other privately-sponsored
developments.
Bill Lanius, Chief Executive Officer of United States land development and mortgages, commented:
‘In the past year, our industry has witnessed a moderation in housing demand caused by
significant mortgage rate increases and general economic uncertainty, primarily stemming from
the inflationary surge. Furthermore, lingering supply chain issues and heightened governmental
regulation resulted in extended production cycles. Despite these challenges, the demographics
that support long-term housing demand remain favourable, particularly in Florida and other
sunbelt locations in which our portfolio of properties is concentrated.
During our most recent fiscal year, the United States land development and mortgages business
finalised key transactions and solidified important business relationships that will facilitate
future operations. The results are consistent with our strategy of monetising designated assets
and distributing surplus capital to Reinet. Based on our progress to date, we cautiously enter
the new fiscal year as a streamlined operation with greater ability to respond to changing
economiccircumstances.’
The investment is carried at the estimated fair value of € 26 million as at 31 March 2023
(31 March 2022: € 32 million). The current valuation is based on audited and unaudited
financial statements as at 31 December 2022 adjusted for cash movements up to 31 March 2023.
The decrease in the estimated fair value reflects repayments received during the year of
€ 11 million, offset by increases in the valuation of underlying assets together with the
strengthening of the US dollar against the euro during the year.
OTHER INVESTMENTS
Other investments are carried at their estimated fair value of € 58 million at 31 March 2023
(31March 2022: € 81 million).
The decrease in the estimated fair value relates to decreases in the valuation of underlying
investments and the weakening of sterling against the euro in the year, offset by amounts invested
together with the strengthening of the US dollar against the euro in the year.
22
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
BUSINESS OVERVIEW
CONTINUED
COMMITTED DURING THE YEAR
Commitments made in the year amounted to € 332 million, including € 278 million ($ 300 million) to Coatue funds, € 11 million ($ 12 million)
to Prescient China Growth Enhanced Absolute Return Fund and € 35 million ($ 37 million) to Asia Partners II LP.
TOTAL COMMITMENTS
Funding commitments are entered into in various currencies including sterling and US dollar and are converted into euro using 31 March 2023
exchange rates.
The table below summarises Reinet’s investment commitments as at 31 March 2023.
31 March
2022
(1)
€ m
Exchange
rate
effects
(2)
€ m
Committed
during the
year
(3)
€ m
Funded
during the
year
(3)
€ m
31 March
2023
(3)
€ m
31 March
2023
%
Pension Corporation – – 6 (6) – –
Private equity and related partnerships
Trilantic Capital Partners
Funds, related general partners and
management companies
(4)
137 2 – (19) 120 19.1
TruArc Partners
Funds, co-investment opportunities and
management company 207 4 – (63) 148 23.6
Coatue funds – – 278 (50) 228 36.4
Asian private equity companies and
portfolio funds
Milestone China Opportunities funds
and management company 1 – – (1) – –
Prescient China funds and management
company – – 11 (11) – –
Asia Partners funds 7 – 35 (10) 32 5.1
Specialised investment funds
NanoDimension funds and
co-investment opportunities 66 1 – (7) 60 9.6
Other fund investments 33 (1) – – 32 5.1
United States land development and
mortgages 5 – – – 5 0.8
Other investments 4 – 2 (4) 2 0.3
460 6 332 (171) 627 100.0
(1) Commitments calculated using 31 March 2022 exchange rates.
(2) Reflects exchange rate movements between 31 March 2022 and 31 March 2023.
(3) Amounts calculated using 31 March 2023 exchange rates, which may differ from actual exchange rates on the transaction date.
(4) Commitments noted represent only Reinet’s share of the investments at 31 March 2023, additional commitments payable by the minority partner amount to € 3 million in respect of Trilantic.
REINET INVESTMENTS S.C.A.
23 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
CASH AND LIQUID FUNDS
Reinet holds cash on deposit principally in European-based banks and in liquidity funds holding highly rated short-term instruments.
Reinet’s liquidity is measured by its ability to meet potential cash requirements, including unfunded commitments on investments and the
repayment of borrowings, and at 31 March 2023 can be summarised as follows:
Cash and liquid funds € 288 m
Undrawn borrowing facilities € 227 m
Cash required for unfunded commitments (refer to table on previous page) (€ 627 m)
Cash required to meet GBP borrowing obligations (€ 227 m)
The undrawn borrowing facilities comprise a revolving facility with Bank of America, N.A. and with Citibank N.A. (see below).
Reinet may sell further BAT shares or use such shares to secure additional financing facilities from time to time.
BANK BORROWINGS
BORROWINGS
Reinet has a fixed-rate £ 100 million margin loan due to Citibank N.A., which is repayable in August 2024. At 31 March 2023, the estimated fair
value of the loan amounted to € 108 million (31 March2022: €114 million).
In addition, Reinet has a fixed-rate £ 100 million margin loan due to Bank of America, N.A., which is repayable in March 2025. At 31March 2023,
the estimated fair value of the loan amounted to € 109 million (31 March 2022: € 119 million).
The decrease in the estimated fair value of both loans reflects the increase in the discount rates used (due to increases in market interest rates) together
with the weakening of sterling in the period.
Some 13.8 million BAT shares have been pledged to collateralise these two loans.
In addition, Reinet has a facility agreement in place with Citibank N.A. up to August 2024 and with Bank of America, N.A. up to March2025. These
facilities allow Reinet to drawdown the equivalent of up to € 227 million (£ 200 million) in a combination of currencies to fund further investment
commitments. As at 31 March 2023 no funds have been drawn under these facilities.
Refer to page 56 for a description of Reinet’s policy on foreign exchange exposure.
OTHER LIABILITIES
Minority interest, fees payable and other liabilities, net of other assets comprise:
31 March 2023
€ m
31 March 2022
€ m
Minority interest (4) (3)
Liability in respect of current share buyback programme – (46)
Management fee (19) (17)
Performance fee – (3)
Tax provisions (5) (11)
Accruals and other payables, net of other receivables (8) (11)
BAT dividend receivable 32 31
Total other liabilities (4) (60)
The minority interest liability 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 they have interests.
Tax provisions relate to realised and unrealised gains arising from the investments in Trilantic Capital Partners and TruArc Partners, together with
withholding and corporate taxes relating to the investment in United States land development and mortgages.
The BAT dividend receivable had a record date of 24 March 2023 and a payment date of 3 May 2023.
No provision has been made in respect of a performance fee as at 31 March 2023 (31 March 2022: € 3 million) as the conditions required to pay
a fee had not been met at year end date. In order for a performance fee to be payable at 31 March 2023, the volume weighted average market
price of the Company’s share determined by taking into account volume and price information on the Luxembourg Stock Exchange, Euronext
Amsterdam and the Johannesburg Stock Exchange over the last 20 trading days of the current financial year had to exceed € 18.61. The volume
weighted average market price of the Company’s share was € 18.56 for the last 20 trading days of the current financial year.
The management fee is payable to the Investment Advisor.
24
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
BUSINESS OVERVIEW
CONTINUED
INCOME STATEMENT
The income statement set out below differs from the format used in the IFRS reporting on page 46 and is presented to provide investors with a
more comprehensive picture of the movement in the estimated fair value of assets held by Reinet.
Year ended
31 March 2023
Year ended
31 March 2022
€ m € m € m € m
Income
BAT dividends 122 128
Interest and other investment income 23 16
Realised gain on disposal of BAT shares – 83
Realised gains on sale of other investments 13 107
Realised gains on derivative instruments – 11
Carried interest earned on investments 6 8
Total income 164 353
Expenses
Management fee (49) (44)
Performance fee – (3)
Operating expenses, foreign exchange and transaction-related costs (6) (7)
Interest and related financing expenses (5) (8)
Tax expense (5) (8)
Total expenses (65) (70)
Realised investment income, net of expenses 99 283
Fair value adjustments
BAT – unrealised (loss)/gain on shares held (271) 258
– unrealised gain on shares disposed of
(1)
– (93)
Pension Corporation (15) 41
Other investments 55 117
Derivative instruments – fair value adjustment on outstanding contracts (1) –
– unrealised gains on settled contracts
(2)
– (20)
Borrowings – unrealised gain on outstanding loans 11 4
– unrealised loss on repaid loans
(3)
– 2
Total fair value adjustments (221) 309
(122) 592
Effect of exchange rate changes on cash balances 2 10
Net (loss)/profit (120) 602
Minority interest – –
(Loss)/profit attributable to the shareholders of the Company (120) 602
(1) The reversal of the unrealised gain on shares surrendered during the year ended 31 March 2022 in relation to the repayment of the Merrill Lynch International borrowing represents the
unrealised gain on these BAT shares as at 1 April 2021.
(2) The reversal of the unrealised gains on derivative contracts represents the unrealised fair value as at 1 April 2021.
(3) The reversal of the unrealised loss on borrowings represents the unrealised loss as at 1 April 2021 on borrowings repaid during the year ended 31 March 2022.
REINET INVESTMENTS S.C.A.
25 REINET INVESTMENTS S.C.A.
|
ANNUAL REPORT 2023
INCOME
Dividend income from BAT recorded during the year ended
31 March 2023 amounted to € 122 million (£ 107 million)
(31March 2022: € 128 million (£ 109 million)). Dividend income
received from BAT during the year represents the second, third and
fourth 2022 quarterly dividend paid and the first 2023 quarterly
dividend with a record date of 24 March 2023 and a payment date
of 3May2023.
Interest income is earned on bank deposits, investments and loans
made to underlying investments.
Realised gains on other investments of € 13 million were mainly in
respect of investments in Trilantic Capital Partners, offset by realised
losses in respect of investments in Diamond interests.
Carried interest of € 6 million (31 March 2022: € 8 million) was
attributable to Reinet in respect of investments realised by Trilantic
Capital Partners.
EXPENSES
The management fee for the year ended 31 March 2023 amounts to
€ 49 million and is based on Reinet Fund’s NAV of € 5441million
at 30 September 2022 and € 5 890 million at 31 March 2022
(31 March 2022: € 44 million, based on Reinet Fund’s NAV
of €4783 million at 30 September 2021 and € 5 386 million at
31March 2021).
No performance fee is payable for the year ended 31 March 2023
(31March 2022: € 3 million) as the conditions required to pay a fee
had not been met at year end date. The performance fee is calculated
as 10 per cent of the Cumulative Total Shareholder Return as defined
in the Company’s prospectus, published on 10 October 2008 as last
amended on 25 August 2020, including dividends paid, over the
period since completion of the rights issue in December 2008 up to
31 March 2023, less the sum of all performance fees paid in respect
of previous periods.
Operating expenses of € 6 million include € 1 million in respect
of charges from Reinet Investments Manager S.A. (the ‘General
Partner’), and other expenses, including legal and other fees, which
amounted to € 5 million.
The net tax expense of € 5 million includes corporate and withholding
taxes payable in respect of gains realised on Trilantic Capital Partners,
together with deferred tax provisions related to unrealised gains,
expected distributions and accrued interest in respect of Trilantic
Capital Partners, TruArc Partners and United States land development
and mortgages.
FAIR VALUE ADJUSTMENTS
The investment in 48.3 million BAT shares decreased in value by
€ 271 million during the year under review. Of this, € 191 million
was attributable to the decrease in value of the underlying BAT
shares in sterling terms and € 80 million was due to the weakening
of sterling against the euro during the year under review.
The investment in Pension Corporation decreased in value by
€ 15 million which includes a decrease of € 108 million in respect of
the weakening of sterling against the euro in the year under review
(refer to pages 11 to 12 for a full description of the overall movement
of Pension Corporation during the year).
The unrealised fair value adjustment of € 55 million in respect of
other investments includes an increase in the estimated fair value of
Trilantic Capital Partners and TruArc Partners, offset by decreases
in the fair value of other listed investments, Prescient China funds,
NanoDimension, other fund investments and other investments
(see detailed analysis on page 52). The above amounts include the
effect of changes in foreign exchange rates in the year under review.
Borrowings are carried at estimated fair value reflecting the
discounted cash flow value of future principal and interest payments
taking into account prevailing interest rates. Unrealised gains of
€ 11 million during the year were in respect of changes in the
estimated fair value of the Citibank N.A. and Bank of America,
N.A. loans.
MINORITY INTEREST
The minority interest expense arises in respect of the minority
partner’s share in the earnings of Reinet TCP Holdings Limited.
26
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
BUSINESS OVERVIEW
CONTINUED
CASH FLOW STATEMENT
The summarised cash flow statement set out below differs from the format used in the IFRS reporting on page 48 and is presented to provide
investors with a more comprehensive picture of the movement in cash and liquid funds.
Year ended
31 March 2023
Year ended
31 March 2022
€ m € m € m € m
Investing activities
Purchase of investments, net of repayments (167) (215)
Proceeds from sales of investments 76 336
Net cash and liquid funds (used in)/generated by investing activities (91) 121
Financing activities
Dividend paid (51) (46)
Payment for settlement of derivative contracts – (2)
Cost of share buyback programmes (45) (4)
Net movements in bank borrowings – (250)
Net cash and liquid funds used in financing activities (96) (302)
Operating activities
Dividends received 122 133
Carried interest earned on investments 6 8
Interest and related financing expenses (5) (8)
Operating and related expenses (52) (47)
Taxation paid (13) (7)
Net cash and liquid funds generated by operating activities 58 79
Net cash outflow (129) (102)
Opening cash and liquid funds position 415 507
Effects of exchange rate changes on cash balances 2 10
Closing cash and liquid funds position
(1)
288 415
(1) Includes cash and liquid funds held in the Company, Reinet Fund and its subsidiaries.
INVESTING ACTIVITIES
Investments totalling € 167 million were made during the year,
including Pension Corporation, Trilantic Capital Partners, TruArc
Partners, Coatue funds, Prescient China funds, Asia Partners funds,
NanoDimension funds and other investments. Amounts invested
were partially offset by repayments in respect of loans and interest
received from United States land development and mortgages.
Proceeds from the sale of investments was in respect of Trilantic
Capital Partners, TruArc Partners, Milestone China Opportunities
funds, NanoDimension funds and Diamond interests.
FINANCING ACTIVITIES
A dividend of some € 50.9 million was paid to shareholders in
September 2022.
Reinet paid out € 45 million in respect of the share buyback
programme in the year.
REINET INVESTMENTS S.C.A.
27 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
OPERATING ACTIVITIES
Dividends received from BAT during the year ended 31 March 2023
amounted to € 122 million (£ 105 million) (31 March 2022:
€ 133 million (£ 114 million)). The dividends received from BAT
during the year represent the first, second, third and fourth 2022
quarterly dividends paid.
Interest of € 5 million was paid in respect of the sterling-denominated
loans.
Net US tax payments of € 13 million were paid in the year under review.
This amount includes taxes withheld by US paying agents in respect of
gains and carried interest received, together with estimated taxes paid on
gains and income which will be taxable in the United States.
Cash and liquid funds decreased by € 127 million over the year to
€ 288 million as the amounts invested in new investments, payment
of the dividend, the cost of the share buyback programme, management
fee and operating expenses exceeded amounts received in respect
of dividends and distributions from investments.
RISKS AND UNCERTAINTIES
Reinet’s current investments and future investment strategy are
subject to a number of risks and uncertainties. The General Partner
and Fund Manager have established policies and procedures to
identify and monitor these risks.
Responsibility for investment risk and treasury risk is borne by the
Board of the Fund Manager. The day-to-day treasury position is
monitored by the Chief Executive Officer and the Chief Financial
Officer and policy decisions in respect of the investment of cash
resources are taken by the Board of the Fund Manager.
Investment decisions are the responsibility of the Fund Manager,
acting on the advice of the Investment Advisor, as appropriate.
Reinet’s activities expose it to a variety of financial risks including
market risk (ie currency risk, fair value interest rate risk, cash flow
interest rate risk and price risk), credit risk and liquidity risk; these
risks are detailed in note 5 to the consolidated financial statements
on page 53 of this report.
Global markets continued to be impacted by the effects of the
ongoing Ukraine crisis, increasing interest rates and rising inflation.
Whilst the world has made significant progress in its recovery from
the impacts of COVID-19, general economic and geopolitical
concerns remain elevated. As a result, higher levels of risk and
uncertainty exist at this time and markets are likely to remain
volatile for some time, and thereby continue to have an influence
on the value and prospects of the investments held by Reinet Fund.
Other principal risks are as follows:
LEGAL AND COMPLIANCE RISKS
Laws and regulations governing the operations of the Company and
Reinet Fund may affect their business, investments and results of
operations.
The Company is required to comply with certain regulatory
requirements applicable to a Luxembourg securitisation company,
and Reinet Fund is required to comply with certain regulatory
requirements that are applicable to a Luxembourg specialised
investment fund. The Company is also required to comply with
regulations applicable to a company admitted to listing and trading
on the Luxembourg Stock Exchange and Euronext Amsterdam, and
with a secondary listing on the Johannesburg Stock Exchange.
Additional laws and regulations may apply to the portfolio assets in
which Reinet makes investments, and those laws and regulations, as
well as those applicable to Reinet, may restrict the ability of Reinet
to make certain types of investments in certain countries or affect
the returns available from those investments.
Laws and regulations and their interpretation and application may
also change from time to time and such laws and regulations or
those changes could have a material adverse effect on the business,
investments and results of operations of Reinet. In addition, a
failure to comply with applicable laws or regulations, as interpreted
and applied, or to maintain any necessary regulatory licences, by
any of the General Partner, Fund Manager or Investment Advisor,
could have a material adverse effect on the business, investments
and results of operations of Reinet. Where investee companies are
subject to regulation, failure to obtain appropriate licences or to
comply with regulatory requirements may impact the valuation of
the underlying investment.
Additional laws and regulations may apply to shareholders’
ownership of the Company’s shares, including as a result of Reinet
Fund’s direct and indirect investments.
28
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
BUSINESS OVERVIEW
CONTINUED
The United States’ Foreign Account Tax Compliance Act (‘FATCA’)
imposes reporting and other requirements on payers and recipients
of certain categories of income starting 1 July 2014. Non-US entities
which do not comply with FATCA may be subject to withholding
tax on certain categories of income. The Company and its controlled
affiliates have taken the steps they considered necessary to be and
remain compliant with FATCA.
Under FATCA, the Company or its affiliates may be required to
report to the US Internal Revenue Service (‘IRS’), directly or
through their respective tax authority co-operating with the IRS,
information about financial transactions made by US taxpayers
and other specified entities or individuals, and could be required to
impose withholding tax, documentation and reporting requirements
on such transactions. The additional administrative requirements of
FATCA may result in increased compliance costs and could have an
adverse effect on the business, investments and results of operations
of Reinet.
The Common Reporting Standard (‘CRS’), developed by the
Organisation for Economic Co-operation and Development, is a
global standard for the automatic exchange of financial information
between tax authorities worldwide. Under the CRS, the Company
and/or its affiliates may be required to identify and report to their
respective tax authority information on certain accounts held directly
or indirectly by tax residents in other participating CRS countries,
which may subsequently be disclosed to foreign tax authorities. The
Company and its affiliates have taken the steps they considered
necessary to be and remain compliant with the obligations imposed
by the CRS. The additional administrative requirements of the CRS
may result in increased compliance costs for Reinet.
OPERATIONAL RISKS
The Company does not have any operations of its own. All
operations are carried out by Reinet Fund.
The Company’s principal source of earnings is returns in the form
of income and capital gains from the investments made through
ReinetFund and its subsidiaries.
The ability of Reinet Fund to make cash distributions to the
Company will depend on a number of factors, including, among
others, the actual results of operations and financial condition of
Reinet Fund, its subsidiaries and investee companies, restrictions
on cash distributions that are imposed by applicable law or the
constitutional documents of Reinet Fund, the terms of any future
financing agreements entered into by Reinet Fund or its subsidiaries,
the timing and amount of cash generated by investments that are
made by Reinet Fund, any contingent liabilities to which Reinet
Fund may be subject, the amount of income generated by Reinet
Fund and other factors that the Fund Manager deems relevant.
DIVIDEND
The Company relies on distributions from Reinet Fund as its
principal source of income from which it may pay dividends.
A cash dividend of some € 50.9 million or € 0.28 per share (excluding
treasury shares held) was paid in September 2022, following approval
at the annual general meeting held on 30August2022.
The General Partner has proposed a cash dividend of € 0.30 per
share subject to shareholder approval at the annual general meeting,
which is scheduled to take place in Luxembourg on Tuesday,
29August 2023.
There is no Luxembourg withholding tax payable on dividends
which may be declared by the Company.
In 2013 the Company sought clarification from the South African
Revenue Service (‘SARS’) as to the treatment of any dividends to be
declared by the Company and paid to holders of depository receipts
issued by Reinet Securities SA in respect of Reinet ordinary shares.
This ruling was renewed for a further 5 years on 8 March2018 in
respect of any dividends to be declared by the Company and paid to
holders of the Company’s ordinary shares listed on the Johannesburg
Stock Exchange. The Company is in the process of applying for a
renewal of this ruling in respect of any dividends to be declared and
paid to holders of its ordinary shares listed on the Johannesburg
Stock Exchange. Information relating to the renewal of the ruling
will be provided in due course.
The dividend will be payable in accordance with the following
schedule, subject to shareholder approval:
The last day to trade the Company’s shares cum-dividend in Europe
will be Wednesday, 13 September 2023 and in South Africa,
Tuesday, 12 September 2023. The Company’s shares will trade
ex-dividend from Thursday, 14 September 2023 in Europe and from
Wednesday, 13 September 2023 in South Africa. The record date for
the Company’s shares in Europe and in South Africa will be Friday,
15 September 2023.
The dividend on the Company’s shares in Europe will be paid on
Wednesday, 20 September 2023 and is payable in euro.
The dividend on the Company’s shares in South Africa will be paid
in South African rand on Wednesday, 20 September 2023. Further
details regarding the dividend payable to South African holders may
be found in a separate announcement dated 25 May 2023 on the
Johannesburg Stock Exchange News Service.
REINET INVESTMENTS S.C.A.
29 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
CORPORATE GOVERNANCE
INTRODUCTION
The Company recognises the importance of appropriate corporate
governance procedures in the management and oversight of its
business. The Company acknowledges the obligations placed upon
it as a public company with a listing on the Luxembourg Stock
Exchange and Euronext Amsterdam and a secondary listing on the
Johannesburg Stock Exchange. Notably, the Company is subject to
the X Principles of Corporate Governance of the Luxembourg Stock
Exchange (the ‘X Principles’) in so far as applicable to the Company.
The Company complies with all principles and recommendations
set out in the fourth version of the X Principles to the extent they
are applicable to it.
The Company’s corporate governance principles are described
in the Company Prospectus, in the statutes of the Company (the
‘Statutes’), as well as in the Corporate Governance Charter adopted
by the Company, all of which are available on the Company website,
www.reinet.com. The requirements of the Statutes, the principles set
out in the Company Prospectus and the Corporate Governance
Charter (together with the policies and procedures described
therein) adequately establish the framework of corporate governance
within which Reinet operates.
The Company, a partnership limited by shares (société en commandite
par actions) under the laws of Luxembourg, gives its shareholders
exposure to Reinet Fund, a specialised investment fund.
The Company was formerly known as Richemont S.A., which was
a subsidiary of Compagnie Financière Richemont SA (‘CFR SA’),
a Swiss company with significant luxury goods interests (CFR SA,
together with its subsidiaries are referred to as ‘Richemont’). The
Company separated from its former parent on 20 October 2008,
which saw the luxury businesses transferred to CFR SA. Following
the separation and subsequent restructuring steps, the Company
effectively retained part of Richemont’s former interests in BAT
together with cash and certain smaller investments.
MANAGEMENT
As a partnership limited by shares, the Company is managed by
a general partner rather than a board of directors. The general
partner is Reinet Investments Manager S.A. (the ‘General Partner’),
a limited company established in Luxembourg (société anonyme),
which also owns 1 000 management shares in the Company and
which has unlimited liability for any obligations of the Company
that cannot be met from the assets of the Company.
Both the General Partner and Reinet Fund Manager S.A. (the ‘Fund
Manager’) are owned and controlled by Rupert family interests.
During the year ended 31 March 2023, the Board of Directors of the
General Partner met physically (with all or the majority of members
physically present) on all four occasions. All directors attended all
meetings. The statutes of the General Partner require that the Board
of Directors consists of a minimum of three directors.
The General Partner is not acting as general partner for any
partnership other than the Company.
BOARD OF DIRECTORS OF THE GENERAL
PARTNER
The directors of the General Partner are:
JOHANN RUPERT
Chairman
South African, born 1950
Mr Rupert was appointed to the Board of Directors in 2008.
Mr Rupert studied economics and company law at the University
of Stellenbosch, South Africa. After working for the Chase
Manhattan Bank and Lazard Frères in New York, he founded
Rand Merchant Bank in 1979. In 1985 he joined Rembrandt. He
founded Richemont in 1988 and became Group Chief Executive.
Appointed as Executive Chairman in September 2002, he also
served as Group Chief Executive Officer during the periods from
October 2003 to September 2004 and from April 2010 to March
2013. He was Chairman of CFR SA up to September 2013, when
he indicated his intention to step down from the board of that
company during a sabbatical year. He was re-elected as Chairman
of CFR SA in September 2014. He is also Non-Executive Chairman
of Remgro Limited and is the Managing Partner of Compagnie
Financière Rupert.
Mr Rupert holds honorary doctorates in Law, Economics and
Commerce, is Chairman of the Peace Parks Foundation and the
Michelangelo Foundation.
WILHELM VAN ZYL
Chief Executive Officer
South African & British, born 1965
Mr van Zyl was appointed to the Board of Directors in 2014 and
appointed Chief Executive Officer with effect from January 2015.
Mr van Zyl holds a BCom degree from the University of Stellenbosch
and qualified as a Fellow member of the Institute and Faculty of
Actuaries (United Kingdom) in 1994. He is also a Fellow member
of the Actuarial Society of South Africa and completed the Harvard
AMP program in 2005. Mr van Zyl was group actuary of the financial
services group Metropolitan Holdings from 2001 and headed up
its corporate business from 2006. In 2008 he was appointed as a
director and chief executive of Metropolitan Holdings.
Following the listing of MMI Holdings in 2010, resulting from the
merger between Metropolitan and Momentum, he was appointed
as a director and deputy group chief executive with oversight of
the group’s health, international, investments and employee benefit
operations. He currently also serves on the boards of Pension
Insurance Corporation plc, Pension Insurance Corporation Group
Limited, Milestone Capital Investment Holdings Limited, Prescient
Investment Management China Limited and is also a director of
the Investment Advisor and of various subsidiaries of Reinet Fund.
30
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
ALAN GRIEVE
Non-Executive Director
British & Swiss, born 1952
Mr Grieve was appointed to the Board of Directors in 2008. He
retired as Chief Executive Officer in December 2014.
Mr Grieve served as Chief Financial Officer from 2008 to 2011 and
as Chief Executive Officer from 2012 to 2014. He remains on the
Board of Directors as a Non-Executive Director of both the General
Partner and Fund Manager.
Mr Grieve was appointed to the board of directors of Richemont
S.A. (the predecessor company to Reinet Investments S.C.A.) in
2004. Mr Grieve holds a degree in business administration from
Heriot-Watt University, Edinburgh and is a member of the Institute
of Chartered Accountants of Scotland. Prior to joining Richemont’s
predecessor companies in 1986, he worked with the international
auditing firms now known as PricewaterhouseCoopers and Ernst
& Young. He served as Richemont’s Company Secretary from 1988
to 2004 and as Director of Corporate Affairs from 2004 to 2016.
JOSUA MALHERBE
Non-Executive Director
South African & British, born 1955
Mr Malherbe was appointed to the Board of Directors in 2009.
Mr Malherbe qualified as a chartered accountant in South Africa
in 1984 having commenced his career with a predecessor firm to
PricewaterhouseCoopers. He then joined the Corporate Finance
Department of Rand Merchant Bank in 1985 and was a general
manager of the bank before moving to Rembrandt Group Limited
in 1990, also being involved with Richemont at that time.
He was appointed as Director – Investments of Rembrandt in 1993
and served in this position until the formation of VenFin Limited
in 2000 where he served as Chief Executive Officer until 2006.
Thereafter he held the position of Deputy Chairman of VenFin
Limited until November 2009 at which time Remgro Limited
acquired all the shares in VenFin Limited.
He was appointed as a Non-Executive Director to the board
of CFRSA in September 2010 and assumed the role of Deputy
Chairman in September 2013. He also serves as a director on boards
of a number of companies, including Remgro Limited and Pension
Insurance Corporation Group Limited.
REINET FUND
The Company owns the entire ordinary share capital of Reinet
Fund, a specialised investment fund established as a partnership
limited by shares (société en commandite par actions) under the laws
of Luxembourg.
As a partnership limited by shares, Reinet Fund is managed by a
general partner rather than a board of directors. The general partner
is the Fund Manager, a limited company established in Luxembourg
(société anonyme), which also owns 1 000 management shares in
ReinetFund and which has unlimited liability for any obligations
of Reinet Fund that cannot be met from the assets of Reinet Fund.
BOARD OF DIRECTORS OF THE FUND
MANAGER
The directors of the Fund Manager are:
JOHANN RUPERT
Chairman
(For biographical details see page 29)
WILHELM VAN ZYL
Chief Executive Officer
(For biographical details see page 29)
ALAN GRIEVE
Non-Executive Director
(For biographical details see above)
SWEN GRUNDMANN
Non-Executive Director
Dutch, born 1968
Mr Grundmann was appointed to the Board of Directors in
September 2012.
Mr Grundmann holds a law degree from the Faculty of Law of the
University of Amsterdam. He joined Richemont in January 1996
and has until December 2017 been responsible for the corporate
law affairs of many of its subsidiaries and been involved in various
merger and acquisition projects. He held the position of Company
Secretary of both the General Partner and Fund Manager from
2009 to January 2023. He has been Reinet’s General Counsel and
responsible for its legal affairs from 2011 to January 2023 and serves
on the boards of a number of companies in which Richemont or
Reinet hold an interest.
He is a member of the Dutch Association of Corporate Litigation.
DIANE LONGDEN
Chief Financial Officer
British & Luxembourger, born 1961
Ms Longden was appointed to the Board of Directors in
September2012.
Ms Longden is a member of the Institute of Chartered
Accountants in England and Wales and holds a Masters in Business
Administration from the Sacred Heart University, John F. Welch
College of Business in Luxembourg. Prior to joining Reinet in
2009, Ms Longden worked in the accountancy profession and
international insurance industry. She is also a director of various
subsidiaries of Reinet Fund.
BOARD COMMITTEES AND MANAGEMENT
The Company is managed by a general partner and as such it has
no board of directors, executive management or employees. As a
consequence, aspects of corporate governance which relate, amongst
others, to the composition, organisation and proceedings of the board
of directors and executive management, the establishment of board
committees and related processes of a public company established in
Luxembourg are not directly applicable to theCompany.
CORPORATE GOVERNANCE
CONTINUED
REINET INVESTMENTS S.C.A.
31 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
BOARD OF OVERSEERS
In accordance with Luxembourg law, a Board of Overseers
(Collègedes Commissaires) has been appointed to review the activities
of the Company. The Board of Overseers’ role is one of oversight
and control in addition to the specific powers conferred upon the
Board of Overseers by virtue of the Statutes. It has no executive
responsibility for the management of the Company except that the
Board of Overseers may be consulted by the General Partner on
such matters as the General Partner may determine and no action of
the General Partner that may exceed its powers shall be valid unless
authorised by the Board of Overseers.
The Board of Overseers of the Company has also been appointed as
the Board of Overseers of Reinet Fund. Each of the members of the
Board of Overseers is independent from the General Partner and the
Fund Manager.
The members of the Board of Overseers may not be directors or
employees of the General Partner or of the principal shareholder
of the General Partner or any entity in which the Company has a
material direct or indirect interest.
The Board of Overseers reports each year to the annual general
meeting of shareholders on the results of the mandate entrusted to
it, making such recommendations as it considers appropriate.
Every second year the Board of Overseers conducts a self-
assessment of its role, accountability, composition and effectiveness.
A self-assessment was performed in respect of the year ended
31March2022.
In addition to its role as defined by law, the Board of Overseers also
acts as the audit committee of the Company and Reinet Fund.
The functions of the Board of Overseers include notably:
• Monitoring the financial reporting process;
• Reviewing the financial statements of the Company and Reinet
Fund in order to ensure that they are fair, accurate and complete;
• Monitoring the Company’s and Reinet Fund’s compliance with
applicable legal and regulatory obligations;
• Monitoring the statutory audit of the Company and Reinet
Fund;
• Reviewing and monitoring the independence of the approved
statutory auditor and approving permissible non-audit services
as required;
• Monitoring the effectiveness of internal control and risk
management procedures; and
• Assessing the quality of the internal audit of the Company and
Reinet Fund.
During the year under review, the Board of Overseers met physically
(with all or the majority of members physically present) on two
occasions and in addition five meetings were held by conference
calls (as was permitted by the Luxembourg legal framework relating
to the measures concerning meetings of companies in the context
of the COVID-19 pandemic). All the members attended all of the
conference calls. Subsequent to the year-end, the Board of Overseers
also met on 26 April 2023 and on 15 May 2023 to review and discuss
with the approved statutory auditor the statutory and consolidated
financial statements of the Company and recommended that these
be presented to the annual general meeting of shareholders of the
Company for approval.
Mr John Li is the chairman of the Board of Overseers.
The members of the Board of Overseers are:
JOHN LI
Chairman
Mauritian & Luxembourger, born 1960
Mr Li was appointed to the Board of Overseers in August 2015.
Mr Li is a non-executive director and a partner of The Directors’
Office, a company of independent and non-executive directors.
Previously he was a managing partner of KPMG Luxembourg
and a member of the KPMG global investment management
leadership team, as well as chairman of the supervisory board for
KPMG Luxembourg. Mr Li is a Fellow of the Institute of Chartered
Accountants in England and Wales and a former member of the
Board of the Institut Luxembourgeois des Administrateurs (Institute
of Directors in Luxembourg) for 12 years. His expertise lies in
investment funds, banking and wealth management.
YVES PRUSSEN
Luxembourger, born 1947
Mr Prussen was appointed to the Board of Overseers in
September2009.
Mr Prussen graduated as a doctor at law in 1971 and holds a diploma
from the ‘Institut d’Etudes Politiques’ of the University of Grenoble.
During the same year he became a member of the Luxembourg
bar and since 1975 has been a partner in Elvinger Hoss Prussen, a
Luxembourg legal firm. Mr Prussen is a member of the International
Bar Association, the Luxembourg Section of the International Fiscal
Association and the Luxembourg Association for Arbitration. He is
the author of various publications in the field of tax law, arbitration,
securities laws and the law relating to undertakings for collective
investments.
STUART ROBERTSON
British & Swiss, born 1955
Mr Robertson was appointed to the Board of Overseers in
October2018.
Mr Robertson is a member of the Institute of Chartered Accountants
of Scotland and EXPERTsuisse. He had three decades’ experience
with KPMG auditing financial institutions and also advising them
in areas of risk and regulation, transformation, and M&A. He served
on both the Executive Committee and the Board of Directors of
KPMG Switzerland for 12 years. He also served as the KPMG Global
Financial Services Deal Advisory leader for 11years. He retired from
KPMG at the end of September 2018 and was voted on to the board
of EFG International AG effective from 1October2018.
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
CORPORATE GOVERNANCE
CONTINUED
STUART ROWLANDS
British & Luxembourger, born 1952
Mr Rowlands was appointed to the Board of Overseers in
August2016.
Mr Rowlands was the Head of Financial Risk at the European
Investment Bank (‘EIB’), the development bank of the
European Union, based in Luxembourg, until his retirement on
30June2018. He joined the EIB in 1988 and worked in various
senior roles involving internal audit, credit risk, infrastructure
funding and project finance. Previously, Mr Rowlands was with
PricewaterhouseCoopers Luxembourg and during this time spent
two years with the European Court of Auditors, also based in
Luxembourg. Mr Rowlands is a Fellow of the Institute of Chartered
Accountants in England and Wales and a member of the Institute of
Internal Auditors and an INSEAD-certified independent director.
His expertise lies in financial and credit risk management, internal
audit and corporate governance.
APPOINTMENT OF THE MEMBERS OF THE
BOARD OF OVERSEERS
The Statutes provide for a Board of Overseers composed of at
least three members. The members of the Board of Overseers
are appointed by a resolution of the annual general meeting of
shareholders by a simple majority of the votes cast. The annual
general meeting of shareholders fixes the term of their office. They
may be re-elected. Their appointment is not subject to the approval
of the General Partner.
REMUNERATION
Neither the Company nor Reinet Fund has any employees. Rather,
both entities pay fees to their respective managers, the General
Partner and the Fund Manager, in respect of the management
services provided.
The Company is managed by its General Partner. In accordance with
the Statutes, the Company reimburses the General Partner for its
expenses incurred in the ordinary course of business, including but
not limited to the remuneration of its staff, costs attributable to its
directors’ remuneration, taxes, rentals and any other disbursements,
and pays an annual administration fee equal to 10 per cent of such
expenses. During the year ended 31 March 2023, the Company
paid € 1.2 million to the General Partner in respect of the costs
that it had incurred, out of which € 0.3 million related to the costs
attributable to its directors’ remuneration, and € 0.1 million to the
related administration fee.
The Company’s wholly-owned subsidiary, Reinet Fund, is managed
by the Fund Manager. Reinet Fund reimburses the Fund Manager
for its expenses incurred in the ordinary course of business
including but not limited to the remuneration of its staff, costs
attributable to its directors’ remuneration, taxes, rentals and any
other disbursements, and pays an annual administration fee equal
to 10per cent of such expenses. Any such amounts payable to the
Fund Manager are deductible from any management fees payable to
the Investment Advisor (see Significant Agreements).
The annual general meeting of shareholders sets the remuneration
of the members of the Board of Overseers. An annual compensation
of € 70 000 per annum for each of the members of the Board
of Overseers was approved at the annual general meeting of
shareholders held on 30 August 2022.
Although the management of Reinet is distinct from Richemont
following the restructuring effected in 2008, a number of executives
who have management responsibilities within the General Partner
and the Fund Manager have executive roles in and were employed
by Richemont. With effect from 1 April 2010, separate employment
arrangements in respect of Richemont and Reinet duties apply in
respect of those individuals having roles within both organisations.
Post year-end this is no longer applicable.
SHAREHOLDINGS AND LOANS
Details of shareholdings by members of the Board of Directors of
the General Partner are given in note 14 to the consolidated financial
statements on page 69 of this report.
As noted previously, the General Partner holds 1 000 management
shares in the Company.
The Company has procedures in place requiring persons connected
with the Company, Reinet Fund, the General Partner, the Fund
Manager and the Investment Advisor not to trade in the Company’s
securities during closed periods in advance of the release of financial
information in respect of the Company or at other times when
they may be in possession of price-sensitive information. Approval
of transactions involving the Company’s securities is required
from Mr Rupert, Mr Malherbe or Mr van Zyl and transactions by
persons discharging managerial responsibilities are disclosed on the
Company’s website and information relating to such transactions is
published in a manner that ensures the effective dissemination of
information to the public.
There were no loans outstanding to members of the Board of Directors
of the General Partner during the year or at 31March2023.
At 31 March 2023, the Company owed € 0.8 million to the General
Partner and Reinet Fund owed € 7.5 million to the Fund Manager.
SIGNIFICANT AGREEMENTS
The Company is managed by its General Partner. The Company
reimburses the General Partner for its expenses incurred in
the ordinary course of business, including but not limited to
the remuneration of its staff, costs attributable to its directors’
remuneration, taxes, rentals and any other disbursements, and pays
an annual administration fee equal to 10 per cent of such expenses
(see Remuneration).
The Company’s wholly-owned subsidiary, Reinet Fund, is managed
by the Fund Manager. Reinet Fund reimburses the Fund Manager
for its expenses incurred in the ordinary course of business including
but not limited to the remuneration of its staff, costs attributable to its
directors’ remuneration, taxes, rentals and any other disbursements,
and pays an annual administration fee equal to 10 per cent of such
expenses (see Remuneration).
REINET INVESTMENTS S.C.A.
33 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
Under the terms of the Investment Advisory Agreement dated
9October 2008, as amended on 24 May 2010, 10 November 2011,
7 December 2018 and 1 October 2020 between Reinet Fund and
the Investment Advisor, Reinet Fund pays both management fees
and performance fees to the Investment Advisor.
Mr van Zyl, who is a Director of the General Partner, is also a
member of the Board of Directors of the Investment Advisor.
The management fee is payable to the Investment Advisor at a rate
of 1 per cent per annum on the NAV of Reinet Fund, excluding
cash and interests in funds managed by third parties. It is calculated
semi-annually based on the closing NAV at the end of the previous
six-month period.
The management fee in respect of cash is calculated at a rate of one
quarter of 1 per cent per annum.
No management fee is payable in respect of funds managed by third
parties except where the fee payable to the third-party has been
negotiated to a level below 1 per cent per annum and below the
level payable by other investors in a fund. In such circumstances, the
difference between the fee payable to the third-party manager and
1per cent is payable to the Investment Advisor.
Investments as a limited partner in funds under the management of
a management company in which Reinet Fund is an investor are not
treated as being managed by third parties; the management fee is
payable at 1 per cent per annum to the Investment Advisor. However,
such a fee payable to the Investment Advisor is reduced by any
management fee paid by Reinet Fund to the management company,
net of income received by Reinet Fund on its investment in the
management company in terms of its share of the management fees
earned by (but not carried interest attributable to) the management
company.
The management fee for the year under review amounted to
€ 49 million, of which € 10 million is paid to the Fund Manager.
As detailed in the Company Prospectus, issued when the Company
was established in 2008 as part of the Richemont reorganisation
which was approved by the former Richemont unitholders, the
performance fee in any period is to be calculated as 10 per cent of the
Cumulative Total Shareholder Return at the end of the Performance
Measurement Period, adjusted for all dividends and returns of capital
to the Company’s shareholders, less the sum of all performance fees
paid in previous Performance Measurement Periods. Following a
recent revision, the Cumulative Total Shareholder Return will be the
difference between the volume weighted average market price of the
Company’s shares on the Luxembourg Stock Exchange, Euronext
Amsterdam and the Johannesburg Stock Exchange over the last
20trading days of each financial year of the Company less the Initial
Price, calculated as the volume weighted average market price of
the Company’s shares on the Luxembourg Stock Exchange over the
first 60 trading days following the third day after the conclusion
of the rights issue in December 2008. The Initial Price, calculated
over the trading period from 22 December 2008 to 19 March 2009,
is€7.1945.
No performance fee is payable as of 31 March 2023 (31March2022:
€ 3 million).
The Investment Advisor shall be entitled to all accrued but unpaid
management fees and performance fees should the Fund Manager
(acting on the instructions of the Board of Overseers) terminate
the Investment Advisory Agreement with notice. Such entitlement
will not arise where the Fund Manager (acting on the instructions
of the Board of Overseers) is entitled to, and does, terminate the
Investment Advisory Agreement immediately or if the Investment
Advisory Agreement terminates automatically.
CONFLICTS OF INTEREST
Individuals who are involved in the management of the Company,
the General Partner or the Fund Manager may also be involved in
the management of other industrial and investment companies,
including but not limited to CFR SA and Remgro Limited.
There is a possibility that these individuals may have a conflict of
interest between the duties they owe to the Company or Reinet
Fund and the duties they owe to the other entities relying upon
their expertise. Such a conflict may arise in relation to, in particular,
proposed investment opportunities. The Company and Reinet
Fund will be managed to avoid any such conflicts of interest in all
possible circumstances, as is also formalised in a conflicts of interest
policy which was adopted by the Boards of the General Partner and
Fund Manager. If a conflict of interest in relation to an investment
opportunity would arise between any entities affiliated with Rupert
family interests the opportunity to co-invest may be offered to the
appropriate entities (taking into consideration, among other things,
the investment objective, policies and restrictions of each of those
entities). Specifically, in terms of the Company Prospectus and the
conflicts of interest policy it is expected that any investments in
luxury goods businesses will be made by CFR SA.
CAPITAL STRUCTURE
At 31 March 2023, the Company had 195 941 286 ordinary shares
and 1 000 management shares of no-par value in issue.
At 31 March 2023, the Company held 14 151 395 ordinary shares
as treasury shares. The voting and dividend rights attached to
treasury shares are suspended. Therefore, the total number of voting
rights at 31 March 2023 was 181 790 891.
SIGNIFICANT SHAREHOLDERS
The General Partner holds 1 000 management shares in the
Company, being 100 per cent of the management shares in issue.
The Anton Rupert Trust, the Anton Rupert Descendants Trust and
affiliated parties hold some 48.8 million ordinary shares representing
24.93 per cent of the Company’s issued share capital.
The group of parties regarded as being affiliated to the
Anton Rupert Trust and the Anton Rupert Descendants Trust
includes entities and persons which are not necessarily closely
connected with persons discharging managerial responsibilities
within the Company, as defined in Article 3 paragraph 1 of the EU
Regulation No 596/2014 on Market Abuse (the ‘Market Abuse
Regulation’). As a consequence, share dealings by such entities or
persons are not disclosed as dealings by connected parties in terms
of the Market Abuse Regulation.
34
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
CORPORATE GOVERNANCE
CONTINUED
On 20 September 2022, M&G Plc notified the Company that
accounts under management of M&G Investments Southern
Africa (Pty) Limited (previously Prudential Investment Managers)
held 5.01 per cent of the shares and voting rights in the Company
increasing above the 5 per cent threshold and an increase from 3.8
per cent previously reported.
On 24 December 2021, the Public Investment Corporation notified
the Company that it held 15.02 per cent of the shares and voting
rights in the Company.
On 28 June 2021, Allan Gray Proprietary Limited notified the
Company that accounts under its management held 4.97 per cent
of the shares and voting rights in the Company, falling below the
5per cent threshold.
On 27 April 2020, GIC Private Limited notified the Company that
on 22 April 2020 its holding of the shares and voting rights in the
Company fell below the 3 per cent threshold, to 2.97 per cent.
Old Mutual Investment Group (Pty) Ltd informed the Company
that as from 27 April 2016 its holding on behalf of its clients
exceeded 3 per cent of the shares and voting rights in the Company.
As at the date of this report, the Company has not received any other
notifications of significant shareholdings in excess of 3percent of
the shares in issue.
SHAREHOLDERS’ MEETINGS AND VOTING
RIGHTS
Shareholders’ meetings may be convened by the General Partner or
by the Board of Overseers. All shareholders are invited to attend and
speak at all general meetings of shareholders. Any shareholder may
appoint another person, who need not be a shareholder, to represent
them at the meeting.
Other than as required by law, resolutions to be approved at a
meeting of shareholders will be passed by an absolute majority
of those present and voting. There is no quorum requirement
for a meeting convened to consider the business ordinarily to be
considered by a shareholders’ meeting. The business ordinarily to be
considered at a shareholders’ meeting is the approval of the statutory
and consolidated financial statements as presented by the General
Partner; the consideration and approval of the appropriation
of the result of the year as proposed by the General Partner; the
appointment, removal and remuneration of the Board of Overseers;
and the discharge to be given to the General Partner and to the
members of the Board of Overseers. All other business at an annual
general meeting shall be considered only upon a proposal of the
General Partner unless otherwise provided for in the law.
Any other matter which does not fall within the scope of an annual
general meeting, as set out above, shall be dealt with by way of an
extraordinary meeting. An extraordinary meeting shall require that
50 per cent of shareholders of each class of shares is represented,
failing which the meeting must be reconvened in accordance with the
notice requirements laid down by the law. Resolutions proposed at
such a meeting shall be passed by a vote in favour of at least two-thirds
of the votes cast, provided that no resolution tabled at such a meeting
shall be validly passed unless approved by the General Partner.
The annual general meeting of shareholders of the Company was
held on 30 August 2022. Out of a total of 195 941 286 ordinary
shares and 1 000 management shares in issue, a total of 140 576 069
ordinary shares (some 71.74 per cent of the total voting rights) and
all the 1 000 management shares were represented. The proposals of
the General Partner in respect of the resolutions considered at the
meeting were approved by an overwhelming majority of the votes.
The notice of the 2023 annual general meeting of shareholders is
given on pages 84 to 86 of this report.
FINANCIAL REPORTING, INTERNAL
CONTROL AND RISK MANAGEMENT
The preparation of the statutory and consolidated financial statements
of the Company is the responsibility of the General Partner. The
Company’s role is limited to the holding of the investment in
Reinet Fund, the issuance of its own shares and related activities
and therefore its own entity financial statements are straightforward.
The Board of Directors of the General Partner has established strict
rules designed to protect the Company’s interests in the areas of
financial reporting, internal control and risk management. An
internal control process has been defined and implemented by the
Boardof Directors of the General Partner and approved by the Board
ofOverseers, with the aim of achieving reliability of financial and
accounting information and full compliance with applicable laws
and regulations. The internal controls over financial reporting are
designed to provide assurance that the financial reporting does not
contain any material inadequacies. The level of financial controls
that have been established are considered by the General Partner
to be adequate for the scale of the Company’s and Reinet Fund’s
operations and their level of complexity.
A risk management function exists and quarterly reports are
provided to the Boards of Directors of the General Partner and the
Fund Manager, as well as the Board of Overseers.
The internal audit function is outsourced; an internal audit report
is provided annually and the internal auditor attends at least one
meeting of the Board of Overseers.
Responsibility for management of investment risk and treasury risk
is borne by the Board of Directors of the Fund Manager. The day-
to-day treasury position is monitored by the Chief Executive Officer
and the Chief Financial Officer and policy decisions in respect of the
investment of cash resources are taken by the Board of Directors of
the Fund Manager.
Investment decisions are the responsibility of the Fund Manager,
acting on the advice of the Investment Advisor.
The Company is subject to financial risks, certain of which are
discussed in note 5 to the consolidated financial statements on
page53 of this report.
REINET INVESTMENTS S.C.A.
35 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
INFORMATION POLICY
The Company reports to shareholders in accordance with the
requirements of Luxembourg law, European regulations and
the guidance provided by the Luxembourg Stock Exchange, the
Commission de Surveillance du Secteur Financier (‘CSSF’), Euronext
Amsterdam and the Dutch Authority for the Financial Markets
(Autoriteit Financiële Markten, ‘AFM’). The annual report is
the principal source of financial and business information for
shareholders. The Company’s preliminary announcement of the
results for the financial year is usually issued in May each year.
In addition to the annual report, the Company publishes its half-
yearly unaudited financial report in November, as well as interim
management statements in July and January covering the Company’s
performance during the first and third quarters, respectively, of the
financial year. Ad hoc news announcements are made in respect
of matters which the Company considers to be of significance to
shareholders, in accordance with applicable laws and regulations
(including EU Regulation No 596/2014 on Market Abuse) and the
specific guidelines laid down by the Luxembourg Stock Exchange,
the CSSF, Euronext Amsterdam and the AFM.
The annual report is distributed to all parties who have requested a
copy. Investors may request electronic notification that such reports
have been published on the Company’s website.
All news announcements are distributed by email.
Shareholders and other interested parties may ask to be
included on the distribution list by contacting the Company
Secretary at the Company’s registered office or by email
([email protected]) or by registering on the Company’s website
(http://www.reinet.com/investor-relations/company-announcements).
Copies of the annual report and half-yearly unaudited financial
report, the announcement of the results and ad hoc press
releases may also be downloaded from the Company’s website
(www.reinet.com). A copy of the Statutes of the Company and the
Corporate Governance Charter are available on the website.
In addition, the Company publishes Reinet Fund’s NAV statements.
In accordance with Reinet Fund’s prospectus, these NAV
statements will be published within 20 business days of the end
of each calendar quarter. These statements are also available on the
Company’swebsite.
Statutory and regulatory announcements are filed with the CSSF and
the AFM, published on the Company’s website and made available
to the Luxembourg Stock Exchange and Euronext Amsterdam.
AUDITORS
The statutory and consolidated financial statements of the Company
for the accounting year ended 31 March 2023 were audited by
PricewaterhouseCoopers, Société coopérative, approved statutory
auditors, Luxembourg.
SUSTAINABILITY
The Company’s approach to sustainability matters and its report
on corporate social responsibility for the accounting year ended
31March 2023 are included in the Sustainability Report appended
to the management report on page 37.
ARTICLE 11 OF THE LUXEMBOURG LAW
ON TAKEOVER BIDS OF 19 MAY 2006
The Company publishes the following detailed information as
required by Article 11 (1) of the law of 19 May 2006 on takeoverbids.
CAPITAL STRUCTURE OF THE COMPANY
The Company has issued two classes of shares, namely management
shares and ordinary shares. The 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.
At 31 March 2023, the Company had 195 941 286 ordinary shares
and 1 000 management shares of no par value in issue.
At 31 March 2023, the Company held 14 151 395 ordinary shares
as treasury shares. The voting and dividend rights attached to
treasury shares are suspended. Therefore, the total number of voting
rights at 31 March 2023 was 181 790 891.
The ordinary shares confer on the shareholder the entitlement to
participate in and, except for the treasury shares, to vote at meetings
of shareholders, with each share carrying the right to one vote. Each
share, except for the treasury shares, also entitles each shareholder to
receive a proportionate share of any dividend that the Company may
declare and a proportionate share of the net assets of the Company
on liquidation. The liability of shareholders is limited to the amount
of their investment in the Company.
The management shares confer the same rights with regard to
voting, dividends and the distribution of assets on liquidation as the
ordinary shares. In addition, as the holder of the management shares,
the General Partner has broad powers to manage the Company and
has unlimited liability for any obligations of the Company that
cannot be met out of the assets of the Company. The management
shares are not listed.
RESTRICTIONS ON THE TRANSFER OF
SECURITIES
The ordinary shares are freely transferable. The Company and
its shareholders must comply with the requirements of the
Luxembourg law of 11 January 2008 on transparency requirements
(the ‘Transparency Law’), provided however that in addition to the
thresholds set out in such law, each shareholder shall, in accordance
with the Statutes, be liable to notify the Company of any acquisition
or disposal if the proportion of the holding of shares held by the
shareholder, whether directly and/or indirectly, including those that
are deemed to be controlled by the shareholder in the circumstances
contemplated by Article 9 of the Transparency Law, reaches, exceeds
or falls below the threshold of 3 per cent, failing which the General
Partner may disregard the voting rights attached to the shares and
certain restrictions may apply to such shareholdings in accordance
with the terms of Article 10 of the Statutes.
The management shares are transferable only to a successor or an
additional manager with unlimited liability for the Company’s
financial liabilities.
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
CORPORATE GOVERNANCE
CONTINUED
SIGNIFICANT SHAREHOLDERS
The details of significant shareholders within the meaning of the
Transparency Law are given on page 33 of this report.
SEPARATE CLASSES OF SECURITIES
The management shares held by the General Partner confer the same
rights with regard to voting, dividends and the distribution of assets
on liquidation as the ordinary shares. In addition, as the holder of
the management shares, the General Partner shall have broad powers
to manage the Company. The General Partner will have unlimited
liability for any obligations of the Company that cannot be met out
of the assets of the Company.
SHARES HELD IN RESPECT OF SHARE INCENTIVE
SCHEMES FOR EMPLOYEES OF THE GENERAL
PARTNER, FUND MANAGER AND INVESTMENT
ADVISOR
The Investment Advisor owns 916 512 ordinary shares of the
Company as at 31 March 2023 (31 March 2022: 919 064). These
shares have been acquired to hedge share appreciation rights and
related awards to key executives. Until the rights awarded under
these schemes may be exercised by the key executives concerned,
the voting rights in respect of these shares may be exercised by the
Investment Advisor.
SHAREHOLDERS’ MEETINGS AND VOTING
RIGHTS
Each issued share represents one vote, except for the treasury shares.
The voting and dividend rights attached to the treasury shares are
suspended. The rights of a shareholder to participate in a general
meeting and to vote in respect of their shares shall be determined
with respect to the shares held by the shareholder on the 14th
day prior to the general meeting, as required by Luxembourg law.
Further information is set out above.
SHAREHOLDER AGREEMENTS AND TRANSFER
RESTRICTIONS
There are no agreements between shareholders which are known to
the Company. The Company is not aware of any agreements which
may result in restrictions on the transfer of securities or voting rights.
RULES GOVERNING THE APPOINTMENT OF THE
GENERAL PARTNER AND AMENDMENTS TO THE
ARTICLES OF ASSOCIATION OF THE COMPANY
The Company has no executive management or employees. In
accordance with Luxembourg law, the management of the Company
is carried out by the General Partner, the unlimited shareholder of
the Company, which has been designated as such in the Statutes.
The replacement of the General Partner or the appointment of
additional managers requires an amendment to the Statutes.
Any proposal to amend the Statutes shall be considered and
approved by an extraordinary general meeting of shareholders to
be held before a public notary. At any such meeting, 50 per cent
of shareholders of each class of shares is required to be present or
represented. Resolutions shall be passed by at least two-thirds of the
votes cast, provided that no resolution at any extraordinary general
meeting of shareholders shall be validly passed unless approved
by the General Partner, unless otherwise provided by law and the
Statutes. In that respect it is to be noted that no decision of the
General Partner on behalf of the Company in respect of the exercise
by the Company of any power to amend the Statutes shall be valid
unless approved by the Board of Overseers.
POWERS OF THE GENERAL PARTNER
The General Partner is vested with the broadest powers to perform all
acts of administration in compliance with the Company’s corporate
objects set out in the Statutes except for matters expressly reserved
by Luxembourg law or the Statutes to be approved by the general
meeting of shareholders. Certain decisions of the General Partner
must be approved by the Board of Overseers.
SIGNIFICANT AGREEMENTS
There are no significant agreements to which the Company is a party
and which take effect, alter or terminate upon a change of control of
the Company following a takeover bid.
AGREEMENTS WITH DIRECTORS AND
EMPLOYEES
The Company is managed by the General Partner; it has no directors,
executive management or employees. Details of the agreements with
the General Partner, the Fund Manager and the Investment Advisor
are set out on page 32 of this report.
REINET INVESTMENTS S.C.A.
37 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
SUSTAINABILITY REPORT
Introduction
The business philosophy of Reinet Investments S.C.A. (the
‘Company’) and its subsidiary Reinet Fund S.C.A., F.I.S. (‘Reinet
Fund’, together with the Company, ‘Reinet’) is to find and invest
in assets that offer long-term growth potential. Having a long-term
view allows Reinet to identify investments that build sustainable
value for the long term and support broad economic growth, while
also meeting the needs of its stakeholders, such as shareholders,
employees, business partners and local communities.
Reinet considers it imperative for businesses to work responsibly,
recognising that the world’s resources are finite and that everyone
has a role to play in their conservation. Initiatives to reduce carbon
dioxide emissions, reduce water usage, preserve biodiversity and
enforce human rights are to be welcomed and supported.
Investors such as Reinet have a role to play by seeking out companies
that act responsibly and importantly, also avoiding those that do
not. Reinet’s investment criteria reflect these objectives; Reinet looks
for responsible management in businesses that take account of their
stakeholders’ interests, treat their employees fairly and respect the
environment. Reinet advocates that companies in which it invests
comply with relevant corporate governance requirements.
Reinet Fund’s corporate governance reflects this. Its general partner
Reinet Fund Manager S.A. (the ‘Fund Manager’) is organised to
support and reinforce Reinet Fund’s policy, understanding that its
primary fiduciary duty is to deploy capital to deliver attractive returns
over the long term, rather than short-term investment strategies
designed to generate immediate results. The Fund Manager’s
board has demonstrated commitment to a long-term investment
philosophy. Furthermore, Reinet’s internal policies and procedures
support the investment strategy and principles as set outabove.
Following an Environment, Social and Governance (‘ESG’) assessment
in 2021 identifying gaps and opportunities in its sustainability
approach, Reinet undertook a further ESG regulation review in 2022
to understand the disclosure requirements of existing and upcoming
EU regulations. The review highlighted the Corporate Sustainability
Reporting Directive (‘CSRD’) as having the most potential to impact
Reinet’s ESG disclosure in future, and so Reinet is carrying out a CSRD
readiness assessment to prepare for future reporting requirements of
the CSRD.
About this report
This year, the Company is producing its fifth consecutive
Sustainability Report, which has been prepared in accordance with
the X Principles of Corporate Governance of the Luxembourg Stock
Exchange (the ‘X Principles’) and in line with the Sustainability
Accounting Standards Board (‘SASB’) Standards.
The X Principles
This Sustainability Report has been prepared in accordance with the
X Principles, more specifically with its Principle number 9 relating
to corporate social responsibility (‘CSR’).
The X Principles is a list of ten corporate governance principles set by
the Luxembourg Stock Exchange in 2006 and reviewed in 2017 to
integrate a new principle relating to CSR. Through the X Principles,
the Luxembourg Stock Exchange encourages companies to:
‘…adopt a form of corporate governance that constitutes an integral part
of corporate culture, reflects the values of integrity and responsibility,
and is founded on the transparency of the decision-making processes and
respect for the interests of shareholders and all other stakeholders.’
CSR Principle number 9 is focused on non-financial information
and stronger integration of CSR aspects with financial data and
giving investors a better understanding of how such integration
contributes to a company’s strategy for creating value and global
performance.
The Company, as a listed entity on the Luxembourg Stock Exchange,
is subject to and is in full compliance with the X Principles to the
extent they are applicable to the Company. However, these principles
do not apply to regulated funds and are thus not applicable to its
subsidiary Reinet Fund.
Any responsibility for CSR obligations and reporting relating to the
Company lies with the board of directors of the General Partner.
Reinet Fund has no CSR reporting obligations.
Notwithstanding the latter, the Company has, for the purposes
of this Sustainability Report for the year ending 31 March 2023,
continued to implement the requirements of the X Principles
pertaining to sustainability on a look-through basis to Reinet Fund,
where relevant.
This Sustainability Report outlines the Company’s response to
Principle number 9 of the X Principles focused on CSR.
SASB Standards
As with previous years, the Company continues reporting in line
with selected industry-specific SASB topics and metrics (in addition
to the X Principles), as the SASB Standards represent a globally
recognised and accepted sustainability framework. The SASB
Standards were set up in 2011 to enable businesses to identify and
communicate industry-specific, financially-material sustainability
topics for investors.
The Company has used the SASB Standards and framework, specific
to the Asset Management and Custody Activities industry, to
identify material topics on which to report. SASB has identified the
following industry-specific sustainability topics as material:
• Transparent Information and Fair Advice for Customers;
• Employee Diversity & Inclusion;
• Incorporation of ESG Factors in Investment Management and
Advisory; and
• Business Ethics.
This Sustainability Report outlines the Company’s response to
each of the accounting metrics identified by SASB in relation to
these material topics (see SASB Material Sustainability Topics &
Accounting Metrics on page 39).
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
About Reinet
Structure and management
The Company is a securitisation vehicle incorporated under the laws
of Luxembourg. It is listed on the Luxembourg Stock Exchange,
Euronext Amsterdam and the Johannesburg Stock Exchange; the
listing on the Johannesburg Stock Exchange is a secondary listing.
Reinet Fund is a wholly-owned subsidiary of the Company and is
a closed-ended, specialised investment fund. Reinet Fund is also
the investment vehicle for all the investment assets held within
thestructure.
Reinet Investments
Manager
Reinet Fund
Manager
Shareholders
The Company
Reinet Fund
Assets
GENERAL PARTNERS
REINET
The Company and Reinet Fund are each managed by a general
partner (respectively Reinet Investments Manager S.A. (the ‘General
Partner’) and the Fund Manager, together ‘General Partners’) which
carries out the role generally performed by the board of directors
and the general management of a corporation and as such neither
the Company nor Reinet Fund has a board of directors, executive
management or employees. In addition, the Company and Reinet
Fund are subject to review by the Board of Overseers, responsible
for monitoring compliance with legal and regulatory obligations,
reporting process and its integrity, reviewing the effectiveness of
internal control and risk management procedures, among others.
Assets and investments
This year, Reinet has continued to allocate capital to investments
with a primary focus on assets with long-term growth potential
across sectors.
Listed or regulated investments currently represent in excess of
77per cent of the net asset value of Reinet Fund (‘NAV’).
As a result of the market movements and portfolio rebalancing
over the past years, Pension Insurance Corporation Group Limited
(‘Pension Corporation’), a UK-based insurance company specialising
in securing the liabilities of defined benefit pension schemes, now
represents Reinet’s largest investment, approximately 49 per cent
of the NAV. The investment in British American Tobacco p.l.c.
(‘BAT’) now represents approximately 27 per cent of the NAV.
Over the years, the exposure to BAT has been significantly reduced;
this represented some 80 percent of the NAV at 31March2009.
The investment in BAT provides Reinet with the capacity to
fund new opportunities, either from dividend income, through
borrowing or through the realisation of part of the investment,
and ensures that there is liquidity available at the level of Reinet
Fund, including during times of market distress, and to promote
long-termperformance.
Together, these two investments represent approximately 76 percent
of the NAV; each of these investees has integrated sustainability
in its strategy (see approach to Sustainability on page 39). Reinet
also invests in funds managed by third parties. These include funds
managed by Trilantic Capital Partners, TruArc Partners, Milestone
Capital, Prescient Investment Management China, ND Capital,
Asia Partners and Coatue.
Reinet Fund – Total assets under management
31 March 2023
€ m
31 March 2022
€ m
Assets
Listed equity securities 1 644 1 932
Unlisted equity securities and funds 3 990 3 786
Loans and interest receivable 19 49
5 653 5 767
Derivative financial instruments – 1
Cash and cash equivalents 288 408
Other assets 32 31
Total assets 5 973 6 207
SUSTAINABILITY REPORT
CONTINUED
REINET INVESTMENTS S.C.A.
39 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
Reinet’s approach to sustainability
Reinet seeks, through a range of investment opportunities, to build
partnerships with other investors, specialised fund managers and
entrepreneurs to find and develop opportunities for long-term value
creation for its shareholders. Since its formation in 2008, Reinet has
invested over € 3.5 billion.
Reinet’s strategy is to invest in, work with or create partnerships with
businesses that share similar goals and values.
ESG approach adopted by key investments
The purpose of Pension Corporation and its subsidiaries is to pay
the pensions of current and future policyholders. The assets they
invest in must therefore be sustainable with business models that
can survive changing environments. They have focused on assets
which are socially beneficial and will meet the needs of society in
the future such as investments in social housing, renewable energy,
higher education and long-term infrastructure projects. Their ESG
strategy incorporates ESG risks in investment decisions as well as
engagement with the investee companies to improve their ESG
performance. They have also published their first ESG Policy,
while also establishing a Net Zero working group to support its
commitment to reach net zero within its investment portfolio by
2050. In 2023, Pension Corporation published its ESG and the Task
Force on Climate-related Financial Disclosures (‘TCFD’) reports.
BAT has an open dialogue with stakeholders at local, regional
and global levels on key sustainability issues affecting its industry.
BAT’s own sustainability strategy is built on improving the health
impact of their business by giving customers greater choice and
deploying world-class science in the development of products. It has
made significant progress to develop and grow new categories of
reduced risk products to meet evolving consumer preferences. This
is supported by other ESG priorities, ie (a) environmental strategy
which includes carbon neutrality, water, waste and sustainable
agriculture, (b) social impact strategy which includes human
rights, farmer livelihood, health and safety, people and culture and
(c)robust corporate governance.
In 2022, BAT has taken steps to prepare its reporting in line with
the requirements of the CSRD by undertaking a double materiality
assessment, whilst it has also committed to a new Low-Carbon
Transition Plan aiming to halve absolute emissions across its value
chain by 2030.
Substantial commitments have been made over the years to funds
advised by Trilantic Capital Partners and TruArc Partners. These
operations both have well established ESG principles and practices
which guide their investment strategy and operating models.
Asia Partners has a responsible investment policy and is committed
to (a) ensuring environmental, social and governance issues are
identified and managed responsibly in their business activities and
relationships and (b) to investing in businesses with the intent to
contribute to measurable positive social or environmental, alongside
financial returns, and strive to ensure that impact considerations are
purposefully integrated throughout the investment lifecycle.
Other investments, such as those held through the NanoDimension
funds and related co-investments, are exploring the use of
emerging disruptive technologies to create new drugs or to improve
the mechanisms for the delivery of drugs or improved disease
management. They specifically look for breakthroughs in life,
physical and data sciences across the United States and Europe.
In 2022, Reinet invested in a fund managed by Coatue, an American
technology focused investment manager. Coatue, a signatory to the
United Nations Principles for Responsible Investment (‘UNPRI’),
invests in public and private markets with a focus on technology,
media, telecommunication, the consumer and health care sector,
and supports sustainable innovation in a range of ways.
In summary, Reinet aspires to make value-aligned investment
decisions that offer long-term growth potential to its investors. It
also recognises that the sustainability landscape is continuously
evolving and that there is growing stakeholder expectation for
greater investment clarity and more responsible investment
strategies. To respond to this, the Company aims to advance
year-on-year on its reporting ambitions and to work alongside
third-party sustainability experts to support it on its journey. The
Company has defined its corporate sustainability policy and aims
to comply with recognised international standards and frameworks
for sustainability, developing an ESG roadmap identifying priority
ESG areas and actions to improve transparency and disclosure.
Reinet Fund reviews the activities of investee entities regularly as
part of its ongoing review of its investment portfolio and of the risk
management process, in which ESG factors are incorporated (see
The X Principles and Incorporation of ESG Factors).
SASB Material Sustainability Topics & Accounting Metrics
The Company has used the SASB Standards and framework, specific
to the Asset Management and Custody Activities industry, to identify
material topics and inform its sustainability strategy and reporting.
In order to consider ESG as part of investment decisions the board
of the Fund Manager assesses the non-financial risks associated
with its investments as part of the due diligence process prior to the
acquisition of new assets. A Due Diligence Policy and Checklist
sets out the process to be followed in respect of due diligence to be
conducted, intending to gain a thorough understanding of prospects
for each investment and evaluate potential and inherent risks it faces
or may have to face in the future (see Incorporation of ESG Factors
on page 40). The board of the Fund Manager also regularly reviews
non-financial risks as part of the risk management process.
Transparent Information & Fair Advice for Customers
The Company’s customers are deemed to be its shareholders.
To ensure that shareholders are provided with timely and
comprehensible information relating to the Company, the General
Partner has defined a Shareholder Communication Policy. This
policy creates a framework for communication of transparent
and relevant information to enable all shareholders to exercise
theirrights.
The Company’s annual report is the principal source of financial
and business information for shareholders. The annual report is
distributed to all parties who have requested a copy. Electronic
notification that such reports have been published on the Company’s
website is available on request. In addition, the Company prepares
a half-yearly report, supplemented by quarterly updates to provide
further insight into the investment activities and performance over
the relevant reporting period. The Company also dedicates a specific
section of its website to its shareholders, including all information
required by laws and regulations.
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
MANAGEMENT REPORT
SUSTAINABILITY REPORT
CONTINUED
Reinet aims to conduct business in a manner that avoids complaints.
A Complaints Management Policy is in place to ensure that
complaints are handled properly and promptly, while meeting
the complainant’s interests, in line with applicable regulation
issued by the Commission de Surveillance du Secteur Financier
(‘CSSF’). The complaints handling procedure is available on the
Company’swebsite.
Finally, there has been no monetary loss as a result of legal proceedings
associated with the communication of financial information to
shareholders. The same applies to any regulatory proceeding such as
shareholder-initiated complaints or private civil litigations.
Incorporation of ESG Factors in Investment Management & Advisory
Reinet believes incorporating ESG factors in its investment
process enables it to create and enhance long-term value for all its
stakeholders. Prior to the acquisition of new assets, Reinet Fund
Manager S.A. follows a Due Diligence Policy which covers a
review of, if relevant, employment practices of the target company,
anti-corruption policies and enforcement, tax due diligence, data
privacy, cybersecurity, environmental reports or audits, and checks
for compliance with all relevant environmental laws.
The outcome of the due diligence analysis is considered in assessing
whether or not to proceed with an investment opportunity. Where
important areas have been identified, regular monitoring of investee
entities takes place alongside quarterly reporting on key trends and
risks where relevant.
Reinet Fund’s major investments Pension Corporation and
BAT operate in highly-regulated industries and/or markets.
Pension Corporation, for instance, is regulated by the Financial
Conduct Authority and Prudential Regulation Authority in the
United Kingdom. These companies have integrated ESG within
their business practices and are publicly reporting on material
topics, in line with externally recognised sustainability principles
and frameworks. For example, Pension Corporation is a signatory
to the United Nations’ Principles of Responsible Investment,
while BAT reports against SASB and Global Reporting Initiative
standards. Both entities also align their reporting with the TCFD.
Certain funds in which Reinet Fund invests have also incorporated
ESG factors evaluating the ESG risks and opportunities associated
with investments through pre-acquisition due diligence and ongoing
monitoring of portfolio companies.
Lastly, Reinet Fund has not adopted a formal proxy voting policy
and is not required to do so pursuant to laws and regulations
applicable to it; currently it holds no formal measurement for the
amount of assets under management that employs the integration of
ESG issues and sustainability-themed investing or screening.
Business Ethics
There have been no legal proceedings associated with fraud,
insider trading, anti-trust, anti-competitive behaviour, market
manipulation, malpractice or other related financial industry
laws or regulations in the reporting year. As a result, no monetary
losses were recorded in respect of these matters. To address the
risk of insider trading and to comply with applicable laws and
regulations, the Company has adopted a Code of Conduct. This
restricts persons connected with the Company, Reinet Fund, the
General Partners and with Reinet Investment Advisors Limited (the
‘Investment Advisor’) from trading in shares issued by the Company
and derivatives thereof (‘Reinet securities’) when in possession of
any price-sensitive information.
Specific approval to buy or sell Reinet securities is required from
designated officers of the General Partners. Transactions by members
of the board of directors of the General Partners and the Board of
Overseers, as well as any other persons closely associated with any
of them, are published on the Company’s website, in a manner that
ensures the effective dissemination of the information to the public
and through storage on the regulatory filing mechanism operated by
the Luxembourg Stock Exchange.
The Code of Conduct also imposes restrictions on dealings by
persons connected with the Company, Reinet Fund, the General
Partners and the Investment Advisor in assets in which Reinet Fund
has invested, or may consider investing in.
Reinet’s Conflict of Interest Policy, which was prepared in line
with applicable laws and regulations, aims to ensure that Reinet shall
make decisions in Reinet’s interest without any conflicts of interest.
Furthermore, the Company has adopted a policy on Related
Party Transactions to provide guidance on the current rules and
requirements for reviewing, approving and disclosing all related
party transactions.
As the Company has no employees, there is no formal whistleblowing
policy. For money laundering and terrorist financing matters, a
reporting procedure has been put in place by the Fund Manager.
The Company’s Anti-Money Laundering and Counter-Terrorist
Financing Policy has been updated during the year in compliance
with applicable laws and regulations; this policy is based on a risk-
based approach according to which a risk level is allocated to each
of Reinet Fund’s business relationships (its investors, investees and
key counterparties), which determines the level of due diligence
conducted and frequency of review.
Reinet takes a zero-tolerance approach to bribery and corruption
and is committed to acting professionally, fairly and with integrity
in all its business dealings and relationships. It has adopted an
Anti-Corruption and Bribery Policy which provides guidance and
outlines the responsibilities of all directors and employees of the
General Partners, and of those working for and on the Companies’
behalf, in observing and upholding the Companies’ position on
bribery and corruption. In addition to this, Reinet uses Transparency
International’s Corruption Perception Index and a cutting-edge
screening tool to assess the risks within its investments.
Key policies are subject to regular internal audit and any changes
are properly communicated to and well understood by relevant
individuals. Additionally, a compliance review is conducted
periodically by the internal auditor to ensure the Company and
Reinet Fund comply with their key policies. Any potential issues
identified from the assessment are promptly discussed and reported
to the General Partners, followed by appropriate corrective actions.
To ensure that policies are followed and understood, they are
available to access for all employees, and compliance is assessed
annually.
REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
Omissions from SASB
Owing to the structure of the Company, some topics identified by
SASB as material to the Asset Management and Custody Activities
industry do not apply to the Company.
Accounting metrics
Employee Diversity and Inclusion
As a securitisation vehicle incorporated as a partnership limited by
shares and managed by a general partner, the Company does not
have any operations or staff of its own. Therefore, the Company
has no executive management, non-executive management,
professionals or other employees. This means that considerations of
employee diversity and inclusion do not apply to the Company.
Activity metrics
Total Assets under Custody and Supervision
As required under applicable laws and regulations, the Company has
entrusted the custody of its assets to a credit institution established
in Luxembourg (Banque de Luxembourg). The target investments
are held by Reinet Fund, which is a regulated specialised investment
fund. Banque de Luxembourg is in charge of the supervision of
Reinet Fund’s assets.
Looking ahead
Future ambitions for the Company’s approach to sustainability
disclosure include continuing to report annually in line with the
SASB Standards and Principle number 9 of the X Principles. Reinet
will prioritise investments that pursue ESG goals.
Reinet is currently assessing its CSRD readiness, and based on
the outcomes of the assessment, Reinet will be looking to take
specific steps to ensure its alignment with the upcoming disclosure
requirements of the CSRD.
The Company has a clearly defined corporate sustainability policy
that has been communicated internally, and plans to use it to
enhance its commitment and overall approach to sustainability
going forward.
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
APPROVAL
The General Partner, acting on behalf of the Company, represented
by Wilhelm van Zyl, its Chief Executive Officer and Diane Longden,
its Chief Financial Officer, confirms that:
1. The consolidated financial statements have been prepared in
accordance with IFRS as adopted by the European Union and
give a true and fair view of the consolidated assets, liabilities,
financial position and loss of the Company and its subsidiaries
taken as a whole;
2. The Company financial statements have been prepared in
accordance with Luxembourg legal and regulatory requirements
and give a true and fair view of the Company’s assets, liabilities,
financial position and loss for the year; and
3. This report includes a fair review of the development and
performance of the business and position of the Company and
its subsidiaries taken as a whole, together with a description of
the principal risks and uncertainties that they face.
The consolidated financial statements for the year ended
31 March 2023 on pages 45 to 71 and the Company financial
statements on pages 75 to 80 of this report were approved for
submission to the annual general meeting of shareholders by the
Board of Directors of the General Partner and signed on its behalf
by Wilhelm van Zyl and Diane Longden.
Wilhelm van Zyl Diane Longden
Chief Executive Officer Chief Financial Officer
Reinet Investments Manager S.A.
General Partner
Luxembourg, 23 May 2023
MANAGEMENT REPORT
REINET INVESTMENTS S.C.A.
43 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
REPORT OF THE BOARD OF OVERSEERS
Pursuant to Articles 600-2 and 443-2 of the Luxembourg company
law and Article 18 of the Statutes, we hereby report to the shareholders’
meeting in respect of the accounting year ended 31March 2023 and
the financial statements prepared for suchperiod.
The consolidated and statutory financial statements of the
Company have been audited by the approved statutory auditor,
PricewaterhouseCoopers, Société coopérative, Luxembourg, in
accordance with international standards on auditing. The audit
reports on the consolidated and statutory financial statements
of the Company are presented on pages 72 and 82 of this
report,respectively.
We refer to those consolidated and statutory financial statements,
which we have reviewed and discussed with the approved statutory
auditor who is of the opinion that these provide a true and fair view
of the financial situation of the Company.
During the period referred to previously, we met regularly with
management, reviewed the quarterly financial reports of the
Company and have been kept fully informed by the Board of
Directors of the General Partner about developments in the
Company.
The Board of Overseers recommends that the consolidated and
statutory financial statements of the Company, to be presented
to the annual general meeting of shareholders of the Company,
beapproved.
The Board of Overseers
Reinet Investments S.C.A.
Luxembourg, 25 May 2023
44
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
45 Consolidated financial statements
45 Consolidated balance sheet
46 Consolidated statement of comprehensive income
47 Consolidated statement of changes in equity
48 Consolidated cash flow statement
49 Notes to the consolidated financial statements
72 Audit report
75 Company financial statements
75 Balance sheet
76 Profit and loss account
77 Notes to the financial statements
81 Proposed appropriation of retained earnings
82 Audit report
FINANCIAL STATEMENTS
Reinet Investments S.C.A. (the ‘Company’) has determined that it meets the definition of an investment entity under International Financial Reporting Standards 10, as
a result, its subsidiaries are consolidated in the fair value of Reinet Fund S.C.A., F.I.S., which is disclosed as one line item in the consolidated balance sheet and elsewhere
in the consolidated financial statements as ‘financial assets held at fair value through profit or loss’. The consolidated net asset value, income and cash flow statements are,
however, disclosed in more detail in the business overview as in prior years.
REINET INVESTMENTS S.C.A.
45 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
CONSOLIDATED BALANCE SHEET
Notes
31 March 2023
€ m
31 March 2022
€ m
ASSETS
Non-current assets
Financial assets held at fair value through profit or loss 4, 5 5 721 5 932
Current assets
Cash and cash equivalents - 7
Total assets 5 721 5 939
EQUITY
Equity attributable to the shareholders
Share capital 8 220 220
Share premium 770 770
Treasury shares 8 (222 ) (223 )
Non-distributable reserve 9 22 22
Retained earnings 4 930 5 101
Total equity 5 720 5 890
LIABILITIES
Current liabilities
Amounts owed to affiliated undertakings – becoming due and payable after less
than one year 10 1 3
Other current liabilities 11 - 46
Total liabilities 1 49
Total equity and liabilities 5 721 5 939
Net asset value per share (€ per share)
(based on 181.8 million shares (31 March 2022: 184.1 million shares)) 31.46 31.99
The notes on pages 49 to 71 are an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
46
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes
Year ended
31 March 2023
€ m
Year ended
31 March 2022
€ m
Income
Dividend received from Reinet Fund S.C.A., F.I.S. 55 48
Net change in the fair value of financial assets at fair value through profit or loss 4 (171 ) 556
Total income (116 ) 604
Expenses
Operating expenses 4 2
Total expenses 4 2
(Loss)/profit for the year (120 ) 602
Earnings per share from (loss)/profit for the year (€ per share)
– basic and diluted 13 (0.66 ) 3.27
The notes on pages 49 to 71 are an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
47 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the shareholders
Note
Equity
holders’
capital
€ m
Treasury
shares
€ m
Non-
distributable
reserve
€ m
Retained
earnings
€ m
Total
€ m
Balance at 31 March 2021 990 (173 ) 22 4 545 5 384
Dividend paid - - - (46 ) (46 )
Repurchased shares 8 - (50 ) - - (50 )
Profit attributable to the shareholders - - - 602 602
Balance at 31 March 2022 990 (223 ) 22 5 101 5 890
Dividend paid - - - (51 ) (51 )
Repurchased shares 8 - 1 - - 1
Loss attributable to the shareholders - - - (120 ) (120 )
Balance at 31 March 2023 990 (222 ) 22 4 930 5 720
The notes on pages 49 to 71 are an integral part of these consolidated financial statements.
48
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
CONSOLIDATED CASH FLOW STATEMENT
Year ended
31 March 2023
€ m
Year ended
31 March 2022
€ m
Cash flows from operating activities
Dividend received from Reinet Fund S.C.A., F.I.S. 55 48
Operating expenses (6 ) (2 )
Net cash from operating activities 49 46
Cash flows used in financing activities
Repayment of capital by Reinet Fund S.C.A., F.I.S. 40 10
Repurchased shares (45 ) (4 )
Dividend paid (51 ) (46 )
Net cash used in financing activities (56 ) (40 )
Net movement in cash and cash equivalents (7 ) 6
Cash and cash equivalents at beginning of the year 7 1
Cash and cash equivalents at end of the year - 7
The notes on pages 49 to 71 are an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
49 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
1.1 STATUS
in Luxembourg as a partnership limited by shares (société en
commandite par actions) and is governed by the Luxembourg law on
securitisation. The Company’s registered office is at 35, boulevard
The Company is managed by Reinet Investments Manager S.A. (the
‘General Partner’), a limited company established in Luxembourg
(société anonyme), which also owns 1 000 management shares in the
Company. The General Partner is liable for any obligations of the
Company that cannot be met out of the assets of the Company. The
General Partner’s registered office is at 35, boulevard Prince Henri,
L-1724 Luxembourg.
The Company owns the entire ordinary share capital of Reinet
Fund S.C.A., F.I.S. (‘Reinet Fund’), a specialised investment fund
established as a partnership limited by shares (société en commandite
par actions) under the laws of Luxembourg. Reinet Fund’s registered
office is at 35, boulevard Prince Henri, L-1724 Luxembourg.
Reinet Fund is managed by Reinet Fund Manager S.A. (the ‘Fund
Manager’), a limited company established in Luxembourg (société
anonyme), which also owns 1 000 management shares in Reinet
Fund. The Fund Manager is the general partner in Reinet Fund and
is liable for any obligations of Reinet Fund that cannot be met out
of the assets of Reinet Fund. The Fund Manager’s registered office is
at 35, boulevard Prince Henri, L-1724 Luxembourg.
with whom it may co-invest. Reinet Fund is advised by Reinet
Investment Advisors Limited (the ‘Investment Advisor’) under
the terms of the investment advisory agreement (the ‘Investment
AdvisoryAgreement’).
1.2 SECURITIES LISTINGS AND TRADING
The Company’s ordinary shares are listed and traded on the
Luxembourg Stock Exchange, Euronext Amsterdam and the
Johannesburg Stock Exchange; the listing on the Johannesburg
Stock Exchange is a secondary listing.
1.3 APPROVAL OF THESE FINANCIAL STATEMENTS
These consolidated financial statements have been approved by the
Board of Overseers on 15 May 2023, and by the Board of Directors
of the General Partner on 23 May 2023 for submission to the annual
general meeting of shareholders.
2. INTERNATIONAL FINANCIAL
REPORTING STANDARDS
The Company applies International Financial Reporting Standards
(‘IFRS’) as endorsed by the European Union (‘EU’). As part of its
ongoing programme, the International Accounting Standards Board
(‘IASB’) has issued new or revised IFRS during the period covered
by these financial statements.
(a) New standards and amended standards adopted in the year:
There were no new standards, interpretations and amendments
to existing standards that were effective for the year beginning
1 April 2022 that had a significant effect on the consolidated
financial statements of the Company.
(b) New standards, amendments and interpretations issued but
not effective for the year beginning 1 April 2022 and not
early adopted:
Certain new accounting standards issued by the IASB and new
interpretations issued by the International Financial Reporting
Interpretations Committee are not yet effective and have not been
applied in preparing these consolidated financial statements. None
of these are expected to have a significant effect on the consolidated
financial statements of the Company.
3. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
financial statements in so far as they relate to the Company’s ongoing
activities are set out below. These policies have been consistently
applied to both periods presented, unless otherwise stated.
Where necessary, comparative figures have been adjusted to conform
with changes in presentation in the current year.
3.1 BASIS OF PREPARATION
The financial statements are prepared in accordance with IFRS
as issued by the IASB and adopted by the EU. These financial
statements have been prepared under the historical cost convention,
as modified by the revaluation of financial assets and financial
liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires the General Partner to exercise its judgement in the process
of applying the Company’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements
are disclosed in note 6.
50
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
3.2 INVESTMENT ENTITY AND SUBSIDIARIES
3.2.1 Investment entity
The Company adopted IFRS 10, which requires that investment
entities measure their subsidiaries at fair value through profit or loss.
The General Partner considered all the facts and circumstances when
assessing whether the Company qualifies as an investment entity under
IFRS 10, such as, but not limited to, its objective of long-term capital
appreciation (as reflected in the Company’s prospectus, published
on 10 October 2008 as last amended on 25 August 2020), and its
classification of financial assets at fair value through profit or loss.
IFRS 10 determines that an investment entity is defined as an entity
which meets the following conditions:
(a) obtains funds from one or more investors for the purpose
of providing those investor(s) with investment management
services;
(b) commits to its investor(s) that its business purpose is to invest
funds solely for returns from capital appreciation, investment
income, or both; and
(c) measures and evaluates the performance of substantially all of its
investments on a fair value basis.
In assessing whether the Company meets the definition of an
investment entity as set out in IFRS 10, the General Partner
considered whether the Company has the following typical
characteristics, while noting that the absence of any one or more of
these characteristics does not necessarily disqualify an entity from
being classified as an investment entity:
(a) it has more than one investment;
(b) it has more than one investor;
(c) it has investors that are not related parties of the entity; and
(d) it has ownership interests in the form of equity or similar
interests.
The Company has multiple investors and owns the entire ordinary
share capital of Reinet Fund. The Company is exposed to variable
returns from changes in the fair value of Reinet Fund’s net assets.
Although the Company does not have multiple investments, the
General Partner believes that the Company can be classified as
an investment entity due to the fact that it was formed to give its
shareholders exposure to the underlying assets held by Reinet Fund.
In that respect, it is to be noted that an investment entity may
hold a portfolio of investments directly or indirectly, for example
by holding a single investment in another investment entity that
itself holds several investments. The Company’s investments are all
held through Reinet Fund. References to Reinet Fund include all
underlying subsidiaries.
The Fund Manager further deems Reinet Fund to meet the definition
of an investment entity.
Where applicable, the notes to the consolidated financial statements
give information at the level of Reinet Fund and its subsidiaries.
3.2.2 Subsidiaries
Subsidiaries are all entities over which the Company has control.
The Company controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The Company controls Reinet Fund through its 100 per cent holding
of the ordinary shares of Reinet Fund. The Company and Reinet
Fund operate as an integrated structure whereby the Company
currently invests solely into Reinet Fund. No subscriptions or
redemptions were made during the year. As at 31 March 2023 and
31 March 2022 there were no capital commitment obligations and
no amounts due to Reinet Fund for unsettled purchases.
The change in fair value of Reinet Fund is included in the statement
of comprehensive income in ‘Net change in the fair value of financial
assets at fair value through profit or loss’.
3.3 FOREIGN CURRENCY TRANSLATION
3.3.1 Functional and presentation currency
The performance of the Company is measured and reported to the
investors in euro. The General Partner considers the euro as the
currency which is most appropriate for the representation of the
Company’s results. The financial statements are presented in euro.
The euro is the Company’s functional and presentation currency.
3.3.2 Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign currency assets and liabilities are translated
into the functional currency using the exchange rate prevailing at
the balance sheet date.
Where assets and liabilities are denominated in a currency other
than the functional currency of the entity that holds such assets and
liabilities, foreign exchange gains and losses arising from translation
are included in the statement of comprehensive income.
Foreign exchange gains and losses relating to cash and cash
equivalents, if any, are included in the statement of comprehensive
income.
Foreign exchange gains and losses relating to the financial assets
carried at fair value through profit or loss are presented in the
statement of comprehensive income within ‘Net change in the fair
value of financial assets at fair value through profit or loss’.
3.3 FOREIGN CURRENCY TRANSLATION
3.3.1 Functional and presentation currency
The performance of the Company is measured and reported to the
investors in euro. The General Partner considers the euro as the
currency which is most appropriate for the representation of the
Company’s results. The financial statements are presented in euro.
The euro is the Company’s functional and presentation currency.
3.3.2 Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign currency assets and liabilities are translated
into the functional currency using the exchange rate prevailing at
the balance sheet date.
Where assets and liabilities are denominated in a currency other
than the functional currency of the entity that holds such assets and
liabilities, foreign exchange gains and losses arising from translation
are included in the statement of comprehensive income.
Foreign exchange gains and losses relating to cash and cash
equivalents, if any, are included in the statement of comprehensive
income.
Foreign exchange gains and losses relating to the financial assets
carried at fair value through profit or loss are presented in the
statement of comprehensive income within ‘Net change in the fair
value of financial assets at fair value through profit or loss’.
3.4 SEGMENT REPORTING
The Company’s investment in Reinet Fund is considered to be
its only segment. Segments within Reinet Fund are reported in a
manner consistent with the internal reporting provided by the Fund
Manager in respect of Reinet Fund. The Fund Manager is the chief
operating decision maker and is responsible for allocating resources
and assessing performance of the segments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
51 REINET INVESTMENTS S.C.A.
|
ANNUAL REPORT 2023
3.5 NON-IFRS DISCLOSURES
In the reporting of financial information, the Company uses certain
measures that are not required under IFRS.
Due to the secondary listing of the Company on the Johannesburg
Stock Exchange, the Company is required to present ‘headline’
earnings per share and diluted ‘headline’ earnings per share, as
alternative measures of earnings per share, calculated in accordance
with Circular 1/2021 ‘Headline Earnings’ issued by the SouthAfrican
Institute of Chartered Accountants. This is presented on page 67.
3.6 FINANCIAL ASSETS AT FAIR VALUE THROUGH
PROFIT OR LOSS
3.6.1 Classification
The Company classifies its investments based on both the
Company’s business model for managing those financial assets and
the contractual cash flow characteristics of the financial assets. The
investment in Reinet Fund is managed and performance is evaluated
on a fair value basis. The Company is primarily focused on fair value
information and uses that information to assess the financial asset’s
performance and to make decisions. Consequently, this investment
is measured at fair value through profit or loss.
Current assets are those which are expected to fall due, be receivable
or realised within 12 months from the balance sheet date. Non-
current assets are those where no realisation is currently expected
within a 12-month period from the balance sheet date.
3.6.2 Recognition, derecognition and measurement
Regular purchases and sales of investments are recognised on the
trade date – the date on which the Company commits to purchase
or sell the investment. Financial assets held at fair value through
profit or loss are initially recognised at fair value. Transaction costs
are expensed as incurred in the statement of comprehensive income.
Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or the Company has
transferred substantially all risks and rewards of ownership. Where
the Company is in the process of restructuring the ownership of
an asset, amounts which are to be sold to third parties and where
a signed contract of sale exists, are included as assets held for sale.
Subsequent to initial recognition, financial assets held at fair value
through profit or loss are measured at fair value. Gains and losses
arising from changes in the fair value are presented in the statement
of comprehensive income within ‘Net change in the fair value of
financial assets at fair value through profit or loss’ in the period in
which they arise.
Dividend income from financial assets held at fair value through
profit or loss is recognised in the statement of comprehensive income
when the Company’s right to receive payments is established.
3.6.3 Fair value estimation
The net asset value of Reinet Fund is determined by the Fund Manager.
The Company’s policy requires the Fund Manager to evaluate the
information about Reinet Fund’s financial assets and liabilities on
a fair value basis together with other related financial information.
The General Partner considers the net asset value of Reinet Fund as
determined by the Fund Manager, according to the principles outlined
in the next paragraph, to be the best estimate of fair value.
In calculating the fair value of the assets and liabilities held by Reinet
Fund, the fair value of financial assets traded in active markets (such
as publicly traded securities) is based on quoted market prices at the
balance sheet date. The quoted market price used for financial assets
is the closing bid price. The fair value of financial assets that are not
traded in an active market is determined by the Fund Manager using
valuation techniques in accordance with International Private Equity
and Venture Capital Valuation (‘IPEV’) guidelines and in compliance
with IFRS 13, Fair Value Measurement. The Fund Manager uses a
variety of valuation methods in each case considered to be most
appropriate to the assets concerned. Where necessary, valuations are
obtained by the Fund Manager from third-party experts to support
the valuations being used in the financialstatements.
Valuation techniques used include the use of comparable recent
arm’s-length transactions, reference to other instruments that have
substantially the same characteristics, discounted cash flow analysis,
option pricing models and other valuation techniques commonly
used by market participants making the maximum use of market
inputs and relying as little as possible on entity-specific inputs. For
recent investments in unquoted investments, cost may be considered
to be the best estimate of fair value (in accordance with the most
recent IPEV guidelines and in compliance with IFRS 13), for a
limited period after the date of the transaction and in the absence of
any indications to the contrary.
The net asset value of Reinet Fund is determined by the Fund Manager.
The Company’s policy requires the Fund Manager to evaluate the
information about Reinet Fund’s financial assets and liabilities on
a fair value basis together with other related financial information.
The General Partner considers the net asset value of Reinet Fund as
determined by the Fund Manager, according to the principles outlined
in the next paragraph, to be the best estimate of fair value.
In calculating the fair value of the assets and liabilities held by Reinet
Fund, the fair value of financial assets traded in active markets (such
as publicly traded securities) is based on quoted market prices at the
balance sheet date. The quoted market price used for financial assets
is the closing bid price. The fair value of financial assets that are not
traded in an active market is determined by the Fund Manager using
valuation techniques in accordance with International Private Equity
and Venture Capital Valuation (‘IPEV’) guidelines and in compliance
with IFRS 13, Fair Value Measurement. The Fund Manager uses a
variety of valuation methods in each case considered to be most
appropriate to the assets concerned. Where necessary, valuations are
obtained by the Fund Manager from third-party experts to support
the valuations being used in the financialstatements.
Valuation techniques used include the use of comparable recent
arm’s-length transactions, reference to other instruments that have
substantially the same characteristics, discounted cash flow analysis,
option pricing models and other valuation techniques commonly
used by market participants making the maximum use of market
inputs and relying as little as possible on entity-specific inputs. For
recent investments in unquoted investments, cost may be considered
to be the best estimate of fair value (in accordance with the most
recent IPEV guidelines and in compliance with IFRS 13), for a
limited period after the date of the transaction and in the absence of
any indications to the contrary.
3.7 CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits held at
call with banks, other short-term highly liquid investments with
original maturities of three months or less and bank overdrafts.
3.8 RECEIVABLES
Receivables are recognised initially at fair value and are subsequently
measured at amortised cost less loss allowance.
3.9 ACCRUED EXPENSES
Accrued expenses are recognised initially at fair value and are
subsequently measured at amortised cost less loss allowance.
3.10 TREASURY SHARES
Treasury shares are recorded at acquisition price on the trade date.
Transaction costs are expensed as incurred in the statement of
comprehensive income. A liability is recorded for unpaid amounts
under any ongoing share buyback programme.
3.11 TAXATION
The Company is registered in Luxembourg and is subject to
corporate tax as determined by Luxembourg law.
Reinet Fund may incur withholding taxes imposed by certain
countries on investment income and capital gains. Such tax on
income or gains is recorded within the fair value of the Company’s
investment in Reinet Fund.
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REINET INVESTMENTS S.C.A.
4. FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
31 March 2023
€ m
31 March 2022
€ m
Financial assets held at fair value through profit or loss
– Unlisted investments: Reinet Fund 5 721 5 932
Total financial assets at fair value through profit or loss 5 721 5 932
Net change in the fair value of financial assets at fair value through profit or loss:
– Repayment of capital received (40) (10)
– Unrealised (loss)/gain (171) 556
Total (211) 546
The investment held is in Reinet Fund, which is considered to be a related party of the Company. Also refer to note 14 for related partydisclosures.
The following table presents the movement of the investments held by Reinet Fund for the year ended 31 March 2023:
Assets held at fair value through profit
or loss
Opening
balance
1April
2022
€ m
Purchases/
(repayments)
€ m
Sale
proceeds
€ m
Realised
gains/
(losses)
in the year
€ m
Movement
in unrealised
gains/
(losses)
in the year
(1)
€ m
Closing
balance
31 March
2023
€ m
Listed investments
British American Tobacco p.l.c. (‘BAT’) 1 832 – – – (271) 1 561
Other listed investments 100 – – – (17) 83
Unlisted investments
Pension Insurance Corporation Group
Limited (‘Pension Corporation’) 2 796 6 – – (15) 2 787
Trilantic Capital Partners 385 22 (38) 21 82 472
TruArc Partners 202 66 (3) 1 35 301
Coatue funds – 50 – – – 50
Asian private equity companies and
portfoliofunds 213 22 (9) 2 (9) 219
Specialised investment funds 106 7 (6) 1 (12) 96
United States land development
andmortgages 32 (11) – – 5 26
Diamond interests 20 – (20) (12) 12 –
Other investments 81 5 – – (28) 58
5 767 167 (76) 13 (218) 5 653
Cash and liquid funds 408 288
Other assets and liabilities (243) (220)
Total 5 932 5 721
(1) Unrealised gains/(losses) in the year include accrued interest income from investments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
53 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
The following table presents the movement of the investments held by Reinet Fund for the year ended 31 March 2022:
Assets held at fair value through profit
or loss
Opening
balance
1April
2021
€ m
Purchases/
(repayments)
€ m
Sale
proceeds
€ m
Realised
gains/
(losses)
in the year
€ m
Movement
in unrealised
gains/
(losses)
in the year
(1)
€ m
Closing
balance
31 March
2022
€ m
Listed investments
BAT 1 826 – (242) 83 165 1 832
– shares held at year-end 1 574 – – – 258 1 832
– shares disposed of during the year
(2)
252 – (242) 83 (93) –
Other listed investments
(3)
96 43 – – (39) 100
Unlisted investments
Pension Corporation 2 755 – – – 41 2 796
Trilantic Capital Partners 179 128 (25) 6 97 385
TruArc Partners 161 80 (173) 123 11 202
Asian private equity companies and
portfoliofunds 242 (34) (7) – 12 213
Specialised investment funds 194 18 (102) (22) 18 106
United States land development
andmortgages 33 (10) – – 9 32
Diamond interests 17 (15) – – 18 20
Other investments 69 5 – – 7 81
5 572 215 (549) 190 339 5 767
Cash and liquid funds 506 408
Other assets and liabilities (692) (243)
Total 5 386 5 932
(1) Unrealised gains/(losses) in the year include accrued interest income from investments.
(2) The reversal of the unrealised gain on shares surrendered during the year represents the unrealised gain as at 1 April 2021.
(3) Includes € 43 million for the reclassification of the holding in Grab from ‘Asian private equity companies and portfolio funds’ to ‘Other listed investments’.
5. FINANCIAL RISKS
5.1 FINANCIAL RISK FACTORS
The Company has a sole investment in Reinet Fund, therefore the
General Partner of the Company relies on the risk management
procedures performed by the Fund Manager, and thus the risk
management disclosures set out below are at the level of Reinet Fund.
The Company, through its investment in Reinet Fund, is exposed
to a variety of financial risks including market risk (ie currency risk,
fair value interest rate risk, cash flow interest rate risk and price risk),
credit risk and liquidity risk.
The Fund Manager seeks to maximise the returns derived for the
level of risk to which Reinet Fund is exposed and seeks to minimise
potential adverse effects on financial performance. Reinet Fund’s
investment policy allows it to use derivative financial instruments
to both moderate and create certain risk exposures. All investments
present a risk of loss of capital. The management of these risks is
carried out by the Fund Manager.
Reinet Fund will use different methods to measure and manage
the various types of risks to which it is exposed; these methods are
explained on the following pages. There have been no changes in the
methods used in the year under review.
Global markets continued to be impacted by the effects of the ongoing
Ukraine crisis, increasing interest rates and rising inflation. Whilst the
world has made significant progress in its recovery from the impacts
of COVID-19, general economic and geopolitical concerns remain
elevated. As a result, higher levels of risk and uncertainty continue
to exist and markets are likely to remain volatile for some time,
and thereby continue to have a possible influence on the value and
prospects of the investments held by Reinet Fund.
54
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
5.1.1 Market risk
Reinet Fund – Financial assets and liabilities subject to market risk
31 March 2023
Total
€ m
Price risk
€ m
Foreign
exchange
risk
€ m
Interest
rate risk
€ m
Assets
Listed equity securities 1 644 1 644 1 644 –
Unlisted equity securities and funds 3 990 3 990 3 952 –
Loans and interest receivable 19 – 19 19
5 653 5 634 5 615 19
Cash and cash equivalents 288 234 288 –
Other assets 32 – 32 –
Total assets 5 973 5 868 5 935 19
Liabilities
Borrowings (217) – (217) (217)
Other liabilities (35) – (5) –
Total liabilities (252) – (222) (217)
Total investment in Reinet Fund 5 721
31 March 2022
Total
€ m
Price risk
€ m
Foreign
exchange
risk
€ m
Interest
rate risk
€ m
Assets
Listed equity securities 1 932 1 932 1 932 –
Unlisted equity securities and funds 3 786 3 786 3 751 –
Loans and interest receivable 49 – 49 49
5 767 5 718 5 732 49
Derivative financial instruments 1 1 1 1
Cash and cash equivalents 408 246 407 –
Other assets 31 – 31 –
Total assets 6 207 5 965 6 171 50
Liabilities
Borrowings (233) – (233) (233)
Other liabilities (42) – (18) –
Total liabilities (275) – (251) (233)
Total investment in Reinet Fund 5 932
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
55 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
5.1.1.1 Price risk
Reinet Fund is exposed to price risk. This arises from the investments
held by Reinet Fund for which prices in the future are uncertain.
The fair value of listed securities is dependent upon stock exchange
movements which are determined by the market’s expectations
reflecting interest rates, sentiment, volatility, currency and other
factors both specific to each investment and those affecting the market
as a whole. Investments in venture capital and start-up projects will
also tend to have higher price volatility than more mature investments.
Where non-monetary financial instruments are denominated in
currencies other than the euro, the price initially expressed in foreign
currency and then converted into euro will also fluctuate because of
changes in foreign exchange rates. Note 5.1.1.2 ‘Foreign exchange risk’
sets out how this component of price risk is managed and measured.
Reinet Fund’s policy is to manage price risk through the diversification
and selection of securities and other financial instruments. It is
expected that this diversification policy will be implemented on a
measured basis, over a period of time.
Reinet Fund’s exposure to price risk in respect of long-term assets and liabilities was as follows:
31 March 2023
€ m
31 March 2022
€ m
Listed equity securities
– BAT 1 561 1 832
– Other listed investments 83 100
Unlisted equity securities and funds
– Pension Corporation 2 787 2 796
– Others 1 203 990
5 634 5 718
Derivative financial assets – 1
Total exposure to price risk 5 634 5 719
During the years ended 31 March 2023 and 31 March 2022, Reinet Fund’s exposure to various industry sectors was principally in respect of
its indirect investments held in BAT and Pension Corporation. This represented some 76 per cent of the net asset value of Reinet Fund as at
31March 2023 (31 March 2022: 78 per cent).
The table below summarises the sensitivity of Reinet Fund’s assets to price movements as at 31 March 2023 and 31 March 2022.
The analysis is based on the assumption that prices would increase or decrease by 20 per cent with all other variables held constant. The change
is based on a reasonable possible change in the fair value of the investments held as at year-end.
31 March 2023
€ m
31 March 2022
€ m
Effect of a 20 per cent increase in prices
Effect on equity securities and funds 1 174 1 144
Effect on net assets 1 174 1 144
Effect of a 20 per cent decrease in prices
Effect on equity securities and funds (1 174) (1 144)
Effect on net assets (1 174) (1 144)
56
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
5.1.1.2 Foreign exchange risk
Reinet Fund operates internationally and holds both monetary
and non-monetary assets denominated in currencies other than
the euro, primarily the US dollar, sterling and South African rand.
Foreign currency risk, as defined in IFRS 7, arises as the value of
future transactions, recognised monetary assets and monetary
liabilities denominated in other currencies fluctuate due to changes
in foreign exchange rates. IFRS 7 considers the foreign exchange
exposure relating to non-monetary assets and liabilities to be a
component of market price risk not foreign currency risk. The Fund
Manager, however, monitors the exposure on all foreign currency
denominated assets and liabilities, and hence, the table below has
been analysed between monetary and non-monetary items to meet
the requirements of IFRS 7.
Reinet Fund’s policy is currently to minimise its exposure to
monetary foreign exchange movements on liquid funds by holding
such liquid funds in euro, US dollar and sterling where there
are corresponding US dollar and sterling liabilities. That policy
may change to reflect the Fund Manager’s view as to the likely
development of foreign exchange rates in the medium-term or to
take account of requirements for funds for investment purposes in
currencies other than the euro. Where appropriate, Reinet Fund
may enter into foreign exchange hedging transactions. The exposure
to sterling has been partially hedged by borrowings in this currency.
When the Fund Manager formulates a view on the future direction
of foreign exchange rates and the potential impact on Reinet Fund,
the Fund Manager factors that into its resource allocation decisions.
While Reinet Fund may have direct exposure to foreign exchange
rate changes on the price of non-euro denominated securities, it
may also be indirectly affected by the impact of foreign exchange
rate changes on the earnings of certain companies in which it
invests, most notably BAT and Pension Corporation. For that
reason, the sensitivity analysis will not necessarily indicate the total
effect on Reinet Fund’s net assets of future movements in foreign
exchangerates.
Reinet Fund has certain investments in foreign operations, whose
net assets are exposed to foreign currency translation risk. Where
appropriate, borrowings in foreign currencies may be used as a
natural hedge of foreign currency assets. Currency exposure arising
from the net assets of the foreign operations is managed where
considered necessary through borrowings denominated in the
relevant foreign currencies.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
57 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
The table below summarises Reinet Fund’s assets and liabilities by currency as at 31 March 2023:
Concentration of assets and liabilities
by currency
GBP USD ZAR EUR Total
€ m £ m € m $ m € m R m € m € m
Assets
Monetary assets
Cash and liquid funds 144 126 144 156 – – – 288
Non-monetary assets
BAT 1 561 1 372 – – – – – 1 561
Other listed investments – – 83 90 – – – 83
Pension Corporation 2 787 2 450 – – – – – 2 787
Trilantic Capital Partners – – 436 473 – – 36 472
TruArc Partners – – 301 327 – – – 301
Coatue funds – – 50 54 – – – 50
Asia private equity companies and
portfolio funds – – 219 237 – – – 219
Specialised investment funds 1 1 93 101 – 6 2 96
United States land development
and mortgages – – 26 28 – – – 26
Other investments 6 6 52 56 – – – 58
Other assets 32 28 – – – – – 32
Total assets 4 531 3 983 1 404 1 522 – 6 38 5 973
Percentage of total assets 75.9% 23.5% – 0.6% 100%
Liabilities
Monetary liabilities
Borrowings (217) (190) – – – – – (217)
Non-monetary liabilities
Fees payable, other liabilities and minority
interest – – (5) (5) – – (30) (35)
Total liabilities (217) (190) (5) (5) – – (30) (252)
Percentage of total liabilities 86.1% 2.0% – 11.9% 100%
Reinet Fund NAV 4 314 1 399 – 8 5 721
Percentage of NAV 75.4% 24.5% – 0.1% 100%
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
The table below summarises Reinet Fund’s assets and liabilities by currency as at 31 March 2022:
Concentration of assets and liabilities by
currency
GBP USD ZAR EUR Total
€ m £ m € m $ m € m R m € m € m
Assets
Monetary assets
Cash and liquid funds 203 171 204 225 – – 1 408
Non-monetary assets
BAT 1 832 1 543 – – – – – 1 832
Other listed investments – – 100 111 – – – 100
Pension Corporation 2 796 2 355 – – – – – 2 796
Trilantic Capital Partners – – 355 392 – – 30 385
TruArc Partners – – 202 224 – – – 202
Asia private equity companies and
portfolio funds – – 213 236 – – – 213
Specialised investment funds 1 – 99 110 1 20 5 106
United States land development
and mortgages – – 32 36 – – – 32
Diamond interests – – – – 20 316 – 20
Other investments 26 22 55 61 – – – 81
Derivative financial instruments – – 1 1 – – – 1
Other assets 31 26 – – – – – 31
Total assets 4 889 4 117 1 261 1 396 21 336 36 6 207
Percentage of total assets 78.8% 20.3% 0.3% 0.6% 100%
Liabilities
Monetary liabilities
Borrowings (233) (196) – – – – – (233)
Non-monetary liabilities
Fees payable, other liabilities and minority
interest – – (18) (20) – – (24) (42)
Total liabilities (233) (196) (18) (20) – – (24) (275)
Percentage of total liabilities 84.7% 6.6% – 8.7% 100%
Reinet Fund NAV 4 656 1 243 21 12 5 932
Percentage of NAV 78.5% 20.9% 0.4% 0.2% 100%
Changes in value due to movement in foreign
exchange rates, applying the March 2023
foreign exchange rates to the March 2022 assets
and liabilities (195) 26 (5) (174)
Management of the Fund Manager monitors Reinet Fund’s foreign exchange exposure in respect of monetary assets on a weekly basis and the
Board of Directors of the Fund Manager reviews it at each meeting.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
59 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
The table below summarises the sensitivity of Reinet Fund’s assets and liabilities to changes in foreign exchange movements at year-end in
absolute terms. The analysis is based on the assumptions that the relevant foreign exchange rate increased/decreased by 10 per cent to the euro,
with all other variables held constant. This increase or decrease in the net assets attributable to shareholders arises mainly from a change in the
fair value of UK equities, notably the investments held in BAT and Pension Corporation, and other investments denominated in US dollar that
are classified as financial assets held at fair value through profit or loss.
Movement in each currency against euro
31 March 2023
Increase or decrease
€ m
31 March 2022
Increase or decrease
€ m
Sterling
Monetary 7 3
Non-monetary 439 469
US dollar
Monetary 4 20
Non-monetary 126 104
Applying current year exchange rates to the 31 March 2022 assets
and liabilities would have resulted in a decrease in value of some
€174 million, due to the weakening of sterling and the SouthAfrican
rand, offset by the strengthening of the US dollar against the euro.
5.1.1.3 Interest rate risk
Interest rate risk arises from the effects of fluctuations in the
prevailing levels of market interest rates on the fair value of financial
assets and liabilities and future cash flows. Reinet Fund holds fixed
interest loans and has long-term borrowings that expose it to fair
value interest rate risk.
As at 31 March 2023, Reinet Fund held financial assets with
fixed interest rates amounting to € 19 million (31 March 2022:
€41 million) and with variable interest rates amounting to € nil
(31March 2022: € 8 million).
In respect of financial assets with variable interest rates, a movement
in interest rates of 100 basis points, with all other variables held
constant, would result in an impact on operating results of € nil at
31 March 2023 (31 March 2022: € 0.1 million).
Borrowings at variable rates expose Reinet Fund to cash flow
interest rate risk, this is partly offset by cash and financial assets held
at variable rates. Borrowings at variable rates amounted to € nil at
31March 2023 (31 March 2022: € nil).
Changes in interest rates affect the fair value of fixed interest
financial assets and liabilities. A change in interest rates of
100 basis points would increase/decrease the fair value by € 4 million
at 31March2023 (31 March 2022: € 4 million).
Reinet Fund may also be indirectly affected by the impact of interest
rate changes on the earnings of its investments and the impact on
the investment valuations that use interest rates as an input in the
valuation model. The sensitivity analysis may not indicate the total
effect on the movement in these interest rates.
The Fund Manager monitors Reinet Fund’s overall interest rate
sensitivity on a regular basis.
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REINET INVESTMENTS S.C.A.
5.1.2 Credit risk
Reinet Fund is exposed to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when they fall due.
The main credit risk to which Reinet Fund is exposed arises from bank deposits, bonds, loans to third parties and borrowings where Reinet Fund’s
assets are pledged in favour of a third-party. Reinet Fund is also exposed to counterparty credit risk on other receivable balances.
Reinet Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management
consider both historical analysis and forward-looking information in determining any expected credit loss.
Reinet Fund’s policy to manage this risk is to place funds only with banks which have strong credit ratings.
The analysis below summarises the credit quality of Reinet Fund’s cash and liquid funds.
31 March 2023 31 March 2022
Banks by rating category (Moody’s) € m % € m %
Aaa 234 81 246 60
Aa1 – – 42 10
Aa3 19 7 24 6
A1 1 – – –
A2 14 5 52 13
A3 20 7 44 11
Total 288 100 408 100
In addition, Reinet Fund has the following investments and receivables that are exposed to credit risk:
31 March 2023 31 March 2022
€ m % € m %
Loans to private equity interests at fair value 19 100 49 98
Derivative instruments – – 1 2
Total 19 100 50 100
Investments in loans are reviewed periodically and revalued where
necessary. The loans are neither rated nor listed.
All transactions in listed securities are settled/paid for upon delivery
using approved brokers. The risk of default is considered minimal, as
delivery of securities sold is only made once the broker has received
payment. Payment is made on a purchase once the securities have
been received by the broker. The trade will fail if either party fails to
meet its obligation.
5.1.3 Liquidity risk
Liquidity risk is the risk that Reinet Fund may not be able to generate
sufficient cash resources to settle its obligations in full as they fall due
or can only do so on terms that are materially disadvantageous. The
FundManager monitors Reinet Fund’s liquidity position on a daily basis.
During the year under review, Reinet Fund obtained a fixed-rate
£100million margin loan from Citibank N.A. The loan is repayable
in August 2024.
In addition, Reinet Fund obtained a fixed-rate £ 100 million margin
loan from Bank of America, N.A. The loan is repayable in March 2025.
Some 13.8 million BAT shares have been pledged to collateralise these
two loans.
Reinet Fund has a facility agreement in place with Citibank N.A. up to
19 August 2024 and with Bank of America, N.A. up to 21 March 2025.
The borrowing facilities allow Reinet to drawdown the equivalent of up
to € 227 million (£ 200 million) in a combination of currencies to fund
further investment commitments. As at 31 March 2023, Reinet Fund
has not drawn any amount under these facilities.
As at 31 March 2023, 70.1 per cent of the net asset value of
Reinet Fund’s invested assets are not actively traded on a stock
exchange. Reinet Fund’s listed investment in BAT is considered
readily realisable as its shares are traded with significant daily
volumes on the London Stock Exchange.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
61 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
The table below shows the contractual undiscounted cash flows in respect of borrowings and interest thereon.
Payments due at 31 March 2023
31 March 2023
€ m
31 March 2024
€ m
31 March 2025
€ m
Borrowings GBP 200 million – – 217
Payments due at 31 March 2022
Borrowings GBP 200 million – – 233
5.2 CAPITAL RISK MANAGEMENT
The Company’s principal objective when managing capital is to
safeguard its ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders
and to maintain a strong capital base to support the development of
its investment activities.
Capital is comprised of share capital, share premium, non-
distributable reserves, retained earnings and treasury shares
asapplicable.
Reinet Fund is not subject to any externally imposed capital
requirements other than any minimum capital requirement imposed
by applicable laws and regulations (currently a minimum capital
of€ 1 250 000 is required by law).
During the year, Reinet Fund complied with the above requirement
and reported a net asset value of € 5 721 million as at 31 March2023
(31 March 2022: € 5 932 million).
During the year under review, a dividend of some € 51 million
(31March 2022: € 46 million) was paid to shareholders. In addition,
2.3 million shares were repurchased for a cost of € 45 million
(31March 2022: 0.2 million shares for a cost of € 4 million). There
have been no other changes in capital in the year other than profits
generated in the ordinary course of business.
5.3 FAIR VALUE ESTIMATION
The Company and Reinet Fund have established a control
framework with respect to the measurement of fair values. This
includes a valuation role that is responsible for co-ordinating all
significant fair value measurements, including level 3 fair values, and
reports directly to the Chief Financial Officer (‘CFO’).
Where necessary, independent external valuation experts may
be engaged to assist in the assessment of the fair value of those
investments where market observable data is limited. A review is
carried out on a quarterly basis of all fair values based on latest
available financial information. The CFO reviews significant
unobservable inputs and valuation adjustments.
Consideration is also given to the classification of each investment
into the fair value hierarchy to reflect the level of judgement involved
in estimating fair values. Where a transfer between levels is required
in the reporting period, the transfer is deemed to have occurred at
the beginning of the reporting period.
All investment valuations, including significant valuation issues are
reported to the Board of Overseers and the Board of Directors of the
Fund Manager and General Partner on a quarterly basis.
In accordance with IFRS 13 the Company classifies fair value
measurements using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The
fair value hierarchy has the following levels:
• Quoted prices (unadjusted) in active markets for identical assets
(level 1);
• Inputs other than quoted prices included within level 1 that are
observable for the asset, either directly (ie as prices) or indirectly
(ie derived from prices) (level 2); and
• Inputs for the assets that are not based on observable market data
(ie unobservable inputs) (level 3).
The level in the fair value hierarchy within which the fair value
measurement is categorised in its entirety is determined on the
basis of the lowest level input that is significant to the fair value
measurement in its entirety. For this purpose, the significance
of an input is assessed against the fair value measurement in its
entirety. If a fair value measurement uses observable inputs that
require significant adjustment based on unobservable inputs, that
measurement is a level 3 measurement. Assessing the significance of a
particular input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset orliability.
The determination of what constitutes ‘observable’ requires
significant judgement. The Company considers observable data
to be market data that is readily available, regularly distributed or
updated, reliable and verifiable, not proprietary, and provided by
independent sources that are actively involved in the relevantmarket.
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The following table analyses, within the fair value hierarchy, the Company’s financial assets and liabilities measured at fair value at year-end:
31 March 2023
Level 1
€ m
Level 2
€ m
Level 3
€ m
Total
€ m
Assets
Financial assets designated at fair value through profit or loss:
– Investment in Reinet Fund – – 5 721 5 721
Total – – 5 721 5 721
31 March 2022
Assets
Financial assets designated at fair value through profit or loss:
– Investment in Reinet Fund – – 5 932 5 932
Total – – 5 932 5 932
The Company had no transfers between level 2 and level 3 during the year.
The following table presents the movement in level 3 investments for the Company for the years ended 31 March 2023 and 31 March 2022:
31 March 2023
€ m
31 March 2022
€ m
Opening balance 5 932 5 386
Distribution of capital (40) (10)
(Loss)/gain for the year (171) 556
Closing balance 5 721 5 932
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
63 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
The following tables analyse, within the fair value hierarchy, Reinet Fund’s financial assets and liabilities measured at fair value:
31 March 2023
Level 1
€ m
Level 2
€ m
Level 3
€ m
Total
€ m
Assets
Financial assets designated at fair value through profit or loss:
– Equity securities and funds 1 644 141 3 849 5 634
– Loans – – 19 19
Total 1 644 141 3 868 5 653
Liabilities
Borrowings – (217) – (217)
Total – (217) – (217)
Net 5 436
Other assets/(liabilities) 285
Reinet Fund net asset value 5 721
31 March 2022
Level 1
€ m
Level 2
€ m
Level 3
€ m
Total
€ m
Assets
Financial assets designated at fair value through profit or loss:
– Equity securities and funds 1 932 141 3 645 5 718
– Loans – – 49 49
Derivative financial instruments – 1 – 1
Total 1 932 142 3 694 5 768
Liabilities
Borrowings – (233) – (233)
Total – (233) – (233)
Net 5 535
Other assets/(liabilities) 397
Reinet Fund net asset value 5 932
Investments whose values are based on quoted market prices in
active markets, and therefore classified within level 1, include active
listed equities. Reinet Fund does not adjust the quoted price for
theseinstruments.
Financial instruments that trade in markets that are not considered
to be active but are valued based on quoted market prices, dealer
quotations or alternative pricing sources supported by observable
inputs, as well as open-ended funds are classified within level 2.
Aslevel 2 investments include positions that are not traded in active
markets and/or are subject to transfer restrictions, valuations may be
adjusted to reflect illiquidity and/or non-transferability, which are
generally based on available market information.
Investments classified within level 3 have significant unobservable
inputs, as they trade infrequently. Level 3 instruments include the
Company’s investment in Reinet Fund, which in turn includes
investments in unlisted equities, private equity funds and loans. As
observable prices are not available for these investments, ReinetFund
has used fair values obtained from audited and unaudited financial
statements provided by fund managers, valuations obtained from
third-party experts using appropriate valuation methods, and
discounted cash flow analyses to derive fair values.
As noted in 5.1.1.1 Reinet Fund holds shares in BAT, these shares are
listed on the London Stock Exchange and movements in the share
price could have a significant effect on the value of Reinet Fund.
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REINET INVESTMENTS S.C.A.
Sensitivity of level 3 investments
Level 3 valuations are reviewed on a regular basis by the Board
of Overseers, who consider the appropriateness of the valuation
models used, as well as the results using various valuation techniques
generally recognised as standard within the fund industry.
Unobservable inputs and the resulting estimated fair values are based
on the best information available at each reporting date. Changes
in fair values due to updated inputs and new information will be
recorded in the period in which they occur. Given the nature of
the investments and their underlying risks and uncertainties there
is a wide range of potential outcomes in respect of these estimated
fair values which may vary significantly from the fair value figures
presented.
The table below summarises for each of Reinet Fund’s significant
level 3 investments the valuation methodology used and any
significant unobservable inputs used in calculating the value of the
investment as at 31 March 2023. The table is not intended to be
all-inclusive, but rather provides information which Reinet Fund
regards as significant in respect of unobservable inputs and their
sensitivity to reasonable change.
Unlisted investments
Fair value at
31 March
2023
€ m
Primary valuation
technique
Unobservable
inputs
Range
(weighted
average)
Reasonable
possible
change +/-
(absolute
value)
(1)
€ m
Pension Corporation 2 787
Market comparable
companies
(2)
Market multiples 0.85 – 1.04
(0.94)
-267/+296
Discount 5% – 15%
(10%)
+155/-155
Trilantic Capital Partners 472 Net asset value
(3)
n/a n/a n/a
TruArc Partners 301 Net asset value
(3)
n/a n/a n/a
Coatue funds 50 Net asset value
(3)
n/a n/a n/a
Asian private equity companies and
portfolio funds 74 Net asset value
(3)
n/a n/a n/a
4 Discounted cash flow Discount rate n/a Not significant
Specialised investment funds 76 Net asset value
(3)
n/a n/a n/a
20 Recent financing round Discount n/a Not significant
United States land development
and mortgages
26 Discounted cash flow
(4)
Discount rate 10% – 30% +3/-2
(14.4%)
Other investments 16 Net asset value
(3)
n/a n/a n/a
42 Recent financing round Discount n/a Not significant
Total 3 868
(1) The reasonable possible change is calculated based on the range of unobservable inputs indicated in the table and is only an indication of the sensitivity of such inputs. A larger change in value
could arise as a result of other factors which may occur after the reporting date.
(2) The market multiples for the peer group were considered and used as a basis in calculating the estimated fair value of the investment; a movement of 10 per cent has been applied for calculating
the reasonable possible change for this factor, as this is deemed as a reasonable market movement by management. A discount of 10 per cent was applied to recognise in part the lack of
liquidity in the unlisted shares; a movement of 5 per cent has been applied for calculating the reasonable possible change for this factor, as this is deemed as a reasonable market movement by
management. This investment has also been reviewed by a third-party valuation expert.
(3) Reinet Fund has relied upon the latest available net asset value data provided by investment/fund managers, adjusted for changes in the value of listed investments included in the portfolios
and cash movements up to 31 March 2023, as applicable. No sensitivity analysis has been performed on the underlying data as no significant unobservable input has been identified at the
level of Reinet Fund.
(4) Included in this investment are US land lots and properties which have been valued at 31 December 2022 on a discounted cash flow approach. Mortgage loans receivable and mortgages
payable have been valued using a discounted cash flow approach. Discount rates in the range of 10 per cent to 30 per cent have been applied in determining the fair values of the mortgages
based on the level of risk and estimated timing of repayment. Changes in land values would also affect the value of the investment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
65 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
6. CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS
6.1 CRITICAL ACCOUNTING ESTIMATES AND
ASSUMPTIONS
The General Partner must make estimates and assumptions
concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are addressed below.
Fair value of unquoted investments
The Company holds an investment in Reinet Fund. The value
of Reinet Fund is determined by the Fund Manager who applies
various valuation techniques in valuing the underlying assets. The
General Partner considers the net asset value of Reinet Fund as
determined by the Fund Manager to be the fair value.
The fair value of investments not quoted in an active market may
be determined by the Fund Manager using reputable pricing
sources (such as pricing agencies) or indicative prices from
bond/debt market makers. Broker quotes as obtained from the
pricing sources may be indicative and not executable or binding.
The Fund Manager exercises judgement and estimates on the
quantity and quality of pricing sources used. Where no market
data is available, the Fund Manager may value positions using its
own models, which are based on valuation methods and techniques
generally recognised as standard within the industry. The inputs into
these models are primarily earnings multiples and discounted cash
flows. The models used to determine fair values are validated and
periodically reviewed by personnel independent of the party that
created them. The models used for private equity securities are based
mainly on earnings multiples, adjusted for lack of marketability and
control premiums. The models used for debt securities are based
on the net present value of estimated future cash flows, adjusted as
appropriate for liquidity, and credit and market risk factors.
Models use observable data to the extent practicable. However,
areas such as credit risk (both own and counterparty), volatilities
and correlations require management to make estimates. Changes in
assumptions about these factors could affect the reported fair value
of financial instruments.
The determination of what constitutes ‘observable’ requires
significant judgement by the Fund Manager. The Fund Manager
considers observable data to be market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
Taxation
Subsidiaries of Reinet Fund are subject to income taxes in several
jurisdictions. Judgement is required in determining the worldwide
provision for income taxes. There are transactions and calculations
for which the ultimate tax determination is uncertain. Reinet Fund
recognises liabilities for anticipated tax payments using estimates
of the amount of taxes due. Where the final outcome is different
from the amounts that were initially recorded, such differences will
impact the current and deferred income tax assets and liabilities in
the period in which such determination is made.
6.2 CRITICAL JUDGEMENTS
Functional currency
The General Partner considers the euro to be the currency that
most appropriately represents the economic effect of the underlying
transactions, events and conditions. The euro is the currency in
which Reinet Fund measures its performance and reports its results.
Investment entity
The Company has multiple investors and owns the entire ordinary
share capital of Reinet Fund. The Company is exposed to variable
returns from changes in the fair value of Reinet Fund’s net assets.
Although the Company does not have multiple investments, the
General Partner believes that the Company can be classified as
an investment entity due to the fact that it was formed to give its
shareholders exposure to the underlying assets held by Reinet Fund.
In that respect it is to be noted that an investment entity may hold
a portfolio of investments directly or indirectly, for example by
holding a single investment in another investment entity that itself
holds several investments. The Company’s investments are all held
through Reinet Fund.
The Fund Manager further deems Reinet Fund to meet the definition
of an investment entity.
7. SEGMENT INFORMATION
Due to the Company’s sole investment in Reinet Fund, the General
Partner of the Company relies on the segment analysis performed
by the Fund Manager.
The Fund Manager makes the strategic resource allocations on
behalf of Reinet Fund according to its investment portfolio as
disclosed innote 4.
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REINET INVESTMENTS S.C.A.
8. SHARE CAPITAL
Ordinary share capital
31 March 2023
€ m
31 March 2022
€ m
Issued capital
195 941 286 (31 March 2022: 195 941 286) ordinary shares issued, fully paid with no par value 220 220
The ordinary shares (excluding the treasury shares, the voting and
dividend rights attached to which are suspended) confer on the
shareholder the entitlement to participate in and to vote at meetings
of shareholders, with each share carrying the right to one vote
as well as the entitlement to receive a proportionate share of any
dividend that the Company may declare. Each share also entitles
each shareholder to receive a proportionate share of the net assets of
the Company on liquidation. The liability of shareholders is limited
to the amount of their investment in the Company.
The relevant movements in the capital are shown on the statement
of changes in equity.
The ordinary shares are listed and traded on the Luxembourg Stock
Exchange, on Euronext Amsterdam and on the Johannesburg Stock
Exchange; the listing on the Johannesburg Stock Exchange is a
secondary listing.
Management share capital
31 March 2023
€ 000’s
31 March 2022
€ 000’s
Issued capital
1 000 (31 March 2022: 1 000) management shares issued, fully paid with no par value 1 1
The management shares are held by the General Partner and confer
the same rights with regard to voting, dividends and the distribution
of assets on liquidation as the ordinary shares. In addition, as the
holder of management shares, the General Partner has broad
powers to manage the Company and has unlimited liability for any
obligations of the Company that cannot be met from the assets of
the Company.
Treasury shares
All ordinary shares repurchased are held as treasury shares and are
recorded at cost, being the price paid on the acquisition date.
On 19 November 2018, the Company announced the commencement
of a share buyback programme in respect of a maximum of 3.2 million
ordinary shares for an aggregate maximum amount of € 55 million.
The programme ran from 20 November 2018 to 30 January 2019
when 3 200 000 ordinary shares were repurchased for a cost of
€ 42 million, plus transaction costs.
On 6 February 2019, the Company announced the commencement
of a second share buyback programme in respect of a maximum
of 5 million ordinary shares for an aggregate maximum amount
of € 75 million. The programme ran from 11 February 2019 to
31May 2019 when 3 449 689 ordinary shares were repurchased for
a cost of € 50 million, plus transaction costs.
On 14 June 2019, the Company announced the commencement
of a third share buyback programme in respect of a maximum of
2.75 million ordinary shares for an aggregate maximum amount
of € 44 million. The programme ran from 19 June 2019 to
23August2019 when 2 047 348 ordinary shares were repurchased
for a cost of € 31 million, plus transaction costs.
On 6 September 2019, the Company announced the commencement
of a fourth share buyback programme in respect of a maximum of
3.1 million ordinary shares for an aggregate maximum amount
of € 50 million. The programme ran from 11 September 2019
to 27 November 2019 when 2 954 358 ordinary shares were
repurchased for a cost of € 50 million, plus transaction costs.
On 24 March 2022, the Company announced the commencement
of a fifth share buyback programme in respect of a maximum of
2.5 million ordinary shares for an aggregate maximum amount
of € 50 million. The programme ran from 28 March 2022 to
23May2022 when 2 500 000 ordinary shares were repurchased for
a cost of € 49 million, plus transaction costs.
All ordinary shares repurchased are held as treasury shares.
As at 31 March 2023, there was no share buyback programme
inprogress.
Number of shares
Cost
€ m
Repurchased shares
1
st
buyback programme 3 200 000 42
2
nd
buyback programme 3 449 689 50
3
rd
buyback programme 2 047 348 31
4
th
buyback programme 2 954 358 50
5
th
buyback programme 2 500 000 49
Total treasury shares held as at 31 March 2023 14 151 395 222
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
67 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
9. NON-DISTRIBUTABLE RESERVE
The legal reserve amounting to € 22 million at 31 March 2023 and
31 March 2022 is not available for distribution.
10. AMOUNTS OWED TO AFFILIATED
UNDERTAKINGS
The amount payable includes the fee payable to the General
Partner of € 0.8 million and € 0.7 million due to Reinet Fund at
31March2023 (31 March 2022: € 0.9 million and € 2.3 million).
The amounts owed to affiliated undertakings are measured at
amortised cost less loss allowance, with the carrying amount
approximating fair value at 31 March 2023.
11. OTHER CURRENT LIABILITIES
Other current liabilities are measured at amortised cost less loss
allowance, with the carrying amount approximating fair value at
31March 2023.
12. TAX EXPENSE
Under the current laws of Luxembourg, the Company pays
corporation tax on profits at rates enacted in Luxembourg. The
General Partner does not expect significant taxes to be payable for
the current year or in the near future, due to the structure of the
Company, dividends declared by the Company being tax deductible,
and given that the Company has assessed operating losses available
to it at the year-end.
13. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the (loss)/profit for the year attributable to the shareholders by the weighted average number
of shares in issue during the year.
31 March 2023 31 March 2022
€ millions
(Loss)/profit for the year (120) 602
Millions of shares
Shares outstanding at beginning of year (excluding treasury shares) 184.1 184.3
Effect of repurchased shares in the year (2.1) –
Weighted average number of ordinary shares in issue 182.0 184.3
€ per share
Earnings per share from (loss)/profit for the year – basic and diluted (0.66) 3.27
The Company has not issued any shares or other instruments that are considered to have dilutive potential. There were no movements in the
year ended 31 March 2023.
The presentation of headline earnings per share, as an alternative measure of earnings per share, is mandated under the JSE Listings Requirements.
It is calculated in accordance with Circular 1/2021 ‘Headline Earnings’, as issued by the South African Institute of Chartered Accountants.
Headline earnings per share
31 March 2023
€ per share
31 March 2022
€ per share
Unadjusted earnings per share (0.66) 3.27
Headline earnings per share (0.66) 3.27
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REINET INVESTMENTS S.C.A.
14. RELATED PARTY TRANSACTIONS
The Company has a number of relationships and transactions with
related parties, as defined in IAS 24, Related party transactions, all of
which have been conducted on an arm’s-length basis and on normal
market terms.
All related parties are categorised as ‘other related parties’
under IAS24, except for the Boards of Directors of the General
Partner and the Fund Manager, which is categorised as ‘key
managementpersonnel’.
Parties identified as related parties are:
COMPAGNIE FINANCIÈRE RICHEMONT SA
(‘CFR SA’)
The Company has identified CFR SA, a public company
incorporated in Switzerland, as a related party.
Although the management of the Company is distinct from CFRSA,
a number of executives who have management responsibilities
for the Company are also employed by a subsidiary of CFR SA.
MrRupert is also the Chairman of CFR SA.
RLG REAL ESTATE PARTNERS L.P.
In 2018, Reinet Fund committed to invest in RLG Real Estate
Partners L.P. (‘RLG’), a property fund managed by a subsidiary
of CFR SA. RLG invests in and develops real estate properties,
including luxury brand retail developments situated in prime
locations throughout the world. At year-end, Reinet Fund’s
investment in RLG was fully redeemed.
THE ANTON RUPERT TRUST, THE ANTON
RUPERT DESCENDANTS TRUST AND AFFILIATED
PARTIES
The Anton Rupert Trust, the Anton Rupert Descendants Trust
and affiliated parties hold some 48.8 million Company shares
representing 24.93 per cent of the Company’s issued share capital.
The group of parties regarded as being affiliated to the AntonRupert
Trust and the Anton Rupert Descendants Trust includes entities and
persons which are not necessarily closely connected with persons
discharging managerial responsibilities within the Company, as
defined in Article 3 paragraph 1 of the EU Regulation No596/2014
on Market Abuse (the ‘Market Abuse Regulation’). As a consequence,
share dealings by such entities or persons are not disclosed as dealings
by connected parties in terms of the Market Abuse Regulation.
THE GENERAL PARTNER
The Company is a partnership limited by shares (société en
commandite par actions) which is managed by the General Partner.
The Company reimburses the General Partner for its expenses
incurred in the ordinary course of business, including but not limited
to the remuneration of its staff, costs attributable to its directors’
remuneration, taxes, rentals and any other disbursements, and pays
an annual administration fee equal to 10 per cent of suchexpenses.
The General Partner is controlled by Rupert family interests.
THE FUND MANAGER
The Company’s wholly-owned subsidiary, Reinet Fund, is managed
by the Fund Manager. Reinet Fund reimburses the Fund Manager
for its expenses incurred in the ordinary course of business,
including but not limited to the remuneration of its staff, costs
attributable to its directors’ remuneration, taxes, rentals and any
other disbursements, and pays an annual administration fee equal
to 10 per cent of such expenses. Any such amounts payable to the
Fund Manager are deductible from any management fees payable to
the Investment Advisor.
The Fund Manager is controlled by Rupert family interests.
THE INVESTMENT ADVISOR
The Investment Advisor owns 916 512 shares of the Company as at
31 March 2023 (31 March 2022: 919 064).
Under the terms of the Investment Advisory Agreement dated
9October 2008, as amended on 24 May 2010, 10 November 2011,
7 December 2018 and 1 October 2020, between Reinet Fund and
the Investment Advisor, Reinet Fund pays both management fees
and performance fees to the Investment Advisor.
The management fee is payable to the Investment Advisor at a rate
of 1 per cent per annum on the net asset value of Reinet Fund,
excluding cash and interests in funds managed by third parties. It is
calculated semi-annually based on the closing net asset value at the
end of the previous six-month period.
The management fee in respect of cash is calculated at a rate of one-
quarter of 1 per cent per annum. No management fee is payable
in respect of funds managed by third parties except where the fee
payable to the third-party has been negotiated to a level below
1percent per annum and below the level payable by other investors
in a fund. In such circumstances, the difference between the fee
payable to the third-party manager and 1 per cent is payable to the
Investment Advisor.
Investments as a limited partner in funds under the management
of a management company in which Reinet Fund is an investor
are not treated as being managed by third parties; the management
fee is payable at 1 per cent per annum to the Investment Advisor.
However, such a fee payable to the Investment Advisor is reduced
by any management fee paid by Reinet Fund to the management
company, net of income received by Reinet Fund on its investment
in the management company in terms of its share of the
management fees earned by (but not carried interest attributable to)
the managementcompany.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
Management fee
31 March 2023
€ m
31 March 2022
€ m
Investment Advisor 39 35
Fund Manager 10 9
Total management fee 49 44
The performance fee in any period is calculated as 10 per cent of the Cumulative Total Shareholder Return at the end of the Performance
Measurement Period (both terms being defined in the Company’s prospectus, published on 10 October 2008 as amended on 25 August 2020)
(refer to page 33), adjusted for all dividends and returns of capital to the Company shareholders, less the sum of all performance fees paid in
previous Performance Measurement Periods.
No provision has been made in respect of a performance fee as at 31 March 2023 (31 March 2022: € 3 million) as the conditions required to pay a
fee had not been met at year end date. In order for a performance fee to be payable at 31 March 2023, the volume weighted average market price of
the Company’s share determined by taking into account volume and price information on the Luxembourg Stock Exchange, Euronext Amsterdam
and the Johannesburg Stock Exchange over the last 20 trading days of the current financial year had to exceed € 18.61. The determined volume
weighted average market price of the Company’s share was € 18.56 for the last 20 trading days of the current financial year.
BOARDS OF THE GENERAL PARTNER AND THE FUND MANAGER
Members of the Boards of Directors of the General Partner and the Fund Manager are considered to be related parties. Details of the Boards of
Directors are set out in the corporate governance report on pages 29 to 30 of this annual report.
Aggregate shareholdings of directors of the General Partner and the Fund Manager (excluding Mr Rupert, see page 68).
31 March 2022
Acquired
during the year
Sold/disposed
during the year 31 March 2023
Number of shares 270 409 – – 270 409
31 March 2021
Acquired
during the year
Sold/disposed
during the year 31 March 2022
Number of shares 226 409 44 000 – 270 409
TRANSACTIONS AND BALANCES WITH RELATED PARTIES
Compagnie Financière Richemont SA or significant shareholders
There were no fees paid during the year and no balances payable to or receivable from CFR SA or significant shareholders at 31 March 2023.
Reinet Investments Manager S.A.
31 March 2023
€ m
31 March 2022
€ m
– Expenses charged by the General Partner to the Company during the year 1.1 1.1
– Administration fee for the year 0.1 0.1
– Balance payable by the Company to the General Partner 0.8 0.9
Reinet Fund S.C.A., F.I.S.
31 March 2023
€ m
31 March 2022
€ m
– Balance payable by the Company to Reinet Fund 0.7 2.3
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REINET INVESTMENTS S.C.A.
Reinet Fund Manager S.A.
31 March 2023
€ m
31 March 2022
€ m
– Expenses charged to Reinet Fund during the year 9.0 7.7
– Administration fee for the year 1.0 0.8
– Balance payable by Reinet Fund to the Fund Manager 7.5 5.4
Reinet Investment Advisors Limited
31 March 2023
€ m
31 March 2022
€ m
– Management fee charged during the year 39.0 35.3
– Performance fee charged during the year – 3.4
– Balance payable by Reinet Fund to the Investment Advisor 18.7 20.0
There are no commitments between the Company and its related parties as at 31 March 2023.
15. BOARD OF OVERSEERS
Fees of up to € 70 000 per member were paid to the Board of
Overseers in respect of the year ended 31 March 2023, such
fees are split equally between the Company and Reinet Fund
(31March2022: € 50 000).
Mr Prussen is a partner with the law firm Elvinger Hoss Prussen.
Legal fees of € 0.1 million (31 March 2022: € 0.3 million) were
recorded in respect of Elvinger Hoss Prussen for the year ended
31March 2023.
16. AUDIT AND OTHER FEES PAID TO
PRICEWATERHOUSECOOPERS
Fees for the year ended 31 March 2023 billed and unbilled by
PricewaterhouseCoopers, Société coopérative, Luxembourg and other
member firms of the PricewaterhouseCoopers network, which relate
to the audit of the Company accounts, amounted to € 0.2 million
(31 March 2022: € 0.1 million). Such fees are presented under
‘Operating expenses’ in the statement of comprehensive income.
Audit fees relating to Reinet Fund and its principal subsidiaries as
shown in note 21 amounted to € 0.3 million for the year ended
31March 2023 (31 March 2022: € 0.3 million).
Fees relating to non-audit services during the year are considered to
be insignificant.
17. CAPITAL COMMITMENTS
At 31 March 2023, the Company had no capital commitments,
however its wholly-owned subsidiary Reinet Fund had committed
to invest a further € 627 million (31 March 2022: € 460 million) in
unlisted investments (see table on page 22). This amount relates to
Reinet Fund’s own investment commitments. Where Reinet Fund
co-invests with minority partners the amount does not include the
partners’ commitment.
18. CONTINGENT LIABILITIES
Reinet Fund has pledged 7.5 million BAT shares in respect of its
borrowing from Citibank N.A. and 6.3 million BAT shares in
respect of its borrowing from Bank of America, N.A.
19. DIVIDEND
A cash dividend of some € 50.9 million, or € 0.28 per share (excluding
treasury shares held), was paid in September 2022, following
approval at the annual general meeting on 30 August2022.
The proposed cash dividend payable to shareholders of € 0.30
per share will be payable on 20 September 2023, once approved
by the shareholders at the annual general meeting to be held on
29August2023.
20. SUBSEQUENT EVENTS
Reinet Fund, through wholly-owned subsidiaries, received an
interim dividend of some € 32 million (£ 28 million) from its
investment in BAT and an inaugural dividend of some € 57 million
(£ 50 million) from its investment in Pension Corporation. The
interim dividend from BAT was declared by the directors of BAT
with a record date of 24 March 2023 and paid on 3 May 2023, and
is included in Reinet Fund’s financial results as at 31 March 2023.
The Pension Corporation dividend was approved by shareholders in
April 2023 and as such will be included in Reinet Fund’s financial
results in the year ended 31 March 2024.
During April and May 2023, Reinet Fund made payments in the
amount of € 7.3 million in respect of its commitments shown
innote 17.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
71 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
21. INVESTMENTS HELD IN SUBSIDIARIES AND AFFILIATES
The principal companies held by Reinet Fund are as follows:
Investments Company Domicile Percentage held
BAT Reinet Jersey Holdings Limited Jersey, Channel Islands 100%
Pension Corporation Reinet PC Investments (Jersey) Limited Jersey, Channel Islands 100%
Trilantic Capital Partners Reinet TCP Holdings Limited Jersey, Channel Islands 94%
RSF S.A. Luxembourg 100%
Reinet TCP Fund V NECI Limited Jersey, Channel Islands 100%
Reinet New TCP NECI GP Limited Jersey, Channel Islands 100%
Reinet New TCP LP Limited Jersey, Channel Islands 100%
TruArc Partners Reinet SPG Limited Jersey, Channel Islands 100%
Coatue funds Reinet Columbus Limited Jersey, Channel Islands 100%
Asian private equity companies
and portfolio funds Reinet Columbus Limited Jersey, Channel Islands 100%
Specialised investment funds Reinet Columbus Limited Jersey, Channel Islands 100%
Reinet Flex Holdings Limited Jersey, Channel Islands 100%
United States land development
and mortgages RSF II Limited Jersey, Channel Islands 100%
Reinet Stokes Holdings S.A. Luxembourg 100%
RPH Limited Jersey, Channel Islands 100%
Other investments Reinet Columbus Limited Jersey, Channel Islands 100%
Reinet Flex Holdings Limited Jersey, Channel Islands 100%
Reinet S.à r.l. Luxembourg 100%
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REINET INVESTMENTS S.C.A.
AUDIT REPORT
To the Shareholders of
Reinet Investments S.C.A.
Report on the audit of the consolidated financial statements
Our opinion
In our opinion, the accompanying consolidated financial statements
give a true and fair view of the consolidated financial position of
Reinet Investments S.C.A. (the ‘Company’) and its subsidiaries
(‘Reinet’) as at 31 March 2023, and of its consolidated financial
performance and its consolidated cash flows for the year then ended
in accordance with International Financial Reporting Standards
(‘IFRS’) as adopted by the European Union.
Our opinion is consistent with our additional report to the Board of
Overseers or equivalent.
What we have audited
Reinet’s consolidated financial statements comprise:
• the consolidated balance sheet as at 31 March 2023;
• the consolidated statement of comprehensive income for the year
then ended;
• the consolidated statement of changes in equity for the year
thenended;
• the consolidated cash flow statement for the year then ended; and
• the notes to the consolidated financial statements, which include a
summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with the EU Regulation
No537/2014, the Law of 23 July 2016 on the audit profession (‘Law
of 23 July 2016’) and with International Standards on Auditing
(‘ISA’) as adopted for Luxembourg by the ‘Commission de Surveillance
du Secteur Financier’ (‘CSSF’). Our responsibilities under the EU
Regulation No 537/2014, the Law of 23 July 2016 and ISA as
adopted for Luxembourg by the CSSF are further described in the
‘Responsibilities of the ‘Réviseur d’entreprises agréé’ for the audit of the
consolidated financial statements’ section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
We are independent of Reinet in accordance with the International
Code of Ethics for Professional Accountants, including International
Independence Standards, issued by the International Ethics Standards
Board for Accountants (‘IESBA Code’) as adopted for Luxembourg
by the CSSF together with the ethical requirements that are relevant
to our audit of the consolidated financial statements. We have fulfilled
our other ethical responsibilities under those ethical requirements.
To the best of our knowledge and belief, we declare that we have not
provided non-audit services that are prohibited under Article 5(1) of
the EU Regulation No 537/2014.
The non-audit services that we have provided to the Company and
its controlled undertakings, if applicable, for the year then ended, are
disclosed in Note 16 to the consolidated financial statements.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
Existence of investments
All unlisted investments are held by Reinet Fund S.C.A., F.I.S.
(‘Reinet Fund’). We focused on the existence of unlisted investments
as a key audit matter because (1) of their importance; and (2) of the
complexity of their holding structure.
(1) As described on page 64 of the consolidated financial statements,
unlisted investments represent a significant amount of Reinet’s
investments (€ 3 868 million and 67.6 per cent of its net
assetvalue).
(2) The investments are diverse in their nature (regulated company
active in the insurance sector, private equity funds and related
partnerships, private start-up businesses, etc.) and are generally
held by Reinet Fund through intermediate holding companies
and comprise various financial instruments (common equity,
preferred equity, debt/loan instruments with ad hoc features,
etc.), which means that the exact determination of ownership in
each instrument and in each target investment is complex.
How our audit addressed the key audit matter
Our procedures over the existence of unlisted investments held by
Reinet Fund included, but were not limited to the following:
• we gained an understanding of the internal control environment
surrounding authorisation, completeness and accuracy of
investment transactions and the reconciliation of investment
holdings at year-end;
• we gained an understanding of the approach and controls of the
custodian bank in order to fulfil its legal duties;
• on a sample basis, we obtained and reviewed minutes of the relevant
board meetings approving new investments as well as all executed
agreements in order to ensure that the recording of transactions is
in accordance with the detailed terms and conditions of the legal
agreements;
• on a sample basis, we obtained, reviewed and reconciled
independent ownership confirmations obtained directly from
relevant sources with the accounting records;
• we obtained and reviewed the custody confirmation provided
by the custodian bank and reconciled it with the accounting
records;and
• we verified the reconciliation between the accounting records and
the detailed investment holding statements of Reinet Fund at
year-end.
Key audit matter
Valuation of Level 3 investments
We focused on the valuation of level 3 investments as a key audit
matter because (1) of their importance and (2) of the significant
degree of judgement involved and (3) the potential impact of
COVID-19 and the Russian invasion of Ukraine on the fair value
of these investments.
(1) As disclosed on page 64 of the consolidated financial statements
as at 31 March 2023, Reinet held level 3 investments of
€3868million, representing 67.6 per cent of its net asset value.
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
73 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
(2) The valuation of level 3 investments is complex and requires the
application of significant judgements by the Fund Manager. Both
the determination of the most appropriate valuation methodology
(market multiples, recent transaction prices with proper
calibration, net asset value approach, current value approach, or
a mix of various approaches) and of the significant unobservable
inputs (valuation premium/discount, peer group determination,
etc.) applied in determining the valuation of level 3 investments
involve a high degree of judgement. In addition, COVID-19 and
the Russian invasion of Ukraine have led to significant levels of
market uncertainty mostly reflected in increased market, currency
and commodity volatility. Inappropriate judgements may have a
material impact on the net asset value of Reinet.
How our audit addressed the key audit matter
Our procedures over the valuation of level 3 investments held by
Reinet Fund included, but were not limited to the following:
• we obtained an understanding of the Fund Manager’s processes
and controls around the fair valuation of level 3 investments;
• we assessed the compliance of the valuation policies for all level 3
investments with IFRS;
• we reviewed, on a sample basis, the documentation of the Fund
Manager’s back-testing analysis;
• we obtained the valuation reports produced by the external
valuation experts mandated by management to support the
valuations applied by Reinet and we performed an assessment of
the competence and objectivity of the external valuation experts;
• we ensured that investments are valued in accordance with
International Private Equity and Venture Capital Valuation (‘IPEV’)
guidelines and its approved valuation procedures and methodologies;
• we reconciled the external valuation experts’ reports with the
accounting records and the portfolio holding statements and we
reviewed the reports on a sample basis;
• on a sample basis, we discussed with the external valuation experts the
methodology applied to the level 3 valuations including, but not limited
to, changes in valuation approach compared to the previous year,
reliability of data, judgement on unobservable and estimated inputs
and support received from the underlying investment managers;
• given the weight of Pension Corporation on the NAV of Reinet
(48.7 per cent) we discussed with management of Pension
Corporation the factors driving the change in the first quarter
2023 in its adjusted equity own funds;
• we assessed the appropriateness of the valuation methodologies
applied by the Fund Manager as well as the reasonableness of the
key assumptions and valuation model inputs used;
• we specifically challenged the significant unobservable inputs
used in the level 3 valuations (including peer group selection) and
assessed their consistency over multiple accounting periods;
• we ensured, on a sample basis, that the value of the private
equity funds as reported in their 31 March 2023 capital
account statements does not materially differ from the fair value
determined by the Fund Manager;
• for the most significant private equity funds and when capital
account statements as at 31 March 2023 are not available, we
obtained support from the respective general partners to understand
the drivers of the fair value at 31 March 2023, including the
processes and controls around fair value determination and we
corroborated that information, to the extent possible, with externally
available industry and country economic data;
• we reconciled the impact of both realised and unrealised valuation
movements with the net change in the fair value of financial assets
at fair value through profit or loss; and
• we assessed the appropriateness of the disclosures in the notes of
the financial statements to address the estimation of uncertainty.
Other information
Reinet Investments Manager S.A. (the ‘General Partner’) is responsible
for the other information. The other information comprises the
information stated in the annual report including the management
report and the corporate governance statement but does not include
the consolidated financial statements and our audit report thereon.
Our opinion on the consolidated financial statements does not cover
the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements,
our responsibility is to read the other information identified above
and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the General Partner and those charged with
governance for the consolidated financial statements
The General Partner is responsible for the preparation and fair
presentation of the consolidated financial statements in accordance
with IFRS as adopted by the European Union, and for such internal
control as the General Partner determines is necessary to enable the
preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the General
Partner is responsible for assessing Reinet’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
the General Partner either intends to liquidate Reinet or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing Reinet’s
financial reporting process.
The General Partner is responsible for presenting and marking
up the consolidated financial statements in compliance with the
requirements set out in the Delegated Regulation 2019/815 on
European Single Electronic Format (‘ESEF Regulation’).
Responsibilities of the ‘Réviseur d’entreprises agréé’ for the
audit of the consolidated financial statements
The objectives of our audit are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to
issue an audit report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the EU Regulation No 537/2014, the
Law of 23 July 2016 and with ISA as adopted for Luxembourg by
the CSSF will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
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REINET INVESTMENTS S.C.A.
As part of an audit in accordance with the EU Regulation
No537/2014, the Law of 23 July 2016 and with ISA as adopted
for Luxembourg by the CSSF, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control;
• obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of Reinet’s internal control;
• evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by the General Partner;
• conclude on the appropriateness of the General Partner’s use of
the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on Reinet’s
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our audit report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our audit report. However,
future events or conditions may cause Reinet to cease to continue
as a going concern;
• evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation; and
• obtain sufficient appropriate audit evidence regarding the financial
information of the entities and business activities within Reinet to
express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of
Reinet’s audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and communicate to them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate
threats or safeguardsapplied.
From the matters communicated with those charged with governance,
we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in
our audit report unless law or regulation precludes public disclosure
about the matter.
We assess whether the consolidated financial statements have been
prepared, in all material respects, in compliance with the requirements
laid down in the ESEF Regulation.
Report on other legal and regulatory requirements
The management report is consistent with the consolidated financial
statements and has been prepared in accordance with applicable
legalrequirements.
The corporate governance statement is included in the management
report. The information required by Article 68ter Paragraph
(1) Letters c) and d) of the Law of 19 December 2002 on the
commercial and companies register and on the accounting records
and annual accounts of undertakings, as amended, is consistent
with the consolidated financial statements and has been prepared in
accordance with applicable legal requirements.
We have been appointed as ‘Réviseur d’entreprises agréé’ by the
General Meeting of the Shareholders on 4 March 2008 and the
duration of our uninterrupted engagement, including previous
renewals and reappointments, is 15 years.
We have checked the compliance of the consolidated financial
statements of Reinet as at 31 March 2023 with relevant statutory
requirements set out in the ESEF Regulation that are applicable to
consolidated financial statements.
For Reinet it relates to the requirement that:
• the consolidated financial statements are prepared in a valid
XHTML format; and
• the XBRL markup of the consolidated financial statements uses
the core taxonomy and the common rules on markups specified in
the ESEF Regulation.
In our opinion, the consolidated financial statements of Reinet as
at 31 March 2023 have been prepared, in all material respects, in
compliance with the requirements laid down in the ESEF Regulation.
PricewaterhouseCoopers, Société coopérative
Luxembourg, 25 May 2023
Represented by
Geoffroy Marcassoli
PricewaterhouseCoopers, Société coopérative,
2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg
T : +352 494848 1, F : +352 494848 2900, www.pwc.lu
Cabinet de révision agréé. Expert-comptable
(autorisation gouvernementale n°10028256)
R.C.S. Luxembourg B 65 477 - TVA LU25482518
AUDIT REPORT
CONTINUED
CONSOLIDATED FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
75 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
BALANCE SHEET
as at 31 March 2023
Notes
31 March 2023
€ 000’s
31 March 2022
€ 000’s
ASSETS
Fixed assets
Financial assets
Shares in affiliated undertakings 3 1 705 289 1 745 289
Own shares 4 221 674 175 970
1 926 963 1 921 259
Current assets
Cash at bank and in hand 171 7 240
Prepayments 149 133
320 7 373
Total assets 1 927 283 1 928 632
CAPITAL, RESERVES AND LIABILITIES
Capital and reserves
Subscribed capital 5 220 103 220 103
Share premium account 6 548 636 594 340
Reserves
– legal reserve 7 22 100 22 100
– reserve for own shares 8 221 674 175 970
Profit brought forward 9 861 710 867 240
Profit for the financial year 51 054 45 372
1 925 277 1 925 125
Creditors
Amounts owed to affiliated undertakings
– becoming due and payable within one year 10 1 532 3 137
Trade creditors
– becoming due and payable within one year 344 229
Other creditors
– becoming due and payable within one year 7 8
– becoming due and payable after more than one year 123 133
2 006 3 507
Total capital, reserves and liabilities 1 927 283 1 928 632
The accompanying notes form an integral part of these financial statements.
COMPANY FINANCIAL STATEMENTS
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REINET INVESTMENTS S.C.A.
PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2023
Notes
Year ended
31 March 2023
€ 000’s
Year ended
31 March 2022
€ 000’s
Income
Dividend received from Reinet Fund 13 55 000 48 000
Interest receivable and similar income 268 37
Total income 55 268 48 037
Charges
Other operating expenses 11 1 449 1 391
Other external expenses 12 1 393 1 111
Interest payable and similar expenses 1 367 158
Taxes 14 5 5
Total charges 4 214 2 665
Profit for the financial year 51 054 45 372
The accompanying notes form an integral part of these financial statements.
COMPANY FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
77 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
1. GENERAL INFORMATION
Reinet Investments S.C.A. (the ‘Company’), incorporated on
5 March 1979, is a partnership limited by shares (société en
commandite par actions) and is governed by the Luxembourg law on
securitisation. The Company’s registered office is at 35, boulevard
Prince Henri, L-1724, Luxembourg. The Company owns the entire
ordinary issued capital of Reinet Fund S.C.A., F.I.S. (‘Reinet Fund’),
a partnership limited by shares established in Luxembourg.
The Company was formerly known as Richemont S.A. and was a
subsidiary of Compagnie Financière Richemont SA (‘CFR SA’),
a Swiss company with significant luxury goods interests.
TheCompany is managed by Reinet Investments Manager S.A. (the
‘General Partner’), a limited company established in Luxembourg
(société anonyme), which also owns 1 000 management shares in
the Company. The General Partner has unlimited liability for any
obligations of the Company that cannot be met from the assets of the
Company. The General Partner’s registered office is at 35,boulevard
Prince Henri, L-1724, Luxembourg.
The Company’s financial year starts on 1 April and ends on 31March
of each year.
The Company has also prepared consolidated financial statements
which will be made available at the Company’s head office as
required by Luxembourg law.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION
The financial statements have been prepared in accordance with
Luxembourg legal and regulatory requirements under the historical
cost convention, as well as with generally accepted accounting
principles in Luxembourg.
The Law of 18 December 2015, amending the Law of
19 December 2002 on the Register of Commerce and Companies
and the accounting and annual accounts of undertakings, and
the Grand-Ducal Regulation as of the same date, have revised the
layout of the balance sheet and profit and loss account.
The preparation of financial statements requires the use of certain
critical accounting estimates. It also requires the General Partner
to exercise its judgement in the process of applying the accounting
policies. Changes in assumptions may have a significant impact on
the financial statements in the period in which the assumptions
changed. The General Partner believes that the underlying
assumptions are appropriate and that the financial statements
therefore present the financial position and results fairly.
The Company makes estimates and assumptions that affect the
reported amounts of assets and liabilities in the next financial
year. Estimates and judgements are continually evaluated and
are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under
thecircumstances.
2.2 FORMATION EXPENSES
The formation expenses of the Company are directly charged to the
profit and loss account of the year in which they are incurred.
2.3 FINANCIAL ASSETS
Shares in affiliated undertakings and the Company’s own shares held
as fixed assets are valued at purchase price. In case of permanent
impairment in value in the opinion of the General Partner, value
adjustments are made in respect of fixed assets, so that they are
valued at the lower figure to be attributed to them at the balance
sheet date. These value adjustments are not continued if the reasons
for which the value adjustments were made have ceased to apply.
In accordance with Luxembourg law, in case of acquisition of own
shares, an amount equal to the carrying amount is recorded in a
non-distributable reserve for own shares.
2.4 DEBTORS AND CREDITORS
Debtors and creditors are valued at their nominal value. The debtors
are subject to value adjustments where their recovery is compromised.
These value adjustments are not continued if the reason for which
the value adjustments were made have ceased to apply.
2.5 FOREIGN CURRENCY TRANSLATION
Transactions expressed in currencies other than euro are translated
into euro at the exchange rate effective at the time of the transaction.
Cash at bank is translated at the exchange rate effective at the balance
sheet date. Exchange gains and losses are recorded in the profit and
loss account of the year.
Fixed assets expressed in currencies other than euro are translated into
euro at the exchange rate effective at the time of the transaction. At
the balance sheet date, these assets remain at historic exchangerates.
Other assets and liabilities are translated separately, respectively at
(i) the lower or at the higher of the value converted at the historical
exchange rate or (ii) the value determined on the basis of the
exchange rates effective at the balance sheet date. The unrealised
exchange gains and losses are thus recorded in the profit and loss
account. The realised exchange gains are recorded in the profit and
loss account at the moment of their realisation.
2.6 PREPAYMENTS
Prepayments include expenditure incurred in the financial year but
relating to a subsequent financial year.
2.7 PROVISIONS
Provisions are created to cover charges which originate in the
financial year under review or in a previous financial year, the nature
of which is clearly defined and which at the date of the balance
sheet are either likely to be incurred or certain to be incurred but
uncertain as to their amount at the date on which they will arise.
NOTES TO THE FINANCIAL STATEMENTS
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3. SHARES IN AFFILIATED UNDERTAKINGS
31 March 2023
€ 000’s
31 March 2022
€ 000’s
Book value – opening balance 1 745 289 1 755 289
Capital repaid in the year (40 000) (10 000)
Book value – closing balance 1 705 289 1 745 289
The Company holds the entire share capital of Reinet Fund,
whose functional currency is the euro. During the year ended
31March2023 Reinet Fund repaid capital of € 40 million to allow
the Company to repurchase its own shares. At 31 March 2023, the
net asset value of Reinet Fund was € 5 721 million (31 March 2022:
€5 932 million) and it recorded a loss for the year of € 116 million
(31 March 2022: profit of € 604 million).
4. OWN SHARES
Treasury shares are recorded at cost, representing the price paid on
the acquisition date.
On 19 November 2018, the Company announced the
commencement of a share buyback programme in respect of
a maximum of 3.2 million ordinary shares for an aggregate
maximum amount of € 55 million. The programme ran from
20 November 2018 to 30 January 2019 when 3 200 000
ordinary shares were repurchased for a cost of € 42 million, plus
transactioncosts.
On 6 February 2019, the Company announced the commencement
of a second share buyback programme in respect of a maximum
of 5 million ordinary shares for an aggregate maximum amount
of € 75 million. The programme ran from 11 February 2019 to
31May 2019 when 3 449 689 ordinary shares were repurchased for
a cost of € 50 million, plus transaction costs.
On 14 June 2019, the Company announced the commencement
of a third share buyback programme in respect of a maximum of
2.75 million ordinary shares for an aggregate maximum amount
of € 44 million. The programme ran from 19 June 2019 to
23August2019 when 2 047 348 ordinary shares were repurchased
for a cost of € 31 million, plus transaction costs.
On 6 September 2019, the Company announced the commencement
of a fourth share buyback programme in respect of a maximum of
3.1 million ordinary shares for an aggregate maximum amount
of € 50 million. The programme ran from 11 September 2019
to 27 November 2019 when 2 954 358 ordinary shares were
repurchased for a cost of € 50 million, plus transaction costs.
On 24 March 2022, the Company announced the commencement
of a fifth share buyback programme in respect of a maximum of
2.5 million ordinary shares for an aggregate maximum amount of
€ 50 million closing on 3 June 2022. The programme ran from
28March 2022 to 23 May 2022 when 2 500 000 ordinary shares
were repurchased for a cost of € 49 million, plus transaction costs.
All ordinary shares repurchased are held as treasury shares.
As at 31 March 2023, there was no share buyback programme
inprogress.
Number
of shares
Cost
€ 000’s
Repurchased shares
1
st
buyback programme 3 200 000 41 964
2
nd
buyback programme 3 449 689 49 866
3
rd
buyback programme 2 047 348 30 792
4
th
buyback programme 2 954 358 49 824
5
th
buyback programme 2 500 000 49 228
Own shares held at 31 March 2023 14 151 395 221 674
COMPANY FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
REINET INVESTMENTS S.C.A.
79 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
5. SUBSCRIBED CAPITAL
31 March 2023
€ 000’s
31 March 2022
€ 000’s
Ordinary shares
Subscribed capital – 195 941 286 ordinary shares
(31 March 2022: 195 941 286), fully paid with no par value 220 102 220 102
Total ordinary share capital 220 102 220 102
Management shares
Subscribed capital – 1 000 management shares
(31 March 2022: 1 000), fully paid with no par value 1 1
Total management share capital 1 1
Total capital 220 103 220 103
The ordinary shares, excluding the voting and dividend rights
attached to treasury shares which are suspended, confer on the
shareholder the entitlement to participate in and to vote at meetings
of shareholders, with each share carrying the right to one vote. Each
share also entitles each shareholder to receive a proportionate share
of any dividend that the Company may declare and a proportionate
share of the net assets of the Company on liquidation. The liability
of ordinary shareholders is limited to the amount of their investment
in the Company.
The management shares are held by the General Partner and confer
the same rights with regard to voting, dividends and the distribution
of assets on liquidation as the ordinary shares. In addition, as the
holder of the management shares, the General Partner has broad
powers to manage the Company and has unlimited liability for any
obligations of the Company that cannot be met from the assets of
the Company.
6. SHARE PREMIUM ACCOUNT
The share premium relates to a reserve amounting to € 548 635 737
(31 March 2022: € 594 340 102), available for distribution subject
to the approval of the shareholders. An amount of € 45 704 365
(31March 2022: € 3 524 256) was transferred to the reserve for own
shares during the year as shares were repurchased (see note 8).
7. LEGAL RESERVE
In accordance with Luxembourg law, the Company allocated
annually a minimum of 5 per cent of its net profit to the legal
reserve, which now equals 10 per cent of the subscribed capital.
The legal reserve amounting to € 22 100 000 (31 March 2022:
€22100 000) is not available for distribution.
8. RESERVE FOR OWN SHARES
The Company repurchased a total of 14 151 395 own shares for an
amount of € 221 674 392. In accordance with Luxembourg law, the
Company has created a non-distributable reserve for the sameamount.
9. PROFIT OR LOSS BROUGHT FORWARD
31 March 2023
€ 000’s
31 March 2022
€ 000’s
Opening balance 867 240 879 499
Dividend paid (50 902) (46 073)
816 338 833 426
Result for the prior year 45 372 33 814
Balance at the end of the year 861 710 867 240
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REINET INVESTMENTS S.C.A.
10. AMOUNTS OWED TO AFFILIATED UNDERTAKINGS
31 March 2023
€ 000’s
31 March 2022
€ 000’s
Becoming due and payable after less than one year 1 532 3 137
11. EMOLUMENTS GRANTED TO MEMBERS OF THE ADMINISTRATIVE, MANAGERIAL AND
SUPERVISORY BODIES
Year ended
31 March 2023
€ 000’s
Year ended
31 March 2022
€ 000’s
General Partner 1 228 1 227
Board of Overseers 140 100
1 368 1 327
12. AUDIT AND OTHER FEES PAID TO
PRICEWATERHOUSECOOPERS
Fees for the year ended 31 March 2023 billed and unbilled by
PricewaterhouseCoopers, Société coopérative, Luxembourg and
other member firms of the PricewaterhouseCoopers network,
which relate to the audit of the Company accounts, amounted to
€ 0.2 million (31 March 2022: € 0.1 million). Such fees are presented
under ‘Other operating expenses’ in the profit and lossaccount.
Fees relating to non-audit services during the year are considered to
be insignificant.
13. RELATED PARTY TRANSACTIONS
During the financial year under review all transactions with related
parties have been conducted on an arm’s-length basis and on normal
market terms.
A dividend of € 55 million was received from Reinet Fund in the
year (31 March 2022: € 48 million).
Capital repayments of € 40 million were received from Reinet Fund
in the year (31 March 2022: € 10 million).
14. TAXATION
The Company is subject to tax as determined by Luxembourg law,
which takes into account profit for the financial year and dividends
paid to shareholders in the current year.
15. SUBSEQUENT EVENTS
There have been no events subsequent to 31 March 2023 which
would have any material impact on these financial statements.
COMPANY FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
REINET INVESTMENTS S.C.A.
81 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
€ 000’s
Available retained earnings
Profit and loss brought forward 912 612
Dividend paid (50 902)
861 710
Net profit for the financial year 51 054
Balance at the end of the year 912 764
PROPOSED APPROPRIATION
The proposed ordinary dividend payable to the Company’s shareholders of € 0.30 per share will be payable on 20 September 2023, once
approved by the shareholders at the annual general meeting to be held on 29 August 2023.
The available retained earnings remaining after deduction of the dividend amount will be carried forward to the following year.
Reinet Investments Manager S.A.
General Partner
Luxembourg, 23 May 2023
PROPOSED APPROPRIATION OF RETAINED EARNINGS
as at 31 March 2023
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REINET INVESTMENTS S.C.A.
AUDIT REPORT
To the Shareholders of
Reinet Investments S.C.A.
Report on the audit of the financial statements
Our opinion
In our opinion, the accompanying financial statements give a true
and fair view of the financial position of Reinet Investments S.C.A.
(the ‘Company’) as at 31 March 2023, and of the results of its
operations for the year then ended in accordance with Luxembourg
legal and regulatory requirements relating to the preparation and
presentation of the financial statements.
Our opinion is consistent with our additional report to the Board of
Overseers or equivalent.
What we have audited
The Company’s financial statements comprise:
• the balance sheet as at 31 March 2023;
• the profit and loss account for the year then ended; and
• the notes to the financial statements, which include a summary of
significant accounting policies.
Basis for opinion
We conducted our audit in accordance with the EU Regulation No
537/2014, the Law of 23 July 2016 on the audit profession (‘Law of
23 July 2016’) and with International Standards on Auditing (‘ISA’)
as adopted for Luxembourg by the ‘Commission de Surveillance
du Secteur Financier’ (‘CSSF’). Our responsibilities under the EU
Regulation No 537/2014, the Law of 23 July 2016 and ISA as
adopted for Luxembourg by the CSSF are further described in the
‘Responsibilities of the ‘Réviseur d’entreprises agréé’ for the audit of
the financial statements’ section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
We are independent of the Company in accordance with the
International Code of Ethics for Professional Accountants,
including International Independence Standards, issued by the
International Ethics Standards Board for Accountants (‘IESBA
Code’) as adopted for Luxembourg by the CSSF together with the
ethical requirements that are relevant to our audit of the financial
statements. We have fulfilled our other ethical responsibilities under
those ethicalrequirements.
To the best of our knowledge and belief, we declare that we have not
provided non-audit services that are prohibited under Article 5(1) of
the EU Regulation No 537/2014.
The non-audit services that we have provided to the Company and
its controlled undertakings, if applicable, for the year then ended,
are disclosed in note 12 to the financial statements.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in
the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
We have determined that there are no key audit matters to
communicate in our report.
Other information
The General Partner is responsible for the other information.
The other information comprises the information stated in the
management report and the corporate governance statement but does
not include the financial statements and our audit reportthereon.
Our opinion on the financial statements does not cover the
other information and we do not express any form of assurance
conclusionthereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Responsibilities of the General Partner and those charged with
governance for the financial statements
The General Partner is responsible for the preparation and fair
presentation of the financial statements in accordance with
Luxembourg legal and regulatory requirements relating to the
preparation and presentation of the financial statements, and for
such internal control as the General Partner determines is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the General Partner is
responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
General Partner either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Company’s financial reporting process.
The General Partner is responsible for presenting the financial
statements in compliance with the requirements set out in the
Delegated Regulation 2019/815 on European Single Electronic
Format (‘ESEF Regulation’).
Responsibilities of the ‘Réviseur d’entreprises agréé’ for the
audit of the financial statements
The objectives of our audit are to obtain reasonable assurance about
whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an audit
report that includes our opinion.
COMPANY FINANCIAL STATEMENTS
REINET INVESTMENTS S.C.A.
83 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the EU
Regulation No 537/2014, the Law of 23 July 2016 and with ISA as
adopted for Luxembourg by the CSSF will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the EU Regulation No
537/2014, the Law of 23 July 2016 and with ISA as adopted for
Luxembourg by the CSSF, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control;
• obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control;
• evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by the General Partner;
• conclude on the appropriateness of the General Partner’s use
of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt
on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our audit report to the related disclosures in
the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our audit report. However,
future events or conditions may cause the Company to cease to
continue as a going concern: and
• evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and communicate to them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these
matters in our audit report unless law or regulation precludes public
disclosure about the matter.
We assess whether the financial statements have been prepared, in
all material respects, in compliance with the requirements laid down
in the ESEF Regulation.
Report on other legal and regulatory requirements
The management report is consistent with the financial statements
and has been prepared in accordance with applicable legal
requirements.
The corporate governance statement is included in the
management report. The information required by Article 68ter
Paragraph (1) Letters c) and d) of the Law of 19 December 2002
on the commercial and companies register and on the accounting
records and annual accounts of undertakings, as amended, is
consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
We have been appointed as ‘Réviseur d’entreprises agréé’ by the
General Meeting of the Shareholders on 4 March 2008 and the
duration of our uninterrupted engagement, including previous
renewals and reappointments, is 15 years.
We have checked the compliance of the financial statements
of the Company as at 31 March 2023 with relevant statutory
requirements set out in the ESEF Regulation that are applicable to
financialstatements.
For the Company it relates to the requirement that the financial
statements are prepared in a valid XHTML format.
In our opinion, the financial statements of the Company as at
31 March 2023 have been prepared, in all material respects, in
compliance with the requirements laid down in the ESEFRegulation.
PricewaterhouseCoopers, Société coopérative
Luxembourg, 25 May 2023
Represented by
Geoffroy Marcassoli
PricewaterhouseCoopers, Société coopérative,
2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg
T : +352 494848 1, F : +352 494848 2900, www.pwc.lu
Cabinet de révision agréé. Expert-comptable
(autorisation gouvernementale n
o
10028256)
R.C.S. Luxembourg B 65 477 – TVA LU25482518
84
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
NOTICE OF ANNUAL GENERAL MEETING
Notice of the annual general meeting of shareholders of Reinet
Investments S.C.A. to be held on 29 August 2023
Shareholders are invited to attend the annual general meeting of
shareholders of Reinet Investments S.C.A. (the ‘Company’) in
person or by proxy.
The annual general meeting (the ‘Meeting’) will take place
on: Tuesday, 29 August 2023 at 2:00 pm at Hotel Le Royal,
12,boulevard Royal, L-2449 Luxembourg.
AGENDA
Business reports for the accounting year ended 31 March 2023
1. To consider the report of the General Partner to the
shareholders; the report of the Board of Overseers; and the
reports of the approved statutory auditor of the Company in
respect of the statutory financial statements of the Company
and in respect of the consolidated financial statements for the
accounting year ended 31 March 2023.
Financial statements
2. To approve the statutory financial statements of the Company
for the accounting year ended 31 March 2023.
3. To approve the consolidated financial statements of the
Company for the accounting year ended 31 March 2023.
Appropriations
4. At 31 March 2023, the retained earnings available for
distribution amounted to € 912 764 182. The General Partner
proposes that a cash dividend of € 0.30 per share be paid. The
General Partner proposes that the remaining available retained
earnings of the Company at 31 March 2023 after payment of
the dividend be carried forward to the following business year.
Granting of discharge of liability to the General Partner and
Board of Overseers
5. To grant discharge of liability to the General Partner and all the
members of the Board of Overseers of the Company who have
been in office during the accounting year ended 31March2023
for the performance of their duties.
Board of Overseers
6. To re-elect Mr J Li, Mr Y Prussen, Mr S Robertson and
MrSRowlands as members of the Board of Overseers for the
year ending at the next annual general meeting.
7. To approve a remuneration of € 70 000 per annum for each
of the members of the Board of Overseers, such fees to be split
equally between the Company and Reinet Fund S.C.A., F.I.S.
Authorisation to acquire ordinary shares
8. At the meeting held on 30 August 2022, shareholders
authorised the Company to acquire ordinary shares within the
limits approved at that meeting for a period up to the date of
the Meeting to be held in 2023, subject to such period being
no longer than 13 months from the date of the authorisation.
Pursuant to Article 9 of the Company’s Articles of Association
and relevant Luxembourg law, the General Partner proposes that a
new authorisation be granted to the Company to acquire ordinary
shares, directly or indirectly (through subsidiaries or otherwise, such
as through an intermediary or agent) for a period up to the date
of the next meeting, subject to such period being no longer than
13months from the date of this authorisation.
The General Partner proposes that the Company be authorised to
acquire, in accordance with applicable laws and regulations, ordinary
shares up to 20 per cent of the Company’s issued ordinary share capital
which at the date of authorisation, 29 August 2023, is 195941286
ordinary shares, for valuable consideration, by all means, on any
one or combination of the Luxembourg Stock Exchange, Euronext
Amsterdam or the Johannesburg Stock Exchange, at a price no more
than an amount equal to 110 per cent of the reference price of the
ordinary shares on the relevant exchange and not less than one euro
cent; the reference price being the weighted average price for the
market value for such ordinary shares for the five days of trading
immediately prior to the acquisition of such shares.
The General Partner will at all times retain full discretion with
regards to the acquisition of the shares of the Company. This
includes whether to and when to initiate any acquisition process and
to determine the quantum and terms and conditions of any such
planned acquisition of ordinary shares of the Company (subject
to the limits set out above), having regard to, inter alia, available
liquidity in order to fulfil any purchase and other obligations of the
Company and the anticipated acquisition price per share relative to
the estimated net asset value per share of the Company at that time.
The present notice, the statutory financial statements and the
consolidated financial statements of the Company for the
accounting year ended 31 March 2023, together with the reports
of the approved statutory auditor, of the Board of Overseers and of
the General Partner and any draft resolutions, are available at the
registered office of the Company and on the Company’s website:
www.reinet.com.
The Meeting will be validly constituted to resolve on the matters
raised in the agenda regardless of the number of shares represented
at the Meeting; resolutions to be considered at the Meeting are
approved by a simple majority of the votes cast. The Meeting will
be held in English.
Shareholders who together hold at least 5 per cent of the share capital
may place items on the agenda of the Meeting and submit draft
resolutions for all the items on the agenda. Any such request must reach
the Registrar, UI efa S.A., by email ([email protected])
no later than 7 August 2023.
Every shareholder who attends the Meeting shall have the right to
ask questions related to the items on the agenda of the Meeting.
The official notice convening the annual general meeting will be published in the Luxemburger Wort, the Financial Times, RESA the Luxembourg online legal publication platform, on the website of
the Company and of the Luxembourg Stock Exchange and sent to all shareholders recorded in the register of shareholders of the Company by registered letter and distributed by the Registrar through
the usual channels in accordance with Luxembourg law and may differ from this notice in respect of the definitive proposals.
REINET INVESTMENTS S.C.A.
85 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
Instructions for attendance and voting
Persons entitled to participate in and vote at the Meeting are all
persons (or their proxy) who were shareholders of record of the
Company at midnight on 15 August 2023 Luxembourg time (the
‘Record Date’).
(i) Instructions for holders of shares whose ownership is directly
recorded in the Company’s shareholders’ register (defined for
the purposes of this section only as ‘Registered Shareholders’)
Registered Shareholders whose ownership is directly recorded in
their own name in the Company’s shareholders’ register who wish
to attend the Meeting or who wish to appoint a proxy to represent
them at the Meeting must notify the Registrar, UI efa S.A., 2, rue
d’Alsace, L-1122 Luxembourg no later than 22 August 2023. The
Registrar will draw up a list of shareholders and proxy holders
authorised to attend the Meeting.
Registration forms to request admission to the Meeting or to appoint
a proxy to attend the Meeting may be obtained from the Registrar or
downloaded from the Company’s website: www.reinet.com.
Registered Shareholders may appoint a proxy, who need
not be a shareholder, as their representative at the Meeting.
Forms of proxy are provided on the registration forms for
admission to the Meeting. The signed proxy must be sent by
mail, telefax or email to either the Company or UI efa S.A.
Proxy voting instructions may be given to the Chairman of the
Meeting; these must be received by the Registrar duly completed and
signed by 22 August 2023. Unless proxies given to the Chairman of the
Meeting include explicit instructions as to the contrary, voting rights
will be exercised in support of the proposals of the GeneralPartner.
Registration forms for admission to the Meeting must be delivered
to the Registrar on 22 August 2023 at the latest. No admission cards
will be issued after that day.
(ii) Instructions for shareholders whose shares are held in the
European clearing systems (Euroclear Nederland, Euroclear
Bank, Clearstream) and are traded on Euronext Amsterdam or
the Luxembourg Stock Exchange (defined for the purposes of
this section only as ‘European Shareholders’)
European Shareholders may (a) attend the Meeting in person,
(b) appoint a proxy (who need not be a shareholder) as their
representative at the Meeting or (c) grant a proxy and issue voting
instructions prior to the Meeting.
(a) Attending the Meeting in person
European Shareholders who wish to attend the Meeting may follow
either of the following processes:
(1)
Register via the e-voting platform (‘Evote by ING Platform’)
administered by ING Bank (‘ING’)
at https://evote.ingwb.com
or via their own intermediary, in any event no later than
22 August 2023. After registration on the Evote by ING
Platform, the European Shareholder’s information provided
will be verified with the information held by the European
Shareholder’s intermediary as at the Record Date. When the
intermediary has confirmed the information, the registration
will be accepted. Duly registered European Shareholders will be
provided by ING with an attendance card and details on how
to gain access to the Meeting by email.
(2) Send in a legally valid written registration form to ING at the
address below, in any event no later than 22 August 2023.
A registration form to request admission to the Meeting is
available as of today at www.reinet.com. European Shareholders
must also instruct their bank or financial intermediary with
whom the shares are on deposit to send a certificate (the
‘Shareholding Certificate’) to ING at the address below to be
received no later than 22 August 2023 indicating clearly the
precise identity of the European Shareholder and confirming
the number of shares being held by the European Shareholder
as at the Record Date. After completion of this registration
process, European Shareholders will be provided by ING by
email with an attendance card and details on how to gain access
to the Meeting.
(b) Appointing a proxy as their representation at the Meeting
European Shareholders who wish to appoint a proxy, as
their representative at the Meeting may follow either of the
followingprocesses:
(1) Register their proxy via the Evote by ING Platform at
https://evote.ingwb.com or via their own intermediary, in any
event no later than 22 August 2023. After registration on
the Evote by ING Platform, the European Shareholder’s
information provided will be verified with the information held
by the European Shareholder’s intermediary as at the Record
Date. When the intermediary has confirmed the information,
the registration will be accepted. European Shareholders who
have duly registered their proxy will be provided by ING with
(an) attendance card(s) with proxy registration by email.
(2) Send in a legally valid written proxy instrument to ING at the
address below, in any event no later than 22 August 2023. A
proxy form is available as of today at www.reinet.com. European
Shareholders who wish to appoint a proxy must also instruct
their bank or financial intermediary with whom the shares are
on deposit to send a Shareholding Certificate to ING at the
address below to be received no later than 22 August 2023
indicating clearly the precise identity of the European
Shareholder and confirming the number of shares being held
by the European Shareholder as at the Record Date. After
completion of this registration process, European Shareholders
will be provided by ING by email with an attendance card with
proxy registration.
(c) Granting a proxy and issuing voting instructions
European Shareholders who wish to grant a proxy and issue
voting instructions prior to the Meeting may follow either of the
followingprocesses:
(1) Register their instructions via the Evote by ING Platform at
https://evote.ingwb.com or via their intermediary in any event
no later than 22 August 2023. After registration on the Evote
by ING Platform, the European Shareholder’s information
provided will be verified with the information held by the
European Shareholder’s intermediary as at the Record Date.
When the intermediary has confirmed the information the
voting instructions will be accepted.
(2) Sending in a legally valid written proxy instrument to ING at
the address below, in any event no later than 22 August 2023.
A proxy voting form is available as of today at www.reinet.com.
Proxy voting instructions may be given to the Chairman of the
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
Meeting. A Shareholding Certificate in respect of the shares must
be provided to ING at the address below to be received no later
than 22 August 2023 indicating clearly the precise identity of
the shareholder and confirming the number of shares being held
by the European Shareholder as at the Record Date. Failure to
provide the Shareholding Certificate will invalidate the proxy
voting instructions. A person designated by the Company will
collect all voting instructions and submit them at the Meeting.
Unless proxies given to the Chairman of the Meeting include
explicit instructions as to the contrary, voting rights will be
exercised in support of the proposals of the General Partner.
The Evote by ING Platform is available from the publication date
of this convocation until seven days before the Meeting. This means
that European Shareholders can use the Evote by ING Platform from
28 July 2023 to 22 August 2023, 17:00 CEST. The Evote by ING
Platform will close on 22 August 2023, 17:00 CEST, but European
Shareholders can still view any instructions they have given.
ING address:
ING Bank N.V.
Attn. Robert Peerenboom
Issuer Services, Location code TRC 02.039
Foppingadreef 7, 1102 BD Amsterdam
The Netherlands
Email address ING: I[email protected]
(iii) Instructions for shareholders whose shares are held in
SouthAfrica through Central Securities Depository Participants
(‘CSDPs’) or brokers and are traded on the Johannesburg Stock
Exchange (defined for the purposes of this section only as
‘South African Shareholders’)
South African Shareholders who were shareholders of record of the
Company at midnight on 25 July 2023 (the ‘Posting Record Date’)
will receive a notice of the Meeting. The notice of the Meeting will
be distributed on 28 July 2023.
South African Shareholders whose ownership is indirectly recorded
through CSDPs and brokers whose shares are traded on the
Johannesburg Stock Exchange and who wish to attend the Meeting,
either in person or by proxy, must advise their broker or CSDP in
accordance with the mandate with their broker or CSDP, and their
broker or CSDP will issue the necessary letter of representation
to the South African Shareholder to allow the South African
Shareholder or their proxy holder to attend and vote at the Meeting.
The broker or CSDP of South African Shareholders should contact
South African Shareholders to ascertain how they wish to cast
their vote at the Meeting and should thereafter cast the votes in
accordance with the South African Shareholders’ instructions. If
South African Shareholders have not been contacted by their broker
or CSDP, it is advisable for them to contact their broker or CSDP
and furnish it with their voting instructions.
If a broker or CSDP does not obtain voting instructions from a
South African Shareholder, it will be obliged to vote in accordance
with the instructions contained in the custody agreement concluded
between the South African Shareholder and their broker or CSDP.
A registration form to request admission to the Meeting or to
appoint a proxy is available as of today at www.reinet.com.
As the Record Date is 15 August 2023, the last day to trade to
determine eligible South African Shareholders that may vote at the
Meeting is 9 August 2023.
Requests for letters of representation and voting instructions
must be submitted by brokers and CSDPs to Strate no later
than 12:30pm (South African time) on 22 August 2023 so that
they may be collated and verified by Strate prior to the Meeting.
SouthAfrican Shareholders should therefore submit their requests
for a letter of representation or voting instructions to their broker
or CSDP within the time period required by their broker or CSDP
or as stipulated in the custody agreement concluded between
SouthAfrican Shareholders and their broker or CSDP.
(iv) Admittance to the Meeting
Registration for admission to the Meeting will take place from one
hour prior to commencement of the Meeting. Shareholders or their
proxy holders shall hand in the attendance card at the registration
desk, will need to sign the attendance list of the Meeting and may
be requested to provide proof of identity before and during the
Meeting. A proxy holder shall also be requested to hand in a copy/
original of their proxy instrument at the registration desk.
Shareholders or proxy holders not registered to attend the Meeting
will not be allowed to participate.
Personal data processing
Shareholders are informed that the Company, as controller,
processes the personal data of the shareholders and proxyholders
(name, address, contact details, shareholding) in the context
of the Meeting in accordance with applicable data protection
laws. The Company processes such personal data in order to
comply with the legal obligation of holding such a Meeting.
Such personal data will be used for the purposes of analysing and
administering the attendance and voting process in connection
with the Meeting and will be accessed by entities assisting in the
administration of the voting process such as the Registrar, ING
and South African entities processing personal data of the South
African Shareholders on behalf of the Company. Shareholders
and proxyholders may notably request access to and rectification
of the personal data processed by the Company by contacting
the Company Secretary Ms Caroline Apostol, 35 boulevard
Prince Henri, L-1724 Luxembourg, tel: +352 22 42 10, email:
Reinet Investments Manager S.A.
General Partner
For and on behalf of
REINET INVESTMENTS S.C.A.
Luxembourg, 23 May 2023
NOTICE OF ANNUAL GENERAL MEETING
CONTINUED
REINET INVESTMENTS S.C.A.
87 REINET INVESTMENTS S.C.A.
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ANNUAL REPORT 2023
EXCHANGE RATES AND SHARE INFORMATION
EXCHANGE RATES AGAINST THE EURO
Year ended
31 March 2023
Year ended
31 March 2022
Average for the year
Sterling 0.8641 0.8506
US dollar 1.0415 1.1624
Swiss franc 0.9942 1.0677
South African rand 17.6943 17.2493
Closing – as at the end of the year
Sterling 0.8793 0.8424
US dollar 1.0841 1.1067
Swiss franc 0.9926 1.0214
South African rand 19.2901 16.1681
SHARE INFORMATION
Reinet Investments S.C.A. (the ‘Company’) ordinary shares are listed and traded on the Luxembourg Stock Exchange (symbol ‘REINI’, Refinitiv
code REIT.LU), on Euronext Amsterdam (symbol ‘REINA’, Refinitiv code REIT.AS) and on the Johannesburg Stock Exchange (symbol ‘RNI’,
Refinitiv code RNIJ.J) with the ISIN number LU0383812293; 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.
As at 31 March 2023 and 31 March 2022, there were 195 941 286 ordinary shares and 1 000 management shares in issue.
As at 31 March 2023, the Company held 14 151 395 ordinary shares as treasury shares (31 March 2022: 11 825 416). The voting and
dividend rights attached to the treasury shares are suspended. Therefore, the total number of voting rights at 31 March 2023 was 181 790 891
(31March2022: 184 116 870).
DAILY CLOSING PRICES FROM 31 MARCH 2022 TO 31 MARCH 2023
(1)
(1) The EUR:ZAR exchange rate was 1:16.1681 on 31 March 2022 and 1:19.2901 on 31 March 2023.
(2) Represents the closing share price of the Company on the Luxembourg Stock Exchange (listed under the symbol ‘REINI’).
(3) Represents the closing share price of the Company on Euronext Amsterdam (listed under the symbol ‘REINA’).
(4) Represents the closing share price of the Company on the Johannesburg Stock Exchange (listed under the symbol ‘RNI’).
Source: Refinitiv.
Closing share price EUR
Closing share price ZAR
Luxembourg share price in EUR
(2)
Amsterdam share price in EUR
(3)
Johannesburg share price in ZAR
(4)
ZAR 365.06
ZAR 330.06
EUR 20.40
EUR 18.80
EUR 19.00
EUR 20.80
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31 Mar 202331 Dec 202230 Sep 202230 Jun 202231 Mar 2022
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88
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REINET INVESTMENTS S.C.A.
REINET INVESTMENTS S.C.A.
REGISTERED OFFICE
REINET INVESTMENTS S.C.A.
35, boulevard Prince Henri
L-1724 Luxembourg
Grand Duchy of Luxembourg
Telephone: +352 22 42 10
Company Secretary: Ms C Apostol
REGISTERED NUMBER
REINET INVESTMENTS S.C.A.
Registre de commerce et des sociétés, Luxembourg B 16.576
GENERAL PARTNER
REINET INVESTMENTS MANAGER S.A.
35, boulevard Prince Henri
L-1724 Luxembourg
Grand Duchy of Luxembourg
Telephone: +352 22 42 10
Company Secretary: Ms C Apostol
CUSTODIAN
BANQUE DE LUXEMBOURG S.A.
14, boulevard Royal
L-2449 Luxembourg
Grand Duchy of Luxembourg
REGISTRAR AND PAYING AGENT
UI efa S.A.
2, rue d’Alsace
P.O. Box 1725
L-1017 Luxembourg
Grand Duchy of Luxembourg
Telefax: +352 48 65 61 8002
EURONEXT AMSTERDAM LISTING AGENT
AND DUTCH PAYING AGENT
ING BANK N.V.
Bijlmerplein 106
1102 CT Amsterdam
The Netherlands
JOHANNESBURG STOCK EXCHANGE
SPONSOR
RAND MERCHANT BANK
(A division of FirstRand Bank Limited)
1 Merchant Place
Corner Fredman Drive and Rivonia Road
Sandton, 2146
Republic of South Africa
RÉVISEUR D’ENTREPRISES AGRÉÉ
PRICEWATERHOUSECOOPERS, SOCIÉTÉ COOPÉRATIVE
2, rue Gerhard Mercator
L-2182 Luxembourg
Grand Duchy of Luxembourg
FURTHER INFORMATION
Legal Entity Identifier: 222100830RQTFVV22S80
Website: www.reinet.com
Email: [email protected]
STATUTORY INFORMATION
DATA PROTECTION
The Company acting through the General Partner collects, processes and stores personal data in relation to the shareholders in compliance with
EU Regulation No 2016/679 of 27 April 2016 (the ‘General Data Protection Regulation’) as well as any complementing or other law or regulation
relating to the protection of personal data applicable to the Company. In this respect, the Company acts as data controller. All the information
in relation to the processing of the shareholders’ personal data carried out by the Company is detailed in a data protection information notice
available on the Company’s website: www.reinet.com/investor-relations/data-protection. Changes may occur in the way the Company processes
personal data in relation to the shareholders. In case these changes oblige the Company to update the data protection information notice, the
Company will bring this to the shareholders’ attention and may do so by any available means such as by email, announcement on the Company’s
website or otherwise. For any data protection inquiries, the shareholders may contact the Company at the following address: 35, boulevard Prince
Henri, L-1724 Luxembourg or by email at: data-protection@reinet.com.
ISBN: 978-2-9199552-8-2
ISSN: 2354-4678
# 16914
Reinet Investments S.C.A. Annual Report at 31 March 2023
www.reinet.com