| Tue 22 Nov 2011, 10:20 | | FFA/FFB - Fortress Income Fund Limited - Disposal of linked units in Vukile |
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FFA FFB
FORT
FFA/FFB - Fortress Income Fund Limited - Disposal of linked units in Vukile
Property Fund Limited ("Vukile")
FORTRESS INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2009/016487/06
Share codes: FFA ISIN: ZAE000141313
FFB ISIN: ZAE000141321
("Fortress")
DISPOSAL OF LINKED UNITS IN VUKILE PROPERTY FUND LIMITED ("VUKILE")
TERMS OF THE VUKILE DISPOSAL, CONDITIONS PRECEDENT AND USE OF PROCEEDS
Unitholders are advised that Fortress has disposed of an aggregate of 14
870 480 linked units in Vukile on market on the JSE between 14 October 2011
and 18 November 2011 for an aggregate cash consideration of R215 171 709
("the Vukile disposal").
The Vukile disposal is not subject to any outstanding conditions precedent.
Following the Vukile disposal, Fortress will hold 10 629 520 Vukile linked
units which equates to 3% of Vukile`s current issued linked unit capital.
The cash proceeds from the Vukile disposal will be used by Fortress to
reduce interest-bearing borrowings in the short term.
RATIONALE FOR THE VUKILE DISPOSAL
Fortress realised a portion of its holding in Vukile to take advantage of
other investment opportunities.
FINANCIAL INFORMATION
The unaudited pro forma financial effects, set out in the table below, have
been prepared for illustrative purposes only, to provide information on how
the acquisition of 25 500 000 linked units in Vukile, as announced on SENS
on 28 July 2011 ("the Vukile acquisition") and the Vukile disposal, both of
which occurred post Fortress` financial year ended 30 June 2011, may have
impacted Fortress` audited consolidated financial statements for the year
ended 30 June 2011.
Due to their nature, the unaudited pro forma financial effects may not
fairly present Fortress` financial position, changes in equity, results of
operations or cash flows following the Vukile acquisition and the Vukile
disposal. The unaudited pro forma financial effects are the responsibility
of the directors of Fortress and have not been reviewed or reported on by
Fortress` auditors.
The unaudited pro forma financial effects of the Vukile acquisition and the
Vukile disposal on Fortress` basic earnings per A and B share, basic
earnings per A and B linked unit, headline earnings per A and B share,
headline earnings per A and B linked unit and distribution per B linked
unit for the year ended 30 June 2011 as well as net asset value and net
tangible asset value per B linked unit as at 30 June 2011 are set out
below. The unaudited pro forma financial effects of the Vukile acquisition
and the Vukile disposal on distribution per A linked unit, as well as net
asset value and net tangible asset value per A linked unit are not material
and have not been disclosed.
Before the Pro forma Change
Vukile after the
acquisition Vukile
and the acquisition
Vukile and the
disposal Vukile
disposal
Basic earnings per A share (cents) 62.62 68.60 9.5%
Basic earnings per B share (cents) 62.62 68.60 9.5%
Basic earnings per A linked unit 164.22 170.20 3.6%
(cents)
Basic earnings per B linked unit 75.30 82.17 9.1%
(cents)
Headline earnings per A share (cents) 11.81 17.79 50.6%
Headline earnings per B share (cents) 11.81 17.79 50.6%
Headline earnings per A linked unit 113.41 119.39 5.3%
(cents)
Headline earnings per B linked unit 24.50 31.37 28.0%
(cents)
Distribution per B linked unit (cents) 12.67 13.56 7.0%
Net asset value per B linked unit 1.42 1.54 8.5%
(Rand)
Net tangible asset value per B linked 1.42 1.54 8.5%
unit (Rand)
Weighted average A linked units in 225 875 000 225 875 000 -
issue
Weighted average B linked units in 225 875 000 225 875 000 -
issue
Actual A linked units in issue 231 000 000 231 000 000 -
Actual B linked units in issue 231 000 000 231 000 000 -
Notes:
- The amounts set out in the "Before the Vukile acquisition and the
Vukile disposal" column have been extracted, without adjustment, from
the audited consolidated financial statements of Fortress for the year
ended 30 June 2011.
- The Vukile acquisition and the Vukile disposal are assumed to have
been implemented on 1 July 2010 for purposes of basic earnings per A
and B share, basic earnings per A and B linked unit, headline earnings
per A and B share, headline earnings per A and B linked unit and
distribution per B linked unit.
- The Vukile acquisition and the Vukile disposal are assumed to have
been implemented on 30 June 2011 for purposes of net asset value and
net tangible asset value per B linked unit.
- A total of 25 500 000 Vukile linked units were acquired for an
aggregate purchase consideration of R334 050 000 with effect from 1
July 2010.
- A total of 14 870 480 Vukile linked units were disposed of for an
aggregate sale consideration of R215 171 709 (net of transaction
costs) with effect from 1 July 2010, thereby realising a profit on
disposal of R20 368 421.
- It has been assumed that Fortress earned distributable income from the
Vukile linked units based on Vukile`s historical distribution of
50.525 cents in respect of the three months ended 30 September 2010,
67.12 cents per linked unit in respect of the six months ended 31
March 2011 and 54.314 cents in respect of the three months ended 30
June 2011.
- The total purchase consideration of R334 050 000 in respect of the
Vukile acquisition is assumed to be funded using interest-bearing
borrowings.
- The proceeds of R215 171 709 from the Vukile disposal are assumed to
be used to partly repay interest-bearing borrowings.
- Interest on the interest-bearing borrowings is assumed to be incurred
at 9% per annum.
- A fair value gain on investments in respect of the balance of 10 629
520 Vukile linked units held by Fortress has been recognised using
Vukile`s bid linked unit price at 30 June 2011 of R14.14.
- Tax has been provided at a rate of 14%.
- All adjustments have a continuing effect.
CATEGORISATION
The Vukile disposal constitutes a Category 2 transaction in terms of the
Listings Requirements of the JSE Limited and is accordingly not subject to
approval by Fortress` linked unitholders.
22 November 2011
Sponsor to Fortress
Java Capital
Date: 22/11/2011 10:20:46 Produced by the JSE SENS Department.
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