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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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
