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Financial Effects and withdrawal of cautionary announcement
DIPULA INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/013963/06)
JSE share code: DIA ISIN: ZAE000158317
JSE share code: DIB ISIN: ZAE000158325
(Approved as a REIT by the JSE)
(“Dipula” or the “company”)
FINANCIAL EFFECTS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Linked unitholders are referred to the announcements released on SENS on 21 August 2014 and
3 October 2014 wherein unitholders were advised that Mergence Africa Property Investment Trust
(the “purchaser” or “Mergence”) and Dipula, being the sole capital and income beneficiary of
Mergence, had concluded an agreement with Redefine Properties Limited (“Redefine” or the “seller”)
for the acquisition of the rental enterprises conducted in respect of and including certain properties and
buildings of the seller (collectively, the “property portfolio”) (the “acquisition”). The purpose of this
announcement is to present the financial effects of the acquisition.
2. FINANCIAL EFFECTS
Set out below are the forecast revenue, operating profit, net profit after taxation and distributable
earnings of the property portfolio (“the forecasts”) for the 9 months ending 31 August 2015 and the
year ending 31 August 2016 (the “forecast periods”). The forecasts have been prepared on the
assumption that the acquisition will be implemented on 1 December 2014.
The forecasts, including the assumptions on which they are based and the financial information from
which they are prepared, are the responsibility of the directors of Dipula. The forecasts have not been
reviewed or reported on by the independent reporting accountants or external auditors.
The forecasts presented in the table below have been prepared in accordance with the company’s
accounting policies and in compliance with IFRS.
9 months ending Year ending
31 August 2015 31 August 2016
R’000 R’000
Contractual rental and tenant recoveries 38 036 54 388
Uncontracted rental 1 161 2 410
Straight-line of lease income adjustment 3 998 4 172
Total rental revenue 43 195 60 970
Net operating income* 36 013 50 355
Net profit after taxation* 29 207 41 281
Distributable earnings 25 209 37 109
*Includes the effects of straight-lining rental income.
The forecasts incorporate, inter alia, the following material assumptions:
1. Contracted revenue is based on existing lease agreements.
2. Uncontracted revenue comprises 2.7% and 4.0% of the gross rental revenue for the 9 months
ending 31 August 2015 and the year ending 31 August 2016.
3. All existing lease agreements are valid.
4. R106.75 million of the purchase consideration (including acquisition costs and expected capital
expenditure) is assumed to be funded through third party interest-bearing borrowings. These
interest bearing borrowings are assumed to incur interest at weighted average interest rate
of 8.5% p.a.
5. It is assumed that the balance of the purchase consideration and capital expenditure of R318.75
million will be funded through the issue of approximately 19 137 359 A-linked units at an issue
price of R9.58 per A-linked unit and the issue of approximately 19 137 359 B-linked units at an
issue price of R7.07 per B-linked unit to Redefine.
6. In terms of the asset management agreement with Dipula Asset Management Trust (the
“manager”), Dipula will pay the manager a monthly fee equivalent to 1/12th of 0.3% of the
aggregate of the market capitalisation and borrowings of Dipula.
7. Dipula will pay the appointed property manager for all property management services a monthly
fee equivalent to 2.5% of the gross monthly income collected (including VAT).
3. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects of the acquisition on Dipula’s net asset value and tangible
net asset value per A-linked unit and per B-linked unit, based on the reviewed consolidated statement
of financial position as at 31 August 2014, are not significant (less than 3%) and therefore have not
been disclosed.
The unaudited pro forma financial effects are the responsibility of the directors of Dipula and have not
been reviewed or reported on by the company’s auditors.
4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Dipula linked unitholders are advised that following the release of the financial effects of the
acquisition, caution is no longer required to be exercised by linked unitholders when dealing in their
linked units.
14 November 2014
Sponsor
Java Capital
Date: 14/11/2014 10:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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