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Summarised audited financial statements, changes to the board of directors and cash dividend
NEWPARK REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2015/436550/06)
JSE share code: NRL
ISIN: ZAE000212783
(Approved as a REIT by JSE)
(“Newpark” or “the company” or “the group”)
SHORT-FORM ANNOUNCEMENT:
SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS, CHANGES TO
THE BOARD OF DIRECTORS AND CASH DIVIDEND DECLARATION
for the 12 months ended 29 February 2020
AT A GLANCE
REVENUE decreased to R127,1 million (down 0,6%)
DISTRIBUTABLE EARNINGS increased to R44,7 million (up 3,1%)
FINAL DIVIDEND decreased to 15,74 cents per share (down 14,2%)
NET ASSET VALUE PER SHARE decreased to R8,94 (down 3,4%)
LOAN-TO-VALUE deteriorated to 32,2% (down from 31,9%)
HEADLINE EARNINGS PER SHARE decreased to 37,93 cents (up 31,2%)
EARNINGS PER SHARE decreased to 12,16 cents (down 83,1%)
NATURE OF BUSINESS
Newpark is a property holding and investment company that is
currently invested in A-grade commercial and industrial
properties.
STRATEGY
Newpark’s investment strategy is to seek well-positioned prime
commercial and industrial properties which provide quality cash
flows with the potential of upward rating on lease renewals and/or
redevelopment opportunities within the medium- to long-term.
PROPERTY PORTFOLIO
Newpark’s property portfolio consists of four properties. Two are
located in the heart of Sandton, Gauteng, namely the JSE Building
which has 18 163 m2 of gross lettable area (“GLA”) and an
adjoining mixed use property known as 24 Central, which has 15 654
m2 of GLA. A further property is situated in Linbro Business Park,
which has 12 387 m2 of GLA and the fourth property is situated in
Crown Mines, which has 11 277 m2 of GLA. The combined valuations
of these properties prepared by the registered property valuer are
performed annually at the Group’s year-end. The latest valuation
as at 29 February 2020 was R1,38 billion.
COMMENTARY ON RESULTS AND OUTLOOK
The Company’s board of directors (“Board”) is pleased to present
the Group’s results for the year under review, which is slightly
below the guidance provided as a result of refurbishment costs of
R6,1 million being incurred on the group’s mixed use building, 24
Central, as well as an increase in the group’s expected credit
loss provision of R2,1 million.
Newpark’s balance sheet remains robust with satisfactory gearing
levels of 33,2% (2019: 32,7%).
The Group’s vacancies decreased during the period to 12,1% (F2019:
15,7%) as a result of new contracts signed during the current
financial period. Revenue for the financial year was R127,1
million (down 0,6%), which realised an operating profit before
fair value adjustments of R89,2 million (down 6,6%) and, after
allowing for fair value adjustments and the net cost of finance,
resulted in a total comprehensive profit of R12,1 million (down
83,1%). Distributable earnings increased by 3,1% to R44,65 million
(F2019: R43,30 million), which is below the guidance of 6 – 8%
previously given.
Besides the vacancies in the mixed use segment, the tenant profile
has remained largely the same and no acquisitions or disposals
were made during this period.
Newpark will continue to focus on the management of its existing
assets and will remain alert to any potential acquisitions that
are in keeping with the stated strategy.
Rental collections for the first quarter of F2021 were 81% of that
originally budgeted. We do not expect this percentage to decrease
as we progress toward a normalised trading environment in due
course. Furthermore, we have engaged with many of our tenants
individually to understand how we may assist them to ensure the
sustainability of their businesses. In this regard, we have
granted short-term cash flow relief to tenants that is reflected
in the percentage stated above.
The board is mindful of the current uncertainty in the economic
environment caused by the COVID-19 pandemic and how this could
potentially impact our tenants in the mixed-use (retail, office
and storage) and the industrial segments. At this point in time,
the uncertainty generated by the above makes forecasting of any
sort extremely difficult. The board will provide further guidance
as new information becomes available and shareholders can be more
accurately guided on the expected outcomes.
INTEREST RATE AND PERCENTAGE OF DEBT HEDGED
The all-in weighted average cost of funding is 9,675% (28 February
2019: 9,573%) and the average hedge-term is 3,25 years. It is the
Board’s policy to hedge at least 70% of the exposure to interest
rate risk and Newpark currently has 81% of its exposure hedged
with swap-instruments whilst the balance is covered with a zero-
cost collar comprising of a cap and a floor.
CHANGES TO THE BOARD OF DIRECTORS
Gary Harlow and David Sevel resigned as directors of Newpark
during January 2020. Gary Harlow was replaced as chairperson by
Marc Wainer who was appointed as non-executive chairperson. Sadly,
Marc passed away on 20 April 2020. Stewart Shaw-Taylor has been
appointed as chairperson on 19 May 2020 and has resigned from his
positions on the audit and risk committee and remuneration
committee to allow him to take up the chairmanship in accordance
with King IVTM. Dionne Hirschowitz has been appointed as
chairperson of the remuneration committee and Barry van Wyk has
been appointed as a member of the remuneration committee.
CASH DIVIDEND DECLARATION
The board has approved and notice is hereby given of the final
gross dividend of 15,74400 cents per share for the year ended
29 February 2020.
The dividend is payable to Newpark’s shareholders in accordance
with the timetable set out below:
2020
Last date to trade cum dividend Tuesday, 9 June
Shares trade ex dividend Wednesday, 10 June
Record date Friday, 12 June
Payment date Monday, 15 June
Share certificates may not be dematerialised or rematerialised
between Wednesday, 10 June 2020 and Friday, 12 June 2020, both
days inclusive.
The dividend will be transferred to dematerialised shareholders’
CSDP accounts/broker accounts on Monday, 15 June 2020.
Certificated shareholders’ dividend payments will be paid to
certificated shareholders’ bank accounts on or about Monday, 15
June 2020.
In accordance with Newpark’s status as a REIT, shareholders are
advised that the dividend meets the requirements of a “qualifying
distribution” for the purposes of section 25BB of the Income Tax
Act, No. 58 of 1962 (“Income Tax Act”). The dividend will be
deemed to be a dividend for South African tax purposes, in terms
of section 25BB of the Income Tax Act.
The dividend received by or accrued to South African tax residents
must be included in the gross income of such shareholders and will
not be exempt from income tax (in terms of the exclusion to the
general dividend exemption, contained in paragraph (aa) of section
10(1)(k)(i) of the Income Tax Act) because it is a dividend
distributed by a REIT. This dividend is, however, exempt from
dividend withholding tax in the hands of South African tax
resident shareholders, provided that the South African resident
shareholders submitted the following forms to their Central
Securities Depository Participant (“CSDP”) or broker, as the case
may be, in respect of uncertificated shares, or the company, in
respect of certificated shares:
a) a declaration that the dividend is exempt from dividends tax;
and
b) a written undertaking to inform the CSDP, broker or the
Company, as the case may be, should the circumstances
affecting the exemption change or the beneficial owner cease
to be the beneficial owner,
both in the form prescribed by the Commissioner for the South
African Revenue Service. Shareholders are advised to contact
their CSDP, broker or the Company, as the case may be, to arrange
for the abovementioned documents to be submitted prior to payment
of the dividend, if such documents have not already been
submitted.
Dividends received by non-resident shareholders will not be
taxable as income and instead will be treated as an ordinary
dividend which is exempt from income tax in terms of the general
dividend exemption in section 10(1)(k)(i) of the Income Tax Act.
Any dividends received by a non-resident from a REIT will be
subject to dividend withholding tax at 20%, unless the rate is
reduced in terms of any applicable agreement for the avoidance of
double taxation (“DTA”) between South Africa and the country of
residence of the shareholders. Assuming dividend withholding tax
will be withheld at a rate of 20%, the net dividend amount due to
non-resident shareholders is 12,59520 cents per share. A reduced
dividend withholding rate in terms of the applicable DTA, may only
be relied upon if the non-resident shareholder, has submitted the
following forms to their CSDP or broker, as the case may be, in
respect of uncertificated shares, or the Company, in respect of
certificated shares:
a) a declaration that the dividend is subject to a reduced rate
as a result of the application of a DTA; and
b) a written undertaking to inform their CSDP, broker or the
Company, as the case may be, should the circumstances
affecting the reduced rate change or the beneficial owner
cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South
African Revenue Service. Non-resident shareholders are advised to
contact their CSDP, broker or the Company, as the case may be, to
arrange for the abovementioned documents to be submitted prior to
payment of the dividend if such documents have not already been
submitted, if applicable.
Shares in issue at the date of declaration of dividend:
100 000 001
Newpark’s income tax reference number: 9114003149.
By order of the board
Johannesburg
20 May 2020
The above announcement is a summary of information in the full
announcement and does not contain full or complete details and is
the responsibility of the directors. Any investment decisions by
investors and/or shareholders should be based on the full
announcement which is available on
https://senspdf.jse.co.za/documents/2020/jse/isse/NRLE/YEres20.pdf
and published on the company’s website on
http://www.newpark.co.za/pdf/annual_reports/FY2020FYRA.pdf
on 20 May 2020. The full announcement is also available at the
company’s registered office (51 West Street, Houghton, Gauteng,
2198) for inspection, at no charge, during office hours on any
business day and at the offices of the designated advisor, Java
Capital (2nd Floor, 6A Sandown, Valley Crescent, Sandton). Copies
of the full announcement may be requested by email to
info@newpark.co.za.
The annual financial statements including the audit opinion of the
external auditor, BDO South Africa Incorporated, which set out the
key audit matters and the basis for its unmodified opinion, is
available on the company’s website on
http://www.newpark.co.za/pdf/annual_reports/FY2020AFS.pdf.
NEWPARK REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2015/436550/06)
JSE share code: NRL
ISIN: ZAE000212783
(Approved as a REIT by JSE)
(“Newpark” or “the company” or “the group”)
DIRECTORS:
S Shaw-Taylor (Chairperson)**, SP Fifield (Chief executive
officer), JAI Ferreira (Financial director),
BD van Wyk*, DT Hirschowitz*, KM Ellerine*, HC Turner **
* Non-executive director ** Independent non-executive director
Date: 20-05-2020 04:06:00
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