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Summarised audited consolidated financial statements and cash dividend for the 12 months ended 28 February 2023
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 CONSOLIDATED FINANCIAL STATEMENTS AND CASH DIVIDEND
for the 12 months ended 28 February 2023
AT A GLANCE
REVENUE increased to R126,7 million (UP 15,19%)
FUNDS FROM OPERATIONS increased to R67,2 million (UP 44,11%)
TOTAL DIVIDEND increased to 67,19 cents per share (UP 43,23%)
NET ASSET VALUE PER SHARE increased to R8,93 (UP 5,68%)
LOAN-TO-VALUE RATIO improved to 30,9% (DOWN from 33,6%)
HEADLINE EARNINGS PER SHARE increased to 64,78 cents (UP 26,52%)
EARNINGS PER SHARE increased to 130,65 cents (UP 386,04%)
NATURE OF BUSINESS
Newpark is a property holding and investment company that holds
high-quality commercial and industrial properties.
INVESTMENT STRATEGY
Newpark’s investment strategy is to seek well-located prime
commercial, industrial and retail properties in South Africa,
which provide a high-quality, sustainable earnings base with the
potential for capital appreciation 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 16 056
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 and 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 28 February 2023 was R1,38 billion.
COMMENTARY ON RESULTS
The company’s board of directors (“board”) is pleased to present
the group’s results for the year under review.
Newpark’s balance sheet continues to remain financially healthy
with a loan-to-value ratio of 30,9% (F2022: 33,6%).
Improved operation in tenant vacancies at 24 Central together with
asset management initiatives on Newpark’s single-tenanted assets
have positively impacted property valuations and resulted in a
fair value increase of R65,9 million (4,87%) to the value of the
assets relative to the previous year.
Revenue for the financial year ended 28 February 2023 (“the
financial year”) was R126,7 million (F2022: R110,0 million), up
15,2%. Operating profit before fair value adjustments was R88,6
million (F2022: R77,3 million), up 14,6% (F2022: down 6,8%). After
allowing for fair value adjustments and the net cost of finance,
the total comprehensive profit for the financial year was R130,7
million (F2022: R26,9 million), up 386,0% (F2022: up 57,3%),
representing earnings of 130,65 cents per share (“cps”) (F2022:
26,88 cps).
Cash generated from operations (“CGO”) for the financial year
increased by 0,7% from R95,1 million to R95,7 million, mainly as a
result of rental escalations, which were offset by maintenance
costs and the negative rental reversion incurred on the extension
of the lease of the Crown Mines industrial property.
The board declared a final cash dividend of 42,19 cps (F2022:
25,25 cps). The total dividend for the financial year is 67,19 cps
(F2022: 46,91 cps) representing 100% of funds from operations
(“FFO”) and is an increase of 43,23% (F2022: increase of 17,63%)
over the 46,91 cps declared in respect of the prior year (100,6%
of FFO).
FUNDING
Newpark’s revolving credit facility and R300 million of its term
loan facilities, that were due to mature in May 2023, were
refinanced during the financial year. The term loan was replaced
by two separate facilities of R150 million, which mature in
November 2025 and November 2027, respectively, at margins that are
largely in line with those of the previous facilities. The
revolving credit facility is now available until November 2027.
The refinancing of the maturing debt has significantly improved
the liquidity position for Newpark in the short- and medium-term.
In addition to the refinancing, three of the interest rate hedges
matured during the year, which decreased the hedging of Newpark’s
borrowings to 63% at year-end. Although this is below the board’s
previously stated hedging target of 70%, the board is comfortable
with the current level in light of the relatively low gearing
ratio of 30,9% and the current unfavourable hedging environment.
The board will continue to monitor Newpark’s position in the
context of dynamic market conditions.
The reduction in the interest rate hedges decreased the overall
financing costs relative to the prior year, despite the increasing
interest rate environment.
Newpark’s hedged borrowings are contracted at an average interest
rate of 6,52% per annum before banker’s margin until June 2024.
OUTLOOK
Newpark will continue to focus on the management of its existing
assets with the lease renewals of the remaining single tenanted
buildings remaining a key management priority with 57% of leases
by GLA due to expire in 2025 and 2026.
The group will remain alert to any potential acquisitions that are
in keeping with its stated investment strategy and is well-
positioned to capitalise on opportunities that are likely to
present themselves in a suppressed real estate market.
The group is budgeting FFOPS for the year ending 28 February 2024
to be between 63,83 and 70,55 cents per share, being within 5% of
FFOPS for the year ended 28 February 2023 of 67,19 cents, with the
assumption that any negative rental reversions that may arise due
to lease renewals at certain of the single-tenanted buildings are
offset by rental income growth at the balance of the portfolio.
The dividend per share for the year ending 28 February 2024 is
budgeted to be in line with the FFOPS for the year.
The forecast is based on the assumption that no further
deterioration in the macro-economic environment will prevail, no
material tenant default will occur, operating cost increases will
not exceed inflation and no changes will be made to the property
portfolio. This forecast has not been audited or reviewed by the
company’s auditors.
CHANGES TO THE BOARD OF DIRECTORS
During the year we said farewell to Simon Fifield who resigned as
the Chief Executive Officer on 31 October 2022 in order to pursue
new opportunities. Simon was a founding member of Newpark and has
served as CEO since its listing in 2016. We thank Simon for his
invaluable leadership and contributions over the years and wish
him well for the future. Auri Benatar (appointed 1 November 2022)
joined the board to replace Simon and the board looks forward to
benefitting from his insights and experience.
CASH DIVIDEND DECLARATION
The board has approved and notice is hereby given of the final
gross dividend of 42,19497 cents per share for the year ended
28 February 2023.
The dividend is payable to Newpark’s shareholders in accordance
with the timetable set out below:
2023
Last date to trade cum dividend Tuesday, 6 June
Shares trade ex dividend Wednesday, 7 June
Record date Friday, 9 June
Payment date Monday, 12 June
Share certificates may not be dematerialised or rematerialised
between Wednesday, 7 June 2023 and Friday, 9 June 2023, both days
inclusive.
The dividend will be transferred to dematerialised shareholders’
CSDP accounts/broker accounts on Monday, 12 June 2023.
Certificated shareholders’ dividend payments will be paid to
certificated shareholders’ bank accounts on or about Monday, 12
June 2023.
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 33,75597 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
18 May 2023
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/2023/jse/isse/NRLE/YEres23.pdf
and published on the company’s website on
http://www.newpark.co.za/pdf/annual_reports/FY2023FYRA.pdf
on 18 May 2023. 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 (6th Floor, 1 Park Lane, Wierda Valley, Sandton, 2196).
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/FY2023AFS.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) **, AF Benatar (Chief Executive
Officer), AJ Wilson (Financial Director), DT Hirschowitz *,
KM Ellerine *, BD van Wyk *, RC Campbell **, TS Sishuba **
* Non-executive director
** Independent non-executive director
Date: 18-05-2023 04:15:00
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