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Audited consolidated annual financial statements, cash dividend and outlook for the 12 months ended 28 February 2025
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")
AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS, CASH DIVIDEND
AND OUTLOOK FOR THE 12 MONTHS ENDED 28 FEBRUARY 2025
AT A GLANCE
REVENUE increased to R132,8 million (UP 1,5%)
FUNDS FROM OPERATIONS decreased to R78,4 million (DOWN 3,38%)
TOTAL DIVIDEND increased to 78,37 cents per share (UP 11,37%)
NET ASSET VALUE PER SHARE decreased to R5,64 (DOWN 6,47%)
LOAN-TO-VALUE RATIO deteriorated to 43,1% (UP from 41,1%)
HEADLINE EARNINGS PER SHARE decreased to 42,35 cents (DOWN 19,18%)
EARNINGS PER SHARE increased to 36,14 cents per share (UP >100%)
NATURE OF BUSINESS
Newpark is a property holding and investment company that through
its subsidiaries is invested in high-quality 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 18 533,0m2 of gross lettable area ("GLA") and an
adjoining mixed-use property known as 24 Central, which has 16
524,6m2 of GLA. A further property is situated in Linbro Business
Park, which has 13 713,0m2 of GLA and the fourth property is
situated in Crown Mines and has 11 277,0m2, 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 2025 was R1,09 billion.
COMMENTARY ON RESULTS
Newpark's loan-to-value ("LTV") ratio has increased to 43,1%
(F2024: 41,1%), primarily due to the reduction in value of the JSE
property. The positive impact of the increased value at the Linbro
Park and 24 Central properties was offset by the change in
valuation of the JSE property with the overall result being a
total portfolio value decrease of R29,5 million (2,6%) relative to
the value of the assets in the previous year. Independent
valuations for all properties were performed by Broll Valuation
and Advisory Services (Pty) Ltd, who also valued the properties in
the previous financial year.
Revenue for the financial year ended 28 February 2025 ("the
financial year") was R132,8 million (F2024: R130,9 million), up
1,5%. Operating profit before fair value adjustments was R91,2
million (F2024: R96,9 million), down 5,9% with the decrease
predominately resulting from higher property and administration
costs. After allowing for fair value adjustments and the net cost
of finance, the total comprehensive profit for the financial year
was R36,1 million (F2024: loss of R222,3 million), up 116,3%,
representing earnings of 36,14 cents per share ("cps") (F2024:
negative 222,28 cps).
The board declared a final cash dividend of 48,37 cps (F2024:
35,37 cps). The total dividend for the financial year is 78,37 cps
(F2024: 70,37 cps), representing 100,0% of funds from operations
("FFO"), and an increase of 11,37% over the 70,37 cps declared in
respect of the prior year (F2024: 86,8% of FFO).
FUNDING
The group's funding was restructured during the period, which had
the impact of increasing the maturity profile and reducing funding
margins. The previous term facilities amounting to R450 million
were refinanced into a single facility of R475 million with a
maturity date of 29 February 2028. This refinancing resulted in a
decrease in the weighted average margin on term debt from 2,10% to
1,75% and refinanced a portion of capital expenses that had
previously been funded by the revolving credit facility ("RCF").
Additionally, the term of the R50 million RCF was extended to 29
February 2028, with the rate also decreasing from prime less 1,30%
to prime less 1,50%.
The increased borrowings arising from capital expenditure coupled
with the decrease in property valuations resulted in an increase
in the Loan-to-Value ("LTV") ratio to 43,1% at year-end. Despite
the increase in the LTV, the ratio remains well below the
requirement of 50,0% in terms of the group's restructured debt
agreements.
Although decreasing interest rates have had a positive impact on
Newpark's funding costs, the benefit was somewhat offset by the
maturing of an interest rate swap which had fixed a portion of the
group's debt at a low base rate. Newpark currently has an interest
rate swap and an interest rate cap in place, with a combined
nominal value of R250 million, which mature in June 2025 and March
2027 respectively. Newpark will continue to monitor the interest
rate environment and, where appropriate, adjust its hedging
position by adding or replacing instruments during the year to
ensure that interest rate risk is managed in line with its hedging
strategy.
OUTLOOK
Newpark will maintain its focus on managing its existing assets,
with particular attention on the office space at 24 Central, where
vacancies currently account for 4,8% of the portfolio by GLA.
The group will continue to remain alert to any potential
acquisitions and disposals that are in keeping with its stated
investment strategy.
The full rental reversion on the JSE lease will come into effect
in the coming financial year and, taking the resultant impact into
account, the group is budgeting FFOPS for the year ending 28
February 2026 to be between 39,00 and 46,00 cents per share, being
a decrease of between 50,2% and 41,3% of FFOPS for the financial
year of 78,37 cents.
The dividend per share for the year ended 28 February 2026 is
budgeted to be in line with the FFOPS for that year.
The forecast is based on the assumption that there will be no
further deterioration in the macro-economic environment, 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, reviewed or
reported on by Newpark's auditor.
CASH DIVIDEND DECLARATION
The board has approved and notice is hereby given of the final
gross dividend of 48,3680 cents per share for the year ended 28
February 2025.
The dividend is payable to Newpark's shareholders in accordance
with the timetable set out below:
2025
Last date to trade cum dividend Tuesday, 3 June
Shares trade ex dividend Wednesday, 4 June
Record date Friday, 6 June
Payment date Monday, 9 June
Share certificates may not be dematerialised or rematerialised
between Wednesday, 4 June 2025 and Friday, 6 June 2025, both days
inclusive.
The dividend will be transferred to dematerialised shareholders'
CSDP accounts/broker accounts on Monday, 9 June 2025.
Certificated shareholders' dividend payments will be paid to
certificated shareholders' bank accounts on or about Monday, 9
June 2025.
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 ceases
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 38,6944 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.
The audited consolidated annual financial statements for the 12
months ended 28 February 2025 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, are
available on the company's website on
http://www.newpark.co.za/pdf/annual_reports/FY25AFS.pdf.
By order of the board
15 May 2025
This results announcement is the responsibility of the directors
and is only a summary of information in the audited consolidated
annual financial statements for the 12 months ended 28 February
2025 ("2025 AFS") released on SENS on 16 May 2025 and does not
contain full or complete details. Any investment decisions by
investors and/or shareholders should be based on the 2025 AFS
which is available on
https://senspdf.jse.co.za/documents/2025/jse/isse/NRLE/FY25AFS.pdf
and published on the company's website on
http://www.newpark.co.za/pdf/annual_reports/FY25AFS.pdf
on 16 May 2025.
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 OF PUBLICATION: 16 May 2025
SPONSOR: Java Capital
Date: 16-05-2025 04:00:00
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