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NEWPARK REIT LIMITED - Summarised audited consolidated financial statements for the 12 months ended 28 February 2019

Release Date: 22/05/2019 11:59
Code(s): NRL     PDF:  
 
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Summarised audited consolidated financial statements for the 12 months ended 28 February 2019


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 the JSE)
("Newpark" or "the Company" or "the Group")

SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE 12 
MONTHS ENDED 28 FEBRUARY 2019

DIRECTORS' COMMENTARY

NATURE OF BUSINESS
Newpark is a property holding and investment company that is 
currently invested in A-grade commercial and industrial 
properties.

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 15,188 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 28 February 2019 was R1,41 billion. 

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. 

COMMENTARY ON RESULTS
The Company's board of directors ("Board") is pleased to present 
the group's results for the year under review, which are in line 
with the guidance provided. The Group's results for the 12 month 
period under review, came under increased pressure impacted by 
further vacancies in the Group's mixed use asset in Sandton 
resulting in the Group's vacancies increasing during the period to 
15,7% (FY2018: 11,2%). The vacancies, which started to increase 
during the prior year continued further as a result of a large 
tenant electing to consolidate its office footprint into their 
main office space. Expense controls were applied to mitigate the 
impact of this loss of revenue but could not compensate entirely 
for the impact on distributable earnings.

The increased vacancies caused the revenue to decline to R127,9 
million (FY2018: R136,4 million), a decrease of 6,2%. 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.

DISTRIBUTABLE EARNINGS
Distributable earnings for the 12 months declined by 18,0% to 
43,30 cents per share ("cps") (FY2018: 52,80 cps). Accordingly, 
the Board has declared a final dividend of 18,34951 cps (interim 
dividend for H1 FY2019 24,94859 cps).

Year-on-year Newpark has increased its net asset value per share 
to R9,25 from R9,04, an increase of 2%.

SECTORAL SPLIT
Based on:                                                   Gross
                                                  GLA     Rentals
Mixed use (retail and office)                  26,6,%       31,7%
Office                                          31,9%       46,2%
Industrial                                      41,5%       22,1%
                                               100,0%      100,0%
LEASE EXPIRY PROFILE & VACANCIES
Based on:                                                   Gross
                                                  GLA     Rentals
Vacant                                          15,7%       16,8%
Feb 2020                                         5,9%        6,8%
Feb 2021                                         0,2%        0,3%
Feb 2022                                         3,8%        5,9%
Feb 2023                                         0,2%        0,4%
Feb 2024                                         0,3%        0,5%
> Feb 2024                                      73,9%       69,3%
                                               100,0%      100,0%
FUNDING
                                             Amount        Margin       
Facilities                                    R'000        
 Expiry May 2020                            450 000       3-month
                                                      Jibar+1,95%
 Expiry May 2020                             50 000   Prime-1,28%
TOTAL                                       500 000

                                                         Hedges of
                                             Amount  3-month Jibar
                                              R'000      base-rate
Hedge instruments                                       
Hedge 3: rate swap - expires 2020/4/10 
(rolls into Hedge 5)                        230 000          7,70%
Hedge 4: rate swap - expires 2022/5/31      135 000         8,085%
Hedge 5: rate swap - to start 2020/4/10 /   
expires 2022/5/31                           230 000         7,993%

Two separate RMB facilities were restructured on 24 May 2017 into 
a 3-year Term Loan Facility of R450 000 000 maturing in May 2020 
and a Revolving Credit Facility of R50 000 000 maturing in May 
2020. The new consolidated facilities are secured mainly by 
mortgage bonds together with a cession of the leases over the four 
properties. The term loan remains appropriately hedged, as 
outlined above.

INTEREST RATE AND PERCENTAGE OF DEBT HEDGED
The all-in weighted average cost of funding is 9,573% (28 February 
2018: 9,478%) 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 80% of its exposure hedged.

SUMMARY OF FINANCIAL PERFORMANCE
                                       28 February     28 February
                                              2019            2018
Shares in issue                        100,000,001     100,000,001
Net asset value per share                    R9,25           R9,04
Loan-to-value ratio                          31,9%           32,7%
Gross property operating expense ratio       19,4%           19,5%

*The loan-to-value ratio is calculated by dividing interest 
bearing borrowing net of cash on hand by the total of investment 
property.

OUTLOOK
Newpark will continue to focus on a disciplined approach to the 
acquisition of high quality properties that offer meaningful 
growth in both capital and income. In the year ahead, the emphasis 
will be on filling the 24 Central vacancy, introducing an 
appropriately empowered partner into Newpark's shareholder base 
and searching for acquisitions that offer value.

The Board is mindful of the current pressures experienced by 
tenants in the mixed-use (retail and office) segment, manifesting 
in higher than desired vacancies for the short-term. 
Notwithstanding, over the full year Newpark has budgeted to 
deliver growth of 6,0% to 8,0% on its 2019 distributions of 43,30 
cps and, more importantly, to be well positioned for above average 
growth thereafter.

The forecast is based on the assumption that a stable macro-
economic environment will prevail, no material tenant default will 
occur, operating cost increases will not exceed budget. This 
forecast has not been audited or reviewed by the Company's 
auditors.

SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                           Audited        Audited
                                       28 February    28 February
                                              2019           2018
                                            (R'000)        (R'000)
Assets
Non-current assets
Investment properties         note 4     1 278 334      1 261 766
Straight-line lease asset                  111 463         99 984
Lease incentive                             14 556         17 203
                                         1 404 353      1 378 953

Current Assets
Trade and other receivables                  3 960          6 182
Lease incentive                              2 647          2 647 
Receiver of revenue                              -          2 273
Cash and cash equivalents                    9 141          1 720
Total Current Assets                        15 748         12 822
Total Assets                             1 420 101      1 391 775
Equity and Liabilities
Equity
Share capital                              619 918        619 918
Reserves                                   180 412        180 412
Retained income                            124 526        103 594
                                           924 856        903 928
Liabilities
Non-Current Liabilities
Bank borrowings                            458 500        453 400
Derivative financial instruments             8 063         11 050
                                           466 563        464 450
Current liabilities
Trade and other payables                    28 682         23 397
Total Current Liabilities                   28 682         23 397
Total Liabilities                          495 245        487 847
Total Equity and Liabilities             1 420 101      1 391 775

SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                           Audited        Audited
                                         12 months      12 months
                                             ended          ended
                                       28 February    28 February
                                              2019           2018
                                            (R'000)        (R'000)
Revenue                                    127 901        136 450
Property operating expenses                (26 612)       (26 571)
Administrative expenses                     (5 800)        (6 177)
Net gain from fair value adjustment
 on investment property                     16 903         25 383
Net change in fair value of financial
 instruments at fair value through 
 profit or loss                              2 987         (7 972)
Operating profit                           115 379        121 113
Finance income                               1 235          1 884
Finance costs                              (44 592)       (45 639)
Profit before taxation                      72 022         77 358
Taxation                                         -          2 428
Profit for the period                       72 022         79 786
Other comprehensive income                       -              -
Total comprehensive income                  72 022         79 786
Earnings per share information
(cents per share)
Basic earnings per share         note 5      72,02          79,79
Diluted earnings per share       note 5      72,02          79,79


SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                         Capital
                                             re-
                         Share     Total organi-
                 Share   issue     share  sation Retained   Total
               capital   costs   capital reserve   income   equity
               (R'000) (R'000)   (R'000) (R'000)  (R'000)  (R'000)
              
Audited
Balance at
1 March 2017  625 000  (5 082)  619 918 180 412   75 024  875 354 
Profit for
the period          -       -         -       -   79 786   79 786
Dividend
distributions
to owners of
the company
recognised
directly in
equity              -       -         -       -  (51 212) (51 212)  
Balance at
1 March 2018  625 000  (5 082)  619 918 180 412  103 598  903 928
Audited          
Profit for
the period          -       -         -       -   72 022   72 022
Dividend
distributions
to owners of
the company
recognised
directly in
equity              -       -         -       -  (51 094) (51 094) 
Balance at
28 February
2019          625 000   (5 082) 619 918 180 412  124 526  924 856


SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS 
                                           Audited        Audited
                                         12 months      12 months
                                             ended          ended
                                       28 February    28 February
                                              2019           2018
                                            (R'000)        (R'000)
Cash flows from operating activities
Cash generated from operations              94 535         96 000
Finance income                               1 235          1 884
Finance costs                              (44 592)       (45 639)
Tax received                                 2 273              -
Net cash generated from operating 
activities                                  53 451         52 245
Cash flows from investing activities
Purchase of furniture and fittings             (36)        (2 578)
Net cash utilised by investing 
activities                                     (36)        (2 578)
Cash flows from financing activities
Dividends paid                             (51 094)       (51 212)
Bank borrowings advanced                     5 100              -
Bank borrowings repaid                           -        (47 481)
Net cash utilised by financing 
activities                                 (45 994)       (98 693)
Total cash and cash equivalent
movement for the period                      7 421        (49 026)
Cash and cash equivalents 
at beginning of period                       1 720         50 746
Total cash and cash equivalents 
at end of period                             9 141          1 720
Additional info on cash flow:
Cash generated from operations 
before working capital changes              87 030         94 562
Working capital changes                      7 505          1 438
Cash generated from operations              94 535         96 000


SIGNIFICANT FINANCIAL STATEMENT NOTES

1.  BASIS OF PREPARATION AND ACCOUNTING POLICIES
The summarised audited consolidated financial statements are 
prepared in accordance with the requirements of the JSE Listings 
Requirements and the requirements of the Companies Act 71 of 2008 
of South Africa applicable to summarised financial statements. The 
JSE Listings Requirements require reports to be prepared in 
accordance with the framework concepts and the measurement and 
recognition requirements of International Financial Reporting 
Standards ("IFRS"), the SAICA Financial Reporting Guides as issued 
by the Accounting Practices Committee and Financial Pronouncements 
as issued by the Financial Reporting Standards Council, and to 
also, as a minimum, contain the information required by IAS 34, 
Interim Financial Reporting. The accounting policies applied in 
the preparation of these financial statements are in terms of IFRS 
and are consistent with those applied in the previous consolidated 
annual financial statements, except for the adoption of the new 
standards.

The summarised audited consolidated financial statements were 
compiled by Dries Ferreira CA(SA), the financial director.

The directors are not aware of any matters or circumstances 
arising subsequent to the year-end that require any additional 
disclosure or adjustment to the financial statements.

The summarised audited consolidated financial statements for the 
twelve months ended 28 February 2019 have been extracted from 
audited information but are not themselves audited. The directors 
of Newpark take full responsibility for the preparation of this 
report and that the financial information has been correctly 
extracted from the underlying audited consolidated financial 
statements. The annual financial statements were audited by BDO 
South Africa Inc. and an unmodified audit opinion has been issued 
on the audited consolidated financial statements for the financial 
year ended 28 February 2019. The auditor's report does not 
necessarily report on all of the information contained in this 
announcement. Shareholders are therefore advised that in order to 
obtain a full understanding of the nature of the auditor's 
engagement, they should obtain a copy of that report together with 
the accompanying audited consolidated financial statements, both 
of which are available for inspection at Newpark's registered 
office. 

2.  NEW STANDARDS AND INTERPRETATIONS ADOPTED IN THE CURRENT 
    FINANCIAL PERIOD
IFRS 15 - Revenue from contracts with customers
The FASB and IASB issued their long awaited converged standard on 
revenue recognition on 29 May 2014. It is a single, comprehensive 
revenue recognition model for all contracts with customers to 
achieve greater consistency in the recognition and presentation of 
revenue. Revenue is recognised based on the satisfaction of 
performance obligations, which occurs when control of good or 
service transfers to a customer.

The effective date of the standard was for years beginning on or 
after 1 January 2018.

The group has adopted the interpretation for the first time in 
the 2019 annual financial statements. The amendment did not have a 
material impact on the group's consolidated financial statements.

Amendment to IFRS 15 - Revenue from contracts with customers
The IASB has amended IFRS 15 to clarify the guidance, but there 
were no major changes to the standard itself. The amendments 
comprise clarifications of the guidance on identifying performance 
obligations, accounting for licences of intellectual property and 
the principal versus agent assessment (gross versus net revenue 
presentation).

The effective date of the standard is for years beginning on or 
after 1 January 2018.

The Group has adopted the interpretation for the first time in the 
2019 annual financial statements. The amendment did not have a 
material impact on the Group's consolidated financial statements.

IFRS 9 Financial Instruments
This standard replaces the guidance in IAS 39. It includes 
requirements on the classification and measurement of financial 
assets and liabilities; it also includes an expected credit losses 
model that replaces the current incurred loss impairment model. 

The IASB has amended IFRS 9 to align hedge accounting more closely 
with an entity's risk management. The revised standard also 
establishes a more principles-based approach to hedge accounting 
and addresses inconsistencies and weaknesses in the current model 
in IAS 39. 

The effective date of the standard is for years beginning on or 
after 1 January 2018. 

The Group has adopted the standard for the first time in the 2019 
annual financial statements. 

The standard impacted the impairment of financial assets of the 
group as follows:

In relation to the impairment of financial assets, IFRS 9 requires 
an expected credit loss model as opposed to an incurred credit 
loss model under IAS 39. The expected credit loss model requires 
the Group to account for expected credit losses and changes in 
those expected credit losses at each reporting date to reflect 
changes in credit risk since initial recognition of the financial 
assets. In other words, it is no longer necessary for a credit 
event to have occurred before credit losses are recognised.

Specifically, IFRS 9 requires the company to recognise a loss 
allowance for expected credit losses on debt investments 
subsequently measured at amortised cost to which the impairment 
requirements of IFRS 9 apply. In particular, IFRS 9 requires the 
Group to measure the loss allowance for a financial instrument at 
an amount equal to the lifetime expected credit losses if the 
credit risk on that financial instrument has increased 
significantly since initial recognition, or if the financial 
instrument is a purchased or originated credit-impaired financial 
asset. On the other hand, if the credit risk on a financial 
instrument has not increased significantly since initial 
recognition (except for a purchased or originated credit-impaired 
financial asset), the group is required to measure the loss 
allowance for that financial instrument at an amount equal to 12 
months expected credit losses. IFRS 9 also provides a simplified 
approach for measuring the loss allowance at an amount equal to 
lifetime expected credit losses for trade receivables and contract 
assets in certain circumstances. The amendment did not have a 
material impact on the Group's consolidated financial statements.

3.  SEGMENTAL ANALYSIS
Segmental information
At 28 February 2019, the Group is organised into three main 
operating segments:
-  Mixed use (mainly office and retail)
-  Office
-  Industrial

The executive committee ("EXCO") is the chief operating decision 
maker of the Group. The information contained in the segment 
analysis is measured in a manner consistent with the information 
disclosed in the statement of comprehensive income and the 
statement of financial position.

                    Mixed              Indus-
                      use    Office     trial   General     Total
                   (R'000)   (R'000)   (R'000)   (R'000)   (R'000)
28 February 2019
(audited)
Revenue           40 531    56 576     30 794         -   127 901
Property 
operating 
expenses         (23 555)        -     (3 057)        -   (26 612)
Administrative
expenses                -        -          -    (5 800)   (5 800)
Fair value
adjustment        (44 466)  46 600     14 769     2 987    19 890
Operating 
profit            (27 490) 103 176     42 506     2 813   115 379

                    Mixed              Indus-
                      use    Office     trial   General     Total
                   (R'000)   (R'000)   (R'000)   (R'000)   (R'000)
28 February 2018
(audited)
Revenue           49 108    56 568     30 773         -   136 450
Property 
operating 
expenses         (23 286)        -     (3 258)        -   (26 571)
Administrative
expenses               -         -          -    (6 177)   (6 177)
Fair value
adjustment       (24 464)   42 548      7 299    (7 972)   17 411
Operating 
profit             1 358    99 116     34 788   (14 149)  121 113

The amounts provided to the EXCO with respect to total assets are 
measured in a manner consistent with that in the statement of 
financial position. These assets are allocated based on the 
operations of the segment.

                     Mixed             Indus-
                       use    Office     trial  General     Total
                    (R'000)   (R'000)   (R'000)  (R'000)   (R'000)
28 February 2019
(audited)
Investment
property           419 946   620 752   237 636        -  1 278 334
Straight-line 
lease asset          2 054    84 045    25 364        -    111 463
Lease incentive          -    17 203         -        -     17 203
Trade & other 
receivables          3 960         -         -        -      3 960
Cash and cash 
equivalents              -         -         -    9 141      9 141
                   425 960   722 000   263 000    9 141  1 420 101

                     Mixed             Indus-
                       use    Office     trial  General     Total
                    (R'000)   (R'000)   (R'000)  (R'000)   (R'000)
28 February 2018
(audited)
Investment
property           464 748   574 151   222 867        -  1 261 766
Straight-line 
lease asset            252    77 999    21 733        -     99 984
Lease incentive          -    19 850         -        -     19 850
Trade and other 
receivables          6 182         -         -        -      6 182
Receiver of
revenue                  -         -     2 273        -      2 273
Cash and cash 
equivalents              -         -         -    1 720      1 720
                   471 182   672 000   246 873    1 720  1 391 775

The amounts provided to EXCO with respect to total liabilities are 
measured in a manner consistent with that in the statement of 
financial position. These liabilities are allocated based on the 
operations of the segment.

                    Mixed              Indus-
                      use    Office     trial   General     Total
                   (R'000)   (R'000)   (R'000)   (R'000)   (R'000)
28 February 2019
(audited)
Bank borrowings         -         -         -   458 500   458 500
Derivative 
financial 
instruments             -         -         -     8 063     8 063
Trade and other 
payables            2 416    14 727       485    11 053    28 682
                    2 416    14 727       485   477 616   495 245

                    Mixed              Indus-
                      use    Office     trial   General     Total
                   (R'000)   (R'000)   (R'000)   (R'000)   (R'000)
28 February 2018
(audited)
Bank borrowings         -         -         -   453 400   453 400
Derivative 
financial 
instruments             -         -         -    11 050    11 050
Trade and other 
payables            3 398    19 206        19       774    23 397
                    3 398    19 206        19   465 224   487 847

DISTRIBUTABLE INCOME
                                           Audited        Audited
                                         12 months      12 months
                                             ended          ended
                                       28 February    28 February
                                              2019           2018
                                            (R'000)        (R'000)
Headline earnings     (refer note 5)        55 119         54 403
Adjusted for:
Change in fair value of investment
property as a result of amortisation 
of straight-line lease asset and tax
thereof                                    (11 479)       (12 226)
Change in fair value of investment      
property as a result of amortisation of
lease incentive and tax thereof              2 647          2 647
Fair value adjustment of financial     
derivative instruments and the tax
thereof                                     (2 987)         7 972
                                            43 300         52 796
Actual number of ordinary shares in        100 000        100 000
issue ('000)

Reconciliation to dividend per share:
  Distributable income per share (cents
  per share)                                 43,30          52,80
  -  Interim dividend per share              24,95          26,65
  -  Final dividend per share                18,35          26,15

4.  INVESTMENT PROPERTIES
For the year under review the property value includes movement 
consisting of the increase in straight lining of the lease assets 
and the decrease in lease incentives, fair value adjustments, as 
well as additions and depreciation relating to furniture and 
fittings.

                                 Cost/    Accumulated    Carrying
                             Valuation   depreciation       value
                               (R'000)        (R'000)      (R'000)
Audited 28 February 2019
Investment property          1 276 421             -     1 276 421
Furniture and fittings           3 947        (2 034)        1 913
Total                        1 280 368        (2 034)    1 278 334
Audited 28 February 2018
Investment property          1 259 518             -     1 259 518        
Furniture and fittings           3 911        (1 663)        2 248
Total                        1 263 429        (1 663)    1 261 766

Reconciliation of investment properties - 28 February 2019
                                        Fair    
                                       value
                Opening    Addi-    adjust-    Depre-     Closing
                balance    tions      ments   ciation     balance 
                 (R'000)  (R'000)    (R'000)   (R'000)     (R'000)
Investment  
property      1 259 518        -     16 903         -   1 276 421
Furniture 
and fittings      2 249       36          -      (372)      1 913
Total         1 261 766       36     16 903      (372)  1 278 334

Reconciliation of investment properties - 28 February 2018
                                        Fair    
                                       value
                Opening    Addi-    adjust-    Depre-     Closing
                balance    tions      ments   ciation     balance 
                 (R'000)  (R'000)    (R'000)   (R'000)     (R'000)
Investment  
property      1 231 629    2 505     25 383         -   1 259 518
Furniture 
and fittings      2 617       72          -      (440)      2 248
Total         1 234 246    2 578     25 383      (440)  1 261 766

A register containing the information required by Regulation 25(3) 
of the Companies Regulations, 2011 is available for inspection at 
the registered office of the company.

                                       28 February    28 February
                                              2019           2018
                                            (R'000)        (R'000)
JSE Building
Portion 25 of Erf 7 Sandown Johannesburg,
South Africa
- Purchase price                            18 070         18 070
- Fair value adjustment                    602 682        556 081
- Straight-line of lease asset              84 045         77 999
- Lease-incentive                           17 203         19 850
                                           722 000        672 000
24 Central
Portion 20 of Erf 7 Sandton Township,
registration division IR, Province of
Gauteng
- Purchase price                           238 000        238 000
- Fair value adjustment                    176 808        221 274
- Straight-line of lease asset               2 054            252
- Net capitalised expenditure                5 138          5 474
                                           422 000        465 000
Linbro Park
Portion 3 of Erf 9 Frankenwald Ext3
Johannesburg, South Africa
- Purchase price                           127 858        127 858
- Fair value adjustment                     12 350          4 562
- Straight-line of lease asset              20 094         18 482
- Net capitalised expenditure                  698            698
                                           161 000        151 600
Crown Mines
Erven 1 and 2 Crown City Extension 1
- Purchase price                            85 044         85 044
- Fair value adjustment                     11 686          4 705
- Straight-line of lease asset               5 270          3 251
                                           102 000         93 000

                                       28 February    28 February
                                              2019           2018
                                            (R'000)        (R'000)
Fair value of investment property for
accounting purposes
Opening fair value of property assets    1 381 600      1 344 500
Gross fair value adjustment on 
investment property                         16 903         25 383
Additions to furniture and fittings             36          2 578
Depreciation                                  (372)          (440)
Straight-line lease asset and lease
incentive movement                           8 833          9 579
Property valuation                       1 407 000      1 381 600
Less: straight-line lease income 
adjustment                                (111 463)       (99 984)
Less: lease incentive receivable           (17 203)       (19 850)
Closing carrying value of property 
assets                                   1 278 334      1 261 766

Securities
Mortgage bonds at a nominal value of R500 000 000 (February 2018: 
R500 000 000) have been registered over investment properties with 
a fair value of R1 278 333 718 (February 2018: R1 261 766 278) as 
security for interest bearing liabilities.

Details of valuation
The properties were last valued on 28 February 2019 using the 
discounted cash flow of future income streams method. The 
valuations of the properties were performed by a registered 
valuer, Peter Parfitt of Quadrant Properties Proprietary Limited, 
who is a registered valuer in terms of section 19 of the Property 
Valuers Professional Act, No 47 of 2000.

At 28 February 2019, the key assumptions and unobservable inputs 
used by the Company in determining fair value were as follows:

These assumptions are based on current market conditions.
                                  Mixed     
                                    use     Office     Industrial
Discount rate                    14,75%     14,25%         15,00%
Exit capitalisation rate          9,24%      8,75%         10,00%
Capitalised rate                  8,75%      8,25%          9,00%

Measurement of fair value
Valuation techniques:
Discounted cash flows: The valuation model considers the present 
value of net cash flows to be generated from the property, taking 
into account expected rental and expense growth rates, vacant 
periods, lease incentive costs such as rent-free periods and other 
costs not recovered from tenants. The expected net cash flows are 
discounted using a discount rate. The discount rate applied is 
derived using an appropriate capitalisation rate and adding a 
growth rate based on market-related rentals, testing this for 
reasonableness by comparing the resultant Rand rate per m2 against 
comparative sales of similar properties in similar locations. 
Amongst other factors, the capitalisation rate estimation 
considers the quality of the property, its location, the tenants' 
credit quality and their lease terms. 

Inter-relationship between key unobservable inputs and fair value 
measurements:

The estimated fair value would increase/ (decrease) if:
-  expected market rental growth was higher/ (lower);
-  expected expense growth was lower/ (higher);
-  vacant periods were shorter/ (longer);
-  the occupancy rate was higher/ (lower);
-  rent-free periods were shorter/ (longer);
-  discount rate was lower/ (higher); and
-  reversionary capitalisation rate was lower/ (higher).

5.  EARNINGS PER SHARE
                                           Audited        Audited
                                         12 months      12 months
                                             ended          ended
                                       28 February    28 February
                                              2019           2018
Basic earnings per share
Profit attributable to shareholders
(R'000)                                     72 022         79 786
Weighted average number of ordinary
shares in issue ('000)                     100 000        100 000
Basic earnings per share 
(cents per share)                            72,02          79,79
Diluted earnings per share
There are no dilutive instruments 
in issue
Profit attributable to shareholders
(R'000)                                     72 022         79 786
Weighted average number of ordinary
shares in issue ('000)                     100 000        100 000
Basic diluted earnings per share 
(cents per share)                            72,02          79,79
Headline earnings per share
Profit attributable to shareholders
(R'000)                                     72 022         79 786
Adjusted for:
Change in fair value of investment
property and tax thereof (R'000)           (16 903)       (25 383)
                                            55 119         54 403
Weighted average number of ordinary
shares in issue ('000)                     100 000        100 000
Headline earnings per share
(cents per share)                            55,12          54,40

6.  PAYMENT OF FINAL DIVIDEND
The Board has approved and notice is hereby given of the final 
gross dividend of 18,34951 cents per share for the year ended 28 
February 2019.

The dividend is payable to Newpark's shareholders in accordance 
with the timetable set out below:                             2019
Last date to trade cum dividend:                  Tuesday, 11 June
Shares trade ex dividend:                       Wednesday, 12 June
Record date:                                       Friday, 14 June
Payment date:                                     Tuesday, 18 June

Share certificates may not be dematerialised or rematerialised 
between Wednesday, 12 June 2019 and Friday, 14 June 2019, both 
days inclusive. 

The dividend will be transferred to dematerialised shareholders' 
CSDP accounts/broker accounts on Tuesday, 18 June 2019. 
Certificated shareholders' dividend payments will be paid to 
certificated shareholders' bank accounts on or about Tuesday, 
18 June 2019.

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 14,67961 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.

7.  EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any material event which occurred 
after the reporting date and up to the date of this report.

8.  RELATED PARTIES
                                        28 February    28 February
                                               2019           2018
                                            (R'000)        (R'000)
Professional services - Capensis 
Real Estate (Pty) Ltd
(SP Fifield is a director)                   1 197          1 129
Professional services - WellCapital 
(Pty) Ltd                                      475            448
(JAI Ferreira is a director)

By order of the board.

Simon Fifield                                 Dries Ferreira
Chief Executive Officer                       Financial Director

Johannesburg 
22 May 2019

DIRECTORS
G D Harlow (Chairperson) **, S P Fifield (Chief Executive 
Officer), J A I Ferreira (Financial Director), B D van Wyk *, D T 
Hirschowitz*, KM Ellerine*, H C Turner **, D I Sevel ** S Shaw-
Taylor**
* Non-executive director     ** Independent non-executive director

There were no changes to the Board during the period under review.

REGISTERED OFFICE                            WEBSITE
51 West Street, Houghton, Gauteng, 2198      www.newpark.co.za
P O Box 3178, Houghton, Gauteng, 2041

COMPANY SECRETARY                  TRANSFER SECRETARY
CIS Company Secretaries            Computershare Investor Services
Proprietary Limited                Proprietary Limited

DESIGNATED ADVISOR
Java Capital

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