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NEWPARK REIT LIMITED - Summarised audited financial statements, changes to the board of directors and cash dividend

Release Date: 20/05/2020 16:06
Code(s): NRL     PDF:  
 
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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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