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SPEAR REIT LIMITED - Short-Form Announcement: Audited Financial Results And Dividend Declaration For The Year Ended 29 February 2024

Release Date: 22/05/2024 07:05
Code(s): SEA     PDF:  
Wrap Text
Short-Form Announcement: Audited Financial Results And Dividend Declaration For The Year Ended 29 February 2024

SPEAR REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2015/407237/06)
Share code: SEA
ISIN: ZAE000228995
LEI: 378900F76170CCB33C50
Approved as a REIT by the JSE
("Spear" or "the Company")


SHORT-FORM ANNOUNCEMENT: AUDITED FINANCIAL RESULTS AND DIVIDEND DECLARATION FOR
THE YEAR ENDED 29 FEBRUARY 2024 


1.   SALIENT FEATURES

     Distributable income per share ("DIPS") increased by 1.04% to 82.99 cents per share, from 82.14 cents per
     share in the prior corresponding period.

     Distribution per share ("DPS") for the financial year ended 29 February 2024 increased by 3.80% to 78.86
     cents per share, from 75.97 cents per share in the prior corresponding period.

     Final DPS for the six months ending 29 February 2024 increased by 4.37% to 40.53 cents per share from
     38.84 cents per share in the prior corresponding period.

     Average pay-out ratio for the financial year was 95.09% of DIPS. 92.45% in prior corresponding period.

     Collections for the financial year is 98.92% vs billings for the same period.

     Management has successfully renewed/re-let 153 383 sqm at an average negative reversion of 0.37%.

     Net asset value per share increased by 2.79% to 1180 cents per share, from 1148 cents per share in the
     prior corresponding period.

     Portfolio occupancy rate of 93.12% and 100% Western Cape based.

     Investment property value increased by 9.78% to R4.62 billion, from R4.22 billion in the prior corresponding
     period.

     Loan-to-Value decreased to 31.60%, from 36.30% reported at 28 February 2023.

     Revenue increased by 6.57% to R619 million, from R581 million in the prior corresponding period.

     Revenue excluding smoothing increased by 5.92% to R607 million, from R578 million in the prior
     corresponding period.

     Headline earnings per share increased by 3.67% to 82.78 cents per share, from 79.85 cents per share in
     the prior corresponding period.

     Earnings per share increased by 105.53% to 161.57 cents per share, from 78.61 cents per share in the prior
     corresponding period. The large variance to headline earnings per share is due to the inclusion of fair value
     adjustments for the year in earnings per share and not in headline earnings per share.

     *    Shareholders should note that the amounts and numbers in this short-form announcement have been rounded and
          that the complete information is available in the full announcement referred to in paragraph 4 below.

2.   KEY FINANCIAL HIGHLIGHTS

                                       Industrial   Commercial       Retail      Develop-      FY24 Total   FY23 Total
                                                        Office                   ment Land
      Number of properties                     9             14           6                          29           28
      Value of properties (R'000)      1,623,200      2,213,460     734,314        56,421     4,628,065    4,215,939
      Value %                                35%            48%         16%            1%          100%         100%
      Property revenue       excl        218,538        292,103      96,592            74       608,141      573,764
      smoothing (R'000)
      Revenue %                            35.94%        48.03%      15.88%         0.01%          100%         100%
      GLA m²                              252,941       126,235      47,366             -       426,542      409,868
      GLA %                                   59%           30%         11%            0%          100%
      Vacant area m²                        7,503        19,736       2,113             -        29,351       32,034
      Vacancy per sector %                  2.97%        15.63%       4.46%             -             -            -
      Vacancy on total GLA %                1.76%         4.63%       0.50%             -         6.88%         7.82%
      Reversion % YTD                       6.12%        -4.67%      11.03%             -        -0.37%        -3.69%
      Weighted average in-force             7.72%         7.43%       7.47%             -         7.52%         7.40%
      escalation %
      Weighted average lease                23.82         28.58       23.51             -         25.94         26.93
      expiry (months)

                                                                                 FY24 Total               FY23 Total
      Loan to value                                    %                              31.60                    36.30
      Interest cover ratio                             Times                           2.28                     2.51
      Tangible net asset value per share               R                              11.79                    11.47
      Total distributable income                       R'000                        200,805                  188,417
      SA REIT Cost to Income                           %                              43.69                    43.45
      SA REIT Administrative cost to income            %                               6.00                     6.50
      Weighted average cost of debt                    %                               9.48                     8.66
      Weighted average cost of variable debt           %                              10.16                     9.05
      Weighted average cost of fixed debt              %                               8.55                     8.18
      Fixed debt ratio                                 %                              47.24                    53.61
      Weighted Average expiry of debt                  Months                         24.67                    30.14
      Number of net shares in issue                    '000                         260,086                  226,065

3.   DIVIDEND DECLARATION 

     The directors of the Company resolved to declare a gross final dividend of 40.53328 cents per share from
     income reserves in respect of the six months ended 29 February 2024. The dividend amount, net of South
     African dividend tax of 20%, is 32.42662 cents per share for those shareholders who are not exempt from
     dividend withholding tax or are not entitled to a reduced rate in terms of the applicable double-tax agreement.
     The number of ordinary shares in issue at the declaration date is 282 400 242 and the income tax number
     of the Company is 9068437236. 

     The salient dates of the dividend declaration are:

     Declaration date                                              Wednesday, 22 May 2024
     Last day to trade cum dividend                                Tuesday, 11 June 2024
     Trading ex-dividend commences                                 Wednesday, 12 June 2024
     Record date                                                   Friday, 14 June 2024
     Date of payment                                               Tuesday, 18 June 2024

     Share certificates may not be dematerialised or rematerialised between Wednesday, 12 June 2024 and
     Friday, 14 June 2024, both days inclusive.

     In respect of dematerialised shareholders, the distributions will be transferred to the Central Securities
     Depository Participant ("CSDP") or broker accounts on Tuesday, 18 June 2024. Certified shareholders'
     distribution payments will be paid to certified shareholders bank accounts on Tuesday, 18 June 2024.

     Tax implications

     As Spear is a REIT, the distribution meets the definition of a 'qualifying distribution' for the purposes of
     section 25BB of the Income Tax Act, No. 58 of 1962 ("Income Tax Act"). Qualifying distributions received
     by South African tax residents will form part of their gross income in terms of section 10(1)(k)(i)(aa) of the
     Income Tax Act. Consequently, these distributions are treated as income in the hands of the shareholders
     and are not subject to dividends withholding tax. The exemption from dividends withholding tax is not
     applicable to non-resident shareholders, but they may qualify for relief under a tax treaty. 

     South African tax residents

     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
     exception, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act, because it is a dividend
     distributed by a REIT. The dividend is exempt from dividend withholding tax in the hands of South African
     tax resident shareholders, provided that the South African resident shareholders provide the following forms
     to the CSDP or broker in respect of uncertificated shares, or to the company, in respect of certificated shares:

     a)   a declaration that the dividend is exempt from dividend tax; and
     b)   a written undertaking to inform the CSDP, broker or the company, 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 to arrange for the above-mentioned
     documents to be submitted prior to payment of the dividend, if such documents have not already been
     submitted.

     Non-residents shareholders

     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. It should be noted that up to 31 December 2013, dividends
     received by non-residents from a REIT were not subject to dividend withholding tax. Since 1 January 2014,
     any dividend 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 shareholder concerned.

     Assuming dividend withholding tax will be withheld at a rate of 20%, the net dividend amount due to non-
     resident shareholders is 32.42662 cents per share. A reduced dividend withholding rate in terms of the
     applicable DTA may only be relied on if the non-resident shareholder has provided the following form to their
     CSDP or broker 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 DTA; and
     b) a written undertaking to inform their CSDP, broker or the company, 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 company to arrange for the above-
     mentioned documents to be submitted prior to payment of the dividend, if such documents have not already
     been submitted.

     Holders of uncertificated shares must ensure that they have verified their residence status with their CSDP
     or broker. Holders of certificated shares will be asked to complete a declaration to the company.

4.   SHORT-FORM ANNOUNCEMENT 

     This short-form announcement is the responsibility of the directors of the Company. It contains only a
     summary of the information in the audited consolidated financial statements for the year ended 29 February
     2024 ("Full Announcement") and does not contain full or complete details. The Full Announcement can be
     found at:
     https://senspdf.jse.co.za/documents/2024/JSE/ISSE/SEAE/SEAFY24.pdf

     A copy of the Full Announcement is also available for viewing on the Company's website at
     https://spearprop.co.za/pdf/investor-relations/SEAFY24.pdf. In addition, electronic copies of the Full
     Announcement may be requested and obtained, at no charge, from the Company at info@spearprop.co.za
     and from its sponsor, PSG Capital.

     Any investment decisions by investors and/or shareholders should be based on consideration of the Full
     Announcement, as a whole.  

     The Company has based this short-form on information extracted from the audited consolidated financial
     statements of Spear for the year ended 29 February 2024. BDO South Africa Inc., the Company's external
     auditor, expressed an unmodified audit opinion on the audited consolidated financial statements in their
     report dated 17 May 2024. The full report and the full audited consolidated financial statements are available
     on the Company's website at https://spearprop.co.za/investor-communications/financial-results/

5.   RESULTS PRESENTATION 

     Shareholders are invited to view Spear's annual results presentation to be broadcasted on YouTube at
     11h00 SAST today, 22 May 2024.

     Presentation details:
     -   View and listen mode;
     -   Link: https://youtube.com/live/caAY_GxubHs?feature=share
     -   Presentation slides will be made available on Spear's website shortly before the broadcast of the
         presentation under investor relations / financial results / presentations, at the following link:
         https://spearprop.co.za/investor-communications/presentations/
     -   Questions may be e-mailed during the presentation to: info@spearprop.co.za


Cape Town
22 May 2024

Sponsor
PSG Capital      

Date: 22-05-2024 07:05:00
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