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Interim financial statements for the six months ended 31 August 2024, cash dividend and revised guidance
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")
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 AUGUST 2024, CASH DIVIDEND AND REVISED GUIDANCE
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 18,533 m2 of gross lettable area ("GLA") and an adjoining mixed-use property known as 24 Central, which
has 16,526 m2 of GLA. The third property is situated in Linbro Business Park which has 13,713 m2 of GLA and the fourth
property in Crown Mines which has 11,277 m2 of GLA. The combined valuation of these properties, undertaken by the directors
as at 31 August 2024 was R1,042 billion.
KEY FINANCIAL HIGHLIGHTS
Unaudited Unaudited Change
31 August 31 August %
2024 2023
Funds from operations per share ("FFOPS") (cents) (1) 35,50 40,18 (11,7)
Dividend per share (cents) 30,00 35,00 (14,3)
Total assets (R000) 1 112 532 1 355 039 (17,9)
Net asset value per share (Rand)1 5,84 8,16 (28,4)
Loan to value ratio (%)1 41,7% 33,3%
Gross revenue (R000) 68 803 68 753 (0,1)
Operating profit before fair value adjustments 45 996 48 862 (5,9)
Earnings/(loss) per share (cents) 8,33 (42,12) 119,8
Headline earnings / (loss) per share (cents) 21,72 27,88 (22,1)
(1) Financial measure determined in accordance with the SA REIT Best Practice guidelines.
COMMENTARY ON RESULTS
The Company's board of directors ("Board") is pleased to present the Group's interim results for the period under review.
Notwithstanding subdued market conditions, the valuations of Newpark's property portfolio have remained in line with the
29 February 2024 values with the only change during the interim period of six months being to the value of the JSE building
where thelease with the JSE has been extended to December 2030.The valuation at 31 August 2024 accounts for an anticipated
negative reversion of rentals to market related levels on 1 April 2025.
Revenue for the six months ended 31 August 2024 was R68,8 million, an increase of 0,1% compared to the same period in
FY2024, and operating profit before fair value adjustments was R46,0 million (down 5,9%) predominantly as a result of
increased property and administration costs. During the period, there was a R2,5 million downward adjustment in value on the
interest rate hedges and a downward adjustment of R13,4 million on investment properties. Allowing for fair value adjustments
and the net cost of finance, the total comprehensive profit for the period was R8,3 million (H1 FY2024 loss: R42,1 million),
representing a profit per share of 8,328 cents per share ("cps") (H1 FY2024 loss: 42,117 cps).
Funds from operations per share ("FFOPS") for the period were 35,498 cps which represents a 11,7% decrease from the same
period in FY2024. The decrease is attributed to the reversion in rental at HellermannTyton and increased property and
administration costs. The negative impacts were partially off-set by escalations in rentals at the JSE and Crown Mines properties
as well as increased retail occupancies and advertising income at 24 Central.
Following the extensions of the HellermannTyton and the JSE leases, which commenced on 1 January 2024 and 1 August 2024,
respectively, the weighted average lease expiry (by GLA) for the portfolio increased to 5,8 years.
Newpark's balance sheet continues to remain financially sound with a loan-to-value level ("LTV") of 41,7% (FY2024: 41,1%).
Whilst one of the debt covenant measures exceeded the required level as at 31 August 2024, the debt providers have condoned
the breach pending the outcome of the extension of term of debt referred to below.
Debt facilities of R150,0 million will mature in May 2025 and have been reflected under current liabilities. Management is
engaging with debt providers to extend the maturity dates of the facilities. The strong interest cover ratios together with an
extended weighted average lease expiry profile are expected to support a favourable debt extension outcome, resulting in a
longer overall debt maturity profile.
The Group's weighted average cost of funding, following the maturity of one of the interest rate hedges, is 9.300% (31 August
2023:9,258%). Hedges remain in place for 63,8% of the Group's drawn debt exposure as at 31 August 2024.
INTERIM DIVIDEND PER SHARE
After considering the interim decrease in FFOPS and the outlook for the remainder of the year, Newpark has declared an
interim dividend of 30,00 cents per share, being a decrease of 14,3% compared to the dividend per share of 35,00 cents per
share for the six months ended 31 August 2023.
OUTLOOK
After having concluded the lease extension with the JSE, the weighted average lease expiry for the portfolio has increased to
5,8 years, providing a positive outlook for the group with its high quality, medium term predictable cash flows. The positive
outlook is further supported by improving market conditions and the start of the interest rate cutting cycle.
A portion of the groups Group's borrowings will mature in May 2025 and the debt providers will be engaged in order to
refinance the borrowings and to re-align the Group's balance sheet and covenants with the operational cash flow profile of the
business.
Guidance given to the market on Newpark's budgeted FFOPS for the year ending 28 February 2025 was between 50,00 and
60,11 cents per share, being a decrease of between 25,9% and 38,4% when compared to the FFOPS for the year ended 29
February 2024 of 81,11 cents per share. The board has now updated the FFOPS guidance to a revised FFOPS for the year
ending 28 February 2025 of between 67,00 and 78,00 cents per share, being a decrease of between 3,8% and 17,4% when
compared to the FFOPS for the year ended 29 February 2024 of 81,11 cents per share. The revised budgeted FFOPS takes into
account the terms of the early JSE lease extension, effective from 1 August 2024, with the negative impact of the rental
reversion in terms of the lease having been deferred until the next financial year. The contracted lower rentals in terms the JSE
lease extension will result in a 48,5% reduction in rent receivable from the JSE for the financial year ending 28 February 2026
as compared with the current financial year.
The dividend per share, for the year ended 28 February 2025 is budgeted to be in line with the revised FFOPS of 67,00 and
78,00 cents per share being between 4,8% below and 10,8% above the total dividend of 70,37 cents per share declared for the
year ended 29 February 2024.
The forecast is based on the assumption that there is no material change to 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 updated forecast has not been audited or reviewed by the Company's auditors.
PAYMENT OF INTERIM DIVIDEND
The Board has approved, and notice is hereby given of the interim gross dividend of 30,0000 cents per share for the six months
ended 31 August 2024.
The dividend is payable to Newpark's shareholders in accordance with the timetable set out below:
2024
Last date to trade cum dividend: Tuesday, 29 October
Shares trade ex dividend: Wednesday, 30 October
Record date: Friday, 1 November
Payment date: Monday, 4 November
Share certificates may not be dematerialised or rematerialised between Wednesday, 30 October 2024 and Friday,
1 November 2024, both days inclusive.
The dividend will be transferred to dematerialised shareholders' CSDP accounts/broker accounts on Monday,
4 November 2024. Certificated shareholders' dividend payments will be paid to certificated shareholders' bank accounts on or
about Monday, 4 November 2024.
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 24,0000 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: 9506934174.
This results announcement is the responsibility of the directors and is only a summary of information in the unaudited
consolidated interim financial statements for the six months ended 31 August 2024 ("2024 interims results") and does not
contain full or complete details. Any investment decisions by investors and/or shareholders should be based on the 2024
interim results which is available on the Company's website at: http://www.newpark.co.za/pdf/sens/2024HY.pdf and can also
be accessed using the following JSE link: https://senspdf.jse.co.za/documents/2024/jse/isse/NRLE/2024HY.pdf. This results
announcement has not been audited or reviewed by the Company's external auditors.
By order of the Board
9 October 2024
DIRECTORS
A F Benatar (Chief Executive Officer), A J Wilson (Financial Director), B D van Wyk *, D T Hirschowitz*,
KM Ellerine*, R C Campbell **, S Shaw-Taylor**, T S Sishuba**
* Non-executive director ** Independent non-executive director
REGISTERED OFFICE WEBSITE
51 West Street, Houghton, Gauteng, 2198 www.newpark.co.za
P O Box 3178, Houghton, Gauteng, 2041
COMPANY SECRETARY TRANSFER SECRETARY
Bronwyn Baker Computershare Investor Services Proprietary Limited
DESIGNATED ADVISOR
Java Capital
6th Floor, 1 Park Lane, Wierda Valley,
Sandton, 2196
DATE OF PUBLICATION
10 October 2024
Date: 10-10-2024 08:30:00
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