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ANNOUNCEMENT TO SHAREHOLDERS
PINNACLE TECHNOLOGY HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 86/00334/06)
("PINNACLE" OR "THE COMPANY")
ANNOUNCEMENT TO SHAREHOLDERS REGARDING:
- THE DISPOSAL OF 70% OF THE SHARES IN PINNACLE MICRO ZIMBABWE (PRIVATE)
LIMITED ("PINNACLE ZIMBABWE") ("THE DISPOSAL"); AND
- THE ACQUISITION OF THE SHARES IN PINNACLE HOLDINGS LIMITED ("PINNACLE
HOLDINGS") A SUBSIDIARY OF PINNACLE TECHNOLOGY HOLDINGS LIMITED ("PINNACLE")
("THE ACQUISITION"), NOT ALREADY OWNED BY PINNACLE
(COLLECTIVELY "THE TRANSACTIONS")
1. INTRODUCTION AND RATIONALE
FURTHER TO THE CAUTIONARY ANNOUNCEMENT PUBLISHED WITH THE ANNUAL FINANCIAL
STATEMENTS ON 28 SEPTEMBER 1999, SHAREHOLDERS ARE ADVISED THAT PINNACLE HAS
SOLD ITS ENTIRE INTEREST AMOUNTING TO 70% OF ITS SHARES IN AND CLAIMS AGAINST
PINNACLE ZIMBABWE. THE DISPOSAL HAS BEEN MADE DUE TO CONSTANT DEPRECIATION OF
THE ZIMBABWE DOLLAR AGAINST THE SOUTH AFRICAN RAND AND THE STRICT POLICY OF THE
ZIMBABWEAN GOVERNMENT TO THE TRANSFER OF FOREIGN CURRENCY.
IN ADDITION SHAREHOLDERS ARE ADVISED THAT THE COMPANY HAS ACQUIRED THE SHARES
IN AND CLAIMS AGAINST PINNACLE HOLDINGS NOT ALREADY HELD BY THE COMPANY. THE
ACQUISITION HAS BEEN MADE TO ENABLE PINNACLE TO CONSOLIDATE 100% OF PINNACLE
HOLDINGS.
2. TERMS OF THE TRANSACTIONS
2.1 SALIENT TERMS OF THE DISPOSAL
IN TERMS OF THE DISPOSAL AGREEMENT PINNACLE WILL DISPOSE OF ITS ENTIRE INTEREST
AMOUNTING TO 70% OF THE SHARES IN AND CLAIMS AGAINST PINNACLE ZIMBABWE FOR A
TOTAL DISPOSAL CONSIDERATION OF R6 977 777. THE EFFECTIVE DATE OF THE DISPOSAL
IS 1 JULY 1999 AND THE DISPOSAL CONSIDERATION IS PAYABLE IN SOUTH AFRICAN RAND.
THE PAYMENT OF THE DISPOSAL CONSIDERATION WILL BE MADE AS FOLLOWS:
- R2 277 777 ON THE DATE THE DISPOSAL AGREEMENT BECOMES UNCONDITIONAL;
- R2 500 000 WITHIN SIX MONTHS FROM THE DATE THE DISPOSAL AGREEMENT BECOMES
UNCONDITIONAL; AND
- THE BALANCE OF R2 200 000 IS TO BE SETTLED IN TWELVE EQUAL MONTHLY
INSTALMENTS OF R183 334 COMMENCING ON 30 SEPTEMBER 1999.
FURTHER, PINNACLE ZIMBABWE HAS ENTERED INTO A DISTRIBUTION AGREEMENT WITH
PINNACLE WHEREBY IT WILL PURCHASE A MINIMUM OF R6 MILLION OVER THE NEXT TWELVE
MONTHS.
THE PURCHASER OF PINNACLE'S INTEREST IN PINNACLE ZIMBABWE IS GAVIN BRIANT WHO
IS A DIRECTOR OF PINNACLE ZIMBABWE AND WHO HAS BEEN RESPONSIBLE FOR THE
DAY-TO-DAY RUNNING OF PINNACLE ZIMBABWE. CONSEQUENTLY, THE DISPOSAL IS DEEMED
TO BE A RELATED PARTY TRANSACTION IN TERMS OF THE LISTING REQUIREMENTS OF THE
JSE. A CIRCULAR WILL BE SENT TO SHAREHOLDERS INCORPORATING A FAIR AND
REASONABLE STATEMENT ON THE DISPOSAL AND CALLING A GENERAL MEETING AT WHICH AN
ORDINARY RESOLUTION AUTHORISING THE DISPOSAL WILL BE PROPOSED. THE RELATED
PARTY WILL NOT BE ENTITLED TO VOTE ON THIS RESOLUTION.
2.2 SALIENT TERMS OF THE ACQUISITION
THE COMPANY HAS ACQUIRED THE OUTSIDE SHAREHOLDERS' SHARES IN PINNACLE HOLDINGS
AMOUNTING TO 30 MILLION SHARES. THE CONSIDERATION FOR THE 30 MILLION SHARES
ACQUIRED IN PINNACLE HOLDINGS HAS BEEN SETTLED BY THE ISSUE OF 30 MILLION NEW
ORDINARY SHARES IN PINNACLE AT AN ISSUE PRICE OF 40 CENTS PER SHARE. THEREFORE,
FOR EVERY ONE PINNACLE HOLDINGS SHARE HELD BY THE OUTSIDE SHAREHOLDERS, A NEW
PINNACLE ORDINARY SHARE HAS BEEN ISSUED.
3. CONDITIONS PRECEDENT
THE DISPOSAL IS SUBJECT TO THE FOLLOWING CONDITIONS PRECEDENT:
- THE APPROVAL OF THE SOUTH AFRICAN RESERVE BANK AND THE RESERVE BANK OF
ZIMBABWE INSOFAR AS MAY BE NECESSARY FOR THE DISPOSAL; AND
- APPROVAL OF SHAREHOLDERS IN A GENERAL MEETING.
THE ACQUISITION IS SUBJECT TO THE FOLLOWING CONDITION PRECEDENT:
- THE JOHANNESBURG STOCK EXCHANGE GRANTING THE APPLICATION FOR THE LISTING OF
30 MILLION NEW ORDINARY PINNACLE SHARES.
4. FINANCIAL EFFECTS OF THE TRANSACTIONS
4.1 FINANCIAL EFFECTS OF THE DISPOSAL ON HEADLINE EARNINGS PER SHARE AND NET
ASSET VALUE PER SHARE:
BEFORE AFTER PERCENTAGE
DISPOSAL DISPOSAL CHANGE
HEADLINE EARNINGS PER SHARE (CENTS) 6,92 5,12 (26,01)
NET ASSET VALUE PER SHARE (CENTS) 24,27 28,24 16,36
NUMBER OF SHARES IN ISSUE ('000) 120 882 120 882 -
ASSUMPTIONS APPLIED TO THE DISPOSAL
THESE FINANCIAL EFFECTS DO NOT IN ANY WAY INCORPORATE THE ACQUISITION REFLECTED
IN 4.2.
- THE EFFECTIVE DATE OF THE DISPOSAL WAS 1 JULY 1998;
- TOTAL DISPOSAL CONSIDERATION OF R6 977 777 WAS RECEIVED IN CASH ON 1 JULY
1998 WHICH EARNED INTEREST AT A RATE OF 20%; AND
- A FULL TAX RATE OF 30% HAS BEEN APPLIED.
4.2 FINANCIAL EFFECTS OF THE ACQUISITION ON HEADLINE EARNINGS PER SHARE AND NET
ASSET VALUE PER SHARE:
BEFORE THE AFTER THE PERCENTAGE
ACQUISITION ACQUISITION CHANGE
HEADLINE EARNINGS PER SHARE
(CENTS) 6,92 8,24 19,08
NET ASSET VALUE PER SHARE
(CENTS) 24,27 23,32 (3,91)
NUMBER OF SHARES IN ISSUE
('000) 120 882 150 882 -
ASSUMPTIONS APPLIED TO THE ACQUISITION
THESE FINANCIAL EFFECTS DO NOT IN ANY WAY INCORPORATE THE DISPOSAL REFLECTED IN
4.1.
- THE EFFECTIVE DATE OF THE ACQUISITION WAS 1 JULY 1998; AND
- 30 MILLION NEW ORDINARY PINNACLE SHARES WERE IN ISSUE FOR THE FULL FINANCIAL
YEAR ENDED 30 JUNE 1999.
THE FINANCIAL EFFECTS REFLECTED IN 4.1 AND 4.2 HAVE BEEN CALCULATED BASED ON
THE YEAR-END RESULTS OF PINNACLE FOR THE PERIOD ENDED 30 JUNE 1999, PUBLISHED
IN THE PRESS ON 28 SEPTEMBER 1999.
5. CIRCULAR TO SHAREHOLDERS
A CIRCULAR TO SHAREHOLDERS PROVIDING, INTER ALIA, FULL DETAILS OF THE
ACQUISITION IS IN THE PROCESS OF BEING PREPARED AND WILL BE POSTED TO
SHAREHOLDERS IN DUE COURSE, SUBSEQUENT TO THE RELEVANT JSE APPROVAL.
MIDRAND
1 OCTOBER 1999
CORPORATE ADVISOR
GREENWICH CAPITAL (PTY) LTD
(REGISTRATION NUMBER 97/10123/07)
ATTORNEYS
MOSS-MORRIS INC.
(REGISTRATION NUMBER 94/08751/21)
SPONSORING BROKER
GREENWICH SECURITIES (PTY) LTD
(REGISTRATION NUMBER 97/09716/07)
(MEMBER OF THE JOHANNESBURG STOCK EXCHANGE)
AUDITORS AND REPORTING ACCOUNTANTS
MOORES ROWLAND
CHARTERED ACCOUNTANTS (SA)
