Wrap Text
Unaudited interim results for the six months ended 31 December 2014.
PINNACLE HOLDINGS LIMITED
(Registration number 1986/000334/06
Share code: PNC
ISIN: ZAE000184149
(“Pinnacle” or “the Group” or “the Company”)
www.pinnacleholdings.co.za
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER
2014
AT A GLANCE
REVENUE up 14% to R3.6 billion
Headline earnings down 17% to R125 million
HEPS down 16% to 80.4 cents
Debt to equity down from 77.1% to 74.7%
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Full year
Half year 31 Dec 30 Jun
31 Dec 2013 2014
2014 Restated^ Restated^
Unaudited Unaudited Audited
R’000 R’000 R’000
Revenue 3 638 049 3 183 409 7 152 444
Cost of sales (3 112 831) (2 645 963) (6 082 151)
Gross profit 525 218 537 446 1 070 293
Operating expenses (317 906) (282 366) (615 314)
Selling expenses (33 011) (26 179) (61 860)
Employees expenses (242 546) (228 424) (478 689)
Administration expenses (48 502) (38 068) (85 266)
Gain on discounting of
finance lease agreements 1 442 298 778
Profit on foreign exchange 4 711 5 661 5 377
Reclassification of fair
value adjustment on
derecognition of asset – 4 346 4 346
EBITDA * 207 312 255 080 454 979
Depreciation and
amortisation (15 253) (8 784) (23 926)
Impairment of goodwill (3 597) – (2 169)
Operating profit before
interest 188 462 246 296 428 884
Net finance costs (46 362) (29 388) (78 180)
Investment income 3 602 9 785 11 297
Interest paid (49 964) (39 173) (89 477)
Share of equity accounted
associate income 17 157 4 776 20 747
Profit before taxation 159 257 221 684 371 451
Taxation (37 238) (59 412) (98 394)
Net profit for the period 122 019 162 272 273 057
Owners of the Company 121 881 162 146 272 580
Non-controlling interests 138 126 477
Other comprehensive income
Items that will not be
reclassified into profit
or loss: (2 363) – (21 510)
Loss on property revaluation – – (28 075)
Tax relating to items that
will not be reclassified (2 363) – 6 565
Items that can be
reclassified into profit
or loss: 2 739 1 019 (11 132)
Exchange differences from
translating foreign
operations 681 1 019 1 011
Cash flow hedge 2 058 – (12 143)
Total comprehensive income
for the period 122 395 163 291 240 415
Attributable to:
Owners of the Company 122 257 163 165 239 938
Non-controlling interests 138 126 477
* Earnings before interest, taxation, depreciation and
amortisation.
^ Refer restatement/reclassification of prior reporting periods
note.
RECONCILIATION OF HEADLINE EARNINGS
Half year Half year Full year
31 Dec 31 Dec 30 Jun
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
Net profit for the period
attributable to ordinary
shareholders 121 881 162 146 272 580
Impairment of goodwill 3 597 – 2 169
Reclassification of fair
value adjustment on
derecognition of asset
after taxation – (3 738) (3 738)
Reclassification of fair
value adjustment on
derecognition of asset – (4 346) (4 346)
Less: Taxation thereon – 608 608
Profit on sale of property,
plant and equipment net
of taxation (131) (7 592) (8 533)
Profit on sale of property,
plant and equipment (182) (10 545) (11 851)
Less: Taxation thereon 51 2 953 3 318
Headline earnings 125 347 150 816 262 478
Total number of shares in
issue (‘000)
– Total issued less
treasury shares 155 922 158 034 155 922
– Weighted average 155 922 158 031 157 638
FINANCIAL REVIEW
Half year Full year
Half year 31 Dec 30 Jun
31 Dec 2013 2014
2014 Restated^ Restated^
Unaudited Unaudited Audited
Performance per
share (cents)
Basic and diluted earnings
per share 78.2 102.6 172.9
Headline and diluted headline
earnings per share * 80.4 95.4 166.5
Returns (%)
Gross profit 14.4 16.9 15.0
Operating expenses (8.7) (8.9) (8.6)
EBITDA ** 5.7 8.0 6.4
Operating profit before
interest and taxation 5.2 7.7 6.0
Effective tax rate *** 26.2 27.4 28.1
Net profit 3.4 5.1 3.8
* The Company has no dilutionary instruments in issue.
** Earnings before interest, taxation, depreciation and
amortisation.
*** Based on profit before taxation excluding share of equity
accounted associate income.
^ Refer restatement/reclassification of prior reporting periods
note.
CONDENSED SEGMENTAL ANALYSIS
Half year Full year
Half year 31 Dec 30 Jun
31 Dec 2013 2014
2014 Restated^ Restated^
Unaudited Unaudited Audited
R’000 R’000 R’000
Revenue
ICT Distribution 3 552 729 3 107 330 6 984 069
IT Projects and Services 81 849 94 788 169 047
Financial Services 57 344 43 583 93 394
Group Central Services – 493 –
Less: Intra-segmental
revenue (53 873) (62 785) (94 066)
3 638 049 3 183 409 7 152 444
Net profit before taxation
ICT Distribution 123 999 191 435 294 669
IT Projects and Services 3 799 11 807 17 181
Financial Services 24 328 16 528 36 020
Group Central Services 7 131 1 914 23 581
159 257 221 684 371 451
Net profit after taxation
ICT Distribution 87 933 141 048 213 485
IT Projects and Services 2 735 8 424 13 444
Financial Services 17 516 11 899 25 880
Group Central Services 13 835 901 20 248
122 019 162 272 273 057
Net operating assets
ICT Distribution 1 025 150 794 641 862 488
IT Projects and Services 35 092 20 089 24 521
Financial Services 95 013 46 423 60 202
Group Central Services 206 781 321 604 287 631
1 362 036 1 182 757 1 234 842
^ Refer restatement/reclassification of prior reporting periods
note.
CONDENSED ANALYSIS OF GOODWILL
Half year Half year Full year
31 Dec 31 Dec 30 Jun
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
Opening balance 116 517 114 940 114 940
Business combination
acquisitions – 2 256 3 746
Impairments (3 597) – (2 169)
Closing balance 112 920 117 196 116 517
Business combination
acquisitions *
DSP – – 1 995
Pacific – 2 256 1 751
– 2 256 3 746
Impairments
E-Secure (3 597) – (883)
Pinnacle Micro – – (1 286)
(3 597) – (2 169)
* There were no business combination movements in the current
reporting period. For details of prior period business
combinations, refer to the latest Annual Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Half year Half year Full year
31 Dec 31 Dec 30 Jun
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
ASSETS
Non-current assets 969 472 912 063 913 787
Property plant and
equipment 186 902 209 205 176 028
Intangible assets and
goodwill 129 793 131 107 135 406
Investment in associate 295 757 273 450 284 144
Long-term loans 29 843 27 953 28 795
Finance lease receivables 292 143 228 029 257 957
Deferred taxation 35 034 42 319 31 457
Current assets 2 334 701 2 260 376 2 432 892
Inventories on hand 836 118 882 414 894 866
Inventories in transit 75 344 106 950 76 870
Trade and other
receivables 1 257 190 1 160 463 1 328 964
Finance lease receivables 127 515 86 415 105 758
Taxation receivable 11 842 918 1 171
Cash and cash equivalents 26 692 23 216 25 263
Total assets 3 304 173 3 172 439 3 346 679
EQUITY AND LIABILITIES
Capital and reserves 1 362 036 1 182 757 1 234 842
Share capital and premium 1 680 25 996 1 680
Treasury shares (41 766) (41 766) (41 766)
Non-distributable reserves 6 907 33 607 8 589
Cash flow hedge reserve (10 085) – (12 143)
Accumulated profits 1 401 501 1 161 610 1 274 822
Non-controlling interests 3 799 3 310 3 660
Non-current liabilities 481 667 529 152 519 138
Interest-bearing
liabilities 445 987 504 584 487 455
Derivative financial
liability 19 996 – 18 083
Deferred taxation 15 684 24 568 13 600
Current liabilities 1 460 470 1 460 530 1 592 699
Trade and other payables 895 164 963 276 1 129 699
Interest-bearing
liabilities 51 419 17 467 17 944
Short-term loans 149 999 114 999 151 048
Deferred revenue 9 650 14 398 12 412
Taxation payable 3 870 11 401 4 357
Bank overdrafts 350 368 338 989 277 239
Total equity and
liabilities 3 304 173 3 172 439 3 346 679
Capital management
Net asset value per
share (cents) 871.1 746.3 789.6
Net tangible asset value
per share (cents) 787.9 663.4 702.8
Working capital management
Investment in working
capital (R'000) 1 263 838 1 172 153 1 158 589
Days inventory outstanding
(excluding in transit) 49.5 60.0 44.0
Days sales outstanding 58.8 60.0 53.0
Days purchases outstanding 46.6 55.0 50.0
Liquidity and solvency
Debt to equity (%) 74.7 82.5 77.1
– Attributable to
Distribution and Holdings 27.8 35.7 29.9
– Attributable to
Datacentrix 21.8 23.2 23.1
– Attributable to
Finance Assets (Centrafin) 25.2 23.6 24.1
Current ratio (excluding
stock in transit) 1.63 1.59 1.55
Acid test (excluding stock
in transit) 1.03 0.94 0.96
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Half year Full year
Half year 31 Dec 30 Jun
31 Dec 2013 2014
2014 Restated^ Restated^
Unaudited Unaudited Audited
R’000 R’000 R’000
EBITDA * 207 312 255 080 454 979
Changes in working capital (105 249) (108 365) (74 021)
Non-cash flow items 14 813 (10 737) 2 616
Cash generated by operating
activities 116 876 135 978 383 574
Net finance costs (46 362) (29 388) (78 180)
Finance income received 3 602 9 785 11 297
Finance expenses paid (49 964) (39 173) (89 477)
Taxation paid (52 252) (64 275) (104 247)
18 262 42 315 201 147
Cash flows from
investing activities
Property, plant and equipment
acquired (26 621) (60 787) (58 725)
Proceeds on disposals of
property, plant and
equipment 4 431 42 164 34 559
Acquisition of intangible
assets (1 740) (4 175) (8 675)
Net investment in finance
leases receivable (55 943) (43 247) (113 584)
Acquisition of subsidiaries – – (2 580)
Acquisition of shares in
Datacentrix (including
deposit) – (1 223) (321)
Acquisition of
non-controlling interests – (1 465) (2 939)
(79 873) (68 733) (152 265)
Cash flows from
financing activities
Interest-bearing liabilities
raised 308 32 936 68 707
Interest-bearing liabilities
repaid (9 349) (10 707) (28 087)
Non-interest-bearing
liabilities raised – 14 14
Repurchase of shares – – (29 059)
(Increase)/decrease in
trust loans (1 048) 736 (106)
Dividends paid – (64 794) (64 787)
(10 089) (41 815) (53 318)
Decrease in net cash, cash
equivalents and overdrafts (71 700) (68 233) (4 436)
Net overdraft acquired from
business combinations – (994) (994)
Net overdraft at beginning
of period (251 976) (246 546) (246 546)
Net overdraft at end
of period (323 676) (315 773) (251 976)
^ Refer restatement/reclassification of prior reporting periods
note.
* Earnings before interest, taxation, depreciation and
amortisation.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year Half year Full year
31 Dec 31 Dec 30 Jun
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
Opening balance 1 234 842 1 088 059 1 088 059
Shares issued – 14 14
Shares acquired and
cancelled – – (29 059)
Comprehensive income
for the period 122 019 163 291 273 057
Other comprehensive income (1 682) – (20 499)
Cash flow hedge reserve 2 058 – (12 143)
Acquisition of
non-controlling interest – (9 398) (9 398)
Equity-based compensation
reserve 4 799 5 585 9 598
Dividends paid – (64 794) (64 787)
Closing balance 1 362 036 1 182 757 1 234 842
Attributable to:
Owners of the Company 1 358 237 1 179 447 1 231 182
Non-controlling interests 3 799 3 310 3 660
RESTATEMENT/RECLASSIFICATION OF PRIOR REPORTING PERIODS
CENTRAFIN REVENUE RESTATEMENT
The restatement in the financial records of the Group relates to
the accounting classification of the interest income earned in
terms of the finance lease assets of Centrafin Proprietary
Limited (“Centrafin”). Centrafin is mainly involved in the supply
of financing in various forms to customers in relation to the
purchase of ICT equipment. The interest received in terms of the
finance lease assets has been disclosed under the “interest
received” line item below the EBITDA line in the previous
reporting periods. This line item has been reclassified and is
included under the “revenue” line item above the EBITDA line.
This resulted in the restatement of the comparative figures
presented in terms of the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of
Cash Flows, Condensed Consolidated Segmental Analysis and
Financial Review as indicated below.
The justification for the reclassification can be summarised as
follow:
IAS 18 par 7 defines “revenue” as the gross inflow of economic
benefits during the period arising in the course of the ordinary
activities of an entity when those inflows result in increases in
equity, other than increases relating to contributions from
equity participants. From this, it is clear that revenue arises
from the ordinary business activities of the entity which, in the
instance of Centrafin, is its financing and related activities.
Revenue earned from the ordinary activities of the entity should
be faithfully represented according to the nature of the
transactions under the “revenue” line item.
Accordingly, interest earned on finance lease assets, should be
faithfully represented according to the nature of these
transactions as “interest received” as a subsection under the
“revenue” line item as it depicts the main operating activities
of the entity.
Effect on the financial statements of the restatement
The effect of the restatement is set out below for all related
periods:
Half year Half year Full year
31 Dec 31 Dec 30 Jun
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
CENTRAFIN REVENUE RESTATEMENT
Consolidated Statement of
Comprehensive Income
Increase in revenue – 22 537 49 416
Decrease in interest received – (22 537) (49 416)
Consolidated Statement
of Cash Flows
Increase in cash generated by
operating activities – 22 537 49 416
Decrease in finance
income received – (22 537) (49 416)
Condensed Segmental Analysis
Revenue
Increase in revenue from
Financial Services – 22 537 49 416
Increase in interest received
and discounted leases within
Financial Services revenue – (22 537) (49 416)
Financial review
Returns (%)
Increase in gross profit – 0.6 0.6
Increase in EBITDA * – 0.7 0.7
Increase in operating profit
before Interest and taxation – 0.7 0.7
* Earnings before interest, taxation, depreciation and
amortisation.
As the restatement is a pure reclassification between line items
in the Consolidated Statement of Comprehensive Income, it has no
taxation implication and did not result in a restatement of the
opening retained income of the current and prior financial
periods.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated unaudited interim financial results
for the period ended 31 December 2014 have been prepared in
accordance with the framework concepts, measurement and
recognition requirements of International Financial Reporting
Standards (“IFRS”), the SAICA Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards
Council, the information as required by IAS 34: Interim Financial
Reporting, the Listings Requirements of the JSE Limited and the
requirements of the Companies Act of South Africa (Act 71 of
2008), as amended.
The condensed consolidated unaudited interim financial results of
the Group are prepared on a historical basis except for certain
financial instruments, which are stated at fair value as
applicable.
The condensed consolidated unaudited interim financial results
have been prepared using accounting policies that comply with
IFRS and include reasonable judgements and assessments. These
accounting policies are consistent with those applied in the
consolidated annual financial statements for the year ended 30
June 2014. All new interpretations and standards, which became
effective during the 6-month period under review, have been
assessed and adopted with no material impact.
Neither the condensed consolidated unaudited interim financial
results for the six months ended 31 December 2014, nor this set
of summarised financial information and disclosure, have been
reviewed or audited by the Group’s auditors, Sizwe Ntsaluba
Gobodo Inc. The directors take full responsibility for the
preparation of this summarised report. Any reference to future
financial performance included in this announcement has not been
reviewed or reported on by the Group’s auditors.
COMMENTARY
INTRODUCTION
The Group presents its condensed consolidated unaudited interim
financial results for the six months ended 31 December 2014.
FINANCIAL RESULTS
Revenue grew by a satisfactory 14.1% to R3.6 billion with
pleasing growth into markets outside South Africa being recorded.
Gross profit decreased by 2.3% though on margins of 14.4% (2013:
16.9%). Operating expenses increased by 12.6% to leave operating
income (“EBITDA”) down by 18.7%. Included in operating expenses
in the 2013 period was a profit on sale of assets of R10.5
million and a reclassification adjustment of R4.3 million.
Excluding these once-off items, operating expenses increased by
7.0%. The increase in interest paid of 27.5% is largely due to
the acquisition of the 34.99% share in Datacentrix Holdings
Limited for the full six months (2013: 2 months), with the
concomitant increase in the share of equity accounted income.
There was a saving on the tax rate due to the release of minor
over provisions in previous years, to bring total comprehensive
income to R121.5 million. Following the share repurchase in April
2014, the weighted average number of shares in issue declined to
155 922 000 (2013: 158 031 000). This brings the earnings per
share to 78.2 cents (2013: 102.6 cents) and headline earnings per
share to 80.4 cents (2013: 95.4 cents).
* Earnings before interest, taxation, depreciation and
amortisation.
DIVISIONAL PERFORMANCE
The Distribution division increased revenue by 14%, but net
profit after tax decreased by 38%. In July 2014, this division
was prevented from trading effectively in its Pinnacle Africa
Gauteng premises due to the month long NUMSA strike. Since then,
the division has traded well in a difficult market although gross
margins have reduced by 2.4 percentage points, brought about by
competitive pressures and the product mix as the Group continues
its progress into large technology projects which typically carry
lower margins. Management has addressed the declining gross
margins by focusing specifically on the procurement process and
all aspects of margins are a top priority for the division. Cost
management was acceptable, with increased efficiencies resulting
in operating expenses, as a percentage of revenue, decreasing by
approximately 0.3 percentage points when measured against the
prior period. This is after adjusting for the once-off profit on
sale of assets of R10.5 million recorded in the prior period. The
continued focus into growing other markets outside South Africa
is being rewarded with an increase of revenue into Africa of 24%
and it now represents 16% of Distribution revenue (2013: 13%).
Pinnacle Business Solutions, the Managed Print Services division,
has constantly disappointed in its ability to penetrate the
market sufficiently to be able to operate at an acceptable level
of return and we will now look to substantially reduce our
investment herein.
Infrasol, the IT Projects and Services division, was unable to
sustain the project revenue recorded in the first half of the
prior year and with increased expenses, recorded a decrease in
net profit after tax to R2.7 million (2013: R8.4 million).
Management has developed a good pipeline, but has been unable to
finalise the larger projects in the current period.
Centrafin increased its revenue by 32% and achieved net profit
after tax growth of 47%. The book continues to grow strongly (now
at R445 million from R333 million a year ago). The margins have
been maintained and customer defaults continue to be well
controlled.
FINANCIAL POSITION AND CASH FLOW
Inventories decreased by R60 million from June 2014 and have been
well controlled throughout the period. Inventory days reduced to
50 days from 59 days at the end of December 2013.
Trade receivables are by and large well controlled. Daily Sales
Outstanding (“DSOs”) were at 58 days compared to 60 days at the
end of December 2013.
Daily Purchases Outstanding (“DPOs”) reduced to 47 days (55 days
in December 2013) and, together with the decrease in activity in
December compared to June, has resulted in trade and other
payables being R235 million less than that reported in June 2014.
The main cash outflows comprised:
– increase in working capital of R105 million;
– taxation paid of R52 million;
– net increase in fixed assets of R22 million, the major part of
which was an increase in leased assets in Centrafin of R10
million. Other property improvements, vehicles, office
equipment and software acquisitions (less disposals) make up
the balance of R12 million;
– further investment of R56 million into Centrafin’s customer
base as it continues to build its financial lease book (R420
million) and its leased asset base (R25 million after
depreciation); and
– further repayments on the Axiz acquisition loan (R9 million).
This was funded by EBITDA of R207 million and increases in
overdrafts of R72 million. Borrowings now comprise R150 million
in short-term loans raised for Centrafin’s finance lease book and
rental asset pool, subsidiary preference shares issued to Nedbank
(treated as interest-bearing liabilities at Group level) of R130
million, the Nedbank loan to fund the purchase of Axiz amounting
to R16 million, the medium-term domestic note (“DMTN”) programme
of R315 million, the Samrand land funding of R32 million and
overdrafts of R350 million.
It must be borne in mind that the borrowings profile is
considerably skewed by two assets that should be ring-fenced due
to their non-operational nature insofar as they relate to
mainstream ICT distribution. These assets are the investment in
Datacentrix Holdings Limited of R296 million and the investment
into Centrafin’s financial assets totalling R445 million. Without
these the Group’s borrowings would be in the order of R400
million and its debt to equity ratio would be under 28% (2013:
30%).
SUBSEQUENT EVENTS
No other events material to the understanding of the report
occurred in the period between the period-end date and the
publication date of this report.
DIVIDENDS
In line with previous years, no interim dividend is proposed for
the period under review.
PROSPECTS AND STRATEGIC INITIATIVES
Following the withdrawal by the State of the bribery allegations
at the end of August 2014, management has returned its focus onto
the business and all the opportunities that exist in each
cluster. Key changes have been made to the management structure
and new appointments have been made to enhance the leadership
capabilities of the team. We are confident that this new energy
will deliver the expected results into the future.
The gearing of the Group remains a key priority and to that end
the Board has approved the following:
– the disposal of the Group’s property portfolio, including the
land in Samrand that was earmarked for the Group’s future
premises, largely through sale and lease back arrangements. It
is anticipated that this will reduce gearing by approximately
R125 million. Offers have already been received in this regard
and are currently being evaluated;
– the winding down of the investment in the Managed Print
Services business. This may take some time and might incur
further losses, but will result in a reduction of
approximately R50 million in funding;
– other actions and initiatives, which together with the items
noted above, will reduce the overall gearing by approximately
R250 million; and
– the suspension of annual dividend payments to remain in place
until the gearing of the Company improves to approximately 50%
of shareholders’ funds.
It should be noted that the preference share funding of R130
million and the DMTN funding of R315 million are both due for
repayment in the early part of 2016. Negotiations on the
restructuring of these loans have already commenced and it is
anticipated that they should be concluded to our satisfaction by
the end of this year.
In addition, the Board has approved the strategy of the Group as
follows:
– Distribution will remain one of the core competencies of the
Group. The focus will be on improving the margins through
product mix and improved procurement, reduction of overheads
and driving growth through our ongoing expansion into Africa;
– We will continue responsibly to grow the Finance book at
acceptable returns within maintained credit procedures; and
– Services will be a core competency of the Group and
initiatives to explore the synergies between the two services
organisations within the Group will be pursued. To that end,
it is confirmed that the investment in Datacentrix will be of
a long-term nature.
The outlook for the year to June 2015 is positive with earnings
expected to be above those of June 2014 due to ongoing
improvements in all business segments. The Distribution division
is well managed and well positioned to take advantage of the
opportunities in both the local market and those beyond our
borders. Our Services division is confident that the prospect
pipeline that they have been working on for some time will be
brought to fruition and Centrafin will continue to maintain their
steady growth.
JSE
Shareholders are advised that the JSE, after careful
consideration of all the facts, has determined that the Company
did not contravene the Listings Requirements with regard to the
bribery allegations.
CHANGES TO THE BOARD OF DIRECTORS
Shareholders are advised that Mr Ashley (“Oshy”) Tugendhaft BA
(Wits); LLB (Wits) (66), who was acting as Chairman, has been
appointed as Non-Executive Chairman effective 10 March 2015. Oshy
is the senior partner of attorneys Tugendhaft, Wapnick Banchetti
and Partners (“TWB”). He is an accomplished practitioner in
commercial and corporate law, has more than 40 years’ experience
in practice and also serves as a Non-Executive Director and
Deputy Chairman of Imperial Holdings Limited.
In accordance with King III Requirements, when the Chairman is
considered to be not independent, a Lead Independent Director is
required to be appointed. Shareholders are therefore advised that
Mr Bheki Sibiya (“Bheki”) has been appointed as Lead Independent
Director with effect 10 March 2015.
Bheki holds an MBA from Western Michigan University after having
obtained a B Admin degree at the University of Zululand. He has
had extensive leadership experience in both the private and
public sector. Among the companies and organisations he has
headed are the Wits Business School and Business Unity South
Africa (“BUSA”). He has also held senior management positions in
Transnet Limited, Tongaat-Hulett Sugar South Africa Limited, the
Black Management Forum (“BMF”) and South African Breweries
Limited.
In 2004 he was the founding Chief Executive Officer of BUSA,
where he regularly engaged with ministers and key stakeholders in
the economic cluster. Also, as a past president of the BMF, he
lobbied the then President of South Africa on BBBEE. Whilst at
BUSA and the BMF, Bheki contributed to King I, II, and III.
Furthermore, his involvement in BUSA, the BMF and National
Economic Development and Labour Council (Nedlac) enabled him to
develop significant networks across government, business and
labour.
Bheki is the current Chief Executive of the Chamber of Mines,
which is the foremost organisation that represents mining
companies that produce in excess of 90% of all the minerals in
South Africa both by volume and value.
He is the Chairman of PPC Limited, Uhuru Energy, Matador
Refrigeration (Pty) Ltd, Leadership Matters Institute and Deputy
Chairman of Tiger Brands Limited and a Non-Executive Director of
Famous Brands Limited.
In order to improve the efficiency and effectiveness of the
Board, it has been decided to reduce the size of the Board to
comprise only two Executive Directors, being the CEO and the CFO,
in addition to the Non-Executive Directors. Accordingly, Mr TAM
Tshivhase and Mr RN Nkuna will step down from the Board effective
10 March 2015, but continue to serve on the Executive Committee.
Mr TAM Tshivhase will step down as a member of the Social and
Ethics Committee.
Mr RN Nkuna, the Group’s Head of HR, will continue to serve as a
member of the Social and Ethics Committee as a Prescribed
Officer.
After the above changes the composition of the Board will be as
follows:
DIRECTOR POSITION CLASSIFICATION
Mr A Tugendhaft Chairman Non-Executive Chairman
Mr B Sibiya Lead Independent Independent Non-Executive
Director
Ms N Medupe Board member Independent Non-Executive
Ms SH Chaba Board member Independent Non-Executive
Mr E van der Merwe Board member Independent Non-Executive
Mr AJ Fourie Chief Executive Executive Director
Officer
Mr RD Lyon Chief Financial Executive Director
Officer
The composition of the Board Committees, effective 10 March 2015,
is as follows:
AUDIT AND RISK COMMITTEE
DIRECTOR POSITION CLASSIFICATION
Ms N Medupe Chairperson Independent Non-Executive
Mr B Sibiya* Member Lead Independent Non-
Executive
Ms SH Chaba Member Independent Non-Executive
Mr E van der Merwe Member Independent Non-Executive
*Mr Sibiya is appointed to the Audit and Risk Committee effective
10 March 2015.
REMUNERATION COMMITTEE
DIRECTOR POSITION CLASSIFICATION
Ms N Medupe Chairperson Independent Non-Executive
Ms SH Chaba Member Independent Non-Executive
Mr A Tugendhaft Member Non-Executive Chairman
SOCIAL AND ETHICS COMMITTEE
DIRECTOR POSITION CLASSIFICATION
Ms SH Chaba Chairperson Independent Non-Executive
Mr B Sibiya** Member Lead Independent Non-
Executive
Mr RN Nkuna Member Prescribed Officer
– Head of HR
** Mr B Sibiya replaces Mr TAM Tshivhase who steps down from the
Committee, effective 10 March 2015.
CHIEF EXECUTIVE OFFICER (“CEO”) SUCCESSION
Having carefully considered the need for a proper succession
process, the Board is pleased to announce the appointment of Mr
Pierre Spies (“Pierre”) (50) as Deputy Chief Executive Officer
with effect 1 July 2015. Pierre will work closely with the
current CEO, Mr Arnold Fourie (“Arnold”), with a view to assuming
the CEO position on Arnold’s eventual retirement. Arnold is
determined to see Pinnacle through to a renewed position of
strength and as such has not put a firm date on this handover.
Pierre is currently the Chief Executive Officer of AxizWorkgroup,
a major subsidiary of the Pinnacle Group.
Pinnacle’s Chairman, Oshy Tugendhaft commented: “The directors
are delighted to be able to appoint a successor of Pierre’s
calibre to the helm of Pinnacle. The Board is particularly
pleased to have been able to appoint an internal candidate with
such extensive ICT distribution, services and financial
expertise. Pierre has worked closely with Arnold since he joined
the Group in 2014 and has made considerable contributions to both
AxizWorkgroup and the wider Pinnacle Group. By announcing the
successor now, we will have the benefit of a smooth succession in
the Chief Executive’s role. My fellow Board members join me in
wishing Pierre every success during this succession phase.”
The selection process for the recruitment of a new Chief
Executive Officer of AxizWorkgroup will commence shortly.
BACKGROUND INFORMATION ON PIERRE SPIES
Pierre is a commerce graduate from University of Johannesburg and
completed his articles with PricewaterhouseCoopers in 1992. He
joined what was to become the JSE-listed MB Technologies Group
(“MB Tech”) where he served as Chief Financial Officer and Chief
Executive Officer of Tarsus, its major subsidiary. Pierre played
an instrumental role over twenty years in growing Tarsus from a
R60 million turnover business into an ICT distribution group
generating revenues in excess of R5 billion per annum.
Pierre oversaw the national expansion of various Group companies,
various mergers and acquisitions, the establishment of a channel
finance business and MB Tech’s expansion into Africa. With over
20 years’ experience Pierre is a stalwart of the ICT Industry,
and is well respected by the Group’s customers, vendors and
staff.
Arnold Fourie commented as follows: “Having recognised Pierre’s
talent over many years through competing in the market and more
recently having worked with him as Chief Executive Officer of
AxizWorkgroup, I am confident that he is the right candidate to
drive Pinnacle forward, unlock the full potential of the Group
and deliver value to all stakeholders.”
STATEMENT OF COMPLIANCE
These condensed consolidated unaudited interim financial results
for the 6 months ended 31 December 2014 have been prepared in
accordance with the Group’s accounting policies under the
supervision of the Chief Financial Officer, RD Lyon CA.
For and on behalf of the Board
A Tugendhaft AJ Fourie
Chairman Chief Executive Officer
Midrand
11 March 2015
PINNACLE HOLDINGS LIMITED
(Registration number 1986/000334/06
Share code: PNC
ISIN: ZAE000184149
(“Pinnacle” or “the Group” or “the Company”)
Directors: A Tugendhaft* (Chairman), AJ Fourie (Chief Executive
Officer), SH Chaba*^, RD Lyon (Chief Financial Officer),
N Medupe*^, B Sibiya*^, E van der Merwe*^
* Non-executive ^ Independent non-executive
Preparer of results: RD Lyon CA
Company Secretary: JV Parkin (BCompt(Hons), CTA)
Registered Office: The Summit, 269, 16th Road, Randjespark,
Midrand, 1685
Transfer Secretaries: Computershare Investor Services (Pty) Ltd,
Ground Floor, 70 Marshall Street, Johannesburg, 2001
Auditors: Sizwe Ntsaluba Gobodo Inc., Registered Auditors, Summit
Place Office Park, Building 4, Garstfontein Road 221, Menlyn,
0081
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd, Building
8, Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead,
2196
Date: 11/03/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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