Wrap Text
Reviewed condensed consolidated preliminary financial results for the year ended 30 June 2016
PINNACLE HOLDINGS LIMITED
(Registration number 1986/000334/06)
Share code: PNC
ISIN: ZAE000184149
(“Pinnacle” or “the Group” or “the Company”)
www.pinnacleholdings.co.za
REVIEWED CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL RESULTS for
the year ended 30 June 2016
AT A GLANCE
REVENUE UP 37% to R10.9 billion
CORE EPS UP 12% to 205.1 cents
CASH GENERATED UP 47% to R748.0 million
DEBT TO EQUITY IMPROVED from 50% to 19%
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
R’000 R’000
Revenue 10 969 132 7 987 636
Cost of sales (9 305 726) (6 870 002)
Gross profit 1 663 406 1 117 634
Operating expenses (984 244) (653 666)
Selling expenses (69 450) (71 705)
Employees expenses (806 789) (491 520)
Administration expenses (141 322) (97 214)
Gain on discounting of finance
lease agreements 1 619 2 069
Profit on foreign exchange 6 384 4 704
Fair value adjustment on acquisition
of former associate (17 654) –
Profit on disposal of former
subsidiary 42 968 –
EBITDA * 679 162 463 968
Depreciation and amortisation (63 284) (31 509)
Impairment of goodwill – (5 592)
Operating profit before interest
and taxation 615 878 426 867
Net finance costs (108 694) (91 445)
Investment income 17 617 7 767
Interest paid (126 311) (99 212)
Share of equity accounted associate
income 22 702 37 915
Profit before taxation 529 886 373 337
Taxation (148 283) (93 233)
Net profit for the year 381 603 280 104
Owners of the Company 341 652 279 849
Non-controlling interests 39 951 255
Other comprehensive income
Items that will not be reclassified
into profit or loss: (23 825) 17 181
Profit on revaluation of property – 22 542
Realisation of non-distributable
reserve on disposal of properties (23 825) –
Tax relating to items that will
not be reclassified – (5 361)
Items that can be reclassified into
profit or loss: 7 811 6 936
Exchange differences from translating
foreign operations 2 126 946
Profit on acquisition of
non-controlling interest – 1 254
Cash flow hedge 5 685 4 736
Total comprehensive income for
the year 365 589 304 221
Attributable to:
Owners of the Company 325 638 303 966
Non-controlling interests 39 951 255
* Earnings before interest, taxation, depreciation and
amortisation.
RECONCILIATION OF HEADLINE EARNINGS AND CORE EARNINGS
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
R’000 R’000
Net profit for the period attributable
to ordinary shareholders 341 652 279 849
Impairment of goodwill – 5 592
Fair value adjustment on acquisition
of former associate net of taxation 13 700 –
Fair value adjustment on
acquisition of former associate 17 654 –
Less: Taxation thereon (3 954) –
Profit on sale of property, plant
and equipment net of taxation (1 492) (270)
Profit on sale of property,
plant and equipment (2 072) (375)
Less: Taxation thereon 580 105
Profit on sale of former subsidiary
net of taxation (27 565) –
Profit on sale of former subsidiary (42 968) –
Less: Taxation thereon 15 403 –
Headline earnings 326 295 285 171
Amortisation of intangibles net
of taxation 12 052 –
Amortisation of intangibles 16 739 –
Tax thereon (4 687) –
Core earnings 338 347 285 171
Total number of shares in issue (‘000)
– Total issued less treasury shares 171 226 155 922
– Weighted average 164 992 155 922
FINANCIAL REVIEW
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
Performance per share (cents)
Basic and diluted earnings per share 207.1 179.5
Headline and diluted headline
earnings per share * 197.8 182.9
Core and diluted core earnings per
share * 205.1 182.9
Dividend cover – –
Returns (%)
Gross profit 15.2 14.0
Operating expenses (9.0) (8.2)
EBITDA ** 6.2 5.8
Operating profit before interest
and taxation 5.6 5.3
Effective tax rate *** 29.2 27.8
Net profit 3.5 3.5
Return on equity 18.8 20.2
* The Company has no dilutionary instruments in issue.
** Earnings before interest, taxation, depreciation and
amortisation.
*** Based on profit before tax excluding share of equity
accounted associate income.
CONDENSED SEGMENTAL ANALYSIS
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
R’000 R’000
Revenue
ICT Distribution 9 408 761 7 769 806
Services and Solutions 1 608 180 184 491
Financial Services 148 840 120 157
Less: Intra-segmental revenue (196 649) (86 818)
10 969 132 7 987 636
Reconciliation between EBITDA** and
profit before tax
EBITDA **
ICT Distribution 384 652 347 501
Services and Solutions 152 710 11 669
Financial Services 100 664 85 453
Group Central Services 41 136 19 344
Total EBITDA ** 679 162 463 967
Depreciation and amortisation (63 284) (31 509)
Impairment of goodwill – (5 592)
Net finance costs (108 694) (91 445)
Share of equity accounted
associate income 22 702 37 915
Profit before taxation 529 886 373 336
Net operating assets
ICT Distribution 1 100 741 1 091 576
Services and Solutions 746 497 39 533
Financial Services 151 203 111 958
Group Central Services 411 076 302 054
2 409 517 1 545 121
** Earnings before interest, taxation, depreciation and
amortisation.
CONDENSED ANALYSIS OF GOODWILL
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
R’000 R’000
Opening balance 108 166 116 517
Business combination acquisitions 239 680 –
Goodwill re-allocated to assets
held-for-sale – (2 759)
Impairments – (5 592)
Closing balance 347 846 108 166
Business combination acquisitions
Datacentrix 190 465 –
Solareff 45 222 –
Intdev 3 993 –
239 680 –
Impairments
E-Secure – (3 597)
DSP – (1 995)
– (5 592)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 Jun 30 Jun
2016 2015
Reviewed Audited
R’000 R’000
ASSETS
Non-current assets 1 100 391 850 660
Property, plant and equipment 120 011 67 315
Intangible assets and goodwill 506 663 129 824
Investment in associate – 314 678
Finance lease receivables 408 020 311 108
Deferred taxation 65 697 27 735
Current assets 3 912 260 2 716 198
Inventories on hand 832 538 781 900
Inventories in transit 125 187 144 455
Assets held-for-sale – 208 613
Short-term loans – 21 217
Trade and other receivables 2 524 373 1 375 275
Finance lease receivables 178 663 146 452
Taxation receivable 10 006 2 161
Cash and cash equivalents 241 493 36 125
Total assets 5 012 651 3 566 858
EQUITY AND LIABILITIES
Capital and reserves 2 409 517 1 545 121
Share capital and premium 193 646 1 680
Treasury shares (72 856) (72 856)
Non-distributable reserves 36 107 57 806
Cash flow hedge reserve (1 722) (7 407)
Accumulated profits 1 931 000 1 565 523
Non-controlling interests 323 342 375
Non-current liabilities 432 612 20 831
Interest-bearing liabilities 353 416 437
Derivative financial liability 3 444 –
Deferred revenue 29 213 –
Deferred taxation 46 539 20 394
Current liabilities 2 170 522 2 000 906
Trade and other payables 2 026 899 1 193 012
Interest–bearing liabilities 154 486 388
Derivative financial liability 16 154 21 958
Short-term loans – 151 078
Deferred revenue 96 111 5 261
Taxation payable 12 619 7 736
Bank overdrafts 18 585 109 390
Liabilities associated with assets
classified as held-for-sale – 26 083
Total equity and liabilities 5 012 651 3 566 858
Capital management
Net asset value per share (cents) 1 218.4 990.7
Net tangible asset value per
share (cents) 922.5 907.5
Working capital management
Investment in working
capital (R'000) 1 359 088 1 103 357
Days inventory outstanding
(excluding in transit) 22.9 31.1
Days sales outstanding 52.3 50.7
Days purchases outstanding 47.7 47.0
Liquidity and solvency
Debt to equity (%) 18.8 49.8
Current ratio (excluding stock
in transit) 1.85 1.39
Acid test (excluding stock in transit) 1.44 0.96
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
R’000 R’000
Profit before taxation 529 886 373 337
Adjusted for:
Finance income received (17 617) (7 767)
Finance expenses paid 126 311 99 212
Non-cash flow items 19 137 15 680
Changes in working capital 90 178 28 280
Cash generated by operating
activities 747 895 508 742
Net finance costs (108 694) (91 445)
Finance income received 17 617 7 767
Finance expenses paid (126 311) (99 212)
Taxation paid (180 411) (88 822)
Dividends received from equity
accounted investment 8 170 12 026
466 960 340 501
Cash flows from investing activities
Property, plant and equipment acquired (18 222) (44 871)
Proceeds on disposals of property,
plant and equipment 1 306 6 787
Proceeds on disposals of assets
classified as held-for-sale 226 116 –
Assets classified as held-for-sale
acquired (617) –
Acquisition of intangible assets (9 870) (10 529)
Purchase consideration paid on
business combinations (56 521) –
Net investment in finance leases
receivable (118 973) (93 455)
Additional costs incurred on equity
accounted investment (3 678) (4 645)
19 541 (146 713)
Cash flows from financing activities
Interest-bearing liabilities raised 350 050 444
Interest-bearing liabilities repaid (655 439) (17 995)
Decrease in short-term loans 25 292 7 578
(280 097) (9 973)
Increase in net cash, cash
equivalents and overdrafts 206 404 183 813
Net cash acquired from business
combinations 89 769 –
Net cash movements related to assets
classified as held-for-sale – (5 102)
Net overdraft at beginning of year (73 265) (251 976)
Net cash, cash equivalents/(overdraft)
at end of year 222 908 (73 265)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
R’000 R’000
Opening balance 1 545 121 1 234 842
Shares issued 191 966 –
Profit for the period 381 603 280 104
Other comprehensive income 2 126 18 127
Cash flow hedge reserve 5 685 4 736
Acquisitions/(disposals) of
non-controlling interest 283 016 (2 286)
Equity-based compensation reserve – 9 598
Closing balance 2 409 517 1 545 121
Attributable to:
Owners of the Company 2 086 175 1 544 746
Non-controlling interests 323 342 375
BUSINESS COMBINATIONS
1. DATACENTRIX HOLDINGS LTD
On 1 October 2015 and on 11 January 2016, the Company
announced on SENS that it had acquired a further 20 000 000
and 19 791 464 Datacentrix Holdings Ltd shares respectively,
resulting in Pinnacle’s shareholding in Datacentrix
increasing to 108 311 512 shares, which represents 55.2% of
Datacentrix’s total voting shares in issue as at 30 June
2016.
Datacentrix is a complete ICT systems integrator that
provides solutions and services across the full information
value chain to its customers and has been listed on the main
board of the JSE since 1998.
The cumulative purchase consideration for the additional
shares acquired amounted to R192.0 million, and was settled
by the issue of 15 303 588 ordinary Pinnacle Holdings Ltd
shares, being 1 Pinnacle share for every 2.6 Datacentrix
shares held.
The primary reasons for the business combination were to
allow Pinnacle increased access to the fast-growing
enterprise services market, to further allow for leveraging
of synergies throughout the combined Group and to allow for
improved cost management.
Datacentrix has been consolidated and included in the
Services and Solutions segment with effect from 1 January
2016.
The transaction was accounted for in terms of IFRS 3
Business Combinations.
RECOGNISED AMOUNTS OF IDENTIFIABLE NET ASSETS
At
31 December
2015
R’000
Property, plant and equipment 63 451
Intangible assets 141 577
Finance lease receivables 10 150
Inventories on hand 127 089
Trade and other receivables 535 681
Cash and cash equivalents 87 468
Total assets 965 416
Trade and other payables (259 446)
Deferred revenue (88 739)
Loan payable (13 560)
Current tax liabilities (9 854)
Deferred taxation (2 249)
Total liabilities (373 848)
Identifiable net assets 591 568
Non-controlling interest (275 497)
Acquirer’s interest 316 071
Purchase consideration 506 536
Goodwill on acquisition 190 465
Cash flow information
Cash and cash equivalents acquired 87 468
Acquisition date fair value
Acquisition date fair value of equity interest
in acquiree prior to acquisition date 425 497
Fair value adjustment on acquisition of former
associate (17 654)
Since the acquisition date, Datacentrix has contributed R1.5
billion to Group revenue and R102.8 million to Group profit
before tax.
2. SOLAREFF (PTY) LTD
On 7 December 2015, Pinnacle announced on SENS its intention
to acquire 51% of the total voting shares in issue of
Solareff (Pty) Ltd (“Solareff”). All conditions precedent
were met on 27 January 2016 and the effective date of the
acquisition was 1 February 2016.
Solareff is a fast-growing solar photovoltaic specialist
with more than a decade’s experience in renewable energy
projects. As one of the top three solar photovoltaic
specialist companies in Southern Africa, it is recognised as
a market leader in its field.
The purchase consideration payable by Pinnacle in terms of
the acquisition was an initial amount of R54.8 million,
which may be increased by a maximum of R145.2 million based
on the 2017 financial performance of Solareff.
80% of the initial amount was paid in cash on 1 February
2016 and the remainder thereof on 9 May 2016. The balance of
the purchase consideration will be payable on the fifth
business day after finalisation of the 2017 audited
financial statements.
The Board of Pinnacle has decided that it is strategic for
the Group to enter the renewable energy space.
With Pinnacle’s vast footprint in Southern Africa, as well
as a reputation for quality solutions, it is ideally placed
to assist Solareff in expanding its business further across
the region. Pinnacle will also integrate the solar
photovoltaic product into its existing product range and aim
to become the market-leading distributor of the products.
Solareff has been consolidated and included in the Services
and Solutions segment with effect from 1 February 2016.
The transaction was accounted for in terms of IFRS 3
Business Combinations.
RECOGNISED AMOUNTS OF IDENTIFIABLE NET ASSETS
At
31 January
2016
R’000
Property, plant and equipment 506
Intangible assets 15 487
Loans receivable 4 075
Work in progress 9 389
Trade and other receivables 3 814
Cash and cash equivalents 1 957
Total assets 35 228
Trade and other payables (7 813)
Deferred revenue (2 270)
Current tax liabilities (2 007)
Deferred taxation (4 336)
Total liabilities (16 426)
Identifiable net assets 18 802
Non-controlling interest (9 213)
Acquirer’s interest 9 589
Purchase consideration 54 811
Goodwill on acquisition 45 222
Cash flow information
Cash and cash equivalents acquired 1 957
Since the acquisition date, Solareff has contributed R104.8
million to Group revenue and R17.9 million to Group profit
before tax.
3. INTDEV INTERNET TECHNOLOGIES (PTY) LTD
Pinnacle acquired 60% of the issued ordinary share capital
of Intdev Internet Technologies (Pty) Ltd (“Intdev”),
effective 1 March 2016. The transaction was entered into to
further increase the Group’s Services and Solutions segment.
Intdev is an award-winning South African IT company with a
countrywide presence that has been offering complete and
customised IT and Internet Solutions since 2003.
The total purchase consideration of R1.7 million was paid in
cash on 22 April 2016.
Intdev has been consolidated and included in the Services
and Solutions segment with effect from 1 March 2016.
The transaction was accounted for in terms of IFRS 3
Business Combinations.
RECOGNISED AMOUNTS OF IDENTIFIABLE NET ASSETS
At
28 February
2016
R’000
Property, plant and equipment 1 191
Intangible assets 2 069
Deferred taxation 1 097
Inventories 209
Trade and other receivables 2 628
Cash and cash equivalents 344
Total assets 7 538
Interest-bearing liabilities (2 752)
Trade and other payables (3 846)
Loans payable (4 744)
Total liabilities (11 342)
Identifiable net assets (3 804)
Non-controlling interest 1 521
Acquirer’s interest (2 283)
Purchase consideration 1 710
Goodwill on acquisition 3 993
Cash flow information
Cash and cash equivalents acquired 344
Since the acquisition date, Intdev has contributed R9.7
million to Group revenue and R0.7 million to Group profit
before tax.
If all of the above acquisitions had occurred on 1 July
2015, Group revenue would have amounted to R12.3 billion and
Group profit before tax would have amounted to R565.3
million.
FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Fair value measurements of financial assets and liabilities are
analysed as follows:
Level 1 – fair value is determined from quoted prices
(unadjusted) in active markets for identical assets or
liabilities.
Level 2 – fair value is determined through the use of valuation
techniques based on observable inputs, either directly
or indirectly.
Level 3 – fair value is determined through the unobservable
inputs for the asset or liability.
In estimating the fair value of an asset or liability, the Group
uses market-observable data to the extent that it is available.
The Group uses valuation models to value the financial
instruments using market inputs. Where appropriate, the Group
engages third party qualified valuers to perform the valuation.
The Chief Financial Officer reviews the inputs and outcome of the
valuation for reasonableness.
The carrying amount for the financial assets and financial
liabilities approximates fair value.
Full year Full year
30 Jun 30 Jun
2016 2015
Reviewed Audited
Level R’000 R’000
Financial assets
Trade and other receivables 2 491 507 1 334 044
Share purchase scheme loans – 21 217
Finance lease receivables 586 683 457 560
Cash and cash equivalents 241 493 36 125
Financial liabilities
Interest-bearing liabilities 353 570 486 825
Derivative financial
liabilities – stated at
fair value 2 19 598 21 958
Trade and other payables 1 817 480 1 107 795
All amounts above are stated at amortised cost, except as
indicated.
COMMENTARY
GROUP FINANCIAL PERFORMANCE
The Board is pleased to announce the reviewed financial results
for the year ended 30 June 2016.
During the year, the Group has successfully concluded four
projects that will have a significant impact on the nature and
structure of the Group’s business in the future.
1. DATACENTRIX HOLDINGS LIMITED (“DATACENTRIX”)
As announced on SENS on 11 January 2016, the Offer that
Pinnacle had made to Datacentrix shareholders resulted in
Pinnacle increasing its shareholding in Datacentrix to its
current 55.2%. Consequently, Datacentrix results have been
consolidated with effect from January 2016 and this
contributes substantially to the growth in revenue for the
Group. In addition, their inclusion results in a significant
increase in the income generated in the Service and Solutions
segment. The issue of shares was moderately dilutive in
earnings, but this is considered acceptable as a cost of
control.
2. ASSETS CLASSIFIED AS HELD-FOR-SALE
Assets classified as held-for-sale in the statement of
financial position as at June 2015 were all realised in the
first half of the financial year and the cash generated from
these disposals was utilised to repay debt. In total, R655.4
million of debt was repaid during the period with R350.1
million being raised. The cash on hand at the end of June
2016 was R241.5 million (2015: R36.1 million) and bank
overdrafts reduced to R18.6 million (2015: R109.4 million).
This shows the focus that the Group has put on managing its
statement of financial position and cash generation which
materially improved its gearing. The Group wishes to utilise
the cash generation capacity of its operations for
acquisitive growth.
3. CENTRAFIN SECURITISATION
As announced on SENS on 3 May 2016, Pinnacle repaid the R315
million on its Domestic Medium-Term Note Programme. This
funding was replaced by a more appropriate and flexible long-
term funding from Nedbank involving the securitisation of a
significant portion of the Centrafin finance lease book. The
facility has been set at R350 million with a view to
increasing to R500 million, depending on the growth of the
book. This facility effectively secures the requisite funding
for Centrafin to grow and the securitisation structure
provides a vehicle for funding for the foreseeable future.
4. BROAD-BASED BLACK ECONOMIC EMPOWERMENT TRANSACTION
As announced on SENS on 2 August 2016, Pinnacle has concluded
a B-BBEE transaction whereby the Group undertook a complete
restructure of its corporate holdings so that certain South
African entities are now held through a subsidiary, DCT
Holdings (Pty) Ltd. The South African entities will thus have
B-BBEE ownership.
FINANCIAL RESULTS
The Group had an eventful but satisfactory financial year.
Earnings per share increased by 15.4% to 207.1 cents (2015: 179.5
cents) and core earnings per share increased by 12.1% to 205.1
cents (2015: 182.9 cents). The core earnings per share is a non-
IFRS measure, which the directors believe is a meaningful
additional measure of evaluating the performance of the Group’s
operations. It is based on the headline earnings per share
(“HEPS”) measure and adjusted to exclude the amortisation charges
of intangibles recognised on business combinations. Core earnings
per share is reported as part of the Group’s accounting policies.
Revenue increased by 37.3% to R10.9 billion and gross profit
increased 48.8% to R1.66 billion. The fair value adjustment on
acquisition of former associate of R17.6 million was as a result
of Datacentrix moving from an investment in associate to being
accounted as a subsidiary. The gain on disposal of the former
subsidiary arose through the disposal of Infrasol (Pty) Ltd and
its subsidiary in July 2015. Depreciation and amortisation
charges have increased substantially as result of the
amortisation charges processed on intangibles identified on the
business combinations, principally Datacentrix. Interest paid has
increased due to the effect of extending our foreign exchange
payments as a result of securing increased terms from our
vendors. Taxation was affected by the fair value adjustment and
the gain on disposal of former subsidiary noted above although
the effective tax rate excluding these items was 28.4%.
Shareholders’ equity attributable to owners of the parent now
stands at R2.1 billion (2015: R1.5 billion) and the only
significant debt relates to the funding of the Centrafin book
which has now been ‘ring-fenced’ with a securitisation structure
noted above. The proceeds of this funding was used to settle the
bond of R315 million and other short-term funding during May
2016.
DIVISIONAL PERFORMANCE
ICT DISTRIBUTION
Management is pleased to report that the Distribution division
delivered in line with expectations and increased revenue by
21.1% during the period. The continued expansion and investment
into new focus areas, such as the high-end data centre storage
and server offerings, the ‘Big’ data and security practice and
the infrastructure products are now delivering on their combined
promise with excellent growth, replacing the revenue declines in
certain of the client computing products.
Margins have decreased as a result of larger deals, tougher
market conditions, the currency volatility and ensuring that
slow-moving items in inventory were cleared. In addition, certain
additional expenses were incurred to ensure that the division is
properly structured for the future. Working capital has been
largely well controlled throughout the period and remains a
constant managerial focus. During the period, the division has
contributed R185 million in dividends to the Group, demonstrating
that it is a valuable supplier of capital for the Group to
utilise in its investing activities.
SERVICES AND SOLUTIONS
This division now includes Datacentrix, Solareff (Pty) Ltd
(“Solareff”) and Intdev Internet Technologies (Pty) Ltd
(“Intdev”).
Datacentrix had a satisfactory six months and continues to
maintain strong customer retentions. In addition, they have been
successful in winning some meaningful new tenders. Infrasol, the
Services division that was acquired from Pinnacle with effect
July 2015, has been successful and complements the service
offerings of Datacentrix.
Pinnacle acquired 51% of Solareff with effect February 2016 and
it has made a solid contribution in the period. Solareff recently
successfully tendered and installed the solar solution at one of
the largest shopping malls in South Africa and is now one of the
largest installers of imbedded solar photovoltaic generation in
the country. We remain optimistic about the possibilities that
this young energetic team can deliver within this segment in the
future.
Intdev was acquired in March 2016 and broadens our exposure in
the telecommunications services arena and has greatly enhanced
the development of our Group cloud offerings.
FINANCIAL SERVICES
Centrafin grew revenue by 23.9% and EBITDA grew by 17.8%. It
should be noted that certain additional expenses were incurred in
implementing the securitisation of the majority of its book at
the beginning of May 2016. Centrafin continues to grow its book
in a controlled manner (now at R607 million from R487 million a
year ago). The management of the book remains of the highest
order with delinquent debtors remaining well below industry
norms. This can be attributed to the application of strict credit
control policies, the specific selection of assets to fund and a
well experienced credit collection team.
LEGAL
As communicated in a SENS announcement issued by the Datacentrix
Board on 14 April 2016 and by Pinnacle on the same date,
Datacentrix Proprietary Limited (“Datacentrix (Pty) Ltd”), a
wholly-owned subsidiary of Datacentrix, has been cited in an
application in the High Court of South Africa seeking to review
and set aside a bid awarded to Datacentrix (Pty) Ltd in January
2015. Datacentrix (Pty) Ltd and the Department of Justice and
Constitutional Development (“DOJ”) are opposing the matter.
Subsequently, a hearing has been scheduled for 15 September 2016
to decide on a further application for an urgent interim
interdict to prevent the DOJ from further executing the contract
related to the awarded bid pending the outcome of the first
application. Both DOJ and Datacentrix (Pty) Ltd are opposing this
application as well.
CHANGE OF NAME
The traditional main business of Pinnacle is that of the
manufacture and distribution of information communication
technology (“ICT”) hardware and software. The Group’s current
strategy is to continue its well established track record of
consistent growth by expanding its product range and footprint
beyond the narrower confines of the ICT distribution sector and
further beyond the borders of South Africa. The Group has made
acquisitions in ICT Services and Solar Technology Solutions and
has an established finance business. It has augmented its
strategic direction with a majority investment into Datacentrix,
a large value added services and managed services provider. In
order to distinguish the listed entity from some of its
subsidiaries that bear the name “Pinnacle” and given that the
Group is expanding beyond its pure ICT distribution roots, it
believes that it is time to change its name to a name that
identifies with its new strategy of being an international
holding company that operates in a number of technology sectors
across the globe. Details of the name change will be provided in
the Annual General Meeting (“AGM”) notice to be issued at the end
of September 2016.
CHANGE IN DIRECTORATE
Mr AJ Fourie assumed the role of Non-Executive Chairman on 1 July
2016, taking over from Mr A Tugendhaft who will now serve as
Deputy Chairman.
Mr E van der Merwe stepped down from the Board on 30 June 2016 to
focus on the Group's international and local expansion programme
in an executive capacity.
Following the above changes, the Board will comprise of AJ Fourie
(Non-Executive Chairman), A Tugendhaft (Deputy Chairman), P Spies
(Chief Executive Officer), RD Lyon (Chief Financial Officer), BL
Sibiya (Lead Independent Director), N Medupe (Independent Non-
Executive Director) and SH Chaba (Independent Non-Executive
Director).
SUBSEQUENT EVENTS
B-BBEE TRANSACTION
Subsequent to the year-end, Pinnacle concluded a Broad-Based
Black Economic Empowerment transaction. Prior to the conclusion
of the transaction, Pinnacle restructured the Group resulting in
most of its South African operating assets being consolidated
under DCT Holdings (Pty) Ltd, a Pinnacle Group company. The B-
BBEE transaction addresses the ownership element of Pinnacle’s
Transformation Plan.
SHARE BUY-BACK
At the last AGM held on 3 December 2015, shareholders gave the
Board a general approval in terms of section 46 and 48 of the
Companies Act, by way of special resolution, to acquire shares of
the Company. In June 2016, the Board exercised this authority and
mandated a buy-back of issued ordinary shares of the Company, to
a maximum of 5 000 000 shares. Since the mandate, 2 981 176
ordinary shares have been bought back totalling 1.7% of the total
issued share capital (excluding treasury shares).
No other events material to the understanding of this report
occurred in the period between the financial period-end date and
the date of issue of this report.
DIVIDENDS
The Company’s policy had been to declare a dividend of 20% of
HEPS (and since the introduction of dividend tax, a gross
dividend of 20% of HEPS before deducting dividend tax). This
policy was suspended in the last two years in order to reduce
gearing to more acceptable levels. After careful consideration,
the Board has decided to lift its suspension of this policy and
to amend its proposed distribution to 10% of HEPS in line with
that of a company that wishes to apply its funds in growing the
business. To this end, the Board has declared a final dividend of
20 cents (2015: Nil) per ordinary share for the financial year
ended 30 June 2016.
The salient dates applicable to the final dividend are as
follows:
Last day of trade “cum” dividend Tuesday, 15 November 2016
First day to trade “ex” dividend Wednesday, 16 November 2016
Record date Friday, 18 November 2016
Payment date Monday, 21 November 2016
No share certificates may be dematerialised or rematerialised
between Wednesday, 16 November 2016 and Friday, 18 November 2016,
both days inclusive.
Dividends are to be paid out of distributable reserves. Dividend
tax (DT) of 15% will be withheld in terms of the Income Tax Act
for those shareholders who are not exempt from DT.
In accordance with paragraphs 11.17(1)(i) and (x) and 11.17(c) of
the JSE Listings Requirements, the following additional
information is disclosed:
– The gross local dividend amount is 20.00 cents per ordinary
share for shareholders exempt from DT;
– The net local dividend amount is 17.00 cents per ordinary
share for shareholders liable to pay DT;
– Pinnacle Holdings Limited has 183 296 037 ordinary shares in
issue (which includes 12 069 974 treasury shares); and
– Pinnacle Holdings Limited’s income tax reference number is
9675/146/71/7.
Where applicable, payment in respect of certificated shareholders
will be transferred electronically to shareholders’ bank accounts
on the payment date. In the absence of specific mandates, payment
cheques will be posted to certificated shareholders at their risk
on the payment date. Shareholders who have dematerialised their
shares will have their accounts at their Central Securities
Depository Participant or broker credited on the payment date.
PROSPECTS
The overall economy faces challenging times ahead, with the
consumer becoming more financially constrained than ever before
and the manufacturing and resources sector under pressure due to
low commodity prices. Nonetheless, the IT sector has demonstrated
its resilient nature due to the increasing importance technology
plays in modern day life, and it is envisaged that it will
continue to remain so.
After a year of strategic alignment, during which a lot of work
was performed to contribute to the sustainable financial well-
being of the Group, the Group is keen to rigorously pursue
commercial opportunities to take advantage of its efficient
infrastructure and broad offerings in the distribution and
services cluster.
With a rejuvenated statement of financial position in place, the
Group is keen to expand its offering through acquisition
opportunities of suitable international and local targets.
STATEMENT OF COMPLIANCE, BASIS OF PREPARATION AND ACCOUNTING
POLICIES
The reviewed condensed consolidated financial statements for the
year ended 30 June 2016 have been prepared in accordance with the
Group’s accounting policies under the supervision of the Chief
Financial Officer, RD Lyon CA, and complies with IAS 34: Interim
Financial Reporting, the framework concepts and the measurement
and recognition requirements of International Financial Reporting
Standards (“IFRS”), SAICA financial reporting guides as issued by
the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards
Council, the Listings Requirements of the JSE Limited and the
requirements of the Companies Act of South Africa (Act 71 of
2008), as amended. All new standards and interpretations that
came into effect during the year were assessed and adopted with
no material impact to the reviewed condensed consolidated
financial statements. The accounting policies, inclusive of
reasonable judgements and assessments, applied in the reviewed
condensed consolidated financial statements, are consistent with
those applied in the preparation of the audited consolidated
annual financial statements for the year ended 30 June 2015. The
accounting policies applied are consistent to the accounting
policies applied in the consolidated annual financial statements
for the Group and comply with IFRS.
The Board of Directors of Pinnacle Holdings Limited (“the Board”)
takes full responsibility for the preparation of this preliminary
report and that the financial information has been correctly
extracted from the reviewed underlying consolidated annual
financial statements.
The reviewed condensed consolidated financial statements comprise
the condensed Statement of Financial Position at 30 June 2016 and
the condensed Statements of Comprehensive Income, Changes in
Equity and Cash Flows for the year then ended.
The reviewed condensed consolidated financial statements of the
Group are prepared as a going concern on a historical basis
except for certain financial instruments, which are stated at
fair value as applicable.
Core earnings per share is a non-IFRS measure and is based on
headline earnings per share (“HEPS”) adjusted to exclude
amortisation charges of intangibles recognised on business
combinations.
REVIEW
The condensed consolidated financial statements and this SENS
announcement have been reviewed by the Group’s auditors,
SizweNtsalubaGobodo Incorporated. The review has been conducted
in terms of International Standards on Review Engagements. A copy
of the unmodified review report is available for inspection at
the Company’s registered office. This auditor’s review report
does not necessarily report on all the information contained in
this announcement. Shareholders are therefore advised that in
order to obtain a full understanding of the nature of the
auditor’s engagement, they should obtain a copy of this auditor’s
review report together with the accompanying financial
information from the Company’s registered office. Any reference
to future financial performance included in this announcement has
not been reviewed nor reported on by the Group’s auditors.
For and on behalf of the Board
AJ Fourie P Spies
Chairperson Chief Executive Officer
Midrand
6 September 2016
PINNACLE HOLDINGS LIMITED
Directors:
AJ Fourie* (Chairperson), A Tugendhaft* (Deputy Chairperson),
P Spies (Joint Chief Executive Officer), RD Lyon CA (Chief
Financial Officer), SH Chaba*^, N Medupe *^, B Sibiya *^
* Non-executive ^ Independent non-executive
REGISTERED OFFICE:
The Summit, 269, 16th Road, Randjespark, Midrand, 1685
PREPARER OF RESULTS: RD Lyon CA
COMPANY SECRETARY: SL Grobler, CA (SA)
TRANSFER SECRETARIES:
Computershare Investor Services (Pty) Ltd, Ground Floor, 70
Marshall Street, Johannesburg, 2001
AUDITORS:
SizweNtsalubaGobodo Inc., Registered Auditors, Summit Place
Office Park, Building 4, Garsfontein Road 221, Menlyn, 0081
SPONSOR:
Deloitte & Touche Sponsor Services (Pty) Ltd, Building 8,
Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead, 2196
Date: 06/09/2016 04:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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