| Mon 31 May 2010, 16:45 | | PNG - Pinnacle Point - Reviewed condensed consolidated results for the year |
|
PNG
PNG
PNG - Pinnacle Point - Reviewed condensed consolidated results for the year
ended 28 February 2010
PINNACLE POINT GROUP LIMITED
(Registration Number: 2000/000059/06)
Share code: PNG ISIN code: ZAE000127122
("Pinnacle Point" or "the Company")
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010
Condensed consolidated statement of financial position at 28 February 2010
Reviewed Audited
28 February 28 February
2010 2009
R`000 R`000
ASSETS
Non-current assets 1 100 147 1 052 004
Property, plant and equipment 14 921 27 863
Investment property 4 400 6 075
Inventory/Freehold land and stands 860 680 854 160
Goodwill 7 504 17 504
Other intangible assets 1 603 1 621
Loans and receivables at amortised 179 169 59 520
cost
Deferred tax assets 31 870 85 261
Current assets 502 293 630 382
Inventory/Freehold land and stands 364 127 398 569
Loans and receivables at amortised 24 216 154 248
cost
Trade and other receivables 17 126 21 347
Current tax receivable 1 045 1 532
Cash and cash equivalents 95 779 54 686
Assets classified as held for sale 23 506 -
Total Assets 1 625 946 1 682 386
EQUITY AND LIABILITIES
Equity and reserves
Issued capital 1 151 007 813 866
Foreign currency translation reserve (15 159) (11 615)
Accumulated loss (328 918) (50 738)
Equity attributable to owners of the 806 930 751 513
parent
Non-controlling interests 12 424 16 100
Total equity 819 354 767 613
Non-current liabilities 239 685 419 148
Borrowings 39 819 165 473
Finance leases and other arrangements 5 188 15 983
Platinum Club obligations - 2 500
Deferred tax liabilities 194 678 235 192
Current liabilities 541 900 495 625
Trade and other payables 116 580 137 009
Borrowings 378 498 247 000
Finance leases and other arrangements 3 631 7 344
Platinum Club obligations 5 550 40 625
Provisions 14 857 14 073
Operating lease liability 102 107
Current tax payable 4 034 8 730
Bank overdraft 18 648 40 737
Liabilities directly attributable to 25 007 -
assets held for sale
Total Equity and Liabilities 1 625 946 1 682 386
Calculated shares in issue at year end 7 006 622 4 599 738
(`000)
Net asset value per share issued 11.52 16.34
(cents)
Net tangible asset value per share 11.39 15.92
(cents)
Actual shares in issue at year end 7 006 622 4 579 783
(`000)
Condensed consolidated statement of comprehensive income for the year
ended 28 February 2010
Reviewed Audited
12 Months to 12 months to
28 February 28 February
2010 2009
R`000 R`000
16 759
Revenue 102 713
Cost of sales (93 348) (66 254)
Gross (loss) / profit (76 589) 36 459
Other gains and losses 16 322 36 165
Marketing and sales expenses (12 206) (15 948)
Other expenses (196 105) (60 643)
Operating loss (268 578) (3 967)
Investment revenue 26 030 37 079
Finance costs (54 227) (35 344)
Loss before tax (296 775) (2 232)
Taxation income / (expense) (9 361) (844)
Loss for the year (306 136) (3 076)
Other comprehensive losses:
Exchange differences arising on (3 544) (11 615)
translation of foreign operations
Fair value adjustments on acquisition - 2 765
Tax relating to components of other - (774)
comprehensive income
Other comprehensive loss for the year, (3 544) (9 624)
net of tax
(309 680)
Total comprehensive loss for the year (12 700)
Loss attributable to:
Owners of the parent (278 180) (2 734)
Non-controlling interests (27 956) (342)
Total comprehensive loss attributable
to:
Owners of the parent (281 724) (14 349)
Non-controlling interests (27 956) 1 649
Loss per share
Basic loss per share (cents) (5.66) (0.09)
Diluted basic loss per share (cents) (3.97) (0.09)
Weighted average shares in issue 4 915 747 2 987 903
(`000)2
Diluted weighted average shares in 7 006 622 2 987 903
issue (`000) 2
(278 180)
Headline loss reconciliation
Loss attributable to owners of the (2 734)
parent
Adjusted for:
Profit on disposal of property, plant (4) (95)
and equipment
Profit on disposal of investment - (3 081)
property
Fair value adjustments on assets held 2 309 -
for sale
Fair value adjustments on investment 939 -
property
Gains on available-for-sale financial (7 445) -
assets
Property, plant and equipment impaired 738 -
Goodwill impaired 10 000 -
Headline loss for the period (271 643) (5 910)
Headline loss per share
Headline loss per share (cents) (5.53) (0.20)
Diluted headline loss per share (cents) (3.88) (0.20)
Weighted average shares in issue 4 915 747 2 987 903
(`000)2
Diluted weighted average shares in 7 006 622 2 987 903
issue (`000) 2
Core headline loss reconciliation
Headline loss attributable to owners of (271 643) (5 910)
the parent
Adjusted for:
Nigerian listing expenses 29 511 -
Capital restructuring costs 6 000 -
Core headline loss (236 132) (5 910)
Core headline loss per share
Core headline loss per share (cents) (4.80) (0.20)
Diluted core headline loss per share (3.37) (0.20)
(cents)
Weighted average shares in issue 4 915 747 2 987 903
(`000)2
Diluted weighted average shares in 7 006 622 2 987 903
issue (`000) 2
Condensed consolidated statement of cash flows for the year ended 28 February
2010
Reviewed Audited
12 Months to 12 months to
28 February 28 February
2010 2009
R`000 R`000
Net cash outflow from operating (231 615)
activities (64 705)
Net cash (outflow) / inflow from (52 987) 49 428
investing activities
Net cash inflow from financing 230 695 100 916
activities
Net (decrease) / increase in cash and (53 907)
cash equivalents 85 639
Cash in transit 95 000 -
Cash and cash equivalents at beginning 54 686
of the year (30 953)
Cash and cash equivalents at end of 95 779
the year 54 686
Condensed consolidated statement of changes in equity for the year ended 28
February 2010
Issued Foreign Accumulated Attributa Non- Total
capital currency loss ble to controll
1 translat owners of ing
ion the interest
reserve parent s
R`000 R`000 R`000 R`000 R`000 R`000
Balance at 1 1 - (48 004) (48 003) 27 (47 976)
March 2008 -
Audited
Loss for the - - (2 734) (2 734) (342) (3 076)
year
Fair value - - - - 1 991 1 991
adjustments
on
acquisition
Foreign - (11 615) - (11 615) - (11 615)
exchange
movement
Total - (11 615) (2 734) (14 349) 1 649 (12 700)
comprehensive
(loss) /
income for
the year
Acquisition - - - - 854 854
of
subsidiaries
Platinum Club - - - - 13 570 13 570
Issue of 364 034 - - 364 034 - 364 034
ordinary
shares to
acquire
assets
Issue of 450 000 - - 450 000 - 450 000
ordinary
shares for
cash
Share issue (169) - - (169) - (169)
costs
Balance at 28 813 866 (11 615) (50 738) 751 513 16 100 767 613
February 2009
- Audited
Loss for the - - (278 180) (278 180) (27 956) (306 136)
year
Foreign - (3 544) - (3 544) - (3 544)
exchange
movement
Total - (3 544) (278 180) (281 724) (27 956) (309 680)
comprehensive
loss for the
year
Issue of 165 515 - - 165 515 - 165 515
ordinary
shares to
settle
liabilities
Issue of 196 485 - - 196 485 - 196 485
ordinary
shares for
cash
Share issue (24 859) - - (24 859) - (24 859)
costs
Platinum Club - - - - 24 280 24 280
Balance at 28 1 151 (15 159) (328 918) 806 930 12 424 819 354
February 2010 007
- Reviewed
1 Includes share capital, share premium, share based payment reserve and equity
reserve arising from the reverse acquisition consolidation.
2 Excluding treasury shares and including shares contracted for but not yet
issued.
BASIS OF PREPARATION
The condensed annual financial statements of the Group are prepared as a going
concern on a historical cost basis, except for certain financial instruments, at
amortised cost or fair value. The condensed annual financial statements conform
to International Accounting Standard 34: Interim Financial Reporting, the
Listings Requirements of the JSE Limited, and the Companies Act of South Africa
(Act 61 of 1973), as amended. The principal accounting policies, which comply
with International Financial Reporting Standards, have been consistently applied
in all material respects in the current and comparative years. All new
interpretations and standards were assessed and adopted with no material impact,
except for IAS1: Presentation of Financial Statements that required some
modified disclosures and terminology.
The Group`s auditors, Deloitte & Touche, have reviewed, but not audited, these
results and a copy of their modified review opinion on this set of condensed
financial information is available for inspection at the Group`s registered
office. Their report includes an emphasis of matter drawing attention to the
support by a major shareholder and financier which is discussed in more detail
in the business and market overview below. Any reference to future financial
performance included in this announcement has not been reviewed or reported on
by the Group`s auditors.
BUSINESS AND MARKET OVERVIEW
The past year has ended on a positive note with the conclusion of the Rights
Offer which opened to Pinnacle shareholders on 16 November 2009. The year will
however be marked as a year of stagnation mainly due to the financial
restructuring programme the Company has gone through with its major shareholders
and the general economic climate
The year started out with the secondary listing on the Nigerian Stock Exchange
("NSE") to enable the Group to access new capital markets to raise funding for
its Lagos Keys development. This did not materialise during the year as soon
after the listing the negotiation with Absa Bank Ltd ("Absa") commenced to
replace the capital lost through the failure of Lurco Trading to honour its
subscription obligations in November 2008. Absa had acquired its 27%
shareholding in the business as a result of certain defaults by third parties in
the South African single stock futures market triggered by declining market
prices and the financial meltdown towards the end of 2008.
The Rights Offer of R260 million brought in approximately R95 million in new
cash and also resulted in the Company converting debt amounting to approximately
R165 million into equity. The Company furthermore, just prior to the Rights
Offer, raised new equity amounting to R100 million through an issue of shares
for cash to the Trilinear Empowerment Trust ("Trilinear").
The capital restructuring happened during one of the worst recorded global
financial crisis and massive contractions of the property market, particularly
in the secondary home sector during a period when credit was scarce for both
developers and the general public.
This period was used as effectively as possible to realign the business and
embark on an extensive cost reduction programme both on the development and
sales and marketing aspects of the business.
The Company will, as part of its short-term strategy, focus on the development
of Wedgewood and the Lagos Keys developments.
The Company has a number of plans and initiatives for the year ahead designed to
unlock the value inherent in its developments and to stimulate the generation of
revenue. Concomitant with the industry in which the Company operates, these
plans are unlikely to materialise without the appropriate level of funding being
made available to the Group to bridge short term cashflow challenges. In this
regard the Company has received an undertaking from its major shareholder that
it will support the Company in addressing these cash flow challenges. In
addition, based on current discussions with a major financier of the Group, the
Board has no reason to believe that existing debt facilities will not be renewed
when they mature.
FINANCIAL RESULTS
The results for the year were very disappointing and this should be viewed
against the poor economic conditions, activity within the Group being mainly
focused on the capital restructuring exercise, and substantial inventory and
asset write downs in compliance with IFRS. This has resulted in a large portion
of the losses being non-cash flow related, amounting to approximately R111
million.
The net loss for the Group for the year ended February 2010 amounted to R306
million (2009: a loss of R3 million) whilst the headline loss for the year
amounts to R272 million (2009: a headline loss of R5.9 million). The core
headline loss for the period amounts to R236 million after adding back the NSE
listing costs and other capital restructuring fees. The diluted loss per share
is 3.97 cents (2009: 0.09 cents loss per share), with a diluted headline loss of
3.88 cents per share and a diluted core headline loss of 3.37 cents per share
after removing the effects of the listing and capital restructuring costs.
In accordance with the Group`s accounting policies, revenue from the sale of
property is only recognised once the property has been transferred to third
parties. Revenue for the year declined from R103 million to R17 million.
The sale of property at most of Pinnacle`s developments came to a virtual
standstill. This was due to the lack of development activity as a result of
funding no longer being available to the Company to enable it to proceed with
its developments. This situation was further compounded by the Company`s
inability to convert pre- and potential sales resulting from financial pressures
experienced by the buyers, being a direct consequence of the poor market
conditions and credit constraints.
The results for the year include once off listing and capital restructuring
costs amounting to R36 million. Certain cost directly relating to the issuing of
shares amounting to R25 million have been written off against share premium.
Property, plant and equipment decreased as a vessel was reclassified as
available for sale. The remainder of the decrease is attributable to
depreciation.
Goodwill attributable to the Wedgewood Golf and Country Estate was impaired by
R10 million in accordance with IAS36: Impairments.
Included in loans and receivables are debentures held by the Group to the value
of R85 million. As the terms and conditions of these debentures changes, a
change in the classification of short- and long-term elements was made.
The inventory write down for the year amounted to R56 million. Standing time
and interest on the active developments expensed during the year amounted to R60
million. Pinnacle expects that certain of the inventory write downs will reverse
when market conditions improve.
Inventories decreased by R28 million to R1,225 billion during the year mainly as
a result of the fair value assessment and consequential write off`s referred to
above. Very little construction activity took place during the year having
regard to the current market conditions and the scarcity of debt funding however
spending on the approvals for the Lagos development continued during the year to
ensure that the development is in a sale ready state early in the new year.
Total interest bearing borrowings amounted to R446 million at year-end (R285
million excluding the Gardener Ross debt) and is 1.8 times covered by equity
(2.9 times excluding the Gardener Ross debt) compared to 1.6 times in 2009. Once
the Gardener Ross debt is stripped out, the development related debt will
comprise R257 million or 90% of the total interest bearing debt which will be
self-liquidating through sales of existing stock on hand.
The cash in transit relates to cash raised on the rights issue which were in
transit at 28 February 2010.
SEGMENTAL REPORTING
Operating segments are components of an entity in respect of which separate
financial information is available and is evaluated regularly by management.
For management purposes, the Group is organised into the following segments:
Sale of freehold land and stands (Project development)
The Group develops leisure resorts and residential lifestyle estates, whereby
land is acquired, rezoned, developed and sold. In the sale of freehold property
and serviced vacant land segment, revenue is derived from the sale of this
property.
The segment is further divided into geographical regions, namely South Africa,
Nigeria and Seychelles. Whilst the South African segment comprise a number of
projects, the various projects are exposed to similar risks and possess similar
characteristics and accordingly, are aggregated into one segment for financial
statement and other reporting purposes. The developments in the countries other
than South Africa are still in their initial phases and no revenue has been
derived from these segments as yet.
Real estate agency services
Real estate agency services comprise commission earned on the sale of property
developed by the Group in South Africa. The service extends to include
subsequent resale of such properties.
Golf course operations
Revenue in this segment is derived principally from membership and green fees
received from golf operations in South Africa.
The operating segments which conduct real estate agency services and golf
operations are immaterial to the Group and accordingly, the Group`s consolidated
results materially reflect the results relating to sale of freehold property and
serviced vacant land.
28 February 2010
Freehold land and stands Other 1 Group
consoli-
dated
South Nigeria Seychel Subtotal
Africa les
Segment revenue 17 175 - - 17 175 (416) 16 759
Segment interest 21 099 - - 21 099 4 931 26 030
income
Segment finance 45 263 8 764 2 912 56 939 (2 712) 54 227
cost
Segment 5 734 - - 5 734 1 345 7 079
depreciation,
amortisation and
impairments
Segment profit / (271 766) (35 642) (7 710) (315 118) 18 343 (296 775)
(loss) before
taxation
Segment income (10 457) - (788) (11 235) 1 874 (9 361)
tax for the year
Segment inventory 634 704 574 882 15 221 1 224 807 - 1 224 807
Segment total 1 050 408 583 186 48 566 1 682 160 (79 720) 1 602 440
assets
Segment total 23 506 - - 23 506 - 23 506
assets held for
sale
Segment 415 473 - - 415 473 2 844 418 317
borrowings
28 February 2009
Freehold land and stands Other 1 Group
consoli-
dated
South Nigeria Seychel Subtotal
Africa les
Segment revenue 102 873 - - 102 873 (160) 102 713
Segment interest 6 272 - - 6 272 30 807 37 079
income
Segment finance 12 527 - - 12 527 22 817 35 344
cost
Segment 2 228 - - 2 228 1 515 3 743
depreciation and
amortisation
Segment income / (11 484) (3 885) 5 195 (10 174) 7 944 (2 230)
(loss) before
taxation
Segment income (4) - 791 787 2 538 3 325
taxation for the
year
Segment inventory 672 791 569 689 10 248 1 252 728 - 1 252 728
Segment total 963 765 578 055 72 347 1 614 167 68 220 1 682 387
assets
Segment 407 957 - - 407 957 20 267 428 224
borrowings
1 Other comprise non-reportable segments and consolidation adjustments
During the period under review, the project development segment included the
following active projects:
- Pinnacle Point Beach and Golf Resort
- Gardener Ross Golf and Country Estate
- Clarens Golf and Trout Estate
- Wedgewood Village Golf and Country Estate
- Romansbaai Beach and Fynbos Estate
- Lagos Keys
- Ile Aurore Nouvelle Seychelles
A number of other projects exist which have been put on hold until the
improvement in market conditions gains more momentum.
DETAILS OF ACTIVE PROJECTS:
Pinnacle Point Beach and Golf Resort ("PPR")
PPR is a 324 hectare resort development built on the sandstone cliffs
overlooking the Indian Ocean, renowned for its natural beauty, near Mossel Bay,
South Africa. The golf course which forms part of this development was rated one
of the 10 best new courses in the world in 2006.
The development has been virtually completed and is largely sold out. The sale
and marketing of these properties have recently been outsourced to a reputable
agency in the area.
Gardener Ross Golf and Country Estate ("Gardener Ross")
Gardener Ross comprises an Ernie Els signature golf course (rated as the top new
course in Gauteng for 2008), and a housing development comprising 1 131 full
title vacant properties. It is situated in Centurion, Gauteng within range of
major developing business areas.
The infrastructure of this development has been virtually completed and more
than 50% of the properties available for sale have been sold. This development
is in the process of being sold to Investec Bank Limited, subject to the
fulfilment of certain suspensive conditions, and hence still included in the
current year`s results.
The Clarens Golf and Trout Estate
This is a 248 hectare resort development in Clarens, Free State Province, South
Africa. The development is nestled amongst the sandstone buttresses on the edge
of the Golden Gate Nature Reserve.
This development has been completed and 70% of the available properties have
been sold. The Group expects the sale of these properties to continue at a
steady pace.
Wedgewood Golf and Country Estate ("Wedgewood")
Wedgewood is 359 hectare development situated on the former Wedgwood Park
Country Club, established in 1949. The development is situated in Port
Elizabeth, South Africa.
The 18 hole golf course has been redesigned and improved and the estate will,
once completed, also have 486 freehold properties, 307 retirement homes, a golf
clubhouse, sport facilities, and commercial and healthcare facilities.
The development infrastructure is approximately 80% complete and more than 50%
of the freehold properties have been transferred and pre-sold amounting to
approximately R141 million. During the year an agreement was concluded to buy
out all the retirement development rights for a sum of R5 million. The
infrastructure services for the retirement development have already been
completed.
Construction activity for this development was put on hold while the Group was
going through its financial restructuring programme. Construction activity has
now recommenced and we expect all services to be completed and the Golf course
to be fully operational by the end of the 2010 calendar year.
Romansbaai Beach and Fynbos Estate
Set amongst the sand dunes and fynbos of the Western Cape, the Romansbaai Beach
and Fynbos Estate is a north facing seaside development which includes 380
residential erven, a group housing village and the possibility of a retirement
village on a 210 hectare piece of land.
Within a 2 hour drive from Cape Town, Romansbaai is one of the few north facing
beaches in the Western Cape and boasts unsurpassed natural beauty with views of
False Bay and Table Mountain in the distance.
Construction on phase one of this development has been suspended, pending
finalisation of funding. Selling activities will only recommence once funding
has been secured.
Lagos Keys
Lagos Keys is a 400 ha development set in Lagos, the largest city in Nigeria and
the second largest in Africa. It has become Nigeria`s main business and
financial centre with a growing population of around 18 million people.
The project carries a central theme of lakes, rivers and cascades and the first
phase of this exciting project will consist of an 18 hole golf course, 430
residential properties, marina and waterfront and a luxury hotel.
The agreement with the Lagos Stage Government to develop this site has been
concluded and the government has issue the "Certificate of Occupation" to
Pinnacle Point West Africa Limited, ("PPWA") a 51% held subsidiary of the
Company.
The Nigerian Federal Government has issued conditional environment impact
assessment approvals to PPWA. Development funding is currently being arranged
and is at an advanced stage. Sales to founding members and the public will
commence during the 2011 financial year.
Ile Aurore Nouvelle Seychelles
The development is situated in the Seychelles, adjacent to the main island of
Mahe. The acquisition of the leasehold land and Casino rights took place in July
2007 soon after the project was awarded to the Group by the Seychelles
government.
All the necessary rights in respect of the Ile Aurore Nouvelle development have
now been obtained. The site is an existing reclaimed island of approximately 60
hectares and it is proposed to add an additional land by reclaiming land from
the sea. This will provide sufficient land to accommodate all the opportunities
and facilities required for a resort of this nature. The 18 hole golf course
with lakes and a water driving range, forms the central theme around which the
resort is designed. All 175 golf and 8 island villas are set on palm-fringed
beaches, with golf course or sea views and most have both.
The public facilities include a casino, waterfront and marina. Condominiums will
be in close proximity to the waterfront and marina and a 90 suite boutique hotel
has been strategically positioned on a northern promontory with magnificent
views of St Anne`s island (a wildlife reserve) and the open sea.
ISSUE OF SHARES
During the year the following shares were issued:
- 666 666 667 fully paid up shares issued to the Trilinear Empowerment Trust
under the Company`s general authority at 15 cents per share for an
aggregate consideration of R100 million, on 30 October 2009.
- 9 900 092 fully paid up shares at 15 cents per share to various
shareholders who acquired shares as part of the renounceable Rights Offer
of 2 400 000 000 shares to registered shareholders on 13 November 2009.
These shares were issued on 7 December 2009.
- Pursuant to the Rights Offer underwriting agreement, 265 306 173 fully paid
up shares at 15 cents per share to Goldbanc Management Associates Limited
("GMA") for the conversion of an existing debt facility advanced to the
Company by GMA earlier in the year and accumulated interest thereon and
including an underwriting fee of R883 249, being 2.27% of the debt
amounting to R38 912 677, which was payable by the Company to GMA. These
shares were issued on 7 December 2009.
- Pursuant to the Rights Offer underwriting agreement, 1 466 666 667 fully
paid up shares at 15 cents per share to Absa on, 28 February 2010.
- Pinnacle Point acquired 26% of the shares in Wedgewood for a purchase
consideration of R3 960 000. 8 800 000 shares were issued on 03 December
2009 at 45 cents per share.
- On 28 December 2009, 4 500 000 shares were issued at 13 cents to the former
chief executive officer, W Robinson in terms of his remuneration as
previously approved by shareholders.
- On 28 December 2009, 5 000 0000 shares were issued at 60 cents to A Wiese,
an ex-executive director as part of the agreed upon remuneration package.
ACQUISITIONS AND DISPOSALS
There were no acquisitions or disposals during the year under review.
Shareholders are referred to subsequent events below.
DIRECTORS AND EXECUTIVE MANAGEMENT
During May 2009 the Board of Pinnacle announced the appointment of Mr Hennie
Pretorius to the Pinnacle Board as Chief Executive Officer in succession to Mr
Wilfred Robinson. Mr Stefan Braun, who was appointed to the Board on 17
September 2009, joined Pinnacle as the Chief Operating Officer at the same time
in May 2009. Both Hennie and Stefan have proven track records in the property
field and have contributed greatly to the restructuring of the business thus
far.
During the year under review and to the date of this report, the directors of
the Group are as follows:
Director Date appointed Date resigned
PL Zim (Chairman)* 31 October 2008
IC Stratford (Deputy 31 October 2008
Chairman)*
HPJ Pretorius (Chief 6 May 2009
Executive Officer)
SLH Braun (Chief 17 September 2009
Operating Officer)
S Kruger (Group 31 October 2008
Financial Director)
YT Moerane*# 16 May 2008
KS Mthembu*# 07 October 2005
AO Austen-Peters 31 October 2008
(Nigerian)*
AV Fasedemi* 31 October 2008
B Igbinedion 20 February 2009
(Nigerian)*
K Massaad (Swiss)* 20 March 2009
W Robinson 21 June 2006 5 May 2009
R Moonsamy* 31 October 2008 18 December 2009
* non-executive # independent
Pursuant to the change in control of the company detailed above, it is the
intention of the Company to restructure the board of directors and an
announcement will be made in due course.
FUTURE PROSPECTS
It appears that South Africa`s residential property market is arguably past its
worst as demand grows off the dismal lows of early 2009 and the acceleration in
house price inflation continues.
Recent reports indicate that high net worth individuals are returning to real
estate investments in the global hot spots to take advantage of the softer
prices.
While many questions still remain regarding the sustainability of the global
economic recovery, and thus SA`s own economic and property recovery, we remain
cautiously optimistic that property as an asset class is on the up for
homeowners and investors alike and will continue to do so into the foreseeable
future at an increased pace. In South Africa, Pinnacle has a substantial
portfolio of transferable stock and developments that already have all their
approvals in place to take advantage of the gradual upswing in the property
market.
The Group is also in the fortunate position of having two international
developments; one in Lagos and one in the Seychelles, both of which offer unique
opportunities to high net worth individuals. It is expected that the Lagos Keys
development will commence shortly and that it will be the largest contributor to
the Group`s performance for 2011. With the recapitalisation of the Group
completed, the focus on the forthcoming year will be on sales.
The Pinnacle Board anticipates an improvement in the results for 2011,
particularly in the second half of the year.
CONTINGENT LIABILITIES
Subsequent to the Company`s year end, it came to the attention of the Company
that certain of the Company`s shareholders had engaged in legal proceedings
against a South African institution for alleged damages suffered relating to,
inter alia, the non disclosure of material information by this institution in
respect of the shares for assets exchange between the then Acc-Ross Holdings
Limited and the Pinnacle Group of Companies, during October 2008. In its
defence, this institution is claiming a contribution from the Company relating
to the claim and filed a joinder notice on the Company. The Board and the
Company`s legal advisors believe that there is not at all a basis for such claim
and the Company has filed a notice to defend the joinder.
At the balance sheet date the Group does not have any contingent liabilities
(2009: RNil).
SUBSEQUENT EVENTS
As announced on 9 March 2010, the Company successfully negotiated the disposal
of the Gardener Ross Golf and Country Estate (Proprietary) Limited to Investec
Bank Limited for a sum of R171 million, comprising R10 million cash and an
assignment of debt amounting to R161 million, subject to certain conditions
precedent. While this is one of the Group`s more prestigious developments,
strategically this disposal has more merit to Pinnacle given the current market
conditions and more importantly the funding arrangement with Investec Bank
Limited. A separate announcement will be made in due course.
The sale will impact positively on the Group`s gearing and cash flow as the
development debt relating to this development amounted to approximately R161
million at 28 February 2010 which comprises approximately 36% of the total
interest bearing debt outstanding at the end of February 2010. Savings on
interest and other overheads will also be substantial as is the monthly cash
flow saving.
As a result to the pending disposal detailed above, shareholders are advised
that the results of the company will be expected to be more than 20% better than
the prior six month period ended 31 August 2009. Once Competition Authorities
have approved the transaction, a trading update will be issued for the six month
period ending 31 August 2010.
On 18 May 2010, the Competition Authorities ruled in favour of the transaction
whereby Absa sold its entire interest in the Company to Trilinear. This resulted
in Trilinear increasing its shareholding in the Company to approximately 48.4%
and a change in control. This transaction places approximately 56% of the voting
control in the Company in the hands of previously disadvantaged individuals on a
broad base. This transaction will also make the Company the first listed black
owned property development group in the country, which bodes well for the
future.
DIVIDENDS
The directors have decided not to declare a dividend for the year under review
(2009: R Nil).
ANNUAL GENERAL MEETING
Shareholders will be advised of the date of the annual general meeting in due
course.
By order of the Board
P.L. Zim H. Pretorius
Chairman Chief Executive Officer
31 May 2010
Johannesburg
Registered Office
Arcay House Number 3 Anerley Road Parktown Johannesburg
2193
PO Box 62397 Marshalltown Johannesburg 2107
Directors
PL Zim (Chairman)*, IC Stratford (Deputy Chairman)*, HPJ
Pretorius (CEO), Dr AO Austen-Peters (Nigerian)*, SLH Braun
(COO), AV Fasedemi*, BA Igbinedion (Nigerian)*, S Kruger (Group
Financial Director), Dr K Massaad (Swiss)*, YT Moerane*, KS
Mthembu*.
* Non-executive
Designated Advisor Transfer Office
Arcay Moela Sponsors Computershare Investor Services
(Proprietary) Limited (Proprietary) Limited
Date: 31/05/2010 16:45:02 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.
