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Pinnacle Technology Holdings Limited - Repurchase Of Ordinary Shares In Pinnacle
And The Acquisition Of The Remaining 35% Of Pinnacle Micro Cape (Pty) Limited
Pinnacle Technology Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/000334/06)
Share code: PNC ISIN: ZAE000022570
(`Pinnacle`)
REPURCHASE OF ORDINARY SHARES IN PINNACLE AND THE ACQUISITION OF THE REMAINING
35% OF PINNACLE MICRO CAPE (PTY) LIMITED
A. REPURCHASE OF ORDINARY SHARES IN PINNACLE
1. Introduction
Shareholders are hereby advised that Pinnacle has acquired 5 412 415 of it`s own
ordinary shares on the open market for a total purchase consideration of R 4 123
660 (`the general repurchase`). The general repurchase was effected in terms of
a general authority to Pinnacle`s directors (`the directors`), which was granted
in terms of special resolution number 1 passed by the members at Pinnacle`s
Annual General Meeting (``AGM`) held on 29 October 2004 and comprises 3.63% of
the total issued ordinary shares at the date of the AGM.
2. Implementation
The general repurchase commenced on 14 March 2004 and continued on a day-to-day
basis as market conditions allowed and in accordance with the JSE Securities
Exchange South Africa (`JSE`) Listings Requirements until 7 June 2005. The
highest and lowest prices paid for the ordinary shares were 80 cents and 69
cents per share respectively. It is not the intention of Pinnacle to cancel the
shares acquired through the general repurchase and such shares will be held as
treasury stock.
3. Extent of general authority outstanding
The extent of the general authority outstanding for the current financial year
is approximately 24 398 915 ordinary shares, representing approximately 16.37%
of the total issued ordinary share capital of Pinnacle.
4. Sources of funds
The general repurchase has been funded from available cash resources.
5. Opinion of directors
The directors have considered the effect of the general repurchase and are
satisfied that:
- Pinnacle and Pinnacle`s subsidiaries (`the Pinnacle group`) will be able in
the ordinary course of business to pay its debts for a period of 12 months after
the date of this announcement;
- the assets of Pinnacle and the Pinnacle group will be in excess of the
liabilities of Pinnacle and the Pinnacle group for a period of 12 months after
the date of this announcement. For this purpose, the assets and liabilities
should be recognised and measured in accordance with the accounting policies
used in the audited financial statements for the year ended 30 June 2004;
- the adequacy of ordinary capital and reserves of Pinnacle and the Pinnacle
group for a period of 12 months after the date of this announcement; and
- the adequacy of working capital of Pinnacle and the Pinnacle group for a
period of 12 months after the date of this announcement.
The directors of Pinnacle confirm compliance with paragraph 5.72 of the JSE
Listings Requirements.
6. Financial effects
The pro forma financial effects on the earnings, headline earnings, net asset
value and net tangible asset value per ordinary share, before and after the
general repurchase are set out below:
Note Before After Change
s
(cents) (cents) (%)
Earnings 1 3.9 4.0 2.56
Headline Earnings 1 4.1 4.2 2.44
Weighted number of 1 149,103 143,691 (3.63)
shares (`000)
Net asset value 2 63.9 63.4 (0.78)
Net tangible asset 2 61.6 61.0 (0.97)
value
Number of shares 2 149,126 143,714 (3.63)
(`000)
Notes:
1. The amounts in the `Before` column represent the unaudited earnings and
headline earnings per share disclosed in the interim results for the six months
ended 31 December 2004. The amounts in the `After` column represent the earnings
and headline earnings per share after the general repurchase on the following
assumptions:
- the general repurchase was effective 1 July 2004; and
- an after tax rate of 4.6% per annum on the cash resources required to fund
the general repurchase.
2. The amounts in the `Before` column represent the unaudited net asset value
and net tangible asset value per share as disclosed in the financial results for
the six months ended 31 December 2004. The amounts in the `After` column
represent the unaudited net asset value and net tangible asset value based on
the financial results for the six months ended 31 December 2004, adjusted for
the general repurchase, had it been effected on 31 December 2004.
7. Conclusion
The directors of Pinnacle will continue to repurchase securities as and when
opportunities arise.
B. THE ACQUISITION OF THE REMAINING 35% OF PINNACLE MICRO CAPE (PTY) LIMITED
1. Introduction
Deloitte & Touche Sponsor Services (Pty) Ltd is authorised to announce that
Pinnacle has entered into an agreement to acquire the remaining 35% of the
shareholding in Pinnacle Micro Cape (Pty) Limited (`Pinnacle Micro Cape`) from
Craig Nowitz, Rudi Thietz and Tim Humpreys-Davies, (`the management team`) who
are directors of Pinnacle Micro Cape, effective 1 January 2005, subject to the
suspensive conditions set out in paragraph 6 below.
2. Rationale for the acquisition
Pinnacle Micro Cape has over the past three years contributed to the exceptional
performance of the Infrastructure and Support Group, through a focused
combination of correct buying, stock management and client interaction driven by
the management team of the branch.
Pinnacle believes that by acquiring the shareholding of the Pinnacle Micro Cape
management team, it can unlock synergies in the group that can be applied and
leveraged to the benefit of all stakeholders.
3. Description of the business of Pinnacle Micro Cape
Pinnacle Micro Cape provides a wide range of international quality hardware,
software, peripherals, components and consumables to a regional dealer network
that services the Western Cape.
Best known for it`s locally manufactured, international quality Proline
desktops, servers and notebooks, Pinnacle Micro Cape also distributes such
global brands as Intel, Microsoft, Logitech, Canon, LG, Verbatim and more.
4. Terms of the acquisition
The purchase price will be settled by a cash payment of R 4 900 000 and the
issue of 3 230 769 Pinnacle treasury shares. At an average market price of 75
cents per share the total purchase price amounts to R7 323 077.
These Pinnacle shares shall be held in trust and transferred to the management
team in staggered quantities over the next two years. During this period
benefits of ownership shall accrue to the management team.
The management team has furthermore signed separate 2 year employment and 18
months restraint of trade agreements to provide assurance that their expertise
shall remain within the group.
5. Related party transaction
In terms of the Listings Requirements of the JSE, the acquisition is a related
party transaction and requires a fair and reasonable opinion from an independent
financial advisor which is to be appointed by the Board of Directors. The fair
and reasonable opinion will be included in the circular to shareholders referred
to in paragraph 8 below.
6. Suspensive conditions
The acquisition is subject to the approval of this transaction by the
shareholders of Pinnacle at a General Meeting to be convened for that purpose.
7. Financial effects
The unaudited pro forma financial effects of the acquisition on the headline
earnings, earnings, net asset value and tangible net asset value per Pinnacle
share, before and after the acquisition, are set out below.
The unaudited pro forma financial information provided is the responsibility of
the directors of Pinnacle (`directors`). The unaudited pro forma financial
information has been prepared for illustrative purposes only and because of its
nature, may not fairly present the financial position of Pinnacle, changes in
its equity or results of its operations or cash flows.
Notes Before After Change
(cents) (cents) (%)
Headline earnings 1 4.1 4.5 9.76
Earnings 1 3.9 4.2 7.69
Net asset value 2 63.9 63.9 0
Net tangible asset value 2 61.6 57.3 -6.98
Notes:
1. The amounts in the `Before` column are based on the headline earnings and
earnings per Pinnacle share as reported in the unaudited interim financial
results of Pinnacle for the six months ended 31 December 2004. The amounts in
the `After` column represents the headline earnings and earnings that would have
accrued per Pinnacle share for the six months ended 31 December 2004 based on
the following:
- The acquisition had been effective 1 July 2004;
- The actual operating results of Pinnacle Micro Cape for the six months
ended 31 December 2004;
- Interest earned has been reduced as a result of the reduced positive cash
balances with a net after tax effect of R167,000; and
- Goodwill created as a result of this transaction shall be amortised over a
period of ten years.
2. The amounts in the `Before` column are based on the net asset value per
share and net tangible asset value per share as reported in the unaudited
interim financial results of Pinnacle for the six months ended 31 December 2004.
The amounts in the `After` column represents the net asset value per share and
tangible net asset value per share had the acquisition been effective 31
December 2004.
8. Shareholder documentation
With the consent of the JSE, a circular pertaining to the transaction will be
submitted to the shareholders, either with the Annual Financial Statements which
will be sent to shareholders during September 2005, or such earlier opportunity
as may be required by a subsequent transaction.
Midrand
9 June 2005
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
(Registration number 1996/000034/07) |
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