REVIEWED CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL RESULTS

Transcription

1 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 cents CASH GENERATED UP 47% to R748.0 million DEBT TO EQUITY IMPROVED from 50% to 19% Registration number 1986/000334/06 Shar Share e code: PNC ISIN: ZAE ( Pinnacle or the Gr Group oup or the Company ) www

2 Condensed Consolidated STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME R 000 R 000 Revenue Cost of sales ( ) ( ) Gross profit Operating expenses ( ) ( ) Selling expenses (69 450) (71 705) Employees expenses ( ) ( ) Administration expenses ( ) (97 214) Gain on discounting of finance lease agreements Profit on foreign exchange Fair value adjustment on acquisition of former associate (17 654) Profit on disposal of former subsidiary EBITDA * Depreciation and amortisation (63 284) (31 509) Impairment of goodwill (5 592) Operating profit before interest and taxation Net finance costs ( ) (91 445) Investment income Interest paid ( ) (99 212) Share of equity accounted associate income Profit before taxation Taxation ( ) (93 233) Net profit for the year Owners of the Company Non-controlling interests Other comprehensive income Items that will not be reclassified into profit or loss: (23 825) Profit on revaluation of property 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: Exchange differences from translating foreign operations Profit on acquisition of non-controlling interest Cash flow hedge Total comprehensive income for the year Attributable to: Owners of the Company Non-controlling interests * Earnings before interest, taxation, depreciation and amortisation. 1

3 Reconciliation of HEADLINE EARNINGS and CORE EARNINGS R 000 R 000 Net profit for the period attributable to ordinary shareholders Impairment of goodwill Fair value adjustment on acquisition of former associate net of taxation Fair value adjustment on acquisition of former associate 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 Profit on sale of former subsidiary net of taxation (27 565) Profit on sale of former subsidiary (42 968) Less: Taxation thereon Headline earnings Amortisation of Intangibles net of taxation Amortisation of intangibles Tax thereon (4 687) Core earnings Total number of shares in issue ( 000) Total issued less treasury shares Weighted average FINANCIAL REVIEW Performance per share (cents) Basic and diluted earnings per share Headline and diluted headline earnings per share * Core and diluted core earnings per share * Dividend cover Returns (%) Gross profit Operating expenses (9.0) (8.2) EBITDA ** Operating profit before Interest and taxation Effective tax rate *** Net profit Return on equity * 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. 2

4 Condensed SEGMENTAL ANALYSIS R 000 R 000 Revenue ICT Distribution Services and Solutions Financial Services Less: Intra-segmental revenue ( ) (86 818) Reconciliation between EBITDA** and profit before tax EBITDA ** ICT Distribution Services and Solutions Financial Services Group Central Services Total EBITDA ** Depreciation and amortisation (63 284) (31 509) Impairment of goodwill (5 592) Net finance costs ( ) (91 445) Share of equity accounted associate income Profit before taxation Net operating assets ICT Distribution Services and Solutions Financial Services Group Central Services ** Earnings before interest, taxation, depreciation and amortisation. Condensed ANALYSIS OF GOODWILL R 000 R 000 Opening balance Business combination acquisitions Goodwill re-allocated to assets held-for-sale (2 759) Impairments (5 592) Closing balance Business combination acquisitions Datacentrix Solareff Intdev Impairments E-Secure DSP (3 597) (1 995) (5 592) 3

5 Condensed Consolidated STATEMENT OF FINANCIAL POSITION R 000 R 000 AssETs Non-current assets Property, plant and equipment Intangible assets and goodwill Investment in associate Finance lease receivables Deferred taxation Current assets Inventories on hand Inventories in transit Assets held-for-sale Short-term loans Trade and other receivables Finance lease receivables Taxation receivable Cash and cash equivalents Total assets EQUITY AND LIABILITIEs Capital and reserves Share capital and premium Treasury shares (72 856) (72 856) Non-distributable reserves Cash flow hedge reserve (1 722) (7 407) Accumulated profits Non-controlling interests Non-current liabilities Interest-bearing liabilities Derivative financial liability Deferred revenue Deferred taxation Current liabilities Trade and other payables Interest-bearing liabilities Derivative financial liability Short-term loans Deferred revenue Taxation payable Bank overdrafts Liabilities associated with assets classified as held-for-sale Total equity and liabilities Capital management Net asset value per share (cents) Net tangible asset value per share (cents) Working capital management Investment in working capital (R'000) Days inventory outstanding (excluding in transit) Days sales outstanding Days purchases outstanding Liquidity and solvency Debt to equity (%) Current ratio (excluding stock in transit) Acid test (excluding stock in transit)

6 Condensed Consolidated STATEMENT OF CASH FLOWS R 000 R 000 Profit before taxation Adjusted for: Finance income received (17 617) (7 767) Finance expenses paid Non-cash flow items Changes in working capital Cash generated by operating activities Net finance costs ( ) (91 445) Finance income received Finance expenses paid ( ) (99 212) Taxation paid ( ) (88 822) Dividends received from equity accounted investment Cash flows from investing activities Property, plant and equipment acquired (18 222) (44 871) Proceeds on disposals of property, plant and equipment Proceeds on disposals of assets classified as held-for-sale 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 ( ) (93 455) Additional costs incurred on equity accounted investment (3 678) (4 645) ( ) Cash flows from financing activities Interest-bearing liabilities raised Interest-bearing liabilities repaid ( ) (17 995) Decrease in short-term loans ( ) (9 973) Increase in net cash, cash equivalents and overdrafts Net cash acquired from business combinations Net cash movements related to assets classified as held-for-sale (5 102) Net overdraft at beginning of year (73 265) ( ) Net cash, cash equivalents/(overdraft) at end of year (73 265) 5

7 Condensed Consolidated STATEMENT OF CHANGES IN EQUITY R 000 R 000 Opening balance Shares issued Profit for the period Other comprehensive income Cash flow hedge reserve Acquisitions/(disposals) of non-controlling interest (2 286) Equity-based compensation reserve Closing balance Attributable to: Owners of the Company Non-controlling interests

8 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 and Datacentrix Holdings Ltd shares respectively, resulting in Pinnacle s shareholding in Datacentrix increasing to shares, which represents 55.2% of Datacentrix s total voting shares in issue as at 30 June 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 The cumulative purchase consideration for the additional shares acquired amounted to R192.0 million, and was settled by the issue of 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 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 Intangible assets Finance lease receivables Inventories on hand Trade and other receivables Cash and cash equivalents Total assets Trade and other payables ( ) Deferred revenue (88 739) Loan payable (13 560) Current tax liabilities (9 854) Deferred taxation (2 249) Total liabilities ( ) Identifiable net assets Non-controlling interest ( ) Acquirer s interest Purchase consideration Goodwill on acquisition Cash flow information Cash and cash equivalents acquired Acquisition date fair value Acquisition date fair value of equity interest in acquiree prior to acquisition date 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. 7

9 BUSINESS COMBINATIONS continued 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 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 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 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 Loans receivable Work in progress Trade and other receivables Cash and cash equivalents Total assets 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 Non-controlling interest (9 213) Acquirer s interest Purchase consideration Goodwill on acquisition Cash flow information Cash and cash equivalents acquired Since the acquisition date, Solareff has contributed R104.8 million to Group revenue and R17.9 million to Group profit before tax. 8

10 BUSINESS COMBINATIONS continued 3. INTDEv INTERNET TECHNOLOGIEs (PTY) LTD Pinnacle acquired 60% of the issued ordinary share ca pital of Intdev Internet Technologies (Pty) Ltd ("Intdev"), effective 1 March 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 The total purchase consideration of R1.7 million was paid in cash on 22 April Intdev has been consolidated and included in the Services and Solutions segment with effect from 1 March 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 Intangible assets Deferred taxation Inventories 209 Trade and other receivables Cash and cash equivalents 344 Total assets 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 Acquirer s interest (2 283) Purchase consideration Goodwill on acquisition 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. 9

11 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. Level R 000 R 000 Financial assets Trade and other receivables Share purchase scheme loans Finance lease receivables Cash and cash equivalents Financial liabilities Interest-bearing liabilities Derivative financial liabilities stated at fair value Trade and other payables All amounts above are stated at amortised cost, except as indicated. 10

12 COMMENTARY GROUP FINANCIAL PERFORMANCE The Board is pleased to announce the reviewed financial results for the year ended 30 June 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 cents (2015: cents) and core earnings per share increased by 12.1% to cents (2015: 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 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

13 COMMENTARY continued 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 str ong 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 telecommunica tions 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 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 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

14 COMMENTARY continued 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 shares. Since the mandate, 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 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 cents per ordinary share for shareholders exempt from DT; The net local dividend amount is cents per ordinary share for shareholders liable to pay DT; Pinnacle Holdings Limited has ordinary shares in issue (which includes 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. 13

15 COMMENTARY continued 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 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 Midrand Chairperson Chief Executive Officer 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 GRAPHICULTURE 14