Pinnacle Holdings is making good on its decision to sell off unused land in a bid to reduce its debt.
The listed company, which has interest-bearing liabilities of R446 million and short-term loans of R150 million, has sold a stand in Samrand, near Midrand, for R52 million. After it pays out the commission, this sale will earn it R50.96 million.
Pinnacle explains the property, which comprises 11 stands, was vacant and had been earmarked for future use as warehousing and offices. The sale, to Erf 117746 Nourse Avenue, is subject to several conditions, which must be fulfilled by month-end.
The listed company adds trimming its gearing remains a key priority and, as a result, its board approved the sale of its property portfolio. Once Pinnacle settles the outstanding bond, it will be left with R18 million, which will go into debt, it notes.
Pinnacle had valued the property at R45.3 million in its latest set of results. Its total carrying value of property, plant and equipment was R186.9 million at the end of December.
Its results, for the six months to December, show revenue gained from R3.2 billion to R3.6 billion, although its cost of sales leapt to R3.1 billion from R2.65 billion. Its operating profit came in lower at R188.5 million, compared with R246.3 million a year ago, and its net profit dropped from R150.8 million to R125 million.
In addition to the sale of land, Pinnacle will wind down its investment in the managed print services business, and the suspension of annual dividend payments will remain in place until its debt position improves.
The listed company has also approved a strategy that sees distribution remain one of its core competencies. It will focus on improving the margins through product mix and enhanced procurement, reduction of overheads and driving growth through its ongoing expansion into Africa.
Services is also set to be a core competency and it will explore synergies between its units. Pinnacle expects earnings in the full year to be an improvement on 2014.
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