Technology group Pinnacle Holdings has moved to reassure its investors following a sharp decline in its share price in recent days.
Since the company published a trading update on 8 August, in which it warned that its headline earnings per share for the year to end-June could have fallen by as much as 22% compared to a year earlier, its share price has come under sustained selling pressure.
On Wednesday morning, it fell to a new 52-week low of R7,61/share, a significant decline from the more than R20 it was trading at earlier this year.
The share rallied by more than 18% on Wednesday afternoon after Pinnacle moved to allay concerns among investors about its future.
“The company has noted that there has been a substantial weakening in its share price since the trading statement published on 8 August 2014. The company herewith wishes to address some perceived concerns and hopefully lay to rest any rumours that may be circulating in the market,” it said in a statement issued via the JSE.
“During the last quarter of the financial year, Pinnacle’s revenue grew by a robust 7%, although the benefit of this was negated by lower margins and increased expenses,” it said. “In addition, Pinnacle incurred material once-off charges relating to write downs on large holdings of inventory which were becoming end of life. It is important to note that there has not been any significant diminution in public sector business in the last quarter.”
Pinnacle’s share price has been under sustained pressure since TechCentral broke the news in March that former director Takalani Tshivhase had been arrested for allegedly trying to pay a R5m bribe to secure a tender with the South African Police Service.
The share price plummeted as a result of the arrest and amid concerns about the way Pinnacle managed the release of information about the developments. These concerns wiped more than R1,5bn off its market value in a matter of days.
On Wednesday, Pinnacle reiterated that the case related to the alleged bribery has been postponed until 9 September. “There is no further information to report on this matter at this stage and shareholders will be advised once any new information becomes available,” it said.
“The group remains focused on its day to day business operations. Its customers, all of its suppliers and financiers remain in place and continue to be supportive of the business. The CEO, the executive and nonexecutive directors remain fully committed to the group and are, as usual, fully focused on the business. The group continues to practice the highest standards of corporate governance and transparency. It is therefore business as usual at Pinnacle.” — © 2014 NewsCentral Media
