Property group Pinnacle Group has posted a 3.00 cent headline loss for the year ended February, from the 3.86 cents a year ago.

Revenue was up to R142.2 million from R16.7 million a year ago, mainly due to the disposal of the Gardener Ross Golf and Country Estate properties. Loss for the year was R239.1 million from a R306.1 million loss a year earlier. No dividend was declared.

Pinnacle said after an initial improvement in the property market in the early stages of the financial year, growth had slowed and lower interest rates were yet to positively impact on the residential property market, particularly the secondary home market.

The group develops leisure resorts and residential lifestyle estates, whereby land is acquired, rezoned, developed and sold.

"The National Credit Act has led to the banks tightening their lending criteria which likewise had a bigger impact on the property market than initially expected. Property developers have to evaluate building homes on vacant land as part of the development offering in order to sell property that can be financed," the company said.

Pinnacle Point was also constrained by the lack of funding and development capital which resulted in very low levels of activity.

"Property developers and property speculators across the country are going into liquidation placing further pressure on stock pricing as liquidators and troubled home owners try to offload excess stock at any price," the company said.

Looking ahead, Pinnacle said its board was of the view that the company required additional capital in the amount of approximately R250 million for the replacement of certain existing banking facilities to enable it meet its working capital requirements and to allow the company to realise the potential of its property assets as a going concern.

"The group is in discussions with its stakeholders and lenders, to restructure the existing debt and to recapitalise the group, or alternatively apply for 'business rescue' which if successfully concluded, may have a material effect on the price of Pinnacle Point's securities," the company said.

Source: I-Net Bridge