| Thu 27 Sep 2001, 0:00 | | Pinnacle Technology Holdings Limited - Audited Res |
|
June 2001
Pinnacle Technology Holdings Limited
ISIN CODE : ZAE000022570
SHARE CODE : PNC
Audited results for the year ended 30 June 2001
Proline Datalabs Canon Twinhead Verbatim intel Microsoft
Minolta SMC ASUS USRobotics
COMMENTS
Group profile and overview
Pinnacle's core business activity remains the supply of information
technology products and services. This includes computers, peripherals,
networking products, value-added sales, support services and financing
schemes. During the year under review Pinnacle disposed of its 50% share in
the finance company, Invescor (Pty) Ltd. Pinnacle also discontinued the
development of its b to c e-commerce business due to current low demand and
the high cost involved to maintain such a site.
Group financial review
The group revenue remained static compared to the previous financial year.
This reflects how difficult trading conditions in IT have been in the year
under review. A decrease in revenue was recorded in the government and
retail segments of the market. The new government tender was awarded five
months later than anticipated resulting in a negative growth in this
segment. Due to the decline experienced in operating margins in this retail
segment of the market we restructured to focus on more profitable business.
Operating profit for the year end 30 June 2001 was 55% lower than the
previous year. This decrease was largely attributable to a decrease in gross
margin. The ongoing worldwide decline in demand for information technology
products resulted in an increase in competition between information
technology companies to grow revenue, which has had a direct impact on
revenue growth and gross margins.
A cost containment strategy was followed which resulted in the cost being
reduced by 13% when compared to the previous financial year. The cost saving
did not offset the decline in operating margin.
The balance sheet was strengthened during the period under review. Stringent
inventory control measures were implemented resulting in a reduction of
inventory by 24%, equating to a rand reduction of R13,7 million. Close
scrutiny of the debtors book reduced outstanding debtors by R9,4 million.
This had a positive impact on gearing.
Group prospects
Whilst the negative worldwide IT sentiment will continue to put pressure on
the group's revenue growth and operating margins in the new financial year,
the consolidation in the industry will offer new growth opportunities. These
opportunities extend to new product offerings, which will open new markets
for the company and improve our accessibility into existing markets. The
company is poised to take advantage of these opportunities. Demand is
expected to be stimulated due to the release of Windows XP and Intel Pentium
4. Cost containment measures will continue to be focused on in the next
financial year.
Regional potential has not been exploited sufficiently. This has resulted in
the reallocation of senior management resources with the view to growing
regional operations not only in traditional markets but also new market
segments.
The company was awarded the PC4 government tender during the latter part of
last year, which continues well into the new financial year. In addition the
company was recently successful in the RT50 government tender. This will
increase the company's government market share.
Pinnacle Micro holds various distribution agencies, among others Verbatim,
Canon, Asustek, Aopen, Twinhead, SMC and Meissner and distributes this
product to the national dealer base. The company has also recently been
appointed as Minolta and Canon consumables distributors. In addition
Pinnacle is a Microsoft Direct OEM and Intel Premium Partner.
The company will continue to seek growth by:
Increasing market penetration in the public and corporate sector of the
market.
Continuing to refocus the Proline brand in the above sector.
Exploring opportunities posed in the media and consumables market.
Expanding its value added services offering.
Exploring opportunities in the rest of Africa.
Accounting policies
The accounting policies, as set out in the group's annual report, have been
consistently applied throughout the year under review and are unchanged from
the previous financial year.
Directorate
The board has been reconstituted with Mr Willem van Niekerk who has resigned
as Executive Director and has been appointed as Non-Executive Director. Mr
Wilfried Gartner has been appointed as Executive Director. Otherwise the
board remained the same.
Dividend
No dividend is proposed for the period under review.
Johannesburg
14 September 2001
SUMMARISED CONSOLIDATED BALANCE SHEET
as at 30 June 2001
2001 2000
R000 R000
ASSETS
Non-current assets 43 424 44 208
Property, plant and equipment 24 158 25 022
Investment 150 1
Deferred taxation 19 116 19 185
Current assets 97 458 120 145
Inventories 43 566 57 297
Accounts receivable 53 100 62 506
Bank and cash balances 792 342
Total assets 140 882 164 353
EQUITY AND LIABILITIES
Ordinary shareholders' funds 63 720 61 700
Outside shareholders' interest 1 046 2 159
Long-term liabilities 12 168 12 482
Current liabilities 63 948 88 012
Accounts payable 45 227 67 396
Short-term loan 18 712 19 773
Current portion of long-term liabilities 9 843
Total equity and liabilities 140 882 164 353
ABRIDGED CASH FLOW STATEMENT
for the year ended 30 June 2001
2001 2000
R000 R000
Cash flow from operating activities (1 003) (386)
Cash flow from investing activities 2 600 3 042
Cash flow from financing activities (1 147) (7 011)
Cash flow for the period 450 (4 355)
Cash and cash equivalents
at the beginning of the year 342 4 697
Cash and cash equivalents
at the end of the year 792 342
CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2001
2001 2000
R000 R000
Revenue 295 749 302 636
Operating profit before interest 6 169 13 699
Net interest paid (5 855) (5 469)
Net profit before taxation 314 8 230
SA normal taxation (69) (2 622)
Income for the year 245 5 608
Net profit attributable to
minority shareholders (23) (185)
Net profit from ordinary activities 222 5 423
Exceptional items 661 (404)
Net profit for the year 883 5 019
Earnings per share (cents) 0,60 3,46
Headline earnings per share (cents) 0,15 3,74
EXCEPTIONALITEMS
Write down of investment loan (2 819 880) -
Profit on sale of investment 3 481 681 -
Profit on sale of subsidiaries - 298 090
Loss on sale of land and buildings - (702 190)
661 801 (404 100)
EARNINGSPERSHARE
Earnings per share has been calculated
using the following:
Net profit for the year 883 745 5 019 027
Number of shares in issue during the year 148 069 502 144 966 352
Headline (loss)/earnings per share has been
calculated using the following:
Net profit before exceptional items 221 944 5 423 127
Number of shares in issue during the year 148 069 502 144 966 352
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2001
Retained
Non-dis- earnings/
Share Share tributable (Accumu-
capital premium reserve lated loss) Total
R000 R000 R000 R000 R000
Balance at
1 July 1999 1 208 45 650 3 155 (425) 49 588
Retained
income for
the year - - - 5 019 5 019
Revaluation
of land and
buildings - - 380 - 380
Issued during
the year 241 9 392 - - 9 633
Goodwill
reversal - (2 920) - - (2 920)
Balance at
30 June 2000 1 449 52 122 3 535 4 594 61 700
Retained
income
for the year - - - 883 883
Revaluation
of land and
buildings - - 48 - 48
Issue during
the year 31 1 210 - - 1 241
Goodwill
reversal - (154) - - (154)
Balance at
30 June 2001 1 480 53 178 3 583 5 477 63 718
