| Fri 26 Mar 2004, 16:13 | | UNAUDITED INTERIM RESULTS FOR THE SIX |
|
PINNACLE TECHNOLOGY HOLDINGS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2003
PINNACLE TECHNOLOGY HOLDINGS LIMITED
(Registration number 1986/000334/06)
Share code: PNC ISIN: ZAE000022570
("Pinnacle" or "the Group")
www.pinnacle.co.za
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
GROUP INCOME STATEMENT
6 Months 6 Months 12 Months
ended ended ended
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Reviewed) (Audited)
R"000 R"000 R"000
Revenue 181 660 176 765 417 818
Operating profit before interest 5 516 7 661 17 364
Interest received 827 578 701
Interest paid (2 292) (3 303) (5 052)
Net profit before taxation 4 051 4 936 13 013
Taxation (1 213) (1 295) (4 307)
Net profit 2 838 3 641 8 706
Share of net income/(loss) from
associates 670 7 (230)
Net profit attributable to minority
shareholders of subsidiaries (651) (744) (1 510)
Net profit from ordinary activities 2 857 2 904 6 967
Exceptional items - - (4 554)
Net profit for the period 2 857 2 904 2 413
Weighted average number of shares
in issue ("000) 148 797 148 607 148 607
Earnings per share (cents) 1,9 2,0 1,6
Headline earnings per share (cents) 2,0 2,0 4,8
Reconciliation of headline earnings
Net profit for the period 2 857 2 904 2 413
Exceptional items - - 4 554
Amortisation of goodwill 148 - 143
Headline earnings 3 005 2 904 7 110
SEGMENTAL REPORT
6 Months 6 Months 12 Months
ended ended ended
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Reviewed) (Audited)
R"000 R"000 R"000
Revenue
IT Infrastructure 170 665 160 597 390 091
Software and storage 7 704 11 305 22 311
IT Services 2 925 4 863 5 417
Telecommunication 366 - -
Total group 181 660 176 765 417 818
Net profit before taxation
IT Infrastructure 3 477 4 830 9 266
Software and Storage 901 1 121 3 232
IT Services 186 (1 015) 515
Telecommunication (513) - -
Total group 4 051 4 936 13 013
GROUP BALANCE SHEET
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Reviewed) (Audited)
R"000 R"000 R"000
ASSETS
Non-current assets 62 323 58 500 58 405
Property, plant and equipment 34 138 28 983 34 580
Intangible assets 2 037 1 455 1 563
Investments 10 928 11 939 6 910
Deferred taxation 15 220 16 124 15 352
Current assets 122 160 114 988 106 536
Inventories 51 980 53 394 49 049
Accounts receivable 61 973 56 425 46 042
Bank balances 8 207 5 168 11 444
Total assets 184 483 173 488 164 940
EQUITY AND LIABILITIES
Capital and reserves 85 066 76 910 83 606
Ordinary shareholders" funds 82 327 73 359 79 588
Outside shareholders" interest 2 739 3 551 4 018
Non-current liabilities
Long-term liabilities 10 703 14 236 10 992
Current liabilities 88 714 82 343 70 342
Accounts payable 71 908 60 377 65 931
Short-term loan 13 135 21 281 -
Current portion of long-term liabilities 2 514 - 2 286
Taxation payable 1 157 685 2 125
Total equity and liabilities 184 483 173 488 164 940
Number of ordinary share in issue at
end of period ("000) 149 057 148 607 148 607
Net asset value per ordinary share (cents) 55,2 49,4 53,6
SUMMARISED GROUP CASHFLOW STATEMENT
6 Months 6 Months 12 Months
ended ended ended
31 December 31 December 30 June
2003 2002 2003
(Unaudited) (Reviewed) (Audited)
R"000 R"000 R"000
Net cashflows from operating activities 1 570 (1 996) 1 854
Net cashflows from investing activities (4 919) (89) 775
Net cashflows from financing activities 112 (882) 681
Net movement in cash and cash
equivalents (3 237) (2 967) 3 309
Cash and cash equivalents at
beginning of period 11 444 8 135 8 135
Cash and cash equivalents
at end of period 8 207 5 168 11 444
STATEMENT OF CHANGES IN EQUITY
Non-
distri- Accu-
Share Share butable mulated
capital premium reserve loss Total
R"000 R"000 R"000 R"000
Opening balance
1 July 2002 (Audited) 1 486 124 400 3 589 (59 021) 70 455
Net profit for the period - - - 2 904 2 904
Balance as at
31 December 2002
(Reviewed) 1 486 124 400 3 589 (56 117) 73 358
Net profit for the period - - - (491) (491)
Revaluation of buildings - - 6 721 - 6 721
Balance as at
30 June 2003 (Audited) 1 486 124 400 10 310 (56 608) 79 588
Issue of shares 4 175 - - 179
Net profit for the period - - - 2 857 2 857
Deferred capital gains tax on
property revaluation - - (300) - (300)
Movement in foreign currency
translation reserve - - 3 - 3
Balance at 31 December 2003
(Unaudited) 1 490 124 575 10 013 (53 751) 82 327
COMMENTS
1) Accounting Policies
The Interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice, the Listings
Requirements of the JSE Securities Exchange South Africa ("JSE") and the
South African Companies Act.
The accounting policies used in the preparation of the interim financial
statements are consistent in all material respects with those applied in the
Annual Financial Statements for the year ended 30 June 2003.
2) Introduction
This report covers the consolidated results of Pinnacle Technology Holdings
Limited and its subsidiaries ("Pinnacle" or "the Group").
Pinnacle is a company listed under the "Information Technology Hardware"
sector of the JSE.
The Group comprises 15 operating companies and is structured into six
distinct operating groups to ensure due emphasis and focus is afforded to
the various IT and support disciplines;
* IT Infrastructure
* Software and Storage
* IT Services
* Telecommunication
3) Financial Review
Operating Environment
The Group"s operating results were achieved in an environment heavily
influenced by a stronger Rand, which strengthened by 31% from an average of
R10,30 to R7,08 to the US$. Although the strength of the currency
contributed to make IT products and peripherals more affordable, the average
revenue and gross profit per unit reduced substantially.
During the period under review management invested in resources to
facilitate the identification and successful conclusion of business
opportunities within corporate and parastatal markets.
It also continued to focus on strengthening the Balance Sheet by
concentrating management and staff on reducing operating costs and improving
asset management.
a. IT Infrastructure
Pinnacle Micro, the core business of the Group, continues to supply
information technology products to retail, government and corporate clients.
The Pinnacle brand, "Proline", manufactured from A grade components on our
ISO9001 certified assembly line in Midrand, continues to gain recognition
for quality and reliability in the market.
Pinnacle Micro returned satisfactory results for the first six months of
the year, despite a significant slowdown in Government procurement during
this period.
Turnover increased by 6,4% relative to the comparative period in 2002 and
gross profit for the period increased to 16,1% (June 2003: 12,5%) through
focused procurement and product selection.
Regrettably, the increased level of turnover and gross profit did not keep
pace with the growth in operating expenses. Cost reduction measures were
implemented in November 2003, these included the centralisation of
administrative functions, reduction in headcount and reorganisation of
branch operations.
b. Software and Storage
Intelligent Systems provides advanced backup and PC media reproduction
technologies, in addition to the reproduction and distribution of licensed
software on behalf of well known international brands.
Although unit volumes have almost doubled, Intelligent Systems" revenue and
direct costs reduced significantly by 31% and 33% respectively due to a
reduction in the unit cost of stock and the abovementioned strengthening of
the Rand.
c. IT Services
The Group continues to invest in higher grossing revenue streams and
acquired a 51% stake in Assuage Management Systems on 1 July 2003 in
exchange for financial assistance. This new venture provides sophisticated
document management and workflow solutions to high-end corporate and
government clients.
Assuage Management Systems was substantially ahead of projected targets for
the period under review and management remains committed to success of the
company.
RentNet supplies IT hardware and accessories on short, medium and long-term
rental options to various clients including the high profile Cricket World
Cup and the African Union gatherings in 2003.
d. Telecommunication
Etel commenced telecommunications operations in November 2003. Significant
time has been spent to improve product offering and finalise marketing
strategies, and is expected to contribute significantly to the Group results
in the 2005 financial year.
4) Contingent liability
The Group is contesting claims of R30 575 212 by the South African Revenue
Services against two of its subsidiaries. The Group has obtained favourable
legal opinion from senior counsel regarding its prospects of successfully
defending the claims.
5) Future prospects
In the period subsequent to 31 December 2003 the Group has received
significant orders from various Governmental departments. This should
materially contribute to the operating results for the period ending 30 June
2004.
6) Social responsibility
The Group is committed to conducting its business in a socially responsible
manner, and is engaged in negotiations with Black Economic Empowered ("BEE")
entities. The successful conclusion of these negotiations will result in a
BEE group becoming a significant shareholder in Pinnacle.
7) Corporate Governance
The financial reporting function at head office has been strengthened by
the appointment of a Chartered Accountant (South Africa) with international
expience as Group Financial Manager, and the appointment of new auditors.
The Company continues to apply all material aspects of the requirements of
the King Report on Corporate Governance for South Africa 2002.
8) Dividends
No dividend is proposed for the period under review.
Shareholders are reminded of the cautionary announcement pertaining to the
possible acquisition of shares by a BEE entity.
For and on behalf of the board
C D Biddlecombe A J Fourie
(Chairman) (Chief Executive Officer)
Midrand
25 March 2004
Registered Office: Transfer Secretaries:
Pinnacle Park Computershare Limited
269 16th Road Ground Floor
Randjespark 70 Marshall Street
Midrand Johannesburg, 2001
Directors:
C D Biddlecombe1, A J Fourie,
T Maraga-Tshivhase, A Tugendhaft2
1Chairman and Non-executive 2Non-executive
Sponsors:
Grant Thornton Corporate Finance (Proprietary) Limited
Date: 26/03/2004 04:06:44 PM Produced by the JSE SENS Department
