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Pinnacle - Unaudited Interim Results For The Six Months Ended 31 December 2004
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 2004
Highlights
- Turnover up 10.4%
- EPS and HEPS up 105%
Group Income Statement
6 months 6 months 12 months
ended ended ended
31 December 31 December 31 December
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Revenue 200 596 181 660 497 202
Cost of sales (164 014) (147 364) (413 289)
Gross profit 36 582 34 296 83 913
Operating expenses (27 781) (28 780) (63 785)
Operating profit 8 801 5 516 20 128
Share of net profit from 1 382 670 2 134
associates
Operating profit before 10 183 6 186 22 262
interest
Interest received 1 030 827 2 706
Interest paid (1 359) (2 292) (4 407)
Net profit before 9 854 4 721 20 561
taxation
Taxation (2 992) (1 213) (6 386)
Net profit after taxation 6 862 3 508 14 175
for the year
Net profit attributable
to outside
shareholders (990) (651) (1 513)
Net profit for the period 5 872 2 857 12 662
Weighted average number 149 103 148 797 149 020
of shares in issue (`000)
Earnings per share 3.9 1.9 8.5
(cents)
Headline earnings per 4.1 2.0 8.9
share (cents)
Reconciliation of
headline earnings
Net profit for the period 5 872 2 857 12 662
Ammortisation of goodwill 212 148 431
Impairment of investments 100
and loans
Headline earnings 6 084 3 005 13 193
Segmental Report
Revenue
Infrastructure and 188 071 170 665 472 996
support
Software and storage 9 540 7 704 16 721
ICT services 2 059 2 925 5 240
Telecommunication 926 366 2 245
Holdings and properties
Total group 200 596 181 660 497 202
Net profit
Infrastructure and 4 038 1 897 12 397
support
Software and storage 1 073 401 1 441
ICT services 1 586 (499) (1 612)
Telecommunication (909) (359) (2 292)
Holdings and properties 84 1 417 2 728
Total group 5 872 2 857 12 662
Group Balance Sheet
Assets
Non-current assets 71 853 62 323 62 364
Property, plant and 34 398 34 138 35 000
equipment
Intangible assets 3 486 2 037 3 707
Investments 22 933 10 928 11 969
Deferred taxation 11 036 15 220 11 688
Current assets 129 128 122 160 132 426
Inventories 59 403 51 980 47 932
Trade and other 63 330 61 973 55 116
receivables
Cash and cash equivalents 6 395 8 207 29 378
Total assets 200 981 184 483 194 790
Number of ordinary share 149 126 149 057 149 057
in issue at end of period
(`000)
Net asset value per 63.9 55.2 61.6
ordinary share (cents)
Share capital and premium 126 094 126 066 126 066
Non-distributable 9 671 10 012 9 663
reserves
Accumulated loss (40 465) (53 751) (43 946)
Outside shareholders
interest 1 699 2 739 1 670
Non-current liabilities 10 210 10 703 8 912
Current liabilities 93 772 88 714 92 425
Trade and other payables 71 393 69 668 76 671
Short-term loans 11 545 13 135 5 325
Current portion of long-
term
liabilities 3 594 2 514 3 169
Warranty provisions 5 188 2 240 4 853
Taxation payable 2 052 1 157 2 407
Total equity and 200 981 184 483 194 790
liabilities
Summarised Group Cash
Flow Statement
Cashflows from operating (10 770) 1 569 31 962
activities
Cashflows from investing (10 621) (4 918) (11 025)
activities
Cash flows from financing (1 592) 112 (3 003)
activities
(Decrease)/increase in
cash
and cash equivalents (22 983) (3 237) 17 934
Cash and cash equivalents 29 378 11 444 11 444
at the beginning of the
period
Cash and cash equivalents 6 395 8 207 29 378
at the end of the period
Statement of Change in Equity
Non-dis- Accu-
Share Share tributable mulated
capital premium reserves loss Total
R`000 R`000 R`000 R`000 R`000
Balance at
1 July 2003 1 486 124 400 10 310 (56 608) 79 588
(Audited)
Share issued 4 176 180
Net profit for 2 857 2 857
the period
Deferred
capital gains
tax on
revaluation of (300) (300)
property
Movement in
foreign
currency
translation 2 2
reserve
Balance at 31
December 2003
(Unaudited) 1 490 124 576 10 012 (53 751) 82 327
Net profit for 9 805 9 805
the period
Deferred
capital gains
tax on
revaluation of (375) (375)
property
Movement in
foreign
currency
translation 26 26
reserve
Balance at 30
June 2004
(Audited) 1 490 124 576 9 663 (43 946) 91 783
Shares issued 1 27 28
Dilution of (154) (154)
subsidiary
shareholding
Net profit for 5 872 5 872
the period
Movement in
foreign
currency
translation 8 8
reserve
Dividends paid (2 237) (2 237)
Balance at 31
December 2004
(Unaudited) 1 491 124 603 9 671 (40 465) 95 300
Comments
1. Accounting policies
The Interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice, the Listing 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 2004.
Earnings per share and Headline earnings per share are calculated with reference
to the weighted average number of shares, calculated by considering the date of
issue and the quantum of the shares in relation to the period under review.
2. Operating results
The last quarter of 2004 saw a significant increase in activity in the
Infrastructure and Support group as savings realised on Dollar denominated
procurement were passed on to clients and end users.
Although the Group`s gross profit margin reduced to 18,3% (Dec 2003: 18,9%),
stringent cost control and gains made on foreign exchange contributed to
increase the operating profit for the period to 4.4% of turnover (Dec 2003: 3%).
Revenue growth in the Infrastructure and Support group was achieved through the
development of additional product ranges, most notably Point of Sale and Closed
Circuit monitoring equipment. Through these convergent technologies the Group
delivers complete technology solutions to end users.
The Group has also entered into supply agreements with various national mass
retailers that will substantially contribute to the public`s awareness and
understanding of the quality and international standing of the locally produced
Proline brand.
The now wholly owned Intelligent Systems (Pty) Ltd continued to service the
growing demand in the data storage market, and consolidated it`s long term
relationships with high profile vendors, thus contributing to the 167% increase
in net profit after taxation of the Software and Storage group over the
corresponding 6 month period to December.
The disposal of our interest in Assuage Management Systems (Pty) Ltd required a
provision against the outstanding liability in the Holdings Operating group;
resulting in a loss as shown on the attached segmental analysis for the Holdings
and Properties group. This loss was however offset by the recognition of the
corresponding gain in ICT Services.
Telecommunications provider, Etel Telecommunications Solutions (Pty) Ltd
(`eTel`) successfully defended legal action by an American Service provider
wherein it was alleged that Etel was utilising certain proprietary software in
the provision of international telephony services, and can now cement business
relationships that were dependent on the outcome of the above case.
The Group`s cash-flow was negatively impacted by the necessary investment in
stock to cater for additional orders received, as referred to in future
prospects, and the cyclical deterioration of the debtors book over the December
holiday period.
3. Acquisition of additional 15% of Explix Technologies (Pty) Ltd (`Explix`)
All conditions precedent listed in the 25 October 2004 SENS announcement have
been fulfilled and the acquisition of an additional 15% of Explix equity has
been completed. As the criteria of `control` as defined in IAS 27 have not been
met, the results of Explix for the 6 months to 31 December 2004 have not been
consolidated, and are included in the `Share of net profit from associates`
4. Future prospects
The Group has received significant orders from various institutions for delivery
in the 1st half of 2005. These orders are expected to contribute significantly
to the operating results for the period ending 30 June 2005.
5. Social upliftment
Negotiations with prospective Black Economic Empowered (`BEE`) partners are
continuing. Shareholders will be advised when material terms and conditions have
been agreed.
6. Corporate governance
The Group subscribes to the King Report on Corporate Governance for South Africa
2002 and complies with the main features thereof.
7. Dividends
No interim dividend is proposed for the period under review.
For and on behalf of the Board
CD Biddlecombe AJ Fourie
Chairman Chief Executive Officer
Midrand
21 February 2005
Registered office: Transfer Secretaries
Pinnacle Park Computershare Investor
269 16th Road Services 2004 (Pty) Ltd
Randjiespark Ground Floor
Midrand 70 Marshall Street
Johannesburg, 2001
Executive Directors Non-Executive Directors
AJ Fourie (Chief Executive Officer) CD Biddlecombe (Chairman)
TA Maraga-Tshivhase A Tugendhaft
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
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