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PINNACLE TECHNOLOGY HOLDINGS LIMITED
THE IT COMPANY
REGISTRATION NUMBER: 86/00334/06
AUDITED GROUP RESULTS FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 1999
CONSOLIDATED INCOME STATEMENT
AUDITED FOR THE FORECAST FOR
12 MONTHS THE 12 MONTHS
ENDED 30 JUNE ENDED 30 JUNE
1999* 1999
RAND RAND
REVENUE 362 236 761 375 420 000
OPERATING PROFIT 18 314 096 17 983 000
NET FINANCE CHARGES 2 434 251 2 521 000
NET PROFIT BEFORE TAXATION 15 879 845 15 462 000
TAXATION 3 453 422 4 042 000
NET INCOME BEFORE OUTSIDE
SHAREHOLDERS' INTEREST 12 426 423 11 420 000
PROFIT ATTRIBUTABLE TO MINORITY SHAREHOLDERS 4 060 230 3 420 000
PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS 8 366 193 8 000 000
NUMBER OF SHARES IN ISSUE 120 882 350 120 882 350
EARNINGS PER SHARE 6,92 6,62
NET TANGIBLE ASSET VALUE PER SHARE 24,27 22,80
* NOTE: PINNACLE, PREVIOUSLY A CASH SHELL, WAS EFFECTIVELY DORMANT UNTIL 1 JULY
1998, WHEN THE COMPANY ACQUIRED THE PINNACLE HOLDINGS LIMITED GROUP. THE
COMPANY HAS CHANGED ITS YEAR-END TO 30 JUNE TO COINCIDE WITH PINNACLE HOLDINGS,
RESULTING IN A FINANCIAL PERIOD OF EIGHTEEN MONTHS FORM 1 JANUARY 1998 TO 30
JUNE 1999. HOWEVER, AS THE ACQUISITION WAS EFFECTIVE 1 JULY 1998, TRADING
RESULTS ORE FOR THE TWELVE-MONTH PERIOD ENDED 30 JUNE 1999.
CONSOLIDATED BALANCE SHEET
AUDITED
30 JUNE 1999
RAND
CAPITAL EMPLOYED
SHARE CAPITAL 1 208 824
SHARE PREMIUM 45 650 492
NON-DISTRIBUTABLE RESERVES 3 155 942
ACCUMULATED DEFICIT (20 679 942)
SHAREHOLDERS' FUNDS 29 335 316
OUTSIDE SHAREHOLDERS' INTEREST 9 069 704
DIRECTORS' LOAN 2 532 856
LONG-TERM LIABILITIES 15 505 725
DEFERRED TAXATION 32 389
56 475 990
EMPLOYMENT OF CAPITAL
FIXED ASSETS 30 063 402
INTEREST IN ASSOCIATED COMPANY 600
NET CURRENT ASSETS 26 411 988
CURRENT ASSETS 105 064 827
INVENTORY 50 837 800
ACCOUNTS RECEIVABLE 49 529 364
CASH AND CASH BALANCE 4 697 663
LESS:
CURRENT LIABILITIES 78 652 839
ACCOUNTS PAYABLE 55 085 298
CURRENT PORTION OF LONG-TERM LOAN 1 385 519
SHORT TERM LOAN 17 824 294
TAXATION 4 357 728
56 475 990
CONSOLIDATED CASH FLOW STATEMENT
AUDITED FOR
THE 12 MONTHS
ENDED 30 JUNE
1999
RAND
CASH FLOW FROM OPERATING ACTIVITIES 2 022 332
CASH FLOW FROM INVESTING ACTIVITIES (110 104 405)
CASH FLOW FROM FINANCING ACTIVITIES 125 749 855
EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (5 736 444)
NET INCREASE IN CASH AND CASH EQUIVALENTS 11 931 338
CASH AND CASH EQUIVALENTS ON ACQUISITION OF SUBSIDIARIES (7 233 675)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 4 697 663
COMMENTS
INTRODUCTION
PINNACLE, PREVIOUSLY A CASH SHELL, WAS EFFECTIVELY DORMANT UNTIL 1 JULY 1998,
WHEN THE COMPANY ACQUIRED THE PINNACLE HOLDINGS LIMITED GROUP. THE COMPANY HAS
CHANGED ITS YEAR-END TO 30 JUNE TO COINCIDE WITH THAT OF PINNACLE HOLDINGS,
RESULTING IN A FINANCIAL PERIOD OF EIGHTEEN MONTHS FROM 1 JANUARY 1998 TO 30
JUNE 1999.
HOWEVER, AS THE PINNACLE HOLDINGS LIMITED GROUP ACQUISITION WAS EFFECTIVE 1
JULY 1998, TRADING RESULTS ARE FOR THE TWELVE-MONTH PERIOD ENDED 30 JUNE 1999.
REVIEW OF RESULTS
THE BOARD IS SATISFIED WITH PINNACLE'S MAIDEN RESULTS, WHICH HAVE EXCEEDED THE
FORECASTS MADE IN THE RECENT PRELISTING STATEMENT.
ATTRIBUTABLE INCOME FOR THE PERIOD UNDER REVIEW AMOUNTED TO R8 366 193, WHICH
EXCEEDED THE FORECAST INCOME OF R8 000 000 BY 4,6%.
EARNINGS PER SHARE WERE 6,92 CENTS, WHICH EXCEEDED THE FORECAST EARNINGS OF
6,62 CENTS BY 4,5%.
NET TANGIBLE ASSET VALUE PER SHARE WAS 24,3 CENTS, WHICH EXCEEDED THE FORECAST
NET TANGIBLE ASSET VALUE OF 22,8 CENTS BY 6,6%.
THE RESULTS CAN BE ASCRIBED TO A COMBINATION OF IMPROVED OPERATING EFFICIENCIES
IN THE GROUP, A SHARP FOCUS ON COST CONTROL AND WORKING CAPITAL AND ONGOING
STRONG DEMAND FOR PINNACLE'S PROLINE BRAND AND OTHER LEADING WORLD-CLASS
PRODUCTS.
BUSINESS ACTIVITIES
PINNACLE'S CORE BUSINESS ACTIVITY REMAINS A LEADING SUPPLIER OF INFORMATION
TECHNOLOGY PRODUCTS AND SERVICES. THESE INCLUDE COMPUTERS, PERIPHERALS AND
NETWORKING PRODUCTS, VALUE-ADDED SALES AND SUPPORT SERVICES AND INSTALLATION
AND FINANCING SCHEMES, AS WELL AS INTERNET VALUE ADDED SERVICES. PINNACLE
CONTINUALLY STRIVES TO EXCEL BY OFFERING LEADING EDGE TECHNOLOGY AND
UNCOMPROMISING QUALITY OF PRODUCTS AND SERVICES AT HIGHLY COMPETITIVE RATES.
PINNACLE MICRO'S PROLINE BRAND HAS SEEN CONTINUED DEMAND AND REMAINS ONE OF THE
TOP TWO IT BRANDS IN SOUTH AFRICA. MARKET SHARE INCREASED FROM 9% TO 13%.
INVESCOR FINANCE (PTY) LTD ARE A JOINT VENTURE BETWEEN PINNACLE HOLDINGS
LIMITED AND SAAMBOU BANK LIMITED AND IS AIMED AT FINANCING INFORMATION
TECHNOLOGY REQUIREMENTS OF CONSUMERS. INVESCOR PROVIDES OFF-BALANCE SHEET
FINANCING AND INSTALLMENT SALE SOLUTIONS FOR THE PURCHASE OF INFORMATION
TECHNOLOGY AND OFFICE AUTOMATION EQUIPMENT. INFOLINE, A SUBSIDIARY OF PINNACLE
HOLDINGS, IS THE FIRST COMPANY TO BRING SATELLITE-BASED INTERNET ACCESS AND
BROAD BAND DATA DELIVERY TO THE SOUTH AFRICAN MARKET. THE POINT-TO-MULTI-POINT
DATA-CASTING AND VIDEO STREAMING OVER INTERNET PROTOCOL ABILITIES OF INFOLINE
MAKES IT AN EXTREMELY EFFECTIVE VEHICLE TO SEND DATA FROM ONE POINT TO MULTIPLE
RECIPIENTS. IT FURTHER ALLOWS THE REACH INTO RURAL AREAS THAT ARE NOT COVERED
BY TRADITIONAL DATA LINES.
DIVIDENDS
IN LINE WITH PINNACLE'S POLICY AS OUTLINED IN THE PROSPECTUS, NO DIVIDENDS HAVE
BEEN DECLARED, AND THE CASH RESOURCES WILL BE RETAINED IN THE BUSINESS TO FUND
ONGOING GROWTH AND DEVELOPMENT.
YEAR 2000 COMPLIANCE
WITH REGARD TO DIVISIONS OF PINNACLE, YEAR 2000 COMPLIANCE MEASURES HAVE
ALREADY BEEN INTRODUCED AND IMPLEMENTED TO AVOID ANY PROBLEMS OR DISRUPTIONS
THAT MIGHT OCCUR ON OR ABOUT 1 JANUARY 2000. THUS, PINNACLE BELIEVES ITSELF TO
BE READY FOR THE YEAR 2000 EVENT AND DOES NOT EXPECT TO ENCOUNTER ANY MATERIAL
OPERATIONAL DIFFICULTIES OR PROBLEMS.
PROSPECTS
PINNACLE'S ABILITY TO IDENTIFY AND CAPITALIZE ON THE SYNERGIES AMONGST THE
GROUP'S OPERATING SUBSIDIARIES WILL CREATE OPPORTUNITIES FOR GROWTH. PINNACLE
IS A DOMINANT AND MAJOR FORCE IN PROVIDING GOVERNMENT, CORPORATE AND PRIVATE
MARKETS IN SOUTH AFRICA WITH HIGH QUALITY, COST EFFECTIVE PERSONAL COMPUTERS,
NOTEBOOKS AND COMPUTER PERIPHERALS, AS WELL AS OFF-BALANCE SHEET FINANCING FOR
THE ACQUISITION OF COMPREHENSIVE INFORMATION TECHNOLOGY SOLUTIONS. THESE
FACTORS, TOGETHER WITH THE ESTABLISHMENT OF INFOLINE AS THE FIRST INTERNET
COMPANY TO OFFER UNIFIED INTERNET SERVICES AND SATELLITE TECHNOLOGY ARE
EXPECTED TO PROVIDE LONG TERM, SUSTAINABLE GROWTH FOR PINNACLE.
CAUTIONARY ANNOUNCEMENT
FURTHER TO THE CAUTIONARY ANNOUNCEMENT DATED 6 SEPTEMBER 1999, SHAREHOLDERS ARE
ADVISED THAT NEGOTIATIONS ARE STILL IN PROGRESS WHICH, IF SUCCESSFULLY
CONCLUDED, MAY HAVE AN EFFECT ON THE PRICE OF THE COMPANY'S SECURITIES.
ACCORDINGLY, SHAREHOLDERS ARE ADVISED TO CONTINUE EXERCISING CAUTION WHEN
DEALING IN THE COMPANY'S SECURITIES UNTIL A FULL ANNOUNCEMENT IS MADE.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
A TUGENDHAFT AJ FOURIE
(CHAIRMAN) (CHIEF EXECUTIVE OFFICER)
27 SEPTEMBER 1999
REGISTERED OFFICE:
128 15TH STREET, RANDJESPARK, MIDRAND, 1685
(PO BOX 483, HALFWAY HOUSE, 1685)
TRANSFER SECRETARIES:
MERCANTILE REGISTRARS LIMITED,
10TH FLOOR, FIRST NATIONAL HOUSE, 11 DIAGONAL STREET, JOHANNESBURG, 2001
(PO BOX 1053, JOHANNESBURG, 2000)
DIRECTORS:
A TUGENDHAFT (CHAIRMAN)*, AJ FOURIE (CHIEF EXECUTIVE OFFICER), AS MOHAMMED, L
FOURIE
* NON-EXECUTIVE
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