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PINNACLE TECHNOLOGY HOLDINGS LIMITED
REGISTRATION NUMBER: 1986/000334/06
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2000
CONSOLIDATED INCOME STATEMENT
30 JUNE 30 JUNE
2000 1999
AUDITED AUDITED*
DISCON- DISCON-
CONTINUED TINUED TOTAL CONTINUED TINUED TOTAL
R000'S R000'S R000'S R000'S R000'S R000'S
REVENUE 302 637 - 302 637 296 352 65 885 362 237
OPERATING INCOME
BEFORE DEPRECIATION 15 617 - 15 617 12 754 8 256 21 010
DEPRECIATION (1 917) - (1 917) (2 010) (686) (2 696)
OPERATING INCOME
AFTER DEPRECIATION 13 700 - 13 700 10 744 7 570 18 314
NET INTEREST
(PAID)/RECEIVED (5 469) - (5 469) (2 642) 208 (2 434)
LONG-TERM LIABILITY
(FIXED ASSET) (2 262) - (2 262) - - -
NET SHORT-TERM LIABILITIES
(WORKING CAPITAL) (3 207) - (3 207) (2 642) 208 (2 434)
NET INCOME
BEFORE TAXATION 8 231 - 8 231 8 102 7 778 15 880
TAXATION (2 623) - (2 623) (2 539) (3 453) (5 992)
NET INCOME
AFTER TAXATION 5 608 - 5 608 5 563 4 325 9 888
EXCEPTIONAL ITEMS (404) - (404) - - -
PROFIT ON SALE OF
DISCONTINUED OPERATIONS 298 - 298 - - -
LOSS ON SALE OF
LAND AND BUILDINGS (702) - (702) - - -
NET INCOME BEFORE OUTSIDE
SHAREHOLDERS' INTEREST 5 204 - 5 204 5 563 4 325 9 888
OUTSIDE SHAREHOLDERS'
INTEREST (185) - (185) (1 254) (2 383) (3 637)
INCOME ATTRIBUTABLE
TO ORDINARY SHAREHOLDERS 5 019 - 5 019 4 309 1 942 6 251
EARNINGS PER SHARE (CENTS) 3,46 - 3,46 3,56 1,61 5,17
HEADLINE EARNINGS
PER SHARE (CENTS) 3,74 - 3,74 3,56 1,61 5,17
* AUDITED FIGURES FOR 30 JUNE 1999 AS RESTATED FOR A CHANGE IN ACCOUNTING
POLICY FOR DEFERRED TAXATION
SUMMARISED CONSOLIDATED BALANCE SHEET
AUDITED AUDITED*
30 JUNE 30 JUNE
2000 1999
R000'S R000'S
ASSETS
FIXED ASSETS 25 022 30 063
DEFERRED TAXATION 19 185 21 808
CURRENT ASSETS 120 145 105 065
ACCOUNTS RECEIVABLE 62 506 49 529
CASH RESOURCES 342 4 698
INVENTORY 57 297 50 838
164 352 156 936
EQUITY AND LIABILITIES
ORDINARY SHAREHOLDERS' FUNDS 61 699 47 508
OUTSIDE SHAREHOLDERS' INTEREST 2 160 12 705
DIRECTORS' LOANS - 2 533
DEFERRED TAXATION - 32
LONG-TERM LIABILITIES 12 482 15 506
CURRENT LIABILITIES 88 011 78 652
ACCOUNTS PAYABLE 67 397 55 085
CURRENT PORTION OF
LONG-TERM LIABILITIES 842 1 385
SHORT-TERM LOAN 19 772 17 824
TAXATION PAYABLE - 4 358
164 352 156 936
NET ASSET VALUE PER SHARE (CENTS) 42,56 39,30
ABRIDGED CASH FLOW STATEMENT
AUDITED AUDITED
30 JUNE 30 JUNE
2000 1999
R000'S R000'S
CASH (OUTFLOW TO)/INFLOW FROM
OPERATING ACTIVITIES (689) 2 022
CASH INFLOW FROM/(OUTFLOW TO)
INVESTING ACTIVITIES 3 042 (20 104)
CASH (OUTFLOW TO)/INFLOW
FROM FINANCING ACTIVITIES (6 709) 35 750
EFFECTS OF EXCHANGE RATE DIFFERENCES
ON CASH AND CASH EQUIVALENTS - (5 736)
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS (4 356) 11 932
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 4 698 (7 234)
CASH AND CASH EQUIVALENTS AT
END OF YEAR 342 4 698
YEAR OF CONSOLIDATION
TRADING RESULTS
THE BOARD OF DIRECTORS ARE PLEASED TO ANNOUNCE THAT DESPITE THE NEGATIVE EFFECT
OF THE Y2K SYNDROME ON IT COMPANIES, AND THE SALE OF THE PINNACLE OPERATION IN
ZIMBABWE, OPERATING INCOME FOR THE CONTINUED OPERATIONS HAS INCREASED BY 27%
WHILE OPERATING MARGIN HAS INCREASED FROM 3,63% TO 4,53%. THIS IS IN LINE WITH
PINNACLES' FOCUS ON EARNING A LARGER PORTION OF ITS REVENUES OUT OF
SERVICE-RELATED OPERATIONS, WHERE BETTER MARGIN OPPORTUNITIES EXIST. HEADLINE
EARNINGS PER SHARE ALSO INCREASED FROM 3,56 CENTS TO 3,74 CENTS PER SHARE.
THE COMPANY HAS GONE THROUGH A SUCCESSFUL YEAR OF CONSOLIDATION AFTER BEDDING
DOWN THE TRANSFORMATION OF THE LISTED ENTITY FROM SELECTIVE FINANCIAL GROUP
LIMITED TO PINNACLE TECHNOLOGY HOLDINGS LIMITED. EMPHASIS HAS BEEN PLACED ON
FURTHER RATIONALISING OPERATIONS AND EMBARKING ON A ROAD OF DEVELOPMENT. DURING
THE YEAR UNDER REVIEW THE FOLLOWING WAS ACHIEVED:
DISPOSALS
1. INFOLINE
THE COMPANY IDENTIFIED INFOLINE AS A NON-CORE ACTIVITY AND CONSEQUENTLY
DISPOSED OF ITS INVESTMENT IN INFOLINE WITH EFFECT 1 JULY 1999.
2. PROPERTY
THE PROPERTY IN KRAMERVILLE WAS DISPOSED OF AT A LOSS IN THE YEAR UNDER REVIEW
DUE TO EROSION OF PROPERTY VALUE IN THE KRAMERVILLE AREA. THIS, COMBINED WITH
THE STRATEGY OF CONSOLIDATION AND CONSEQUENTLY THE AMALGAMATION OF THE
KRAMERVILLE BRANCH INTO MIDRAND, PROMPTED THE SALE OF THE PROPERTY.
IN THE INTEREST OF TRANSPARENCY, THE PROPERTY IN MIDRAND WHICH WAS PREVIOUSLY
OFF-BALANCE SHEET, WAS BROUGHT ONTO THE BALANCE SHEET ON 30 JUNE 1999.
GROUP OVERVIEW
1. ZIMBABWE
DESPITE THE DISPOSAL OF THE ZIMBABWE OPERATIONS IN JULY 1999 AND THE
DETERIORATING TRADING CONDITIONS IN ZIMBABWE, WE HAVE CONTINUED TO GROW
PROLINE'S MARKET SHARE IN THE AREA. THE SITUATION IN THE COUNTRY WILL BE
MONITORED CLOSELY, AND IF IMPROVEMENT IS NOTED WE WILL EVALUATE OUR PRESENCE IN
THE AREA.
2. INVESCOR
INVESCOR IS A JOINT VENTURE WITH SAAMBOU BANK LIMITED AND CONTINUES TO MAKE
STRONG PROGRESS INTO FINANCING IT AND OFFICE AUTOMATION EQUIPMENT.
3. IT SERVICES
DURING THE YEAR UNDER REVIEW A STRATEGIC DECISION WAS TAKEN TO FOCUS AND
DEVELOP OUR PRESENCE IN IT SERVICES. THE SERVICE INFRASTRUCTURE CATERS FOR
END-TO-END IT OUTSOURCING SOLUTIONS WITH COMPREHENSIVE MAINTENANCE AND SUPPORT
SERVICES. THE SPECIALISED TECHNICAL SUPPORT AND MAINTENANCE AS WELL AS ON-SITE
ENGINEERING SUPPORT, ENSURES MAXIMUM SYSTEMS UPTIME.
SINCE THE INTRODUCTION OF THIS STRATEGY WE ARE ENCOURAGED BY THE PROGRESS THAT
WE HAVE MADE.
4. CORPORATE
IN ORDER TO GROW OUR PRESENCE IN THE CORPORATE ARENA, WE HAVE ESTABLISHED A
CORPORATE DIVISION TASKED WITH PROVIDING END-TO-END SOLUTIONS TO THE SMALL AND
MEDIUM ENTERPRISES (SME) AND CORPORATE MARKET SEGMENTS.
5. PROLINE
THE PROLINE BRAND HAS BEEN RE-DEFINED TO CATER FOR THE CORPORATE MARKET. THE
BRAND ENJOYED A 9,6% MARKET SHARE LAST YEAR AND WE EXPECT TO INCREASE THIS BY
POSITIONING THE BRAND TO ADDRESS THE CORPORATE AND SME MARKET SEGMENTS MORE
AGGRESSIVELY. IN LINE WITH THIS STRATEGY THE PROLINE BRAND HAS BEEN EXTENDED TO
INCLUDE NOT ONLY DESKTOP COMPUTERS BUT ALSO FILE SERVERS AND NOTEBOOKS.
THE MANUFACTURING PLANT HAS BEEN ISO 9002 CERTIFIED, THUS ENSURING THAT WE
DELIVER QUALITY PROLINE PRODUCTS TO THE MARKET.
PROLINE IS SOLD THROUGHOUT THE ENTIRE SPECTRUM OF THE MARKET, RANGING FROM THE
SOHO MARKET THROUGH ITS ALLIANCES WITH THE MAJOR RETAIL GROUPS IN SA, THROUGH
TO DIRECT CONTRACTS WITH GOVERNMENT DEPARTMENTS AND PARASTATALS. THE BRAND IS
WELL REPRESENTED IN THE RETAIL MARKET SEGMENT AT PRESENT AFTER AN ABSENCE FROM
THIS SEGMENT FOR A FEW MONTHS. A NEW RETAIL STRATEGY WAS ADOPTED AND THE
OPERATIONAL METHODOLOGY CHANGED TO OPTIMISE RETURNS.
THE FUTURE POSITIONING OF THE COMPANY IS DIVIDED INTO VARIOUS DISTINCT AREAS OF
BUSINESS:
* MANUFACTURING
WE WILL CONTINUE TO ENHANCE OUR MANUFACTURING FACILITY TO CONTINUALLY IMPROVE
THE QUALITY OF THE PROLINE BRAND.
* DISTRIBUTION
PINNACLE HOLDS VARIOUS DISTRIBUTION AGENCIES. AMONG OTHERS, VERBATIM, CANON,
ASUSTEK, AOPEN, TWINHEAD, MEISSNER AND ERICSSON AND DISTRIBUTES THESE PRODUCTS
TO A NATIONAL DEALER BASE. IN ORDER TO GROW THIS BUSINESS SEGMENT FURTHER,
STRATEGIC PARTNERSHIPS HAVE EVOLVED WHICH INCLUDES, AMONG OTHERS, PLAYERS THAT
OFFER AFFORDABLE EDUCATIONAL TRAINING TO END-USERS.
* OUTSOURCING SOLUTIONS
THROUGH PINTEQ, A PINNACLE DIVISION, WE PROVIDE END-TO-END IT OUTSOURCING
SOLUTIONS WITH COMPREHENSIVE MAINTENANCE AND SUPPORT SERVICES. THIS ENSURES
OPTIMAL DATA SECURITY, MAXIMUM SYSTEMS AVAILABILITY AS WELL AS SPECIALISED
TECHNICAL SUPPORT AND MAINTENANCE, AS WELL AS ON-SITE ENGINEERING SUPPORT.
* IMPLEMENTATION SOLUTIONS
PINTEQ SUPPORTS THE IMPLEMENTATION OF ENTERPRISE BUSINESS SOLUTIONS. SERVICES
INCLUDE: PROJECT MANAGEMENT, DATA CABLING, SOFTWARE CONFIGURATION AND SOFTWARE
TRAINING. SOLUTIONS OFFERED ARE IN THE FIELD OF ENTERPRISE RETAIL SOLUTIONS
(ERS) AND ENTERPRISE RESOURCE PLANNING (ERP).
* OFF-BALANCE SHEET ERP FINANCING
INVESCOR, A JOINT VENTURE BETWEEN SAAMBOU BANK AND PINNACLE, IS A FOCUSED
FINANCE COMPANY, PROVIDING OFF-BALANCE SHEET FINANCE SCHEMES FOR ERP AND ERS
OFFERINGS.
THE COMPANY HAS IDENTIFIED IT OUTSOURCING, SERVICES, ENTERPRISE RESOURCE
PLANNING AND ENTERPRISE RETAIL SOLUTIONS AS FUTURE GROWTH AREAS. THE LONG-TERM
STRATEGY ENCOMPASSES A CHANGE OF INCOME MIX FROM A LARGELY HARDWARE
DISTRIBUTION BASE TO A MIXTURE OF DISTRIBUTION AND THE ABOVEMENTIONED SERVICES.
SOME HEADWAY HAS ALREADY BEEN MADE IN THIS REGARD AND VARIOUS OTHER
OPPORTUNITIES HAVE BEEN IDENTIFIED FOR EXPLORATION.
ACCOUNTING POLICIES
IN ACCORDANCE WITH THE REVISED GENERALLY ACCEPTED ACCOUNTING PRACTICE THE
GROUP'S ACCOUNTING POLICY NOW RECOGNISES DEFERRED TAX ASSETS TO THE EXTENT THAT
FUTURE TAXABLE PROFITS WILL BE UTILISED AGAINST SUCH DEFERRED TAX ASSETS. THIS
CHANGE IN ACCOUNTING POLICY HAS BEEN ACCOUNTED FOR AND HAS HAD THE EFFECT OF
REDUCING EARNINGS FOR THE YEAR BY R2 623 000 (1999 - R2 539 000) WHICH AMOUNTS
TO 1,81 CENTS (1999 - 2,10 CENTS) IN EARNINGS PER SHARE.
DIVIDEND
NO DIVIDEND IS PROPOSED FOR THE YEAR UNDER REVIEW.
FOR AND ON BEHALF OF THE BOARD.
A TUGENDHAFT AJ FOURIE
CHAIRMAN CHIEF EXECUTIVE OFFICER
29 SEPTEMBER 2000
REGISTERED OFFICE: 128 15TH STREET, RANDJESPARK, MIDRAND, 1685 (PO BOX 483,
HALFWAY HOUSE, 1685)
DIRECTORS: A TUGENDHAFT*(CHAIRMAN), AJ FOURIE (CEO), L FOURIE, AS MAHOMED, WH
VAN NIEKERK, CD BIDDLECOMBE* (*NON-EXECUTIVE)
COMPANY SECRETARY: K BEESLAAR, 128 15TH STREET, RANDJESPARK, MIDRAND, 1685 (PO
BOX 483, HALFWAY HOUSE, 1685)
TRANSFER SECRETARIES: MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET,
JOHANNESBURG, 2001 (PO BOX 1053, JOHANNESBURG, 2000)
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