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PINNACLE TECHNOLOGY HOLDINGS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX

Release Date: 26/03/2004 16:06
Code(s): PNC
Wrap Text

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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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