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PNC - Pinnacle - Reviewed Results for the year ended 30 June 2009
PINNACLE TECHNOLOGY HOLDINGS LIMITED
Registration number 1986/000334/06
Share code: PNC
ISIN: ZAE000022570
("Pinnacle" or "the Group" or "the Company")
www.pinnacle.co.za
REVIEWED RESULTS for the year ended 30 June 2009
FINANCIAL HIGHLIGHTS
Revenue UP 14% to R2.8 billion
Operating profit UP 4.9% to R159 million
Operating cash flow UP 63% to R128 million
Dividend maintained at 12 cents per share
GROUP INCOME STATEMENT for the year ended 30 June 2009
Reviewed Audited
2009 2008
R`000 R`000
Revenue 2 833 716 2 496 300
Cost of sales (2 395 040) (2 115 785)
Gross profit 438 676 380 515
Operating expenses (271 291) (222 121)
Selling and distribution (9 712) (21 148)
Employee expenses (193 726) (173 657)
Administration (42 904) (34 578)
(Loss)/profit on foreign exchange (24 949) 7 262
EBITDA 167 385 158 394
Depreciation (8 305) (5 317)
Impairment of intangible assets - (1 357)
Amortisation (439) (453)
Operating profit 158 641 151 267
Investment income 7 428 6 053
Finance costs (12 056) (10 770)
Net profit before taxation 154 013 146 550
Taxation (43 891) (41 712)
Net profit for the year 110 122 104 838
Attributable to:
Minority shareholders 4 668 1 956
Ordinary shareholders 105 454 102 882
Performance per share (cents)
Earnings per share 72.5 69.3
Diluted earnings per share 57.7 55.4
Headline earnings per share 72.5 70.0
Diluted headline earnings per share 59.1 57.2
Reconciliation of headline earnings
Net profit for the year
attributable to
ordinary shareholders 105 454 102 882
Add back:
Profit on sale of property,
plant and equipment (23) -
Impairment of goodwill - 977
Headline earnings - normal 105 431 103 859
Add back:
Deemed interest on deemed loans 2 528 2 288
Headline earnings - fully diluted 107 959 106 147
Shares in issue (`000)
Weighted average 145 382 148 411
Shares issued to
Amabubesi Investments
(Pty) Limited 37 282 37 282
Fully diluted 182 664 185 693
GROUP BALANCE SHEET as at 30 June 2009
Reviewed Audited
2009 2008
R`000 R`000
Assets
Non-current assets 159 479 127 063
Property, plant and equipment 86 960 56 602
Intangible assets 54 210 52 971
Trust loans 10 536 12 261
Deferred taxation 7 773 5 229
Current assets 856 248 782 137
Inventories 292 910 260 440
Trade and other receivables 399 685 444 498
Cash and cash equivalents 163 653 77 199
Total assets 1 015 727 909 200
Equity and liabilities
Capital and reserves 425 367 281 682
Share capital and premium 143 983 167 629
Treasury shares (20 605) (18 447)
Non-distributable reserves 30 780 7 029
Accumulated profit 269 858 128 715
Minority shareholders` interest 1 351 (3 244)
Non-current liabilities 24 452 49 604
Interest-bearing liabilities 13 777 48 587
Deferred taxation 10 675 1 017
Current liabilities 565 908 577 914
Trade and other payables 539 541 543 880
Foreign exchange contracts 9 993 380
Current portion of interest-bearing
liabilities 2 417 10 769
Warranty provisions 9 674 9 498
Taxation 4 283 13 387
Total equity and liabilities 1 015 727 909 200
Shares in issue (excluding
treasury shares) (`000) 181 860 182 905
SUMMARISED GROUP CASH FLOW STATEMENT for the year ended 30 June 2009
Reviewed Audited
2009 2008
R`000 R`000
Cash and cash equivalents at
the beginning of the year 77 199 88 192
Cash flow from operations 127 539 78 215
Cash from operations 165 113 152 008
Cash released from/(utilised in)
working capital 17 150 (14 328)
Taxation paid (54 724) (59 465)
Cash utilised in investing activities (10 047) (49 147)
Cash flow from financing activities (31 038) (40 061)
Distribution to shareholders (21 970) (18 891)
Increase in third party liabilities (7 411) 1 542
Treasury shares acquired (1 657) (22 712)
Cash and cash equivalents at
the end of the year 163 653 77 199
GROUP STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2009
Reviewed Audited
2009 2008
R`000 R`000
Opening balance 281 682 212 408
Net profit for the year 110 122 104 838
Revaluation of property, plant
and equipment 30 230 2 599
Deferred tax on revaluation (9 636) (364)
Capitalisation of Amabubesi deemed
financial liability 36 948 -
Reversal of deferred taxation thereon 794 -
Deferred losses on unmatched
foreign hedges (884) -
Issue of shares - (161)
Treasury shares acquired (2 158) (22 823)
Treasury shares issued - 4 376
Dividends declared (21 973) (94)
Distribution of share capital - (18 707)
Movement in foreign currency
translation reserve 242 (390)
425 367 281 682
SEGMENTAL REPORT
for the year ended 30 June 2009
Depreciation
and Net
Revenue amortisation EBITDA profit
R`000 R`000 R`000 R`000
2009
Pinnacle Micro 1 619 099 3 213 88 908 57 925
WorkGroup 1 023 895 633 57 262 41 472
RentNet 23 294 1 951 6 374 3 388
DataNet 167 397 1 240 10 367 1 618
Holdings and
properties 31 1 707 4 474 1 051
2 833 716 8 744 167 385 105 454
2008
Pinnacle Micro 1 464 144 3 853 110 541 73 240
WorkGroup 854 978 823 35 671 23 676
RentNet 20 441 977 5 543 3 469
DataNet 156 659 1 350 4 584 1 528
Holdings and
properties 78 124 2 055 969
2 496 300 7 127 158 394 102 882
Capital
expenditure
including Total Total
revaluation assets liabilities
R`000 R`000 R`000
2009
Pinnacle Micro 5 474 481 487 (310 214)
WorkGroup 546 348 756 (269 044)
RentNet 1 835 15 055 (4 872)
DataNet 1 185 54 129 (48 184)
Holdings and
properties 30 536 116 300 41 954
39 576 1 015 727 (590 360)
2008
Pinnacle Micro 5 056 446 604 (317 368)
WorkGroup 504 337 301 (290 044)
RentNet 2 185 13 599 (6 003)
DataNet 1 263 44 517 (44 720)
Holdings and
properties 4 199 67 179 30 617
13 207 909 200 (627 518)
COMMENTS
Introduction
Pinnacle is a diversified Information and Communications Technology group
active in all areas of hardware, software and services. Pinnacle offers a
world-class selection of branded products including Microsoft, VMWare,
Apacer, Dell, Hewlett Packard, Sun, Intel and IBM as well as its Proline
range of ICT equipment.
Product and services sales are handled through individual focused companies,
each with dedicated management teams and own areas of expertise.
Results of operations
Revenue increased by 14% to R2.834 billion. Gross profit as a percentage of
sales increased from 15.2% to 15.5%. Group synergies and focus on cost
management have reduced operating expenses (excluding foreign exchange loss
below) to 8.4% of revenue (2008: 8.9%). Uncovered foreign exchange
liabilities gave rise to a foreign exchange loss of R32 million in October
2008, contributing materially to the full year loss on foreign exchange of
R24.9 million (2008: gain on foreign exchange of R7.2 million). Net profit
for the year increased 5% to R110.1 million.
Fully diluted headline earnings per share reflected an increase of 3.3% to
59.1 cents per share.
Continued focus on capital management yielded positive results. Trade days
outstanding at year-end reduced to 45 days (2008: 57 days). Cash flow from
operations generated R128 million (increasing from R78 million in 2008) being
116% of operating profit. Net cash on hand was R164 million and long-term
debt has been reduced to 3% of equity. Net tangible asset value per share has
increased from 126.8 cent per share to 203.3 cents per share.
It is particularly rewarding that Pinnacle overcame the challenges raised by
the recessive global economies, policy changes in the South African political
landscape and the foreign exchange losses suffered in October 2008 to deliver
positive growth, whilst controlling expenditure and improving the strength of
its balance sheet.
Prospects
New technologies in virtualisation, security, networking and communication as
well as the continued convergence of voice, data and video in day-to-day
business and private applications will offer opportunities for technology
providers.
The launch of Microsoft`s new operating system, Windows 7 as well as the
expected launch of Microsoft Office 2010 will create opportunities for both
hardware and software resellers. Technology advances and reduced bandwidth
and technology costs will contribute to the adoption of new technology in the
SME and residential markets. Implementation of wired and wireless residential
and small commercial networks is expected to become a main stream business
opportunity.
Pinnacle continues to reap the rewards of the diversification strategies
embarked on with the acquisition of WorkGroup, RentNet and Tricon as well as
the continued efforts to expand the range of international branded products
offered by the Group, and the Board trusts that it will be able to report
positive feedback in the near future.
Corporate activity
The Group incorporated a focused business unit, DD1, as distributor of tier 1
hardware products to larger value-added resellers in the corporate market.
A project management business unit, Infrasol, was set up to execute large
networking infrastructure and audio-visual projects using a national
footprint of service and implementation partners.
Broad-Based Black Economic Empowerment
With the expiry of the put option on 30 June 2009, the acquisition of 37 281
647 shares in Pinnacle Technology Holdings Limited by Amabubesi Investments
(Pty) Limited ("Amabubesi") is now complete. Due to the share buy-back
programme, Amabubesi effectively holds 20.4% of the issued equity of the
Group.
Pinnacle continues to embrace the principles of transformation set by the
BBBEE codes. The Group is actively applying policies to improve its
contribution in procurement, employment equity, skills development and socio
economic development.
Pinnacle is a level 4 contributor as measured in accordance with the Broad-
Based Black Economic Codes of Good Practice.
Corporate governance
The Group recognises the need to conduct its business with integrity,
transparency and equal opportunity and subscribes to the spirit of good
corporate governance as set out in the King II Report.
Subsequent events
No events material to the understanding of the report have occurred in the
period between the period-end date and the date of the report.
Dividends
The Board of Directors has proposed a dividend of 12 cents per share (2008:
12 cents per share) for the year under review, yielding a dividend cover of 5
times which it believes will be sustainable.
2009
Results of annual general meeting announcement
published on SENS and dividend distribution
of 12 cents per share confirmed Friday, 30 October
Last day to trade "CUM" dividend Friday, 13 November
Ordinary shares trade "EX" dividend Monday, 16 November
Record date to be recorded in the register
to participate in the dividend
distribution Friday, 20 November
Payment to shareholders in respect of the
dividend distribution Monday, 23 November
No share certificates may be dematerialised or rematerialised between Monday,
16 November 2009 and Friday, 20 November 2009, both days inclusive.
Statement of compliance
These condensed consolidated financial statements for the year ended 30 June
2009 are prepared in accordance with International Financial Reporting
Standards ("IFRS") applicable to interim financial reporting (IAS 34), the
Listings Requirements of the JSE Limited and the Companies Act of South
Africa.
Accounting policies
The reviewed results for the year ended 30 June 2009 have been prepared in
accordance with the Group`s accounting policies which comply with IFRS. The
accounting policies adopted are consistent with those applied in the
preparation of the audited annual financial statements for the year ended 30
June 2008.
Review
The condensed consolidated financial statements for the year have been
reviewed by BDO Spencer Steward (Johannesburg) Inc, and their unmodified
review report is available for inspection at the Company`s registered office.
For and on behalf of the Board
CD Biddlecombe AJ Fourie
Chairman Chief Executive Officer
Midrand
15 September 2009
Registration number 1986/000334/06
Share code: PNC
ISIN: ZAE000022570
("Pinnacle" or "the Group" or "the Company")
Registered Office: The Summit, 269, 16th Road, Randjespark, Midrand, 1685
Transfer Secretaries: Computershare Investor Services (Pty) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001
Directors: CD Biddlecombe* (Chairman), AJ Fourie (Chief executive officer),
H Coetzee, HG Motau*, MP Moyo*, TAM Tshivhase, A Tugendhaft*
* (Non-executive)
Auditors: BDO Spencer Steward (JHB) Inc, Registered Auditors, 13 Wellington
Road, Parktown, 2193
Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
Date: 15/09/2009 07:05:08 Supplied by www.sharenet.co.za
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