Pinnacle Technology holdings has released unaudited results for the six months to 31 December, showing the revenue increased by 39% to R1,354-billion during the period. However, operating profit decreased by 7,3% to R66,million and headline earnings per share were down 11,4% to 30,4 cents per share.
According to statement from the group, Pinnacle Micro's revenue increased by 42% to R767,3-million, as all lines of business achieved revenue and gross profit targets – apart from the Government unit, which was refocused to recapture service delivery in the second hald of 2009.
In line with expectations, the addition of tier-one brands into the Pinnacle portfolio had a dilutionary impact on gross profit margins. Reduced technical support cost on these product sets and improved efficiencies have, however, contributed to realise an adjusted EBITDA (adjusted for an exceptional foreign exchange loss) of 7,1%.
The extraordinary devaluation of the rand in October 2008 gave rise to a material foreign exchange loss of R33-million in this business unit. The company has revised policies to limit exposure to currency fluctuations.
Workgroup achieved EBITDA earnings of R36,3-million for the period, up from R16,6-million a year ago. This is a result of the successful roll-out of virtualisation technologies, the conclusion of several large projects and the devaluation of the rand.
Sole distribution rights were acquired for certain international software brands, recurring revenue streams were doubled from a relatively modest base and logistical, rental and other administrative costs were contained to realise a material improvement in EBITDA margins.
A refocused RentNet posted good gains, recapturing market share in the technology rentals and conferencing support markets. Interpretation and translation equipment was added to the rental fleet, which was utilised to good effect in the Afriran and Sixth African Ministers conferences.
DataNet contributed solid results, concentrating on consolidating its market share, improving internal efficiencies, stock management and margin protection during the period, realising gross profit growth of 71% against the first half of 2008.
The group investment in working capital increased by R89,8-million to R250,4-million, as collective days sales outstanding increased to 65 days over the traditionally tough December collection period.
According to the statement, Pinnacle's expectations for the remainder of the year are moderated by the volatility of the rand and the effects of the global markets on South Africa.
"While operations are manageable at current exchange levels, further deterioration of the rand, should it occur, is expected to impact ICT spending in the SME and retail segments," it says.
"Global market conditions have effectively limited and, in certain cases, cancelled bank facilities previously available to our customers. The lack of cash in the market is thus expected to impact negatively on collection terms and may lead to an increase in collection charges over the remainder of the year.
"Significant potential, however, remains. Attention will be afforded to develop annuity-based revenues and to market, distribute and support technologies that drive down overall cost of ICT ownership, targeted at our government and corporate customer base.
"New, small form factor notebooks have introduced affordable, portable ICT solutions to value market segments, and tier-one servers introduces another product set with which to target the corporate market segment.
"Government continues to invest in the education of citizens through investment in IT infrastructure. Value-added solutions to address government initiatives in education, law enforcement and home affairs require ongoing commitment and support, which Pinnacle is ready to provide on a national basis."