MERGERS, ACQUISITIONS AND FINANCIAL RESULTS
Organic Growth Drives Pinnacle's Better Results
Diversified information, communication and technology product and service provider Pinnacle Technology last week reported improvements in its revenue and headline earnings per share for the year to June, citing organic growth as a reason. Revenue rose 11.8% from R2.83bn to R3.17bn, primarily due to organic growth at two of its subsidiaries, WorkGroup and Pinnacle Africa.
Fully diluted headline earnings per share were up 37.6% from 59.1c to 81.3c . This was despite the group's gross profit percentage having been reduced from 15.5% to 15.1% through WorkGroup's better than average growth and the loss of RentNet's high-margin business having diluted the increased gross profit contribution made by Pinnacle Africa.
Regarding prospects for the next financial year, the company said market sentiment is largely positive, with market indicators having reported improved earnings and jobs data. Regarding its own strategies, improved risk management and reporting strategies should contribute to a global platform for sustained, stable growth, the company said.
"The group will, however, continue to focus on cost containment to reduce pressure on revenue generation. Working capital management and cash generation will continue to enjoy attention as the group aims to further improve its balance sheet and corresponding ratings," it said.
Operating expenses as a percentage of revenue fell from 9.6% in the previous financial year to 8.6%. Included in operating expenses was a R13m charge for bad debts. This came after a record number of business failures during the year.
Cash and cash equivalents increased by 14% from R163,65m to R187m. A dividend of 16c per share for the year under review has been proposed, an increase of 33.3% from the previous year's 12c a share. Corporate activity during the year saw Pinnacle establish Moyahabo Digital Solutions, in which it has a 51% interest. It also increased its equity holding in DataNet by 9.9%.
CEO Arnold Fourie said he hopes to have Competition Commission approval to buy out infrastructure distributor Axiz by month-end. The group announced in July that it was buying Axiz for R170.9m. Fourie said once the deal gets the go-ahead, the group plans to start work on another value-adding deal.