South Africa: Innovative Festive Season Packages' Boost Pinnacle results

Mergers, Acquisitions and Financial Results

Pinnacle Technology thanked "a stable and stronger exchange rate, stable fuel prices and reduced interest charges" for a strong set of results for the six months to December, which saw fully diluted headline earnings per share rise by 37,8% to 34,3c.

The group's largest division, Pinnacle Africa, had delivered "better than expected (retail) results" due to "innovative festive season packages".

The division, maker of Proline personal computers, saw turnover increase from R767m to R815m year on year, with government sales "ahead of budget".

But the company warned that discretionary spending "remained guarded", with the effect most apparent in the retail, construction and entertainment industries. Customer cash and credit constraints had eased slightly but continued to influence day-to-day operations in all units, it said. Pinnacle saw its earnings before interest, tax, depreciation and amortisation increase 26,7% to R89,1m, with the bulk contributed by Pinnacle Africa.

The second-biggest arm, Work Group, grew turnover by 14,5% to R558,8m, with the growth driven by an "ever-increasing portfolio of international brands and strong commodity sales".

But the DataNet division, distributor of network hardware and infrastructure, was hit by "the depressed construction industry and delays in key projects". Its revenue fell 3,9% to R80,2m.

The newest division, Infrasol, realised revenue of R7,2m during its first six months of operations, reporting a R1,3m loss before interest, tax, depreciation and amortisation. But operations were picking up and Pinnacle expected to recover the loss by June.

Business Day