Pinnacle Technology Holdings almost tripled its net profit for the six months to December, thanks to improvements to its business model as well as good economic conditions.
The group`s net profit rose to R17.18 million from R5.94 million for the same period a year earlier, which, on revenue of R390.74 million (2004: R200.6 million), represents a net margin of 4.4% (3%).
CEO Arnold Fourie says the main factors behind the revenue growth were the proportional consolidation of Explix Technologies - R107 million - and a 48% improvement in turnover from the infrastructure and support operations to R277.87 million (R188.07 million).
Gross profit rose from R36.58 million to R64.69 million, with the margin declining from 18.2% to 16.6%. The margin is also down on the 17% gross margin recorded in the 2005 financial year.
Fourie says the decline is in line with management expectations and internal budgets designed to secure loyalty from the infrastructure and support client base.
Earnings per share rose to 11.9c (4c) while headline earnings climbed to 12.2c (4.1c) a share.
"The group moved into a net interest earned position on the settlement of non-current liabilities, improved cash management and effective treasury functions," Fourie says.
The group`s net asset value at the end of the period stood at 82.1c (64.7c) a share, while the net tangible asset value improved to 68.8c (62c) a share.
The balance sheet shows inventory levels increasing to R81.9 million (R59.4 million). Fourie says this was to accommodate the turnover growth and expected sales in the first quarter of this calendar year.
"The convergence of IT, home entertainment and mobile technologies will usher in a new wave of enabling and entertainment-focused product offerings over the next five years," he says.
"Combined with the imminent launch of Microsoft and Intel`s new 64-bit technologies, management believes demand for ICT products will be stimulated in all sectors of the market."
He adds that reliable data storage and disaster recovery technologies are fast becoming a necessity in all sectors of the economy.
The Pinnacle share closed at 204c on the JSE yesterday, 4c or 2% up on Monday`s closing price.
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