Pinnacle doubles earnings

By Nicola Mawson, Contributing journalist

Johannesburg, 18 Sept 2006

JSE-listed Pinnacle Technology Holdings almost doubled earnings in its 2006 financial results to end June.

The company reported headline earnings of R44.8 million, up 98.2% from last year`s R22.6 million. Headline earnings per share were up 102.6% at 30.8c, from 15.2c.

Revenue increased by 48.3% and surpassed the R1 billion mark, coming in at R1.061 billion from R715 million.

CEO Arnold Fourie said on Friday that Pinnacle Micro reported year-on-year growth of 34.2%, while Workgroup reported year-on-year growth of 86.6%. This, he said, was due to the process of consolidating this acquisition, and year-on-year organic growth in Workgroup was actually 38%.

Workgroup, which accounts for 33% of revenue, will be full consolidated in the next set of results. This year, half of the company was consolidated for eight months, and 100% for four months.

Revenue diversification

Fourie said Workgroup will aid the company in balancing its revenue streams as, while Pinnacle Micro will still dominate earnings, it will no longer contribute as much as two-thirds.

The smaller subsidiary, RentNet, which grew 100% to R10 million, contributes 1% of revenue, however this too will change, he said. Fourie said the company was exploring moving into the IT side of events and was seeking to handle aspects such as video and sound production at such events.

As a group, its operating profit increased 64.8% to R62.3 million, up from R37.8 million. The largest contributor - at 66% - was Pinnacle Micro with R40.7 million, a 33% increase.

Workgroup - at 29% - contributed R18.3 million, up 205% from last year`s R6 million. However, these figures were again affected by consolidation. RentNet contributed R1.5 million in operating profit, up 32.7% from R1.13 million in 2005.

The company`s cash-on-hand position was strengthened to R166.2 million through the sale of 20% equity to a black economic-empowerment investment group headed by Amabubesi Investments.

The transaction was consummated when 37.3 million shares were issued at R1 each on 8 April 2006. Pinnacle also issued seven million shares at 50c per share to T Tshivhase, an executive director, under a staff share purchase scheme.

"These two transactions, together with our existing BEE shareholders have resulted in Pinnacle reaching the 30% mark as far as being a truly black economic empowered company," it said in a statement. Fourie said this boded well for future business.

Pinnacle`s shares closed at R2.74 on Friday, after hitting an inter-day high of R2.89. Shares closed at R2.81 on Thursday. Its 12-month high is R2.89, while its 12-month low is R1.18.