Although Pinnacle saw main cash outflow of R756 million during the year, and its borrowings increased, it says it is well-funded for the next 12 months.
It is ready to meet the funding needs of ramping up stocks to meet the government season in January to March 2014.
During the year to June, Pinnacle grew revenue 13%, to R6.6 billion, while earnings before interest, tax, depreciation and amortisation gained 18%, to R493 million. However, it ended with a larger overdraft than last year.
Turnover was boosted by contributions from some newly-acquired entities in the Pinnacle Africa division. Centrafin, its financial services division, delivered net profit growth of 47%, although services unit Infrasol struggled to repeat last year's growth.
Good cost control, particularly in the AxizWorkgroup division, resulted in expenses growing at a lower rate than revenue, and borrowing costs decreased.
Investment spend
The distributor's main cash outflows amounted to R756 million, which included tax of R118 million, annual dividend of R55 million, an investment into land in Samrand of R44 million (for a new head office), as well as land in Bloemfontein for R2 million, to be used as the new Free State office.
It also spent R65 million repaying the short-term Nedbank loan and invested R130 million into Centrafin's customer base as it continues to build its financial lease book and its leased asset base.
Pinnacle also spent R267 million on buying Datacentrix shares. It acquired almost 30% of Datacentrix in an off-market deal, in a bid to determine whether there is potential to develop a working relationship in the future.
Borrowings now comprise R116 million in short-term loans raised on Centrafin's finance lease book and rental asset pool, subsidiary preference shares issued to Nedbank of R130 million, the Nedbank loan to fund the purchase of Axiz amounting to R37 million, a medium-term domestic note of R315 million and overdrafts of R270 million.
"It must be borne in mind that this year's borrowings profile is considerably skewed by two assets that should be ring-fenced due to their non-operational nature insofar as they relate to mainstream ICT distribution," says Pinnacle.
These are the investments in Datacentrix and Centrafin. "Without these, the group's borrowings would only be R348 million and its debt to equity ratio would be under 34%."
It says the board is happy that the company is well-funded for the next 12 months, and ready to meet the funding needs of ramping up stocks to meet the government season in January to March 2014.
Pinnacle also saw inventories grow R253 million because of an "over-estimation of the size of the tablet market and delays in orders on the retail side". The excess inventory situation will be resolved by the end of the month.
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