Pinnacle Holdings' interim results for the six months ended 31 December saw strong revenue growth of 47%, to R6.3 billion, with "pleasing growth" coming from all of its operations, and particularly from the services and solutions cluster.
Headline earnings rose by almost 19% year-on-year to R178 million, while headline earnings per share rose 12.7% to 106.1cps, compared to 94.1cps a year ago. Operating profit grew by 60% to almost R365 million, while operating profit margins improved to 5.7%, from 5.3% previously. In line with previous years, no interim dividend was declared.
"Small losses on foreign exchange were experienced due to the volatility of the rand during the period and due to certain foreign currency exposures that exist in African countries," the group says in its results SENS statement.
"The strategy to diversify the group's business from that of predominantly distribution is bearing fruit with the contribution from the services and solutions cluster becoming more significant. In addition, the focus on delivering profits into cash has transformed the gearing of the group, which has allowed us to recommence our acquisition strategy," Pinnacle says.
A significant milestone in that strategy was the acquisition of the balance of the ordinary share capital of Datacentrix in January, for R541 million. Datacentrix will be accounted for as a 100% owned subsidiary with effect from February.
In October 2016, Pinnacle announced plans to acquire the remainder of shares in Datacentrix that it did not already own. The company increased its shareholding in Datacentrix to 55.2% in the previous financial year and then further increased it to 57.2% in July 2016, through subsidiary DCT Holdings.
Datacentrix is a complete ICT systems integrator that provides solutions and services across the full information value chain. It listed on the main board of the JSE in 1998 and delisted on 14 February 2017.
On 1 February 2016, Pinnacle acquired 51% of the total voting shares of Solareff, which is a fast-growing solar photovoltaic specialist with more than a decade's experience in renewable energy projects.
Pinnacle also acquired 60% of Intdev Internet Technologies, effective 1 March 2016. The transaction was entered into to further increase the group's services and solutions division.
The firm says it will continue to look at further acquisitions, both local and international, to bolster its offerings in each of its clusters.
Name change
Pinnacle says that after approval from shareholders at its annual general meeting, the group decided to change its name from Pinnacle Holdings Limited to Alviva Holdings Limited.
The proposed new name has been approved by the Companies and Intellectual Property Commission. The company will begin trading as Alviva, with the JSE alpha code of "AVV", as of 8 March.
For a period of one year, the company will reflect the former name "Pinnacle Holdings Limited" in brackets beneath the new name of "Alviva Holdings Limited" on all documents of title.
Divisional growth
The group's distribution division increased revenue by 11% for the six months to 31 December and earnings before interest, tax, depreciation and amortisation by 13%.
"The division has traded well in a difficult market. The strategy, implemented in prior periods, to offer more enterprise and infrastructural products to our customers has served the division well. Continued emphasis was placed on working capital management and logistic efficiency in order to yield acceptable returns and the division has responded magnificently to achieve a further reduction in its working capital utilisation," the group says.
The services and solutions division, incorporating Datacentrix and Solareff, also had a pleasing six months, with revenue of R1.8 billion reported.
"New contracts have been secured in a highly competitive environment that place the division well for growth in the ensuing periods."
Centrafin also had a satisfactory six months, with revenue increasing by 20%, and the division continued to contribute positively to the group's growth.
"The outlook for the year to 30 June 2017 is positive, with earnings expected to be above those of June 2016 due to ongoing improvements in all business segments. The distribution division is well-managed and well-positioned to take advantage of the opportunities in both the local market and those beyond our borders."
The group expects Centrafin to continue to maintain steady growth and says the services and solutions segment should continue its growth trajectory.
"The ongoing actions and strategy are to continue with further improvements in working capital, to grow organically, to diversify the overall business, and to invest into new technologies. The services and solutions businesses will be targeted for growth, both organically and by way of strategic acquisitions."
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