Diversified ICT supplier Pinnacle Technology Holdings, coming off a financial year in which revenue soared 45%, to R2.496 billion, says it is well placed to compete effectively in tough economic conditions.
Commenting on the group's latest full-year results, CEO Arnold Fourie says its advantage lies in its diversified brands and varied channels to market.
"Despite the tough economic and social conditions experienced during the past six months, SA is enjoying a period of sustained GDP (gross domestic product) growth," he says.
"Reducing broadband costs, Internet-based services and the roll-out of high-speed wireless networks have introduced increased levels of communication to an eager South African market, making information and communications technology, more than ever before, a vital part of business and everyday life."
Fourie says diversification continued to benefit the group in the year to end-June as its Proline and international branded hardware, software, networking, infrastructure and support services ranges showed further expansion.
He says the acquisition of 100% of Tri Continental Distribution, with effect from 31 October, introduced IBM and Lenovo as tier-one server and mobile offerings to subsidiary Pinnacle Micro.
"Additional agreements were entered into to distribute Sony, Lexmark and Hewlett-Packard products in South and southern Africa, of which the full impact will only be felt in the 2009 financial year."
The acquisition and introduction of new brands had the effect of reducing gross margins from 16.1% to 15.2%, but Fourie says this was partially offset by the reduction in operating cost as a percentage of turnover from 9.4% to 8.9%, helping to maintain the operating margin above 6%.
Volumes grew so well during the period that Pinnacle has had to lease additional warehouse and office space in Cape Town, Bloemfontein, Midrand and Nelspruit. It has opened a sales office in East London and is expanding warehouse space in Port Elizabeth.
"Additional sales offices have been tabled for consideration in outlying business centres," Fourie says.
The Pinnacle share closed at 375c on the JSE yesterday, up 10c or 2.7% from Tuesday's close. The group's board has proposed a cash dividend of 12c (2007: capital distribution of 10c) per share, to be paid on 24 November.
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