Pinnacle Africa retail sales up 25%

The group attributed the increase to innovative and attractive retail solutions, adding that regional sales, being the SME-focused, run rate business, also grew 10% on last year.

Revenue for Pinnacle Africa, a distributor of advanced ITC equipment, increased by 6.8% to 1.73 billion rand "in difficult trading conditions," it said.

"Government ICT spend was curtailed as a result of lower tax collections, prioritised funding for the new national departments and focus on the Soccer World Cup," the group said.

Overall Pinnacle Technology Holdings reported a 37.6% increase in fully diluted headline earnings per share from 59.1 cents to 81.3 cents for the year ended June 2010.

Revenue increased by 11.8% to R3.17 billion.

It reported a gross profit of R479.63 million from R438.68 million previously, as WorkGroup's better than average growth and the loss of RentNet's high margin business diluted the increased gross profit contribution by Pinnacle Africa.

Operating expenses amounted to R271 million, reducing to 8.6% of revenue (2009: 9.6%) as profit and loss on foreign exchange realised a profit of R20 million, a marked improvement on the loss of R24 million reported in 2009.

Included in operating expenses is a R13 million charge relating to bad debts, following a record level of business failures during the year.

Software distributor WorkGroup increased revenue by 18% to R1.2 billion due to accelerated growth in its new IBM hardware agency, good growth in retail, IBM corporate software and virtualisation technologies.

"WorkGroup has positioned itself as a virtualisation and data centre consolidation specialist representing a number of vendor agencies in a fast-growing market segment.

"Annuity-based licensing renewals continue to grow and additional investment was allocated to manage this business," Pinnacle said.

It noted that WorkGroup was well set to expand further into the highly skilled security, identity management and virtualisation solutions markets through its dedicated network of reseller partners.

"To this end it has acquired additional product offerings like Wyse & Veeam which should add to the growth opportunities of WorkGroup for the foreseeable future," Pinnacle said.

Looking ahead, Pinnacle Technology said market sentiment is largely positive, with market indicators reporting improved earnings and jobs data.

"During the run up to and the hosting of the 2010 Soccer World Cup, government showcased its ability to effectively execute high value projects on time.

"Improvements in economic efficiency resulting from the new road infrastructure and improved policing and law enforcement resulting from these investments should pay dividends for all South Africans for years to come," the group stated.

Turning to its own operations, the group said: "Improved risk management and reporting strategies should contribute to a global platform for sustained, stable growth.

"The group will, however, continue to focus on cost containment to reduce pressure on revenue generation.

"Working capital management and cash generation will continue to enjoy attention as the Group aims to further improve its balance sheet and corresponding credit ratings."

The group added that it is constantly striving to acquire new product agencies and businesses that will assist in the diversification of its existing markets, products and clientele, and trust that it will be able to report positive feedback on this in the foreseeable future.