Pinnacle Technology's earnings up 17% to 205.6c

It was able to increase the dividend by 17% to 41c per share.

The company said trading conditions remained tough due to the economic situation in South Africa and throughout the world. Centrafin‚ the group's financial services division‚ has delivered a net profit growth of 47%‚ while Infrasol‚ the services division‚ struggled to repeat the growth experienced in the previous financial year because some large projects did not materialise in time.

The margin has remained constant at a group level as a result of gains in higher margin products offsetting pressure on margins on run-rate products.

Tax rates returned to a more normal 28.3% compared with the unusually low 25.8% in the prior year‚ after the recognition of an assessed loss as a deferred tax asset in a new subsidiary bought last year. The tax rate will continue to deteriorate because of the issue of R130m in preference shares by a subsidiary to Nedbank.

Preference dividends paid by the subsidiary are treated as non-deductible interest in the consolidated income statement.

Inventories increased by R253m‚ which increased inventory days from 46 to 66. This came about as a result of an over-estimation of the size of the tablet market and delays in orders on the retail side. The excess inventory will be largely resolved by the end of September.

The company said the overall economy faced challenging times‚ with the consumer becoming more financially constrained than ever and the resources sector‚ the bedrock of the South African industry‚ bedevilled by labour and demand issues.

Nonetheless‚ the IT sector has remained resilient in the face of these and other economic challenges and it is envisaged that it will remain so.