The company’s annual figures show revenues of £7.9million for the 12-month period, with recurring revenues remaining at 85 per cent, representing a strong base for the company.
While revenues were down as a result of poorer trading on traditional telecommunications services and IT Security, progress has been made by the business in growing its strategically important IT Services and Cloud services, and improving its sales of professional services. The agreement with O2 announced during the year was another highlight.
While overall losses were £1.3million, they marked an improvement on the £1.8million loss reported in 2014. Whilst operational costs were also reduced, legacy issues continue to act as a drag on the business, and contributed to an EBITDA loss for the year as a whole. A positive cash balance at year end of £641k was realised.
Pinnacle’s Board believes that there is still a number of operational challenges but an exciting opportunity to create a scalable and dominant ‘IT as a service’ provider exists due to the highly fragmented market. The acquisitions of Ancar B and The Weston Group for a net consideration of £5million, subject to shareholder approval, are a good strategic fit for the business, particularly in the area of managed IT services for SMEs. Both businesses are based in Leeds, and give Pinnacle a new operational focus, complementary to its existing Scottish operational base in Glasgow.
In March 2015, Pinnacle welcomed a strategic investment made by AIM quoted merchant bank MXC. It was also appointed M&A advisor to the company. MXC has a proven track record of success, creating close to £600m of shareholder value in the last 12 years - is now taking a significant stake of 25 per cent in the business, alongside major investment in Pinnacle from other institutions.
The business is now under the stewardship of new Executive Chairman Gavin Lyons who was appointed on the 7th December 2015 and is a partner at MXC Capital, the technology merchant bank. Gavin was previously the CEO of Accumuli PLC.
Pinnacle is also pleased to announce the appointment of Ian Winn, formerly COO at Accumuli PLC, as Chief Operating Officer & Finance Director. This reunites him with Gavin Lyons, once again putting together the successful team that led a buy-and-build journey through to the exit selling of Accumuli PLC to the NCC Group in 2015 for £55 million.
Pinnacle Chief Executive Officer Nicholas Scallan is departing at the beginning of April after two years, and will not seek re-election at the next AGM.
Commenting on the results, former Chairman James Dodd said "The year ending 30th September 2015 was one of transition for Pinnacle Technology. Operationally we continued to expend considerable effort in reducing costs and resolving legacy issues. Strategically we announced both an investment from MXC and their appointment as M&A advisors. With the acquisitions of Ancar B and The Weston Group now announced the business is in a much better position to push on and take advantage of the market opportunity that exists, namely providing IT as a Service to SMEs."