Pinnacle issues shares in turnaround plan
Pinnacle Technology Group, an Anglo-Scottish IT communications provider, today raised £600,000 through a share issue that will help the company return to profitability.
Advisers placed 7,461,535 new ordinary shares with existing shareholders at 6.5p to raise £500,000 before expenses. A further £100,000 will be raised via an open offer of 1,777,824 shares to qualifying shareholders on the basis of 1 new ordinary share for every 21 held. N+1 Singer acted as sole broker on the placing.
The issue price of 6.5p is the closing middle market price last Friday.
Pinnacle, based in Glasgow and Northampton, wants to use the money to strengthen its balance sheet and accelerate growth through investment in sales and marketing activities which form a key part of the turnaround strategy implemented by chief executive Nicholas Scallan.
He conducted a business and operational review earlier this year which highlighted three key aims: to return the business to profitable revenue growth, to sharpen its focus, and to reduce costs.
There has been a positive response from new and existing clients while the board has identified further opportunities. These include telemarketing and greater sales resources, core infrastructure and systems, as well as cost reductions, while providing general working capital that will act as a buffer for day-to-day purposes.
Customer service is being improved by the deployment of a new market-leading customer management and monitoring system from N-Able, replacing multiple legacy systems.
The board of directors will support this approach by investing £165,000 to help towards the overall target. A number of the company’s major institutional investors are supporting the capital raising – seen as a major vote of confidence towards the company.
For the second half of the year, the business has responded well to the various initiatives that have been put in place to support the turnaround strategy.
The company reduced its second half 2013 loss of £685,099 to £269,882 in the first half of this year and said the situation has improved further. The group is now trading close to adjusted EBITDA neutral on a monthly basis even though revenue decline remains in line with previous periods.
Scallan said: “This capital raising plan represents the cornerstone of a carefully structured investment process as we firmly place the business on the path to profitable growth.
“The directors continue to work towards stabilising revenues and positioning the company to become EBITDA positive.
“To maximise growth opportunities and streamline operations, the business continues to simplify its structure, sharpen its focus, and put an improved customer experience at the heart of the business.
“With those opportunities now available to Pinnacle Technology, the board is increasingly confident about its future prospects.”