LONDON (Alliance News) - Pinnacle Technology Group PLC on Monday said it has agreed to sell its Pinnacle CDT Ltd subsidiary to Chess ICT Ltd for GBP2.8 million, as part of its repositioning towards higher margin services.
Pinnacle CDT generated revenue of GBP6.7 million for the year ended September 30, and a net loss before tax and head office costs of GBP200,000, Pinnacle Technology said.
Pinnacle CDT provides data, telecommunication and certain IT support services to around 1,000 customers from offices in Glasgow and Stockton-on-Tees, Pinnacle Technology added.
Many of those services are dependent upon access to Pinnacle CDT's own core network, its softswitch or upon traditional fixed line telephony service and usage revenue. Pinnacle Technology said none of these are core to its strategy moving forward, which is to provide solutions that are deployed either on premise or in hosted and cloud environments without the need to own infrastructure.
Pinnacle Technology said the GBP2.8 million consideration will be used to further its strategy to consolidate a "a highly fragmented market" of smaller IT services companies to become a provider of 'IT as a service' to the small and medium enterprises market in the UK.
Following the recent disposals of its RMS Managed Security Ltd business and its shareholding in Stripe 21 Ltd, Pinnacle Technology said it now consists of Ancar-B Technologies Ltd and Weston Communications Ltd, both of which it said are generating cash. Pinnacle Technology has a market capitalisation of GBP14.9 million.
"The disposal represents a significant step forwards in achieving our strategy of creating a strong 'IT as a service' business with recurring revenues and higher margin services," said Executive Chairman Galvin Lyons.
"When I was appointed in December 15, it was apparent that there were many legacy and operational issues that needed to be addressed within the group. Through the disposals of Pinnacle CDT, RMS Managed Security and Stripe 21, we now have a stable financial and operational platform to build on," Lyons added.
Shares in Pinnacle Technology were down 1.0% at 6.56 pence on Monday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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