LONDON (Alliance News) - Pinnacle Technology Group PLC Thursday posted a widened pretax loss in the half-year to end-March, although it said it is confident it will return to profitability thanks to the turnaround programme being implemented under its new chief executive.
The IT services company posted a pretax loss of GBP1.2 million, widened slightly from GBP1.1 million in the previous year, as revenue declined to GBP4.3 million, from GBP5.4 million, due mainly to a 64% decline in revenue in its IT security business. The revenue decline was partly offset by lower cost of sales and lower operating expenses.
Pinnacle is slimming down the IT security division to improve its overall profitability. The unit operates in area subject to fierce price competition, and Pinnacle noted that a focus on software with cyclical revenues has not historically tapped into the wider business or its existing customer base.
However, Pinnacle highlighted services already covered by its IT services business, such as deployment and ongoing support for IT infrastructure, which could be applied to trends in the security division.
Revenues in the company's IT services division declined slightly to GBP598,061 from GBP629,067. Pinnacle noted that it has not looked for new customers outside of Scotland in recent years due to operation restraints, however, as part of its review of the business it will explore opportunities outside of Scotland.
The company said the "disappointing" first-half results represented a "work-in-progress" in the midst of a difficult and protracted turnaround. It said that current management had inherited a loss-making business "built up from a wide variety of disparate acquisitions which had never been integrated into an efficient corporate structure."
Newly appointed Chief Executive Nicholas Scallan has been reviewing the business, with the aim of accelerating a return to profitable growth, sharpening its focus, and continuing to reduce costs, said the company.
"Whilst significant progress in turning the business around will take time to achieve, in looking ahead we believe that this review will result in a leaner, more focused organisation that we are confident will return to profitable revenue growth," said Scallan in a statement.
Operational expenses for the half-year were down 8% as the company reduced its headcount to 43 from 68. It continued to cut staff following the half-year to 39 employees as at June 23.
Shares in Pinnacle were trading up 14% at 8.55 pence Thursday afternoon, one of the top gainers in the AIM All-Share index.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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