Cloudcoco Regulatory News (CLCO)

6 October 2011

Pinnacle Telecom Group plc ("the Company")

Acquisition of Online Computer Developments Ltd

Pinnacle Telecom Group plc, the provider of cloud based technology solutions, is pleased to announce it has acquired the entire share capital of Online Computer Developments Ltd ("OCD"), a provider of IT solutions to the SME and mid-market, through its subsidiary Pinnacle Cloud Solutions Ltd ("Pinnacle").

Summary

Ý Acquisition of Online Computer Developments Ltd for a total consideration of up to £110,000.

Ý Consideration satisfied by a combination of cash, convertible loan note and deferred consideration shares at 0.57p.

Ý Well-established business, formed in 1994.

Ý The acquisition of OCD forms a key part of Pinnacle's strategy to build out its IT capability - enabling faster delivery of its cloud services proposition.

Ý OCD's customer base complements that of Pinnacle and further strengthens its presence in the Scottish SME market.

Ý Strong cross-selling opportunities exist across the combined businesses.

The transaction of up to £110,000 is based in part on an earn-out, and is summarised as follows:

1. Initial Consideration: At completion, the initial consideration of £2,000 satisfied in cash.

2. Convertible consideration: At completion, the issue of a two-year convertible loan note for the value of £18,000 of ordinary shares of Pinnacle Telecom Group plc.

3. Deferred consideration: A deferred consideration calculated in accordance with certain growth performance earn-out provisions for the year ending 30th September 2012, contained in the acquisition agreement, allows the vendors additional consideration of £90,000 of Pinnacle Telecom Group plc Ordinary Shares.

4. The deferred consideration will be satisfied by the issue to the Vendors: of 15,789,474 Ordinary Shares of Pinnacle Telecom Group plc at a price per share equal to .57p, credited as fully paid and ranking pari passu with the ordinary shares in existence at completion of the acquisition. Any shares issued pursuant to the Deferred Consideration may not be sold within 24 months of those shares being issued to the seller.

Below are the unaudited annual results of OCD, which are prepared under UK GAAP.

Figures for the year ended 28th February 2011 are taken from the filed accounts for that year.

Figures for the year ended 28th February 2010 are taken from the filed accounts for that year.

Information about OCD

OCD is a well-established business Providing IT desktop and server support to customers in Scotland. The business was established in 1994 as an IT provider, focusing on the needs of small and medium sized businesses. OCD's objective is to be the IT company of choice for the local SME business and to deliver better IT support, better IT services and better value than other IT support companies in Scotland. OCD focus on scheduled visits; planned IT maintenance routines; constant server monitoring and updating of servers as well as proactive hardware replacement rather than waiting for the system to break and then fix it. The OCD IT support desk is run from offices in Glasgow.

The acquired OCD business has 10 employees, all of whom will transfer to Pinnacle at completion. In order to integrate the IT businesses of the group and drive forward the IT Services growth strategy, the key driver of the business, and the founder of OCD, Kevin Ashcroft, will also be staying with Pinnacle post completion.

Comments

Commenting today Kevin Ashcroft, Managing Director of Online Computer Developments Ltd, said:

"We are delighted the team at OCD will be joining Pinnacle. We have been very impressed with Pinnacle's success in both the Scottish market place and the UK in general and we look forward to helping build Pinnacle into a company of scale."

Commenting today Alan J Bonner, Chief Executive of Pinnacle Telecom Group plc, said:

"This is our third acquisition since June and our IT capability is strengthened greatly by the acquisition of OCD. This latest deal, combined with Explore IT and the acquisition in August of MacLellan IT, gives us a very strong position in the central belt of Scotland from which we intend to grow. I am looking forward to working with Kevin and his team as we integrate OCD into Pinnacle.

The acquisition of OCD will be earnings enhancing and is very much in keeping with our strategy to build Pinnacle through bolt-on, well priced acquisitions; thereby enhancing our services, particularly through the deployment of next generation, cloud-based IP solutions, as well as strengthening our organic growth capabilities.

I continue to search for additional well priced earning-enhancing acquisitions of this nature."

Enquiries:

About Pinnacle

Pinnacle Telecom Group plc (AIM: PINN) is a value added, solutions based provider of integrated telecommunications services including IP solutions. It focuses on the SME market across the UK, where it provides a wide range of communications solutions including telecommunications calls, access and consultancy, IT support, mobile solutions - both voice and data and hosted broadband voice services.

Pinnacle is a fully licensed Public Telephone Operator, has its own telephone network and interconnects with BT, Virgin Media and THUS. It has its own hosted voice (VoIP) platforms and engineers and owns Scotland's oldest ISP (and a founder member of Nominet), operating from its data centres in Glasgow, London and Brighton.

Pinnacle's strategy is to be a SME focused, value added, solutions based provider of next generation, cloud-based IP solutions, driven by leveraging organic opportunities as well as through targeted acquisitions. Pinnacle is seeking to acquire and grow businesses to bring together the four main elements of; traditionaltelephony, hosted cloud-based services, IT support and data centres. A particular target area is data centres, where the combination of recurring revenue and a platform to expand its hosted cloud-based services, would create a compelling earnings-enhancing proposition. A strategic acquisition in this area would potentially be transformational and as data centres are worldwide, it is widening the search parameters.