Cloudcoco Regulatory News (CLCO)

6 Jun 2007 08:09

Glen Group PLC06 June 2007 Glen Group plc ("Glen" or "the Company") Acquisition of Pinnacle Group Limited ("Pinnacle Group") The Board of Glen is pleased to announce that it has agreed to acquire theentire issued share capital of Pinnacle Group for a consideration of £700,000,to be satisfied by the issue of 122,727,273 ordinary shares in the Company ("theConsideration Shares") at 0.55 pence per share and cash of £25,000. Thetransaction is conditional only upon the admission of the Consideration Sharesto trading on AIM becoming effective in accordance with the AIM Rules, which itis anticipated will occur at 8.00 am tomorrow, 7th June 2007. Pinnacle Group has two main operating companies, Pinnacle Telecom plc("Telecom") which is wholly owned, and Sports Club Telecom Limited ("SportsClub") which is 80% owned and was acquired by Pinnacle Group in January 2007.Pinnacle Group also has a 50% interest in each of Pinnacle Mobile Limited, aprovider of mobile services to the SME market, based in the Midlands, andPinnacle Data Limited, which is currently dormant. Pinnacle Mobile is notsignificant to the Pinnacle Group and it has not been treated as an associatedcompany. Pinnacle Group is based near Falkirk, between Edinburgh and Glasgow, andprovides solution driven telecommunications services to the SME market,including carrier pre-selection, line rental and other bespoke services. Thebusiness has approximately 200 active customers with several thousand more inits database. These contacts will provide a strong platform for Glen to crosssell its other products and services, particularly IT services through itssubsidiary Explore IT Limited ("Explore IT"). Pinnacle Group will also be ableto take advantage of cross selling opportunities into the current Glen SMEcustomer base, as Glen does not currently provide carrier pre-selectionservices. Pinnacle Group has developed its own specialised billing and customersupport system and provides most of its customer connectivity and calls througha contractual arrangement with BT Wholesale. A significant portion of its incomeand gross margin is recurring. This aspect has been steadily increasing with theintegration into Telecom of the customer base of Sports Club acquired in January2007, which doubled Pinnacle's active customer base at that time. In the monthof April 2007, the latest month with information available, Pinnacle Groupbilled nearly £50,000 of turnover from calls and access services alone. Pinnacle Group is wholly owned by Alan Bonner, who was instrumental in buildingthe Pinnacle business over a six year period from its formation in 1998 to aturnover of £6m by 2004. In that year the fixed-line customer base was sold andthe business today was re-established during 2006 and has grown rapidly sincethen. The directors of the Pinnacle Group majority owned companies other than AlanBonner have resigned, by mutual consent, with effect from completion of theacquisition. Pinnacle Group's two continuing employees will integrate thebusiness fully into the structure of Glen Communications Limited ("GlenCommunications"), the Company's existing SME focused subsidiary, which currentlyprovides mobile and Voice over IP services to its customers. In view of thesedevelopments, it is expected that the Glen Communications name will be withdrawnfrom the market over a three month integration period and Alan Bonner has beenappointed Managing Director of that company, with effect from completion. CraigSaunderson remains as Managing Director of Explore IT, which provides a widerange of IT services to SMEs. Below are the consolidated results of Pinnacle Group drawn up under UK GAAP,taken from the audited filed accounts for the year ended 31st March 2006 and theunaudited management accounts for the year ended 31st March 2007. The figuresinclude the results of Sports Club from the date of acquisition on 17th January2007. The minority interest in Sports Club has not been accounted for as it isimmaterial to the results. PROFIT AND LOSS Year ended 31st March Year ended 31st MarchACCOUNT 2007 2006 £ £ Turnover 490,869 472,990Cost of Sales 283,616 309,014 Gross Margin 207,253 163,976 Overheads 114,156 60,990 Operating Profitbefore exceptionalItems 93,097 102,986Exceptional Items(Note) 86,428 0 Profit beforeInterest and Tax 6,669 102,986Net Interest 895 768 Profit before Tax 7,564 103,754 Note. The exceptional items in 2007 relate to costs which are not related to thebusiness being acquired. The consolidated balance sheets of Pinnacle Group, derived from the auditedfiled accounts at 31st March 2006 and the unaudited management accounts as at31st March 2007, is summarised as follows: BALANCE SHEET 31st March 2007 31st March 2006 £ £ Fixed Assets 125,780 15,658 Current AssetsInvestments 0 50,040Debtors and prepayments 164,007 128,338Bank and cash 10,218 9,245Total Current Assets 174,225 187,623 Current LiabilitiesCreditors and accruals 196,886 13,137Bank loans and overdrafts 0 139,814Value added tax 7,019 1,299Directors' loans 3,101 9,596Total Current Liabilities 207,006 163,846 Net Current (Liabilities) / Assets (32,781) 23,777 Long Term LiabilitiesDeferred consideration (46,000) 0 NET ASSETS 46,999 39,435 Represented by:Share capital 460,000 460,000Share premium 3,000 3,000Reserves (416,001) (423,565) SHAREHOLDERS' EQUITY 46,999 39,435 The expanded SME focused business will comprise the Pinnacle Group companies,Glen Communications and Explore IT, which are expected to be fully integratedwithin 90 days. During the early part of this year, substantial changes weremade to the business and operations of Glen Communications to increase the focusof its product set on the provision of IT services and solutions, including theprovision of voice services over a broadband connection (VoIP). The intentionwas to start to convert its revenue streams to recurring, rather thanproject-based, income. These operational changes have now been completed andfurther details will be provided when Glen issues its interim results for thehalf year ended 31st March 2007 at the end of this month. Commenting today, Graham J Duncan, Chief Executive of Glen Group plc, said: "I am delighted to be able to announce the acquisition of Pinnacle Group. Thisimportant development gives us a steady stream of recurring income, provides asound platform for further growth and brings to the group the services of AlanBonner. Alan is a prominent Scottish telecoms entrepreneur and he has animpressive record of building profitable businesses. I am sure he will play anincreasingly important role in the group as we continue to advance thebusiness." 6th June 2007 Enquiries: Glen Group plcGraham J Duncan, Chief Executive Tel: 0845 119 2100 Seymour Pierce LimitedJonathan Wright Tel: 0207 107 8000 Pelham PRAlex Walters Tel: 0203 170 7435 This information is provided by RNS The company news service from the London Stock Exchange