Pinnacle Telecom has acquired Northampton-based telecoms services provider Accent Telecom UK for £661,000 in shares at 0.13p each.
Chief executive Alan Bonner believes the purchase is a key step in Pinnacle’s growth strategy by increasing its scale. ATUK made an operating profit of £17,000 on revenues of £3.52m in the year to March 2009, and its NAV was £331,000. There is a small amount of equipment leasing debt. The acquisition will help to expand the group geographically.
Founder Darron Giddens, a former finance director of IDN Telecom, and Paul Goodland received enough shares to give them 9.88% each of the enlarged share capital. Mrs Shelly Dronfield was issued with 4.94% of the enlarged share capital. ATUK owns 33% of voice over broadband services provider CityX and 40% of network services provider Stripe 21. The company also owns 30% in each of two Accent branded resellers to the small company market.
Pinnacle, formerly known as Glen Group, offers voice, mobile and data services. This includes in-house billing and cross-company and Pinnacle’s own hosted platform. The main competitor is BT, which is also a partner of Pinnacle. Pinnacle wins business on better service plus the reassurance of having BT as a partner. Around three-quarters of Pinnacle’s revenues are recurring. ATUK also has significant recurring revenues.
Pinnacle has a buy and build strategy. Pinnacle will pay EBITDA multiples of two to six for companies or up to 24 times gross profits for customer bases.
Earn outs will be used but it will be difficult to do much without issuing more shares. After five years Pinnacle wants annual revenues of £50m.
Net cash was £539,000 at the end of September 2008 thanks to the sale of the original IT-related businesses. The business is still losing money so that figure is likely to be lower now.
At 0.14p a share, Pinnacle is valued at £2.38m. The share price has nearly trebled over the past six months.
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