PINNACLE TELECOM GROUP PLC  
REPORT AND FINANCIAL STATEMENTS 30 SEPTEMBER 2011 
COMPANY NUMBER: 05259846  
 
 
Pinnacle Telecom Group plc focuses on the business market 
across the UK. Driven by leveraging organic opportunities as 
well as through targeted acquisitions, we provide a wide range 
of converged managed solutions including Managed Support 
Services, Unified Communications and Collaboration, 
Communications and Mobility, Software as a Service (SaaS) 
and Infrastructure services. 
Pinnacle's strategy is predicated on cross-selling the five elements of our 
converged managed services offering. The objective is to cross-sell all of the 
group’s services into our existing customer base, which strengthens our 
customer's reliance on the company, increases our profit per customer and 
dramatically decreases the likelihood of our customer’s switching to a competitor.  
 
Contents  
 
01 Highlights  
02 Chairman’s Statement  
03 Chief Executive’s Review  
09 Corporate Governance  
11 Report of the Board to the Members on Directors’ Remuneration  
14 Directors’ Report  
19 Statement of Directors’ Responsibilities  
20 Independent Auditors report to the Members of Pinnacle Telecom Group plc  
21 Consolidated Income Statement  
22 Consolidated Statement of Comprehensive Income  
23 Consolidated Statement of Financial Position   
24 Consolidated Statement of Changes in Equity 
25 Consolidated Statement of Cash Flows 
26 Notes to the Consolidated Financial Statements  
52 Independent Auditors report to the Members of Pinnacle Telecom Group plc (Parent Company)   
53 Balance Sheet (Parent Company)  
54 Notes to the Financial Statements (Parent Company)  
60 Notice of Annual General Meeting for Pinnacle Telecom Group plc 
IBC Directors, Secretary and Advisers   
 
 
 
  
 
110% 
Increase 
 
84% of 
Turnover 
 
67% 
Increase 
 
Maiden 
Positive 
Operating 
Cashflows 
 
52% 
Increase 
is recurring 
In operating profit 
In Net Assets 
In EBITDA 
HIGHLIGHTS 
 
Financial benchmarks 
 
• 110% increase in operating profit (2) to £165,299 (2010: £78,647). 
 
• 67% increase in positive EBITDA (1) to £249,880 (2010: £149,379). 
 
• 18% increase in gross profit to £2,464,529 (2010: £2,089,457) a rise of £375,072. 
 
• 60% decrease in the loss for the year (3), falling to £98,305 (2010: £246,072). 
  
• 29% increase in turnover of 1,913,546 to £8,522,079 (2010: £6,608,533). 
 
• 740% combined turnover growth since 2007.  
 
• 84% of turnover now relates to recurring and contracted revenues. 
 
Acquisitions 
 
• Acquired the Business and Assets of an IP CCTV business, delivering combined resilient 
and "always on" 3G and IP connectivity, for high-profile CCTV monitoring to companies 
such as Sotheby’s, Unipart and Hilton Hotels. 
 
• Acquired the Business and Assets of MacLellan IT Limited, a well established profitable IT 
company for 186,046,491 shares at a premium of 58% per share, equivalent to £669,767. 
MacLellan are delivering increased IT consultancy and support revenues in Scotland. 
 
Balance sheet highlights 
 
• Positive cash at the year-end of £452,431 (2010: £697,189). 
 
• Maiden positive operating cash flows from operating activities of £25,752 compared to 
negative £154,377 in 2010. 
 
• Added £647,791 of intangible assets, following on from the addition of £205,567 in 2010, 
which helps strengthen the group's IT asset base. 
 
• 52% increase in group net assets to £1,813,140 (2010: £1,319,743), an increase of 
£493,397. 
 
BBC high-profile contracts 
 
We continue to supply the BBC with voice and data services for high-profile and prestigious events, 
which included the Royal Wedding during 2011. We also have confirmed orders in place for London 
Olympics 2012 as we support the BBC as the host broadcaster to the world’s media. 
 
Strategy 
 
Our strategy of cross-selling the five elements of our converged managed services offering is now 
delivering positive results. The objective is to cross-sell all the group’s services into our existing 
customer base, which strengthens our customer's reliance on the company, increases our profit per 
customer and dramatically decreases the likelihood of our customer’s switching to a competitor. 
 
 
Notes: 
1. EBITDA is defined as Earnings before interest, taxation, depreciation, amortisation of intangibles, exceptional 
acquisition costs, share of results of associates and the embedded fair value adjustment in the convertible loan. 
2. Operating profit is measured before amortisation of intangibles, exceptional acquisition costs, share of results of 
associates and the embedded fair value adjustment in the convertible loan. 
3. Loss for the year is measured after all costs, including the costs of discontinued operations relating to previous 
years. 
Pinnacle Telecom Group plc
Page 1  
 
 
 
  
CHAIRMAN’S STATEMENT 
 
 
 
“The Group has acquired additional core 
skills and continued to innovative. We are 
proud of the solutions we offer and of the 
progress we have made.” 
 
 
Bill Allan, Chairman 
 
 
This is my second year as Chairman of your company, and I am pleased to announce rapid growth and focused determination in the 
pursuit of our goals. We set objectives in 2010 to build a value added solutions based business of substance through the leverage of 
organic opportunities and targeted acquisitions. Since the beginning of that year your company has grown revenues by over 266% 
and broadened its appeal to a larger segment of the UK telecommunications market. More importantly, the transformation of 
Pinnacle from traditional telephony into a provider of IP and bespoke services has been successful and winning new business.  
This year the Group acquired MacLellan IT Limited and Multilayer Limited to complement our existing product set and skills. This 
activity was closely followed in October 2011 by the acquisitions of Online Computer Developments Limited and RMS Managed ICT 
Security Limited. We expect these acquisitions alone to add revenues of about £5 million during 2012. 
Although growth by acquisition consumes management time and focus, our organic growth and ability to innovate has not been 
neglected. This financial year we were proud to participate in some high profile and prestigious events where we provided voice and 
data solutions for the General Election, the Papal Visit to the UK, and the Royal Wedding. These events reinforce our ability to 
operate under pressure and to high levels of quality customer service. 
The Group continues to carefully manage its balance sheet and cash resources. Our maiden operating profit from last year more 
than doubled to £165,299, and positive net cashflow from operating activities was achieved for the first time. These were notable 
achievements. 
Our focus for this year is to integrate the acquisitions and build on our core strengths. We now have a product set that gives us 
additional profile in the market, with additional skills to enhance and develop our services for the years ahead. I have been greatly 
impressed by Alan Bonner and his team for their hard work and dedication. This has been a tough year for the UK - but a tough year 
in which your company became more strongly positioned to compete and grow its business in the UK telecommunication market. I 
look forward with optimism to the year ahead.  
Further detail and comment on the results for the full year are contained in the Chief Executive’s Review 
 
 
 
Bill Allan 
CHAIRMAN 
20 February 2012
Pinnacle Telecom Group plc
Page 2  
 
 
 
  
CHIEF EXECUTIVE’S REVIEW 
 
“2011 has been another very successful year.” 
“Our strategy is working” 
 
Alan Bonner, Chief Executive Officer 
 
Introduction 
I am delighted to report that our strategy is working and 2011 has been another very successful year.  
Over the last few years, we have seen a convergence of technologies from the IT, data, telecoms and mobile industries, and in 
2010, through the leverage of organic opportunities and targeted acquisitions, we set about transforming Pinnacle Telecom Group 
Plc from a well respected telecommunications service provider, into a converged managed services provider. Convergence in our 
space is where a combination of multiple technologies comes together in a new form; to create secure, next generation IP based 
solutions. Where previously separate IT, telecoms, connectivity, mobile, and data services have been merged into a single 
multi-media solution, we have seen that customers have been able to deliver increased productivity at a much lower cost, which 
enables them to differentiate themselves from their competitors in their chosen market. The delivery of a single multi-media solution 
allows us to deliver converged managed services for our customers, specifically tailored to their business needs across their whole 
organisation. 
 
We are convinced that Pinnacle will continue to differentiate itself through the delivery of our converged managed services strategy 
and by cross-selling solutions to our customers. In our view, it is not acceptable to promote a single product alone; today’s 
customers demand value for money and search out suppliers who can deliver flexible solutions. Customers are busy and know 
what they want – namely a supplier who can understand their needs, will evaluate the technology, design, implement and manage a 
solution that delivers against their objectives. 
Strategy 
Our strategy is predicated on cross-selling the five elements of our converged managed services offering (as detailed below), and is 
now delivering positive results. The objective is to cross-sell all of the group’s services into our existing customer base, which 
strengthens our customer's reliance on the company, increases our profit per customer and dramatically decreases the likelihood of 
our customer’s switching to a competitor. 
Converged managed services offering  
1) Managed Support Services 
2) Unified Communications and Collaboration 
3) Communications and Mobility 
4) Software as a Service (SaaS) 
5) Infrastructure services 
Pinnacle Telecom Group plc
Page 3  
 
 
 
  
CHIEF EXECUTIVE’S REVIEW (CONTINUED) 
1) Managed Support Services 
Managed Support Services focuses on IT support and consists of five revenue streams, 1) installation and deployment, 2) desktop 
support, 3) server support, 4) network support and 5) break/fix 
We realised that in order to roll out our converged managed services strategy; we needed to increase our IT capability across the 
group. To this end, we successfully acquired MacLellan IT in August 2011 and followed that with the acquisition of Online Computer 
Developments in October 2011, these two acquisitions have been integrated into our previous IT business of Explore IT Ltd. 
With these recent acquisitions, we have set about increasing our overall IT revenues from the group’s customers, and in line with 
our objectives to move our revenues from being almost exclusively generated from traditional telephony, into revenues generated 
from a converged managed service offering, 2011 certainly signals a shift in the allocation of business resources to this objective. 
At 30 September 2011, we have seen a quantum shift in the cost of group resources dedicated to our IT offerings, increasing from 
£639,855 in 2010 to £1,542,881 in September 2011 and further demonstrates our commitment in this regard. We hope that in 2012, 
revenues from Managed Support Services will be much closer to the combined revenues from Mobile and Telecoms. 
2) Unified communications & collaboration 
Unified communications and collaboration consists of six revenue streams, 1) hosted voice (VoIP), 2) conferencing services,  
3) call centre applications, 4) inbound call services, 5) mobility solutions, 6) call recording solutions. 
In order to deploy our unified communications offering, we acquired Solwise Telephony and Sipswitch in January 2010. 
Through successful delivery of our unified communications and collaboration solutions, we earn trust from our customers, which in 
turn leads to new opportunities for us to supply additional services or bid for new contracts. It is through this cycle that we earn our 
status as a Trusted Advisor to our customers. We have seen the results of this approach by building solutions for some high profile 
and prestigious events, including voice and data solutions for the UK General Election and Papal Visit in 2010 and of course the 
Royal Wedding in 2011. 
3) Connectivity and mobility 
Pinnacle’s heritage is in connectivity and mobility, which consists of seven revenue streams. 1) Broadband services, 2) MPLS,  
3) Ethernet, 4) SIP Trunks, 5) Voice minutes, 6) Fixed line rental, 7) Mobile services 
Whilst on the face of it there seems little to measure between competing offerings in a crowded market, in the area of connectivity 
and mobility, we challenge the bigger players through our value proposition and have increased revenues whilst maintaining 
margins. For us to deliver solutions in this way, we need exceptional people and robust vendor relationships. We also need a deep 
understanding and control of the underlying technologies that come together to make the connectivity solution. Our preference is to 
own the solution from end-to-end, but where we do have to partner; we make sure that we select only the best vendors, those who 
can support us to deliver a seamless service to the customer. 
4) Software as a Service (Saas) 
SaaS is the new world of cloud computing, it allows us to leverage our data centre assets and deliver recurring revenue, which is 
derived from monthly subscriptions by customers having access to software applications that are hosted in the cloud and residing in 
our data centres. There are eight revenue streams to our Saas offering; 1) Security, 2) Digital content; 3) Vertical markets, 4) CRM, 
5) Business process, 6) Supply chain, 7) Business intelligence, 8) Business productivity suites.  
Buoyed by lower start-up and maintenance costs compared to on-premises application deployments, as well as the ability to 
distribute and share applications and documents through the cloud, businesses appetite for SaaS applications is increasing and will 
become a large percentage of the group’s turnover over time, particularly in the hosted desktop and CRM space. 
 
Pinnacle Telecom Group plc
Page 4  
 
 
 
  
CHIEF EXECUTIVE’S REVIEW (CONTINUED) 
5) Infrastructure Services 
Infrastructure services are another opportunity for us to leverage our data centre assets. Consisting of the following four revenue 
streams; 1) Colocation and hosting, 2) Platforms as a service (PaaS), 3) Infrastructure as a Service (IaaS), 4, Data security – data 
backup, disaster recovery, business continuity. 
A good example of leveraging our data centre assets is the acquisition of an IP CCTV business we made in July 2011. The UK 
CCTV market was an area that we felt we needed to break into because we see it as essentially an ISP business, this allows us to 
host the required IP CCTV hardware in our data centres at no extra cost to the company. 
Most businesses demand round the clock CCTV surveillance from external monitoring companies and it was these monitoring 
companies that we sought to target as we entered this new service area. However, the key differentiator for us was service 
resilience. By offering a reliable IP connection with failsafe technology to 2G and 3G as a backup, we have developed a unique and 
innovative solution, combining IP and 2G/3G data into a single solution with seamless automatic failover. We now deliver a 
completely outsourced remote security and surveillance service, sending threat alerts back to the control centre. With this offering, 
we now supply Sotheby’s, Unipart and Hilton Hotels to name but a few and look to develop these services further during the coming 
months and years. 
Each of the five key elements in our converged managed services offering above make use of the skills and expertise we have 
developed in each of the three underlying industry disciplines of Mobile, IT and telecommunications services. You will find a 
breakdown of the performance in each discipline in Note 4 to the accounts. 
 
Our strategy of cross-selling our customers the five elements of our converged managed services, differentiates us from our 
competitors who in the main only sell products. We sell solutions, a mutually agreed-upon answer to a customers’ problem with 
measurable, often transformational improvements.  
Growth 
By effectively executing our strategy, we managed to follow up on the success of last year and more than doubled the maiden 
operating profit we achieved in 2010 (before amortisation and exceptional costs), delivering £165,299 for the year to 2011 (2010: 
£78,647). There is often a balance for a growing company like ours, between profit preservation and investment in growth, but I am 
satisfied that we have achieved a good mix and believe we have given ourselves a solid base on which to grow in 2012.  
In 2011 we achieved revenue growth of 29% over the previous year, delivering £8,522,079 of sales for the period. With 84% of 
turnover now coming from monthly recurring contracts, this stable and recurring revenue base allows us to grow the business in 
other more opportunistic and one-off areas, such a government contracts, education, health and the financial and professional 
service sectors. Of course, we always look to supplement one-off sales with new and ongoing contracts for support, maintenance 
and professional services, however, as we execute our plan to cross-sell converged managed services for our customers, I would 
expect to see the volume of recurring revenues grow overall, but I also expect to see the percentage of non-recurring revenues 
increase in 2012. 
2011 has also been another very successful year from our telecommunications revenues, which grew by a further 33% over 2010 
levels to just under £7m. Much of this increase in turnover was as a result of further developing our partnership with the BBC, other 
world broadcasters, media and event companies. 
2011 year saw our revenues from mobile sales fall 15% on 2010 levels, down to £565,460 from £663,551 in 2010. This reflects the 
overall reduction seen in the commercial terms being offered to business partners from the mobile networks, plus a general fall in 
mobile hardware refresh rates from our customers. Mobile network providers have also moved away from connection bonuses, 
onto a longer-term revenue share model, which realigns our sales efforts and rewards high retention rates. 
Gross margin from revenues fell from 30.4% in 2010, to 28.9% in 2011, in the main; this was due to lower margins from inbound 
non-geographic numbers, which followed a reduction in call rates to 0845 and 0870 numbers. Overall though, with the introduction 
of higher margin professional service revenues towards the later part of 2011 and continuing into 2012, we expect to be able to 
maintain regular margins in excess of 30% on an ongoing basis.  
Pinnacle Telecom Group plc
Page 5  
 
 
 
  
CHIEF EXECUTIVE’S REVIEW (CONTINUED) 
In 2011, due to an increase in headcount as a result of recent acquisitions, we saw a 14% increase in Administration Expenses of 
£288,420 over 2010. As business customers increasingly adopt converged technologies, combining telephony and IT into a single 
managed solution, we recognise the importance of increasing our intellectual capital as an organisation. Our sales effort stretches 
across the UK and we increasingly need technical staff to support our customer solutions across the country. We have seen that the 
SME market prefers to outsource IT and technical development of their business systems to specialist managed service providers 
such as Pinnacle and it is this space that we seek to develop further. 
It is a testimony to the staff within Pinnacle that since September 2009, we have achieved 266% increase in revenues with only a 
52% increase in Administration Expenses over the same period. 
We still strive to achieve our first overall positive profit before tax, but the amortisation of acquired intangible assets as a result of 
growing partly through acquisition, creates a challenge in that respect. Nonetheless, we remain convinced that a strategy of 
acquiring complementary products, people and innovation into the group at the right price delivers enhanced shareholder value.  
Customer Retention 
We strive for excellence in our service delivery whilst constantly looking to improve the way we do business; this approach enables 
us to increase the value in our service offering, and in this way, we successfully punch above our weight and win business from 
much larger competitors. However, we never underestimate the importance of excellent customer account management, and 
retention is a key area of focus within a service sector like ours. We regularly monitor the retention of customers on a monthly basis. 
For a business like ours, where we always look to cross-sell multiple product solutions to our customers, this is an important 
measure of our success and client surveys give us valuable insight into our customer experience. 
 
Each year as part of the audit, we are required to look in detail at the performance of acquired customers who have come into the 
group. This year and for the second year running, as a result of buying additional products and services from other group 
companies, we have seen that customer bases acquired in 2009 and 2010 have actually increased their overall revenue with the 
group. This most recent customer retention review prompted us to amend our intangible asset amortisation policy for acquired 
customer bases post September 2008, as the Directors felt that writing the value of these customer bases down to the profit and 
loss account over a period of five years was too aggressive, given the actual positive retention rates seen. We have therefore, 
chosen to amortise the remaining value of customer bases and intellectual property acquired since September 2008 over the 
maximum allowed of ten years. This change reduced the amortisation charge in the period by £82,702. 
 
As our strategy of cross-selling the five elements of our converged managed services proposition takes hold, it is becoming more 
and more common for customers to take service from many areas of our offering within three years of joining us. This is testimony 
to our account management and customer service efforts. Cross-selling increases our profit per customer and dramatically 
decreases the likelihood of our customer’s switching to a competitor, thereby improving our customer retention. 
Acquisitions 
It has been a successful year on the acquisition front, the range of products and services that we now have in our portfolio allows us 
to offer converged managed solutions, covering all areas of design, implementation, training and ongoing management. We have a 
track record of successfully integrating acquisitions into the group and these additions further increased the group’s intellectual 
capital and technical service offering. We are fortunate to have assembled such a great team of skilled and motivated individuals. 
The acquisition of an IP CCTV business in July 2011 allowed us to break into the CCTV market. In 2010, the value of the CCTV 
market is believed to have increased by an estimated 3% to £1.2bn. We see IP CCTV as essentially an ISP business; this allows us 
to host the required IP CCTV hardware in our data centres at no extra cost to the company.  
Pinnacle Telecom Group plc
Page 6  
 
 
 
  
CHIEF EXECUTIVE’S REVIEW (CONTINUED) 
The acquisitions of MacLellan IT Limited and Online Computer Developments Limited in August 2011 and October 2011 
respectively, were important milestones. It is one thing to develop and sell innovative technical solutions to our customers, but the 
implementation and post-sales support of these solutions is arguably the most important value added service. These acquisitions 
brought us a solid base of technical staff with a wide range of desktop, server and virtualisation experience. All our research shows 
that these are the areas where customers will increase spend over the next five years. Equally important, these acquisitions give us 
a strong foothold in the IT services market in Scotland, expanding our reach across Glasgow, Edinburgh and Fife, from our offices 
in Paisley, Glasgow and Dunfermline. This puts us in the right place, working hand in hand with our customers to deliver new 
technologies into their business as they grow and granting us trusted advisor status with all of our customers. 
This move to develop IT revenues by your Company does not mean that we have forsaken our traditional telephony background. 
We are experts in connectivity and voice solutions. It is this experience gained over many years, which when coupled with our IT 
expertise, puts us in first place to cross-sell converged managed solutions to the UK business community. There is no sign that 
revenues in the telephony sector will disappear, although ultimately, over the next ten years, we do see most companies moving 
from traditional voice, to voice over IP solutions. For us, traditional telephony is the cash generative elder in our portfolio of services 
and gives us the free cash flow to invest in new and emerging solution based revenues. 
On the 9th October 2011, we successfully completed the acquisition of RMS Managed ICT Security Limited (“RMS”), which was 
recently voted McAfee Partner of the Year and can boast a customer base of some of the most prestigious and well-respected 
organisations in the world. These larger corporate customers trust and rely on RMS to deliver and manage their security solutions 
and lock down their networks from attack. We are truly delighted to have secured this acquisition, RMS has a very different 
customer profile to the rest of the group companies and we see this as an opportunity to develop high-end cross-selling 
opportunities of the enlarged customer portfolio into this sector. 
 
Whilst a large percentage of the RMS revenues come from recurring security software solutions, our value-add in this growing 
market is professional services. We differentiate in this area through our expertise from pre-sale design, through to regular 
health-checks, audits, stress testing, ongoing training and service management. We invest a lot of business resources to ensure 
sure that our engineers are fully accredited and trained in all current and developing technologies, and our relationship with our 
Vendor partners is key in this respect. 
 
Whilst I expect to grow revenues organically, we will continue to seek out well-priced and timely acquisitions in synergistic markets 
to help underpin our organic growth efforts.  
High-Profile Contracts 
This year saw us deliver connectivity solutions to over 170 media events across the UK, supporting broadcasts to countries all over 
the world. None were more memorable than the voice and data broadcasting solutions we supplied for the Royal Wedding in April 
2011. This event captured the hearts of the nation and enthralled the rest of the world in a display of true British ceremony. It was a 
major contract win for us and whilst it was extremely high-profile, it came with no margin for error. For the BBC, CNN (USA), Seven 
Network (Australia) and Global Television Network (Canada), we supplied services opposite Buckingham Palace at Canada Gate, 
the Mall and Horse Guards Road, along Whitehall and Downing Street and opposite Westminster Abbey,. I am extremely proud of 
the solution that we delivered at this historic event. I am delighted to report that the solutions we deployed were delivered without a 
glitch. 
 
This year also saw us move into data and connectivity market for UK sporting events with the development of a new relationship 
with IMG Media (“IMG”). IMG is the world's largest independent producer and distributor of sports programming. For IMG in 2011 
we delivered for voice and data networks for The Women’s Golf Open at Carnoustie, the Dunhill Links Championship at Carnoustie, 
St Andrews and Kingsbarns, and the Johnnie Walker Classic Championship held at Gleneagles. 
We expect to continue to win contracts of this nature and were delighted to announce (post year-end) our involvement in the 
London 2012 Olympic and Paralympic Games. 
Pinnacle Telecom Group plc
Page 7  
 
 
 
  
CHIEF EXECUTIVE’S REVIEW (CONTINUED) 
Summary 
 
In summary, 2011 has been another very successful year. 
We have progressed with our strategy to build a converged managed services business of scale, by cross-selling our customers the 
five elements of our converged managed services proposition and we are now starting to see positive results coming through. 
In the year ended 30 September 2011, we increased our operating profit by 110%, EBITDA by 67%, gross profit by 18% and 
turnover by 29%. We have now delivered 740% growth in turnover since 2007 and at the same time enhanced shareholder value. 
In July we acquired the Business and Assets of an IP CCTV business delivering combined resilient and "always on" IP and 3G 
connectivity, for high-profile IP CCTV monitoring. We now supply companies such as Sotheby’s, Unipart and Hilton Hotels. In 
August we acquired the Business and Assets of MacLellan IT Limited, a well established profitable IT company for 186,046,491 
shares at a premium of 58% per share, equivalent to £669,767. MacLellan are delivering increased IT consultancy and support 
revenues in Scotland. 
We continue to supply the BBC with voice and data services for high-profile and prestigious events, delivering solutions to over 170 
media events in 2011, which included the Royal Wedding. We also have confirmed orders in place for the London 2012 Olympic 
and Paralympic Games, supporting the BBC as the host broadcaster to the world’s media. 
As a small company surrounded by industry giants, we continually punch above our weight and I would like to take this opportunity 
to thank each and everyone who contributed to the result in 2011. We can be extremely proud of the solutions that have been 
deployed and the service we deliver to our customers.  
Importantly however, whilst the period to 30th September 2011 has been a very successful year, we have made significant 
progress post year-end. Our strategy is working and I look forward to further updating you of our progress as the year unfolds. 
 
 
 
Alan J Bonner 
CHIEF EXECUTIVE OFFICER 
20 February 2012 
Pinnacle Telecom Group plc
Page 8  
 
 
 
  
CORPORATE GOVERNANCE 
As the company is listed on AIM it is not required to comply with the provisions of the UK Corporate Governance Code, which is 
mandatory for companies with a primary listing on the main market of the London Stock Exchange. This code, among other things, 
sets out standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations 
with shareholders.  
 
Although the company is not required to comply with the provisions of the Code, the board is committed to ensuring that proper 
standards of corporate governance operate and has established governance procedures and policies that are considered 
appropriate to the nature and size of the Group.  
 
Your board considers that at this stage in the Group’s development, the expense of full compliance with the UK Corporate 
Governance Code is not appropriate. 
 
Directors and the board 
The board directs the Group's activities in an effective manner through regular monthly board meetings and monitors performance 
through timely and relevant reporting procedures. Where it deems it necessary the board requests reports on specific areas outwith 
the normal reporting regime. All directors have access to advice from the company secretary and independent professionals at the 
Group’s expense. Training is available for new and other directors as necessary. 
 
The board at present comprises one executive and two non-executive directors. The size of the board is considered to be 
appropriate to the current size and character of the Group. The non-executive directors are independent of management and any 
business or other relationships which could interfere with the exercise of their independent judgment. The roles of chairman and 
chief executive are separate appointments and it is board policy that this will continue. 
 
The board has established two committees, the audit committee and the remuneration committee. Membership of both the audit 
committee and the remuneration committee is exclusively non-executive. A nominations committee will be established should it be 
required. Bill Allan is chairman of the remuneration committee and John Anderson of the audit committee. 
 
A separate report on directors’ remuneration is set out on pages 11 to 13, this is to be approved by the shareholders at the annual 
general meeting. 
 
Under the company’s articles of association, the nearest number to one third of the board shall retire each year by rotation. 
 
Accountability and audit 
The board considers that the annual report presents a balanced and understandable assessment of the Group’s performance and 
prospects. The audit committee has written terms of reference setting out its authority and duties and has meetings, at which the 
executive director also has the right to attend, at least once a year with the external auditors. The audit committee reviews the 
independence and objectivity of the external auditors. The committee reviews the nature and amount of the non-audit work 
undertaken by the auditors to satisfy itself that there is no effect on their independence. The committee is satisfied that Grant 
Thornton UK LLP are independent. 
 
Risk management 
The board has established a risk register which is formally reviewed during each calendar year. 
 
Going concern 
On the basis of a review of cash balances, banking facilities and the ability to call on certain shareholders to subscribe to additional 
loan notes, together with a review of forecasts and sensitised cash flows, the Directors have a reasonable expectation that the 
Group has adequate resources to continue in operational existence for at least the next 12 months from the date of signing the 
financial statements. The Directors recognise that the Group must maintain monthly profitability for the business to cover its cost 
base and remain within its finance facilities. 
 
Pinnacle Telecom Group plc
Page 9  
 
 
 
  
CORPORATE GOVERNANCE (CONTINUED) 
 
Internal financial control 
The Group has established policies covering the key areas of internal financial control and the appropriate procedures, controls, 
authority levels and reporting requirements which must be applied throughout the Group. The key procedures that have been 
established in respect of internal financial control are as follows: 
 
• Financial reporting: there is in place a comprehensive system of financial reporting based on the annual budget which the 
board approves. The results for the Group as a whole and each business segment are reported monthly, along with an 
analysis of key variances. Year-end forecasts are updated on a regular basis. 
 
• Investment appraisal: applications for capital expenditure are made in a prescribed format which places emphasis on the 
commercial and strategic as well as the financial justification. All significant projects require specific board approval. 
 
No system can provide absolute assurance against material misstatement or loss but the Group's systems are designed to provide 
reasonable assurance as to the reliability of financial information, ensuring proper control over income and expenditure, assets and 
liabilities. 
 
Relations with shareholders 
The company values the views of its shareholders and recognises their interest in the Group’s strategy and performance, board 
membership and quality of management. 
 
The annual general meeting is used to communicate with all shareholder and investor groups, and they are encouraged to 
participate. The chairmen of the audit and remuneration committees are available to answer questions. Separate resolutions are 
proposed on each issue so that they can be given proper consideration and there are resolutions to receive the annual report and 
accounts and the report on directors’ remuneration. The company counts all proxy votes and will indicate the level of proxies lodged 
on each resolution, after it has been dealt with by a show of hands.  
 
The company uses its website, www.pinnacletelecomgroup.co.uk, as a means of providing information to shareholders and other 
related parties. The company’s annual report and accounts, interim reports and other relevant announcements are maintained on 
the website.  
Attendance at Board and Committee Meetings 
The following table summarises the number of board and committee meetings held during the year and the attendance record of 
individual directors: 
 
  Board Audit Remuneration 
   Attended Eligible 
to attend 
Attended Eligible 
to attend 
Attended Eligible to 
attend 
W Allan   11 11 1 1 1 1 
J C Anderson   11 11 1 1 1 1 
A Bonner   11 11 - - - - 
 
Pinnacle Telecom Group plc
Page 10  
 
 
 
  
REPORT OF THE BOARD TO THE MEMBERS ON DIRECTORS’ REMUNERATION 
 
The remuneration committee has given consideration to the UK Corporate Governance Code issued by the Financial Reporting 
Council in framing its remuneration policy. As the company is listed on AIM, it is not required to comply with the provisions of 
Section 412 of the Companies Act 2006. The following disclosures are voluntary as is resolution 2 to approve this report at the 
annual general meeting. 
 
Remuneration committee 
 
The remuneration committee determines, on behalf of the board, the Group’s policy for executive remuneration and the individual 
remuneration packages for the executive director. In setting the Group’s remuneration policy, the remuneration committee 
considers a number of factors, including the following: 
 
• salaries and benefits available to executive directors of comparable companies; 
• the need to attract and retain executives of an appropriate calibre; and 
• the continued commitment of executives to the Group’s success through appropriate incentive schemes. 
 
The committee meets at least once a year. 
 
Remuneration of executive director 
 
The remuneration package of the only executive director comprises the following elements: 
 
• Base salary 
The remuneration committee sets the base salary to reflect responsibilities and the skill, knowledge and experience of the 
individual. The executive director does not receive a director’s fee. 
 
• Bonus scheme 
The executive director is eligible to receive a bonus on top of his basic salary dependent on individual and Group 
performance at the discretion of the remuneration committee. Performance conditions are set to ensure they are relevant 
and stretching. 
 
• Car allowance 
The executive director is entitled to a car allowance. 
 
• Pensions 
There are no pension provisions for the executive director. 
 
• Share options 
The executive director is entitled to participate in share option schemes. 
 
• Other benefits 
The executive director receives private medical insurance.  
 
The executive director is engaged under a service contract which requires a notice period of 12 months. 
 
Remuneration of non-executive directors 
 
The fees paid to the non-executive directors are determined by the board. They are not entitled to receive any bonus or other 
benefits. Non-executive directors’ letters of appointment are on a 3 month rolling basis. 
 
Pinnacle Telecom Group plc
Page 11  
 
 
 
  
REPORT OF THE BOARD TO THE MEMBERS ON DIRECTORS’ REMUNERATION (CONTINUED) 
 
Directors’ remuneration 
 
Details of individual directors’ emoluments for the year (excluding employers national insurance contributions) are as follows: 
 
 Salary and 
fees paid or 
receivable 
Bonus paid or 
receivable 
Pension 
contributions 
Other  
benefits 
2011  
total 
2010  
total 
 £ £ £ £ £ £ 
Non- Executive       
W Allan 31,904 - - - 31,904 18,000 
J C Anderson 10,000 - - - 10,000 10,000 
Executive       
A Bonner 85,800 11,000 - 8,895 105,695 143,169 
       
Totals 127,704 11,000 - 8,895 147,599 171,169 
 
Notes: Included in “Other benefits” in the table of Directors’ remuneration above, are the costs of share options issued in 
accordance with IFRS 2 Share Based Payments to the Directors as follows: 
 
 
      
2011 2010 
       
   £    £ 
Name of Director 
             
A J Bonner 
      
7,512 7,512 
  
            
    
Total 
            
7,512 7,512 
 
 
Directors’ interests in shares 
 
The interests of the Directors’ in the ordinary shares of the Company at 30 September 2011 together with their interests 
at 1 October 2010 were as follows: 
 
     
2011 2010 
      
   £    £ 
Name of Director            
W Allan 
     
5,714,286 5,714,286 
A J Bonner 
     
189,076,972 187,076,972 
J C Anderson 
     
1,428,571 1,428,571 
  
          
    
 
Directors’ interests in loan notes  
The interests of the Directors in the loan notes of the Company, referred to in note 16, at 30 September 2011 together with their 
interests at 1 October 2010 were as follows: 
 
     
2011 2010 
      
   £    £ 
Name of Director 
           
A J Bonner 
     
25,000 25,000 
J C Anderson 
     
- 5,000 
 
 
Pinnacle Telecom Group plc
Page 12  
 
 
 
  
REPORT OF THE BOARD TO THE MEMBERS ON DIRECTORS’ REMUNERATION (CONTINUED) 
 
Directors’ interests in share options 
 
The interests of the current Directors in options over the ordinary shares of the Company at 30 September 2011 together with their 
interests at 1 October 2010 (or date of appointment if later) were as follows: 
 
 
1 October 
2010 
 
Granted Lapsed 30 September 
2011 
Exercise Price Date when 
Exercisable 
Expiry date 
 
A J Bonner 
 
54,545,455 
 
- 
 
- 
 
54,545,455 
 
0.1375p 
 
01-Jul-10 
 
01-Jul-18 
A J Bonner 15,000,000  - - 15,000,000 0.3000p 09-Jul-11 09-Jul-19 
 
Two Directors of the Company’s subsidiaries have been granted options over the shares of the Company as follows: 
       
 
1 October 
2010 
Granted Lapsed 30 September 
2011 
Exercise Price Date when 
Exercisable 
Expiry date 
 
D Giddens 
 
8,333,333 
 
- 
 
- 
 
8,333,333 
 
0.3000p 
 
09-Jul-11 
 
09-Jul-19 
B McMillan 2,000,000 - - 2,000,000 0.3000p 09-Jul-11 09-Jul-19 
           
 
All options granted are dependent on increasing shareholder value above 25% of the mid-market share price at the time the options 
were granted. When these options were issued, the Remuneration Committee regarded absolute shareholder return as a valid 
performance criteria relating to all options granted, based on the fact that the Group was not trading profitably and its share price 
had fallen materially. The Remuneration Committee do, however, regard adjusted EBITDA as the key performance measurement 
and future options, if any, will take due regard of this measurement. 
 
Of the total options granted to Directors, 71,545,455 options over the Ordinary Shares in the Company have been granted under 
the terms of the Company’s approved EMI share option scheme and options over 8,333,333 Ordinary Shares in the Company have 
been granted under the terms of the Company’s unapproved share option scheme.  
 
No other Directors have been granted share options in the shares of the Company or other Group companies. The mid-market price 
of the Company’s shares at the end of the financial period was 0.347p and the range of prices during the period was between 
0.475p and 0.30p. 
 
 
By order of the Board 
 
 
 
Bill Allan 
Chairman, Remuneration Committee 
20 February 2012 
 
Pinnacle Telecom Group plc
Page 13  
 
 
 
  
DIRECTORS’ REPORT  
for the year ended 30 September 2011 
 
COMPANY NUMBER: 05259846 
 
The Directors present their report on the affairs of the Group, together with the financial statements and auditors’ report for the year 
ended 30 September 2011. 
 
Principal activity 
The principal activity of the Group is the provision of telecommunications and IT solutions to businesses within the United Kingdom. 
 
Business review 
The business review contained within the Chairman’s Statement on page 2 and the Chief Executive’s review on pages 3 to 8, 
together with the key performance indicators and principal risks and uncertainties disclosed below have been provided by the 
directors in accordance with the Companies Act 2006. 
 
The Company has disclosed the main trends and factors likely to affect the future development, performance and position of the 
business.  
 
Key performance indicator review  
The major key performance indicators that the Directors monitor are turnover, EBITDA, gross margin, total Group overheads, cash 
and capital expenditure. 
 
• Turnover increased by £1.9m on 2010 levels, increasing contracted recurring revenues to 84% during the year. 
 
• Adjusted EBITDA, which excludes exceptional items, was up £100,501 in the year, an increase of 67% over 2010. 
 
• Gross margin increased by £375,072 on the previous year, representing 28.9% of revenues. 
 
• Total administration costs increased by only 14% or £288,420 during the year, despite supporting revenue growth of 29% 
over the same period. 
 
• Cash at the year-end amounted to £452,431, following investment of £143,274 in capital assets and development and 
£55,606 repayment of prior financing activities, including interest. 
 
• The Group delivered its maiden net positive cash flow from operating activities to support the investment program. 
 
Principal risks and uncertainties 
Section 417(3) of the Companies Act 2006 provides that the business review must contain a description of the principal risks and 
uncertainties. The board has established a formal process to identify risks and uncertainties through the production and 
maintenance of a risk register. There are a number of principal risks and uncertainties which have been identified as a result of this 
process which could have a material impact on the Group’s future performance. At all times, the board seeks to mitigate these risks 
and uncertainties. These are not all the risks which the board has identified but those principal risks and uncertainties that the 
Directors currently consider to be the most material. In addition to these risks Note 23 contains details of financial risks. 
 
• Working capital  
Risk: The Group’s cash resources are finite and its borrowing facilities are limited. Although the Group has achieved 
monthly profitability (before the amortisation of intangibles), there is no guarantee that it will remain in profit. The directors 
recognise that the Group must remain profitable for the business to cover its cost base and remain within its finance 
resources.  
 
Mitigation: The board seeks to mitigate this risk by carefully managing the costs and cash resources of the Group. Cash is 
micro managed on a day to day basis by the senior management team. 
Pinnacle Telecom Group plc
Page 14  
 
 
 
  
DIRECTORS’ REPORT (CONTINUED) 
 
• People  
Risk: As in many businesses, the ability to hire and retain good people is fundamental to the success of the business. 
Given the current economic climate, such individuals may be less willing to move to a small business than might 
otherwise be the case in times of prosperity. This includes quality sales personnel.  
 
Mitigation: The board uses its contacts and significant experience in the recruitment and selection of employees. 
Acquisitions also bring people and talent which we can utilise. The board and senior management regularly review 
employee salaries and benefits in line with those offered for commensurate roles in the market to aid retention. 
 
• Reputational damage  
Risk: The Group provides an essential service to an extensive client base many of whom rely on the provision of that 
service in order to run their businesses. Any diminution in the level of service could have serious consequences for 
customer acquisition and retention.  
 
Mitigation: Our high level of recurring revenue and our low level of customer attrition are evidence of our ability to provide 
the level of service required and maintain our reputation in the market. Solutions that are high profile or with critical 
deadlines are handled by senior management as part of a project delivery team, headed by a Director. 
 
• Key suppliers 
Risk: The Group is dependent on certain key suppliers for the continued operation of its business. The most significant of 
which are those for electricity, bandwidth, servers and the delivery of calls and access from licensed operators, 
particularly BT.  
 
Mitigation: In all cases these supplies are obtained from reputable organisations chosen after a thorough selection 
process. In the case of BT, we rely on the regulatory framework provided by the regulator, OFCOM. The Group actively 
seeks to maintain good relationships with its chosen suppliers. The Group also seeks to maintain either several sources 
of supply or alternative sources of supply. 
 
• Bad debts 
Risk: The customer base is mainly made up of SME customers, who are one of the groups feeling the effects of the 
economic downturn. Although we have not yet experienced any material lift in bad debt, that does not mean to say that 
there will not be an increase in 2012 as companies continue to realign their cost base. We are particularly exposed to a 
dealer or reseller running into difficulties as suppliers would require to be paid irrespective of the status of the dealer or 
reseller.  
 
Mitigation: A majority of customers are signed on direct debit which allows us very quickly to know when a customer 
defaults, and so take appropriate action. Those that are not on direct debit are also carefully monitored and the Group 
takes appropriate action to recover older debt including engaging with a debt collection agency to recover delinquent 
debt. 
 
• Competition 
Risk: We pride ourselves in being competitive coupled with having the ability to deliver a solutions based service that 
enhances the customer’s business. Although the economic outlook has marginally strengthened since 2010, a 
deteriorating climate might cause buying decisions to move more in the direction of a price based sale compared to a 
value based sale. Although we have not experienced this, we may do so in the future. 
 
Mitigation: We deliver a complete communications solution to the customer which, in many cases, is cheaper than legacy 
products. Our disconnect rate is modest. Due to the nature of VoIP technology, competition exists from the traditional 
telecom reseller market as well as from IT services businesses. However, the Group considers this as an opportunity as 
well as a competitive threat, as most of these businesses do not have their own proprietary IP platform. To mitigate 
downward pressure on price, the Group sets out to buy services at the highest point in the value chain and will source 
supply direct from wholesale network providers, where it cannot own the infrastructure from end to end. 
  
Pinnacle Telecom Group plc
Page 15  
 
 
 
  
DIRECTORS’ REPORT (CONTINUED) 
 
• Technology 
Risk: As we move towards an IP solution for our customers’ needs, there is an increasing technology risk, particularly with 
the reliability and speed of broadband, which is of fundamental importance to the customer solution. The development of 
IP is moving very quickly, and certain technologies which exist today may well be obsolete quicker than expected in the 
future. This would have a negative impact on the Group who would be exposed to higher costs, not necessarily 
recoverable from the client.  
 
Mitigation: The VoIP platform developed by Sipswitch gives the Group ownership of a proprietary solution. Solwise is able 
to undertake technology development to its own account and does not rely on third parties for its VoIP solution.   
  
• Financing 
Risk: The Group relies on credit from suppliers on reasonable commercial terms. The main creditors tend to be significant 
companies. The Group does not, at this time, rely on the banking market and is therefore somewhat shielded from the 
difficulties associated with overdraft and other loan facilities. From time to time, the Group has taken out leasing for plant 
and vehicles and will continue to do so when required. The Group owns no property. 
 
Mitigation: The Group continues to carefully monitor its cash resources, and its forward plans are regularly updated. 
Should the board believe that additional capital is required, it would move quickly to achieve this. 
 
The above is not an exhaustive list, and it should not be taken as such, but it does cover the principal areas of risk and uncertainties 
which the board continues to focus on. 
 
Results and dividends 
The Group’s loss on ordinary activities after taxation was £190,293 (2010: £270,739). The audited financial statements of the Group 
are set out on pages 21 to 50. The Directors do not propose a dividend for the year ended 30 September 2011 (2010: £Nil). 
 
Directors and their interests 
The present membership of the Board is as follows:  
 
William Allan, Non-Executive Chairman 
Alan J Bonner, Chief Executive Officer 
John C Anderson, Non-Executive Director 
 
In accordance with the Company’s articles of association, William Allan will offer himself for re-election at the forthcoming Annual 
General Meeting. Details of Directors’ interests in the Company’s shares during the year, including changes to the make up of the 
Board during the year, are set out in the report of the Board to the members on Directors’ remuneration on pages 11 to 13. 
 
Acquisitions 
During the year the Company acquired the business assets of Multilayer Limited, a provider of resilient IP-CCTV solutions and 
MacLellan IT Limited, a highly regarded IT Managed Services provider covering East Scotland. Post year end, the Group also 
acquired Online Computer Development Limited, an IT Managed Services provider focused on West Scotland and IT Security 
experts RMS Managed ICT Security Limited.
 
Substantial shareholdings 
At 18 February 2012 the following interests in three per cent or more of the issued ordinary share capital had been notified to the 
Company: 
 Number of ordinary shares Percentage held 
D Giddens 190,273,709 9.10 
A J Bonner 189,076,972 9.05 
Huntingtower Limited 184,046,491 8.90 
P Goodland 178,273,709 8.53 
S Dronfield 84,136,855 4.03 
S Patel (1) 74,556,571 3.57 
      1  Includes the interests of his wife, N Patel 
Pinnacle Telecom Group plc
Page 16  
 
 
 
  
DIRECTORS’ REPORT (CONTINUED) 
 
Share capital 
The share capital during the year and the number of ordinary shares reserved for issue are shown in Note 17 to the consolidated 
financial statements. 
 
Post balance sheet events 
On 6 October 2011, the Company acquired the entire issued share capital of Online Computer Developments Limited, an IT 
services company based in Scotland. Also on 10 October 2011, the Company also acquired Stoke on Trent based IT security 
experts, RMS Managed ICT Security. Full details can be found in Note 24. 
 
Employee involvement 
All companies within the Group use an Intranet system as a source of information on the Group and developments within the 
Group, including updates on the Group’s strategy and details of new products and services provided by the Group. Information 
about all products and services is also available on the websites of the operating companies. 
 
Employment of disabled persons 
Full and fair consideration is given to applications for employment made by disabled persons having regard to their particular 
aptitudes and abilities. Appropriate training is arranged for disabled persons, including retraining for alternative work of employees 
who become disabled, to promote their career development within the organisation. 
 
Supplier payment policy and practice 
The Company and its subsidiaries agree the terms of payment when negotiating the terms and conditions for their transactions with 
their suppliers. Payment is made in compliance with those terms, subject to the terms and conditions of the relevant transaction 
having been met by the supplier. Trade creditor days of the Group at 30 September 2011, calculated in accordance with the 
requirements of the Companies Act 2006, were 47 days (2010: 53 days). Trade creditor days of the Parent Company at 30 
September 2011, were 36 days (2010: 81 days).  This represents the ratio, expressed in days, between amounts invoiced to the 
Company and its subsidiaries in the year by their suppliers and the amounts due, at the year-end, to trade creditors falling due for 
payment within one year. 
 
Financial risk management and objectives 
Details of financial risk management and objectives are contained in Note 23 to the consolidated financial statements. 
 
Financial instruments 
The Group’s financial instruments comprise cash and liquid resources and finance leases together with various items such as trade 
debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to provide 
finance for the Group’s operations. The main risk to the Group is interest rate risk arising from floating rate interest rates.  
 
The Group’s borrowings at 30 September 2011 comprise finance leases totalling £23,857 (2010: £49,653). The interest rates on the 
finance leases are fixed for the term of the lease at between 7.5% and 12%.  
 
On 30 September 2009, Pinnacle created £250,000 unsecured convertible loan notes in units of £5,000. On 30 September 2010, 
notes for a nominal value of £125,000 were issued at par. The loan notes are not transferable and may be redeemed (in whole or in 
part) by Pinnacle, at its sole discretion, at any time. The loan notes become repayable on demand in the event of a specified default 
by Pinnacle. 
 
On 6 October 2011, Pinnacle created a further £500,000 unsecured convertible loan notes in units of £2,000. The loan notes are 
not transferable and may be redeemed (in whole or in part) by Pinnacle, at its sole discretion, at any time. The loan notes will 
become repayable on demand in the event of a specified default by Pinnacle.  
 
All loan notes are convertible into ordinary shares by Pinnacle at any time after the second anniversary following issue, or 
alternatively by the holders of the loan notes at any time following the period of thirty days after the second anniversary of the loan 
notes. The interest accrues on a day to day basis and is payable monthly in arrears.  
 
The directors consider the value of the loan notes to be £138,529 taking into consideration the principal sum of £120,000 and the 
fair value of the early prepayment option, should the loan be converted into shares, less the present value of the interest payable in 
arrears as governed by IAS32. Additional information on financial instruments is included in Note 16 
Pinnacle Telecom Group plc
Page 17  
 
 
 
  
DIRECTORS’ REPORT (CONTINUED) 
 
Research and Development 
As part of the acquisitions of Sipswitch Limited in 2010 and MacLellan IT Limited in 2011, the Group acquired a number of 
proprietary software applications. The Group is committed to the continued research and development of advanced technical 
applications that enhance the services and solutions available to customers, where they demonstrate potential to generate future 
profitable revenue streams. 
 
Political and charitable donations 
The Group did not make any charitable or political donations in either the current or the previous year. 
 
Environmental policy 
The Group acknowledges the importance of environmental matters and where possible uses environmentally-friendly policies in all 
its offices such as recycling and energy-efficient practices.  
 
Awareness of relevant audit information 
So far as each of the directors, at the time the report is approved, is aware: 
 
• there is no relevant audit information of which the auditors are unaware, and 
• the directors have taken all the steps they ought to have taken to make themselves aware of any relevant audit 
information and to establish that the auditors are aware of that information. 
 
Website disclaimer 
The maintenance and integrity of the Pinnacle Telecom Group plc website is the responsibility of the directors. The work carried out 
by the auditor does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any 
changes that may have occurred to the financial statements since they were initially presented on the website. 
 
Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from 
legislation in the other jurisdictions. 
 
Annual General Meeting 
Notice of the Annual General Meeting is set out on pages 59 to 62. Information relating to certain of the resolutions is given or 
referred to in the notes forming part of the notice. 
 
Auditors 
Grant Thornton UK LLP offers themselves for reappointment as auditors in accordance with section 489 of the Companies Act 2006 
and a resolution will be proposed at the forthcoming Annual General Meeting. 
 
 
By order of the Board 
 
 
 
WJM Secretaries Limited 
Company Secretary 
20 February 2012  
Pinnacle Telecom Group plc
Page 18  
 
 
 
  
STATEMENT OF DIRECTORS’ RESPONSIBILITIES 
 
The directors are responsible for preparing the Annual Report of the Group and the Parent Company Financial Statements in 
accordance with applicable law and regulations. 
 
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have 
prepared the Group Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by 
the European Union and the Parent Company Financial Statements in accordance with United Kingdom Generally Accepted 
Accounting Practice (United Kingdom Accounting Standards and applicable laws). Under company law the directors must not 
approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company 
and the Group and of the profit or loss of the Group for that period. In preparing those financial statements, the Directors are 
required to: 
 
• select suitable accounting policies and then apply them consistently; 
 
• make judgements and accounting estimates that are reasonable and prudent; 
 
• for Group financial statements, state whether applicable IFRSs have been followed subject to any material departures 
disclosed and explained in the financial statements; 
 
• for Parent Company financial statements, state whether applicable UK Accounting Standards have been followed, 
subject to any material departures disclosed and explained in the financial statements; and 
 
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will 
continue in business. 
 
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s 
transactions and disclose, with reasonable accuracy at any time, the financial position of the Company and to enable them to 
ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of 
the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 
 
 
 
 
Pinnacle Telecom Group plc
Page 19  
 
 
 
  
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PINNACLE TELECOM GROUP PLC 
 
We have audited the Group financial statements of Pinnacle 
Telecom Group plc for the year ended 30 September 2011 
which comprise the consolidated income statement, 
consolidated statement of comprehensive income, 
consolidated statement of financial position, consolidated 
statement of changes in equity, consolidated statement of 
cash flows and the related notes.  The financial reporting 
framework that has been applied in their preparation is 
applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the European Union. 
This report is made solely to the company’s members, as a 
body, in accordance with Chapter 3 of Part 16 of the 
Companies Act 2006. Our audit work has been undertaken 
so that we might state to the company’s members those 
matters we are required to state to them in an auditor’s 
report and for no other purpose. To the fullest extent 
permitted by law, we do not accept or assume responsibility 
to anyone other than the company and the company’s 
members as a body, for our audit work, for this report, or for 
the opinions we have formed. 
Respective responsibilities of directors and auditor 
As explained more fully in the Directors’ Responsibilities 
Statement set out on page 19, the directors are responsible 
for the preparation of the Group financial statements and for 
being satisfied that they give a true and fair view. Our 
responsibility is to audit and express an opinion on the 
Group financial statements in accordance with applicable 
law and International Standards on Auditing (UK and 
Ireland). Those standards require us to comply with the 
Auditing Practices Board’s (APB’s) Ethical Standards for 
Auditors. 
Scope of the audit of the financial statements 
A description of the scope of an audit of financial statements 
is provided on the APB's website at  
www.frc.org.uk/apb/scope/private.cfm. 
Opinion on financial statements 
In our opinion the Group financial statements: 
• give a true and fair view of the state of the Group's 
affairs as at 30 September 2011 and of its loss for the  
year then ended;  
 
• have been properly prepared in accordance with 
IFRSs as adopted by the European Union; and 
 
• have been prepared in accordance with the 
requirements of the Companies Act 2006. 
Opinion on other matter prescribed by the Companies 
Act 2006 
In our opinion the information given in the Directors' Report 
for the financial year for which the Group financial 
statements are prepared is consistent with the Group 
financial statements. 
Matters on which we are required to report by exception 
We have nothing to report in respect of the following:  
Under the Companies Act 2006 we are required to report to 
you if, in our opinion: 
• certain disclosures of directors’ remuneration 
specified by law are not made; or 
• we have not received all the information and 
explanations we require for our audit. 
 
Other matter 
We have reported separately on the parent company 
financial statements of Pinnacle Telecom Group plc for the 
year ended 30 September 2011.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Andrew Howie  
Senior Statutory Auditor 
for and on behalf of Grant Thornton UK LLP 
Statutory Auditor, Chartered Accountants 
1 - 4 Atholl Crescent,  
Edinburgh  
EH3 8LQ       
    
 
20 February 2012
 
 
 
Pinnacle Telecom Group plc
Page 20  
 
 
 
  
CONSOLIDATED INCOME STATEMENT 
for the year ended 30 September 2011 
  Year ended  Year ended  
  2011  2010  
 Note £  £  
        
Revenue 4 8,522,079  6,608,533  
      
Cost of sales  (6,057,550)  (4,519,076)  
Gross profit  2,464,529  2,089,457  
 
 
    
Administrative expenses  (2,299,230)  (2,010,810)  
      
Operating profit before amortisation of intangibles and       
exceptional costs.  165,299  78,647  
 
Share of profit/(loss) from associate 10 8,684  (1,830)  
Exceptional costs relating to acquisition 3 (23,031)  (18,216)  
Embedded fair value adjustment in convertible loan 16 (10,062)  (8,467)  
Amortisation of intangibles  (239,195)  (296,206)  
      
Operating loss 5 (98,305)  (246,072)  
 
Interest receivable  349  3  
Interest payable  (19,360)  (22,495)  
      
Finance costs 6 (19,011)  (22,492)  
      
Loss before tax  (117,316)  (268,564)  
      
Taxation 18 (997)  18,904  
      
Loss for the period from continuing operations 19 (118,313)  (249,660)  
 
 
    
Discontinued operations      
Loss for the period from discontinued operations  (71,980)  (21,079)  
 
Loss for the year  (190,293)  (270,739)  
      
Loss per share      
- basic and fully diluted - continuing 8 (0.01)p  (0.01)p  
- basic and fully diluted - discontinued 8 0.00p  0.00p  
- basic and fully diluted - total 8 (0.01)p  (0.01)p  
 
 
 
      
Pinnacle Telecom Group plc
Page 21  
 
 
 
  
CONSOLIDATED INCOME STATEMENT (CONTINUED) 
for the year ended 30 September 2011 
 
  Year ended  Year ended  
Earnings before Interest, Taxation, Depreciation  2011  2010  
and Amortisation (EBITDA) 
  £  £  
Operating loss  (98,305)  (246,072)  
Add back amortisation  239,195  296,206   
Add back depreciation  108,990  99,244   
       
EBITDA for the year  249,880  149,379  
 
 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
for the year ended 30 September 2011 
     
  Year ended  Year ended 
  2011  2010 
  £  £ 
Loss for the year from total operations  (190,293)  (270,739) 
Total comprehensive negative income for the year  (190,293)  (270,739) 
Attributable to equity holders of the parent  (190,293)  (270,739) 
Pinnacle Telecom Group plc
Page 22  
 
 
 
  
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
as at 30 September 2011 
  2011  2010 
 Note £  £ 
Non-current assets       
Intangible assets 9 1,267,813     859,217  
Investments in Associated Companies 10       176,559     167,875  
Research and Development Asset 11 220,544   195,834  
Property, plant and equipment 11       166,989       136,244  
 
Total non-current assets  1,831,905  1,359,170 
     
Current assets     
Inventories 13 97,661  73,190 
Trade and other receivables 14 1,576,303  1,220,871 
Cash and cash equivalents 15 452,431  697,189 
 
Total current assets  2,126,395  1,991,250 
 
Total assets  3,958,300  3,350,420 
     
Liabilities     
Short term borrowings  (9,976)  (27,115) 
Trade and other payables  (1,092,069)  (968,006) 
Other taxes and social security costs  (170,162)  (176,814) 
Accruals and other payables  (844,071)   (649,614) 
     
Total current liabilities 16 (2,116,278)  (1,821,549) 
     
Non-current liabilities     
Long term borrowings 16 (28,882)  (209,128) 
     
Total liabilities  (2,145,160)  (2,030,677) 
 
Net assets  1,813,140  1,319,743 
     
Equity     
Share capital    5,667,056      5,481,009  
Share premium account  4,044,052     3,560,331  
Merger reserve  283,357       283,357  
Other reserve  38,948  25,026 
Fair value adjustment  (1,064,130)  (1,064,130) 
Profit and loss reserve  (7,156,143)  (6,965,850) 
 
Total equity 17 1,813,140  1,319,743 
 
These financial statements were approved and authorised for issue by the Board of Directors on 20 February 2012. 
Signed on behalf of the Board of Directors by:  
 
 
A J Bonner  
Chief Executive Officer  
 
The accompanying accounting policies and notes form an integral part of these financial statements.  
COMPANY NUMBER: 05259846  
Pinnacle Telecom Group plc
Page 23  
 
 
 
  
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
for the year ended 30 September 2011 
 Share Share Merger Other Fair Retained  
 capital premium Reserve reserve value earnings Total 
        
At 1 October 2009 
5,316,488 3,238,902 114,392 11,104 (1,064,130) (6,695,111) 921,645 
Loss and total comprehensive 
loss for the period and expense 
for the period 
- - - - - (270,739) (270,739) 
        
Transactions with owners        
Share Issue 164,521  - - - - - 164,521  
Share based payments - - - 13,922  - - 13,922  
Premium on Share Issue - 321,429  168,965  - - - 490,394  
Total Transactions with owners 164,521 321,429 168,965 13,922 - - 668,837 
 
Total movements 164,521 321,429 168,965 13,922 - (270,739) 398,098 
        
Equity at 30 September 2010 5,481,009 3,560,331 283,357 25,026 (1,064,130) (6,965,850) 1,319,743 
 
At 1 October 2010 
5,481,009 3,560,331 283,357 25,026 (1,064,130) (6,965,850) 1,319,743 
Loss and total comprehensive 
loss for the period and expense 
for the period 
- - - - - (190,293) (190,293) 
        
Transactions with owners        
Share Issue 186,047  - - - - - 186,047  
Share based payments - - - 13,922  - - 13,922  
Premium on Share Issue - 483,721 - - - - 483,721  
Total Transactions with owners 186,047 483,721 - 13,922 - - 683,690 
 
Total movements 186,047 483,721 - 13,922 - (190,293) 493,397 
        
Equity at 30 September 2011 5,667,056 4,044,052 283,357 38,948 (1,064,130) (7,156,143) 1,813,140 
 
Note 
* Represents the difference between the fair value of the customer base measured using IFRS2 and the actual consideration paid for the assets of the business. 
 
The accompanying accounting policies and notes form an integral part of these financial statements.  
Pinnacle Telecom Group plc
Page 24  
 
 
 
  
CONSOLIDATED STATEMENT OF CASH FLOWS 
for the year ended 30 September 2011  
  2011  2010 
  £  £ 
Cash flows from operating activities       
Loss before taxation  (117,316)  (268,564) 
 
Adjustments for:     
Depreciation  108,990  99,244 
Amortisation  239,195  296,206 
Share of (profit)/loss from associate   (8,684)  1,830 
Share option charge  13,922  13,922 
Fair value adjustment for convertible loan  10,062  8,467 
Interest expense  19,011  22,492 
Payment of corporation tax  (997)  - 
Increase in trade and other receivables  (318,467)  (216,973) 
Increase in inventories  (24,471)  (42,445) 
Increase/(decrease) in trade payables, accruals and other 
creditors  
104,507  (68,556) 
     
Net cash flow from operating activities  25,752  (154,377) 
     
Cash flows from discontinued activities     
 
Loss of discontinued activities before taxation  (71,980)  (21,079) 
 
Cash flows from investing activities     
Acquisition of business assets, net of cash acquired  (45,000)  (20,525) 
Capitalisation of Software Development costs  (68,000)   
Purchase of property, plant and equipment  (30,274)  (93,377) 
Interest received  349  3 
     
Net cash used in investing activities  (142,925)  (113,899) 
     
Cash flows from financing activities     
Issue of shares  -  450,000 
Repayment of convertible loans  (5,000)  - 
Payment of finance lease liabilities  (31,245)  (23,703) 
Interest paid  (19,360)  (22,495) 
     
Net cash from financing activities  (55,605)  403,802 
     
Net (decrease)/increase in cash  (244,758)  114,447 
Cash and cash equivalents at beginning of period  697,189  582,742 
     
Cash and cash equivalents at end of period  452,431  697,189 
Cash and cash equivalents comprise:     
Cash and cash equivalents    452,431  697,189 
Bank overdrafts   -  - 
     
  452,431  697,189 
Pinnacle Telecom Group plc
Page 25  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
1. General information  
Pinnacle Telecom Group plc is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the 
registered office is given on the inside back cover of this report. The nature of the Group’s operations and its principal activities are 
set out in the Chief Executive’s Review and Directors’ report. The financial statements are presented in pounds sterling because 
that is the currency of the primary economic environment in which each of the Group’s subsidiaries operates. 
 
1.1. Basis of preparation 
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and 
IFRIC interpretations endorsed by the European Union (EU) and with those parts of the Companies Act 2006 applicable to 
companies reporting under IFRS.  
 
The financial statements have been prepared under the historical cost convention. The measurement bases and principal 
accounting policies of the Group are set out below. The principal accounting policies of the Group have remained unchanged from 
the previous year. 
 
On the basis of a review of cash balances, banking facilities and the ability to call on certain shareholders to subscribe to additional 
loan notes, together with a review of forecasts and sensitised cash flows, the Directors have a reasonable expectation that the 
Group has adequate resources to continue in operational existence for at least the next 12 months from the date of signing the 
financial statements. The Directors recognise that the Group must maintain monthly profitability for the business to cover its cost 
base and remain within its finance facilities. 
 
The accounting policies that have been applied in the opening balance sheet have also been applied throughout all periods 
presented in these financial statements.  
 
1.2. New standards and interpretations of existing standards that are not yet effective and have not been adopted early by 
the Group 
The International Accounting Standards Board and the International Financial Reporting Interpretations Committee have issued the 
following standards and interpretations with an effective date after the date of these financial statements:  
 
·   IFRS 9 Financial Instruments (effective 1 January 2013)  
·  Prepayments of a Minimum Funding Requirement  
 
These standards are not yet effective and have not been adopted early by the Group, neither are they expected to have any 
material impact on the Group’s consolidated financial statements: 
 
The financial statements for the year ended 30 September 2011 were approved by the Board of Directors on  
20 February 2012.  
 
2. Principal Accounting Policies 
 
a) Basis of consolidation 
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to 30 September 
2011. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain 
benefits from its activities. The Group obtains and exercises control through voting rights. 
 
Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated 
unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of 
subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. 
 
Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all 
identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or 
not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and 
liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for 
subsequent measurement in accordance with the Group accounting policies.  
 
Pinnacle Telecom Group plc
Page 26  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
a) Basis of consolidation (continued) 
 
Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair 
value of the Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Associates are those 
entities over which the Group has significant influence but which are neither subsidiaries nor interests in joint ventures.  
Investments in associates are recognised initially at cost and subsequently accounted for using the equity method.  Acquired 
investments in associates are also subject to purchase method accounting.  However, any goodwill or fair value adjustment 
attributable to the share in the associate is included in the amount recognised as investment in associates. 
 
All subsequent changes to the share of interest in the equity of the associate are recognised in the Group's carrying amount of the 
investment.  Changes resulting from the profit or loss generated by the associate are reported in "share of profits of associates" in 
the consolidated income statement and therefore affect net results of the Group.   
 
These changes include subsequent depreciation, amortisation or impairment of the fair value adjustments of assets and liabilities.   
 
Items that have been recognised directly in the associate's equity are recognised in the consolidated equity of the Group.  
However, when the Group's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured 
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the 
associate.  If the associate subsequently reports profits, the investor resumes recognising its share of those profits only after its 
share of the profits equals the share of losses not recognised. 
 
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the 
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset 
transferred. Amounts reported in the financial statements of associates have been adjusted where necessary to ensure consistency 
with the accounting policies adopted by the Group. 
 
b) Goodwill 
Goodwill representing the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets 
acquired is capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Refer 
to Principal Accounting Policy (j) for a description of impairment testing procedures. 
 
c) Revenue and revenue recognition 
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary 
course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating 
sales within the Group. 
 
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits 
will flow from the transaction and specific criteria have been met for each of the Group’s activities as described below. The amount 
of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group 
bases its estimates on prior experience, taking into consideration the type of customer and the type of transaction. 
 
The Group recognises three segments for monitoring and reporting purposes: 
 
• Mobile services 
• IT 
• Other telecommunications services 
 
Mobile services 
Mobile network services (voice and data) principally consist of service and usage charges. Service charges are recognised evenly 
over the period to which the service relates. Usage charges are recognised in the period when the service is received by the 
customer. 
 
Where period discounts are offered, the discount is spread evenly over the contract. Commissions receivable from mobile network 
operators for new connections or the resigning of an existing contract are recognised in line with the fulfilment of the associated 
obligation. Separate provision is made for any anticipated liabilities. 
Pinnacle Telecom Group plc
Page 27  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
c) Revenue and revenue recognition (continued) 
 
IT 
Revenue attributable to the maintenance and support of systems is invoiced in accordance with the contract and recognised on a 
straight-line basis over the support period. Deferred income arises where services are invoiced in advance of performance. The 
amount is released to the income statement in subsequent periods with reference to the stage of completion of the transaction at 
the balance sheet date. 
 
Other telecommunications services 
Fixed line network services (voice and data) principally consist of service and usage charges. Service charges are recognised 
evenly over the period to which the service relates. Usage charges are recognised in the period when the service is received by the 
customer. Where period discounts are offered, the discount is spread evenly over the contract.  
 
The Group sells and installs telephony systems. Revenue from the sale and installation of hardware and associated licences is 
recognised in the income statement when the significant risks and rewards of ownership have passed to the buyer, usually on 
installation. External costs associated with the installation are recorded as work-in-progress until the revenue has been recognised. 
Revenue in respect of licences is only recognised where there are no ongoing obligations. Where ongoing obligations exist revenue 
is deferred as appropriate. The system may be sold as part of  
 
a package including network services and maintenance. Customer discounts, such as free maintenance or free line rental for a 
period of the contract, are apportioned between the system sale and the associated service based on sales value. 
 
The Group provides maintenance services for telephony systems. Revenue is recognised evenly over the contract period. Fees 
charged to customers for the provision of maintenance and support services is recognised on a straight line basis over the period of 
the related agreement. 
 
Revenue from the sale and installation of hardware is recognised in the income statement when the significant risks and rewards of 
ownership have passed to the buyer, usually on installation. Costs associated with this revenue are recognised in the same month. 
 
d) Foreign currencies 
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and 
liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. All other exchange 
differences are dealt with through the income statement. 
 
e) Property, plant and equipment 
Property, plant and equipment, which include motor vehicles, are stated at cost, net of depreciation and any provision for 
impairment. The depreciation policy is contained in Principal Accounting Policy (h). 
 
f) Disposal of assets 
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying 
amount of the asset and is recognised in the income statement. The gain or loss arising from the sale or revaluation of held for sale 
assets is included in “Loss for the year from discontinued operations” in the income statement. Any revaluation surplus remaining in 
equity on disposal of the asset is transferred to the profit and loss reserve. 
 
g) Discontinued operations 
A discontinued operation is a cash generating unit, or a group of cash generating units, that either has been disposed of, or is 
classified as held for sale, and: 
 
• represents a separate major line of business or geographical area of operations; 
• is part of a single coordinated plan to dispose of a separate major line of business or geographical area of  operations; or 
• is a subsidiary acquired exclusively with a view to resale. 
 
 
Pinnacle Telecom Group plc
Page 28  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
g) Discontinued operations (continued) 
The disclosures for discontinued operations in the current and prior year relate to all operations that have been discontinued by the 
balance sheet date for the latest period presented. 
 
h) Depreciation 
Depreciation is calculated on a straight line basis so as to write off the cost of an asset, less its estimated residual value, over the 
useful economic life of that asset as follows: 
 
Plant and equipment –three years  
IT equipment –three years 
Fixtures, fittings and leasehold improvements –three years 
Motor vehicles –three years 
Software development –five years 
 
Material residual value estimates are updated as required, but at least annually, whether or not the asset is revalued. 
 
i) Intangible fixed assets 
Intangible assets mainly comprise the fair value of customer bases and other identifiable assets acquired which are not included on 
the balance sheets of the acquired companies. A fair value calculation is carried out based on evaluating the net recurring income 
stream from each type of intangible asset. Intangibles are initially recognised at fair value, and subsequently carried at fair value, 
less accumulated amortisation and impairment. The following items were identified as part of the acquisitions of entities by the 
Group. 
 
- Maintenance contracts amortised over 5 to 10 years  
- Customer lists to be amortised over 5 to 10 years   
- Custom Voice over internet systems to be valued and amortised over a maximum of 10 years. 
j) Impairment testing of goodwill, other intangible assets and property, plant and equipment 
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash 
flows (cash generating units). As a result, some assets are tested individually for impairment and some are tested at cash 
generating unit level. 
 
Goodwill is allocated to those cash generating units that are expected to benefit from synergies of the related business combination 
and represent the lowest level within the Group at which management monitors the related cash flows. Impairment reviews are 
carried out using five year cash flow projections, with a 15% weighted average cost of capital. Cash flows from acquired customer 
bases are assumed to decrease at a rate of 20% per annum. Goodwill and other intangible assets with an indefinite useful life, and 
those intangible assets not yet available for use, are tested for impairment at least annually. All individual assets are tested for 
impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. 
 
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The 
recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal 
discounted cash flow evaluation. Impairment losses are credited to the carrying amount of the relevant asset. With the exception of 
goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. 
 
k) Leased assets 
In accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all 
the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the 
lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if 
any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability. 
 
Pinnacle Telecom Group plc
Page 29  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
k) Leased assets (continued) 
The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the 
income statement over the period of the lease. All other leases are regarded as operating leases and the payments made under 
them are charged to the income statement on a straight line basis over the lease term. Lease incentives are spread over the term of 
the lease. 
 
l) Inventories and work in progress 
Inventories are stated at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items 
and the cost is calculated using the FIFO basis. Work in progress relates to costs incurred on part completed work. 
 
m) Taxation 
Current tax is the tax currently payable based on taxable results for the year. 
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the 
difference between the carrying amounts of assets and liabilities and their tax bases. However, deferredtax is not provided on the 
initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business 
combination or affects tax or accounting profit.  
 
In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition 
as deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the 
extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. 
Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of 
realisation, provided they are enacted or substantively enacted at the balance sheet date. 
 
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where 
they relate to items that are charged or credited directly to equity, in which case the related deferred tax is also charged or credited 
directly to equity. 
 
n) Financial assets 
Financial assets are divided into the following categories: loans and receivables. Financial assets are assigned to the different 
categories by management on initial recognition, depending on the purpose for which the investments were acquired. The 
designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is 
available. 
 
All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial 
assets are initially recognised at fair value, plus transaction costs. 
 
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and 
substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least 
at each balance sheet date. 
 
Interest and other cash flows resulting from holding financial assets are recognised in the income statement when receivable, 
regardless of how the related carrying amount of financial assets is measured. 
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active 
market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the 
receivables. Loans and receivables are subsequently measured at amortised cost using the effective interest rate method, less 
provision for impairment.  
 
Any change in their value through impairment or reversal of impairment is recognised in the income statement. 
 
Provision against trade receivables is made when objective evidence is received that the Group will not be able to collect all 
amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the 
difference between the asset’s carrying amount and the present value of estimated future cash flows.
Pinnacle Telecom Group plc
Page 30  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
o) Cash and cash equivalents 
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments 
that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 
 
p) Financial liabilities 
Financial liabilities are obligations to pay cash or other financial instruments and are recognised when the Group becomes a party 
to the contractual provisions of the instrument. All interest related charges are recognised as an expense in ‘finance cost’ in the 
income statement. Loan notes are raised for support of long-term funding of the Group’s operations. The financial liability arising on 
the loan notes is carried at amortised cost. The embedded derivative, which represents an embedded prepayment option, is carried 
at fair value. 
 
Finance charges, including premiums payable on settlement or redemption, and direct issue costs are charged to the income 
statement on an accruals basis using the effective interest method and are added to the carrying amount of the instrument to the 
extent that they are not settled in the period in which they arise. 
 
Dividend distributions payable to equity shareholders are included in ‘other short-term financial liabilities’ when the dividends are 
approved in general meeting prior to the balance sheet date. 
 
q) Equity 
Equity comprises the following: 
 
• ‘Share capital’ represents the nominal value of equity shares. 
• ‘Share premium’ represents the excess over nominal value of the fair value of consideration received for equity shares, 
net of expenses of the share issue. 
• ‘Merger reserve’ represents the excess over nominal value of the fair value of consideration received for equity shares, 
net of expenses of the share issue, in connection with acquisitions. 
• ‘Other reserve’ represents equity-settled share-based employee remuneration until such share options are exercised. 
• ‘Fair Value Adjustment’ represents the difference between the market value at the date of issue of shares to satisfy 
acquisitions and the value agreed with the vendors relating to these acquisitions. 
• ‘Profit and loss reserve’ represents retained profits and accumulated losses. 
 
r) Employee benefits 
Share-Based Payment – Equity settled 
 
All material share-based payment arrangements are recognised in the financial statements. All goods and services received in 
exchange for the grant of any share-based remuneration are measured at their fair values. Fair values of employee services are 
indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and 
excludes the impact of non-market vesting conditions (for example, profitability and sales growth targets). 
 
All share-based remuneration is ultimately recognised as an expense in the income statement with a corresponding credit to ‘other 
reserve’. If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on 
the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any 
indication that the number of share options expected to vest differs from previous estimates.  
 
Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in 
prior periods if share options ultimately exercised are different to that estimated on vesting. 
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital. 
 
s) Critical accounting judgements and key sources of estimation uncertainty 
 
Critical judgements in applying the Group’s accounting policies 
The Group has made two business asset acquisitions during the year from Multilayer Limited and MacLellan IT Limited. The 
allocation of fair values to the tangible assets and the identification and valuation of intangible assets affects the goodwill and the 
assignment of that to the cash generating unit, recognised in respect of the acquisition.  
 
Pinnacle Telecom Group plc
Page 31  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
s) Critical accounting judgements and key sources of estimation uncertainty (continued) 
Estimates and judgements around the allocation of fair values are continually evaluated and are based on historical experience and 
other factors, including expectations of future events that are believed to be reasonable under the circumstances. 
 
Key sources of estimation uncertainty 
The key assumptions concerning the future and other sources of estimation uncertainty at the balance sheet date that have a 
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are 
discussed below. 
 
Intangible assets 
Intangible assets are non-physical assets which have been obtained as part of an acquisition and which have an identifiable future 
economic benefit to the Group at the point of acquisition. Customer bases are valued at acquisition by measuring the future 
discounted cashflows over a five year period from the date of acquisition assuming diminution for retention at 80% per annum, 
using a 15% weighted average cost of capital. IT systems and software development are valued at cost.  
 
Determining whether intangible assets are impaired requires the judgement of whether there is an impairment indicator. 
Management consider losses in acquired subsidiaries to be an impairment indicator and perform regular tests to measure the future 
cash flow’s to ensure that the loss is due to operating costs, restructuring costs and not a result of the performance of the intangible 
assets.  
 
The key judgement for the carrying value of intangible assets is the cash flows associated with the intangible assets. Each of the 
intangible assets held by the Group continues to generate discounted positive cash flows and therefore management are satisfied 
there is no impairment indicator. 
 
Impairment of goodwill 
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill 
has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the 
cash generating unit and a suitable discount rate in order to calculate the present value.  
 
Share-based payments 
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at 
which they were granted. Judgement is required in determining the most appropriate valuation model for a grant of equity 
instruments depending on the terms and conditions of the grant. Management are also required to use certain assumptions in 
determining the most appropriate inputs to the valuation model including expected life of the option, volatility, risk free rate and 
dividend yield. The assumptions and models used are fully disclosed in note 7. 
 
Contingent consideration 
Under IFRS 3: Business combinations, contingent consideration is included in the cost of a business combination to the extent that 
it is deemed probable and can be measured reliably. This requires management to assess the probability and to estimate the 
financial impact of events on which consideration is contingent. 
 
3. Acquisitions   
 
3.1. Acquisition of Multilayer Limited 
On 7 July 2011, Pinnacle Telecom Plc acquired the customer agreements and intellectual property rights residing in Multilayer 
Limited for a total consideration of £45,000 in cash. The acquisition of this IP CCTV business allowed the Group to enter the CCTV 
market at low cost and enhances the offering to Group customers. 100% of the consideration relates to the customer base and was 
satisfied in full prior to 30 September 2011. Exceptional costs in relation to the transaction were £3,081. 
 
In the twelve months prior to acquisition, Multilayer Limited generated IP CCTV revenues of £106,957, but was loss making. 
Following the successful integration of the core IP technology into the Paisley Data Centre, this business is cash generative. As a 
result of this acquisition, the IP CCTV customer base generated revenues of £26,529 between  
7 July 2011 and 30 September 2011.  
 
Pinnacle Telecom Group plc
Page 32  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
3.1. Acquisition of Multilayer Limited (continued) 
It is not possible to separately identify the revenues, costs and operating profits of the assets acquired with any degree of certainty, 
for the period 1 October 2010 to 6 July 2011 for disclosure under IFRS3(R) as only part of the trading assets of Multilayer Limited 
were acquired by the Group. 
 
3.2. Acquisition of MacLellan IT Limited 
On 1 August 2011, the Group acquired the business and assets of MacLellan IT Security Limited for a total consideration of 
£669,767 satisfied by the issue of 186,041,491 ordinary shares at a price of 0.36p per share, being the mid-market price per share 
at the close of business on 29 July 2011. The sellers are unable to dispose of any shares, subject to certain exceptions, until a 20 
month period has elapsed after completion. 
 
The acquisition delivered a solid base of technical staff with a wide range of desktop, server and virtualisation experience to allow 
the Group’s to further develop its plan of cross-selling reciprocal business into the customer base. 
 
The total purchase price of £669,767 was allocated as £602,791 for the intangible asset relating to the customer base, £60,279 for 
the intellectual property rights relating to the Mainstay leisure management application, £5,893 relating to tangible fixed assets and 
£804 to stock items. Exceptional costs in relation to the transaction were £12,450. 
 
As a result of this acquisition, the MacLellan IT customer base generated revenues of £132,214 between 1 August 2011 and 30 
September 2011. It is not possible to separately identify the revenues, costs and operating profits of the assets acquired with any 
degree of certainty, for the period 1 October 2010 to 31 July 2011 for disclosure under IFRS3(R) as only part of the trading assets of 
MacLellan IT Limited were acquired by the Group. 
 
4. Segment Reporting 
The chief operating decision-maker has been identified as the Chief Executive Officer (“CEO”) of the Company. The CEO reviews the 
Group’s internal reporting in order to assess performance and to allocate resources. The Company has determined its operating 
segments based on these reports. 
 
The Group currently has three reportable segments: 
 
• Mobile services – this segment provides a range of mobile services and solutions to micro and SME companies. 
• IT – this segment provides a wide range of IT focused solutions to both SME and middle market companies, including 
Voice over IP (‘VoIP’) implementations. 
• Other – this sector covers a range of telecommunications services including calls and line rental. 
 
Information regarding the operation of the reportable segments is included below. The CEO assesses the performance of the 
operating segments based on revenue and a measure of Earnings before Interest, Depreciation and Amortisation (EBITDA) before 
any allocation of Group overheads or charges for share based payments. Segment EBITDA is used to measure performance as the 
CEO believes that such information is the most relevant in evaluating the results of the segment. The Group’s EBITDA for the year 
has been calculated after deducting Group overheads from the EBITDA of the three segments as reported internally. The Group 
overheads include the cost of the Board, the costs of maintaining a listing on AIM, legal and professional fees, and the costs of 
shareholder communications including the costs of retaining a Nominated Advisor and a Broker. 
 
The segment information is prepared using accounting policies consistent with those of the Group as a whole. 
The assets and liabilities of the Group are also reviewed by the chief operating decision-maker on a segment basis and have been 
disclosed. All segments are continuing operations. No customer accounts for more than 10% of external revenues. Inter-segment 
transactions are accounted for using an arms-length commercial basis. 
 
Pinnacle Telecom Group plc
Page 33  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
 
 
4.1 Analysis of revenue  2011  2010  
  £  £  
By business sector      
Mobile services  565,460  663,551   
IT  1,042,036   742,070   
Other telecommunications services  6,914,583   5,202,912   
      
Continuing operations  8,522,079  6,608,533  
 
Total revenue  8,522,079  6,608,533  
      
By destination      
United Kingdom  8,522,079  6,608,533  
 
Total revenue  8,522,079  6,608,533  
 
  2011  2010  
By origin  £  £  
      
Continuing operations      
Pinnacle Telecom plc             1,538,436  1,327,003   
Accent Telecom UK Limited              4,890,938      3,504,104   
Solwise Telephony Limited              1,294,080      1,008,372   
Pinnacle Cloud Solutions Limited  
(formerly Glen Communications Limited)  798,625  48,295  
Other group companies  -     720,759   
  8,522,079  6,608,533  
Total revenue  8,522,079  6,608,533  
      
By recurring nature      
Recurring - continuing operations  7,142,835     5,343,492   
Non-Recurring - continuing operations  1,379,244     1,265,041   
  8,522,079  6,608,533  
Total revenue  8,522,079  6,608,533  
 
4.2 Analysis of net loss after tax 
  2011  2010 
4.2.1 By business sector  £  £ 
Mobile services     
Profit from operations before amortisation  38,241  46,083 
     
IT     
Loss from operations before amortisation  (10,613)  (55,379) 
Amortisation  (54,789)  (54,789) 
     
Loss from operations after amortisation  (65,402)  (110,168) 
     
Pinnacle Telecom Group plc
Page 34  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
4.2 Analysis of net loss after tax (continued) 
 
Other telecommunications services  
2011 
£ 
  
2010 
£ 
 
Profit from operations before amortisation  487,162  372,788  
Amortisation  (184,406)  (241,417) 
     
Profit from operations after amortisation  302,756  131,371 
     
Head office  (393,908)  (316,946) 
     
Continuing operations  (118,313)  (249,660) 
IT - discontinued operations  (71,980)  (21,079) 
     
Total losses  (190,293)  (270,739) 
 
 
4.2.2 By destination  
2011 
£ 
  
2010 
£ 
 
United Kingdom  (190,293)  (270,739) 
     
  2011  2010 
  £  £ 
4.2.3 By origin     
Pinnacle Telecom plc  127,755   163,897  
Accent Telecom UK Limited   469,557  155,529  
Solwise Telephony Limited (13 January to 30 September)  (84,143)  60,754 
Pinnacle Cloud Solutions Limited  
(formerly Glen Communications Limited)  4,462  (34,866) 
Head Office and other group companies  (396,749)  (372,765) 
      
Profit from continuing operations before exceptional items  120,882  46,546 
Amortisation  (239,195)  (296,206) 
Eclectic Group Limited and I G Software Limited - 
discontinued operations  (71,980)  (21,079) 
     
Total losses  (190,293)  (270,739) 
     
4.2.4 By recurring nature 
  
2011 
£  
2010 
£ 
     
Recurring - continuing operations  82,949  94,146 
Non-Recurring - continuing operations  37,933  (47,600) 
Profit from continuing operations before exceptional items  120,882  46,546 
 
Amortisation  (239,195)  (296,206) 
Non-Recurring - discontinued operations  (71,980)  (21,079) 
     
Total losses  (190,293)  (270,739) 
 
Pinnacle Telecom Group plc
Page 35  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
4.3 Analysis of assets and liabilities  
 
 Mobile IT 
Other 
telecommunications 
services 
Discontinued 
operations Total 
Assets      
Intangible assets - 783,085 484,728 - 1,267,813 
Investments in Associated Companies - 176,559 - - 176,559 
Property, plant and equipment - 329,074 58,459 - 387,533 
 
Total non-current assets - 1,288,718 543,187 - 1,831,905 
 
 Mobile IT 
Other 
telecommunications 
services 
Discontinued 
operations 
Total 
 
Current assets      
Inventories - 34,653 63,008 - 97,661 
Trade and other receivables 52,053 386,431 1,137,819 - 1,576,303 
Cash and cash equivalents 33,503 53,219 365,469 240 452,431 
 
Total current assets 85,556 474,303 1,566,296 240 2,126,395 
 
Total assets 85,556 1,763,021 2,109,483 240 3,958,300 
 
Liabilities      
Short term borrowings - - (9,976) - (9,976) 
Trade and other payables - (240,325) (833,659) (18,085) (1,092,069) 
Other taxes and social security costs - (56,844) (113,128) (190) (170,162) 
Accruals and other payables (9,032) (113,480) (589,306) (132,253) (844,071) 
 
Total current liabilities (9,032) (410,649) (1,546,069) (150,528) (2,116,278) 
 
Total non-current liabilities - - (28,882) - (28,882) 
 
Total liabilities (9,032) (410,649) (1,574,951) (150,528) (2,145,160) 
 
Net assets / (liabilities) 76,524 1,352,372 534,532 (150,288) 1,813,140 
 
 
5. Operating loss 
2011 2010 
 
£  £  
Loss from operations is stated after charging:  
    
Depreciation of owned fixed assets  108,990 99,244 
Other operating lease rentals:    
– buildings  52,440 57,837 
Auditors’ remuneration: - audit of parent company 
                   - audit of subsidiary companies 
10,000 
24,650 
7,000 
23,000 
Pinnacle Telecom Group plc
Page 36  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
  
6. Finance income and finance costs  
Finance cost includes all interest-related income and expenses. The following amounts have been included in the income 
statement line for the reporting periods presented: 
 
2011 2010 
 
£  £  
Interest income resulting from short-term bank deposits 349 3 
Finance income 349 3 
Interest expense resulting from:   
- Convertible loan 
- finance leases 
- other commercial loans 
- bank overdrafts 
- overdue taxation 
12,000 
6,101 
- 
1,259 
- 
12,500 
4,997 
774 
1,700 
2,524 
   
Finance costs 19,360 22,495 
 
7. Employee costs 
 
7.1 Directors and employees   
At 30 September 2011 the Group employed 37 staff. The average number of staff employed by the Group during the financial 
year amounted to: 
 
2011 2010 
 
Number of management staff 
 
6 
 
6 
Number of operational staff 21  18  
 
Total 
 
27 
 
24 
 
Employee numbers are stated including Directors. 
 
7.2 Employee remuneration  
  
 2011 
£ 
2010 
£ 
   
Wages and salaries 866,661 665,004 
Share option costs 13,922 13,922 
Social security costs 87,527 66,719 
 
Total 
 
968,110 
 
745,645 
 
7.3. Share-based remuneration  
The Company has an HMRC approved EMI share option scheme as part of the remuneration of senior management. There is also an 
unapproved share option scheme in place which is used where the individuals do not fall under the rules of the approved scheme. The 
maximum term of current arrangements under the EMI scheme ends on 1 July 2018.  
 
The unapproved scheme has no set term. In both schemes, upon vesting, each option allows the holder to purchase one ordinary 
share at the pre-agreed option price. All share-based employee remuneration will be settled in equity. The Group has no legal or other 
obligation to repurchase or settle the options. The performance criteria attached to the outstanding options is based on total 
shareholder return. The holder can only exercise the option if the share price exceeds 25% of the share price at the time the option 
was granted. 
Pinnacle Telecom Group plc
Page 37  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
7.3. Share-based remuneration (continued)  
 
  2011   2010 
  
 
  
weighted average 
exercise price   
Weighted average 
exercise price 
  Number  £  Number £ 
                
Outstanding at 1 October 104,878,788  0.00167  65,212,122 0.00167 
Granted  -  -  39,666,666 0.003 
Lapsed  -  -  - - 
                
Outstanding at 30 September 104,878,788  0.00167  104,878,788 0.00167 
   
 
At 30 September 2011, Pinnacle Telecom Group plc has granted the following outstanding share options:  
 
   2011   2010  
   
Weighted 
average 
exercise price 
weighted 
average  
remaining 
contractual life   
weighted 
average 
exercise price 
weighted 
average  
remaining 
contractual life 
  Number £ Months  Number £ Months 
                  
Earliest exercise date        
2005  666,667 0.03 38  666,667 0.03 50 
2011  64,545,455 0.001375 81  64,545,455 0.001375 93 
2011  39,666,666 0.003 93  39,666,666 0.003 105 
                  
In total £13,922 of employee remuneration expense has been included in the consolidated income statement for 2011 (2010: 
£13,922). The fair value of options granted was calculated using the option pricing model, incorporating the following key assumptions:  
 
 
 
  
 
|______________2011 ___________|  
  
 
|______________2010 ___________|  
  
Number of options 
 
 39,666,666 64,545,455 666,667 
 
39,666,666 64,545,455 666,667 
Volatility 
 
 75% 75% 50% 
 
75% 75% 50% 
Spot Price 
 
 0.003 0.001375 0.03 
 
0.003 0.001375 0.03 
Interest rate 
 
 4.50% 4.50% 4.52% 
 
4.50% 4.50% 4.52% 
Dividend yield 
 
 0% 0% 0% 
 
0% 0% 0% 
Vesting period (years) 
 
 2 3 1 
 
2 3 1 
 
Option value weighted  
average exercise price  
 
 £0.0185 £0.00869 £0.0147 
 
£0.0185 £0.00869 £0.0147 
  
 
        
 
      
 
 
 
 
Pinnacle Telecom Group plc
Page 38  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
7.4 Directors 
Details of individual Directors’ emoluments for the year (including employers national insurance contributions shown below) are as 
follows: 
 Fees and salaries Bonus Employers NI 
contributions 
 
Other 
Benefits 
Totals 
(incl. Employers NI) 
 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 
 £ £ £ £ £ £ £ £ £ £ 
Non- Executive          
W Allan 
31,904 18,000 - - 4,084 2,304 - - 35,988 20,304 
J C Anderson 10,000 10,000 - - 1,280 1,280 - - 11,280 11,280 
G J Duncan (1) - 22,032 - - - 2,820 - 435 - 25,287 
Executive           
A Bonner 
85,800 85,800 11,000 49,200 10,982 17,280 8,895 8,169 116,677 160,449 
 
          
                     
Totals 127,704 135,832 11,000 49,200 16,346 23,684 8,895 8,604 163,945 217,320 
 
D Giddens, a director of a subsidiary company received fees during the year of £66,667 (2010: £66,667). 
Benefits include the costs of share options issued in accordance with IFRS 2 Share Based Payments to the Directors of the Company 
as follows: 
 
        
2011 2010 
         
£ £ 
Name of Director 
                  
A J Bonner 
        
7,512 7,512 
G J Duncan (1) 
        
- 435 
 
        
  
  
                
    
Total 
                
7,512 7,947 
 
 
(1) Graham J Duncan ceased to be a director on 29 March 2010. 
 
8. Total and continuing loss per share 
 2011  
£ 
2010  
£ 
   
Loss attributable to ordinary shareholders – continuing operations  109,657 249,660 
Loss attributable to ordinary shareholders – discontinued operations  71,980 21,079 
   
Loss attributable to ordinary shareholders  181,637 270,739 
 
 
Number  Number  
    
Weighted average number of ordinary shares in issue  1,898,436,808 1,732,688,226 
Loss per share (pence) – continuing operations  0.01 0.01 
Loss per share (pence) – discontinued operations  0.00 0.00 
Loss per share (pence) – total  0.01 0.01 
 
Pinnacle Telecom Group plc
Page 39  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
8. Total and continuing loss per share (continued) 
 
Both the basic and diluted earnings per share have been calculated using the net loss after taxation attributable to the shareholders 
of Pinnacle Telecom Group plc as the numerator.   
 
The weighted average number of outstanding shares used for basic earnings per share amounted to 1,898,436,808 shares  
(2010: 1,732,688,226) following the issue of 186,046,491 shares as part of the acquisition of MacLellan IT Limited on 1 August 2011. 
Due to the losses incurred by the Group the share options are anti-dilutive.  
9. Intangible assets 
 
                            
2011 
 
2010 
Fair value at cost  Date of acquisition  £ £ 
Explore IT Limited - Maintenance Contracts    
04 September 2006 
 100,000 100,000 
Pinnacle Telecom plc - billing system    08 June 2007  150,000 150,000 
Pinnacle Telecom plc - customer base    08 June 2007  443,163 443,163 
Sports Club Telecom Limited - customer base    
25 June 2007 
 123,946 123,946 
Colloquium Limited - customer base    
04 June 2008 
 136,444 136,444 
Accent Telecom UK Limited - customer base    11 June 2010  459,000 459,000 
Solwise Telephony Limited - customer base    13 January 2011  291,300 291,300 
Multilayer Limited – customer base    
01 July 2011 
 45,000 - 
MacLellan IT Limited    
10 August 2011 
 602,791 - 
         
2,351,644 
 
1,703,853 
 
Amortisation to date: 
         
Explore IT Limited - Maintenance Contracts      100,000  80,000 
Pinnacle Telecom plc - billing system      150,000  150,000 
Pinnacle Telecom plc - customer base      384,075  295,443 
Sports Club Telecom Limited - customer base      105,354  80,564 
Colloquium Limited - customer base      88,689  61,400 
Accent Telecom UK Limited - customer base      171,088  133,534 
Solwise Telephony Limited - customer base      70,463  43,695 
Multilayer Limited – customer base      1,122  - 
MacLellan IT Limited – customer base      13,040  - 
          
        1,083,831 844,636 
                    
Carrying amount at 30 September       1,267,813 859,217 
  
 
      2011 
£ 
2010 
£ 
         
Net intangible assets at 1 October       859,217 864,123 
Intangible asset additions      647,791 291,300 
Amortisation in period        (239,195) (296,206) 
 
Net intangible assets at 30 September 
       
1,267,813 
 
859,217 
 
Intangible assets are non-physical assets which have been obtained as part of an acquisition and which have an identifiable future 
economic benefit to the Group at the point of acquisition.  
Pinnacle Telecom Group plc
Page 40  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
9. Intangible assets (continued) 
Prior to 1 October 2010, the Group's policy was for customer lists, IT systems and Maintenance contracts to be amortised over a 
maximum of 5 years from the date of acquisition. Following a review of this policy and in light of improved actual customer retention 
rates experienced since 30 September 2008, the Group has amended its policy from 1 October 2010 onwards as follows:  
 
         Acquired             Acquired 
         Prior to 30 September 2008    01 October 2008 onwards 
- Maintenance contracts to be amortised over a period   5 years      10 years 
- Customer lists to be amortised over a period of    5 years      10 years   
- Custom Voice over internet systems to be amortised over a period of 5 years      10 years   
The review of this policy affected the lives of a number of intangible assets including the acquisitions of Accent Telecom UK Limited 
and Solwise Telephony Limited. The revision results in the following change in the original trend of amortisation as follows: 
 
Financial Year 30 September    2012    2013    2014     2015        After 2016 
Decrease/(Increase) in amortization £   82,702    82,702   53,114   (49,758)  (168,760) 
 
For the purposes of assessing impairment, assets are grouped at the lowest level, for which there are separately identifiable cash 
flows (cash generating units). As a result, where there is an impairment indicator in accordance with IAS 36, some assets are tested 
individually for impairment and some are tested at cash generating unit level.  
Customer lists are assessed annually for impairment by measuring the actual post-acquisition cash flows of individual customers 
purchased from the date of acquisition and projecting these cash flows forward over time. The calculation at 30 September 2011 
showed that each of the acquired customer lists will continue to generate positive cash flows in excess of their net carrying value at 
year-end, despite the existence of operating losses which are not as a result of the performance of the intangible assets. In addition, 
the projected revenues from the custom voice over internet systems are forecast to generate cash flows greater than their carrying 
value at year-end. On the basis of the impairment reviews performed, the directors conclude that no further impairment of intangible 
assets is required at 30 September 2011. 
10. Group Investments 
 
10.1 Principal subsidiary undertakings 
 
 
           
Holding  Country of Incorporation Shares                  Nature of business 
Pinnacle Cloud Solutions Limited 
(formerly Glen Communications Limited) 
 
100% Scotland Ordinary  IT Services 
Pinnacle Telecom plc 
100% 
Scotland Ordinary/Preference  Telecommunications 
Accent Telecom UK Limited 
100% 
England and Wales Ordinary/Preference  Telecommunications 
Solwise Telephony Limited 
100% 
England and Wales Ordinary/Preference  Telecommunications 
Sipswitch Limited 
100% 
England and Wales Ordinary/Preference  Voice over Internet 
 
10.2 Associate company 
As part of the acquisition of Accent Telecom UK Limited in 2010, the Group acquired a 40% investment in the ordinary share capital of 
Stripe21 Limited, a company registered in England and Wales. This is being accounted for using the equity method where the 
investment in Stripe21 was initially recognised at cost and has its carrying amount adjusted to recognise the Group’s share of the profit 
or loss of Stripe21, after the date of acquisition. Stripe21 Limited has an accounting reference date of 30 June. 
 
Pinnacle Telecom Group plc
Page 41  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
10.2 Associate company (continued) 2011 
£ 
2010 
£ 
   
Fair value of investment in associated company – Stripe21 Limited 167,875 169,705 
Share of profit/(loss) from associate  8,684 (1,830) 
   
Investment in associated company at 30 September 176,559 167,875 
 
11. Property, plant and equipment 
IT  
Equipment  
Fixtures and 
fittings and 
leasehold 
improvements  
Plant, 
machinery 
and motor 
vehicles 
  
 
 
Software  
 
 
 
Total 
  £  £  
 
£ 
  
£  £ 
Cost of assets           
At 1 October 2010  643,380  137,499  54,039  216,448  1,051,366 
           
Additions  25,274  5,000  -  68,000  98,274 
Additions by acquisition   4,893  -  1,000  60,279  66,172 
Disposals           
             
At 30 September 2011  673,547  142,499  55,039  344,727  1,215,812 
 
 
Cost of assets 
    
 
     
At 1 October 2009  578,904  135,351  42,020  -  756,275 
           
Additions  29,945  1,957  29,909  61,475  123,286 
Additions by acquisition   50,403  191  -  154,973  205,567 
Disposals  (15,872)  -  (17,890)  -  (33,762) 
    
         
At 30 September 2010  
643,380  137,499  54,039  216,448  1,051,366 
  
         
  
IT  
Equipment  
Fixtures and 
fittings and 
leasehold 
improvements  
Plant, 
machinery 
and motor 
vehicles 
 
 
 
 
Software  
 
 
 
Total 
  £  £  
 
£ 
  
£  £ 
Depreciation  
         
At 1 October 2010  565,194  115,498  17,982  20,614  719,288 
Charge for the year  
50,637  2,776  11,283  44,295  108,991 
  
         
At 30 September 2011  
615,831  118,273  29,265  64,909  828,278 
           
Pinnacle Telecom Group plc
Page 42  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
11. Property, plant and equipment (continued) 
  
IT  
Equipment  
Fixtures and 
fittings and 
leasehold 
improvements  
Plant, 
machinery 
and motor 
vehicles 
 
 
 
 
Software 
 
 
 
 
Total 
  
£  £  £  £  £ 
Depreciation  
         
At 1 October 2009 
 
489,650  103,238  29,055  -  621,943 
           
Additions by acquisition  
31,863  -  -  -  31,863 
Charge for the year  
59,553  12,260  6,817  20,614  99,244 
Disposals  
(15,872)  -  (17,890)  -  (33,762) 
  
         
At 30 September 2010  
565,194  115,498  17,982  20,614  719,288 
  
         
Net Book value at 30 September 2011 
57,715  24,226  25,774  279,819  387,533 
           
Net Book value at 30 September 2010 
78,186  22,001  36,057  195,834  332,078 
 
12. Leases  
12.1. Finance leases  
Pinnacle Telecom Group plc has finance leases which relate to assets used within the Group. The net carrying amount of the assets 
held under the leases is £27,953 (2010: £51,674). The assets are included under IT Equipment and Motor Vehicles. The amounts 
held under hire purchase agreements are secured on the assets concerned. Future minimum lease payments as at  
30 September 2011:  
Within 1 year  1 to 5 years  More than 5 years  Total  
£  £  £  £  
Finance lease payments due 9,976 13,881 - 23,857 
 
12.2. Operating leases  
   
The Group’s minimum operating lease payments all relate to land and buildings as follows:  
Within 1 year  1 to 5 years  More than 5 years  Total  
Land and buildings                                        £  £  £  £  
As at 30 September 2011  42,756 21,567 - 64,323 
As at 30 September 2010  43,135 56,238 - 99,373 
 
Lease payments recognised as an expense during the year amounted to £52,440 (2010: £57,837). No sublease income is expected as 
all assets held under lease agreements are used exclusively by the Group. The terms left on the non-cancellable leases can be 
summarised as follows:   
Rented since  
Non-cancellable 
term left  
Property  
101 Abercorn Street, Paisley 1995 6 months 
Brooke House, Northampton 2010 21 months 
Home Farm, Kelty 2011 3 months 
 
Pinnacle Telecom Group plc
Page 43  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
12.2. Operating leases (continued) 
 
Operating leases do not contain any contingent rent clauses. None of the operating lease agreements contain renewal of purchase 
options or escalation clauses or any restrictions regarding dividends, further leasing or additional debt.  
 
13. Inventories  
2011  2010  
£  £  
 
Consumables 
Work in Progress  
70,835 
26,826 
53,631 
19,559 
Inventories  97,661 73,190 
 
 
14. Trade and other receivables  
  
 2011 
 £  
2010 
£ 
Trade receivables  772,978 495,375 
Prepayments and accrued income  803,325 725,496 
 
1,576,303 1,220,871 
 
Trade debtors at the balance sheet date comprise amounts receivable from the provision of IT and telecommunications services. The 
average credit period taken on the provision of these services is 31 days (2010: 25 days). Trade receivables are stated net of an 
impairment for estimated irrecoverable amounts of £81,715 (2010: £71,181). This impairment has been determined by reference to 
known issues. Write offs are made when the irrecoverable amount becomes certain. The carrying value of trade and other 
receivables approximates to their fair value. 
At 30 September 2011 trade receivables amounting to £418,419 (2010: £233,120) were past due but not impaired.  
The age of trade receivables not impaired is as follows:  
 2011 2010 
 £ £ 
Not past due (less than 30 days)  354,559 262,255 
30 – 59 days  164,954 92,764 
60 – 89 days  139,222 102,238 
90 – 119 days  16,379 16,420 
120 days +  97,864 21,698 
 
772,978 495,375 
 
Credit risk  
The Group’s main risk relates to trade receivables which are stated net of the provisions above. No collateral is held as security 
against these debtors and the carrying value represents the fair value. The Group does not identify specific concentrations of credit 
risk with regards to trade and other receivables, as the amounts recognised represent a large number of receivables from various 
customers, including some government and public authorities. 
 
Pinnacle Telecom Group plc
Page 44  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
15. Cash and cash equivalents 
 
 2011 2010 
 £ £ 
   
Cash at bank and in hand 452,431 697,189 
 
Cash balances are held with a small number of counter parties. The figure at 30 September 2011 has been helped by the 
micro-management of cash during the year, and particularly at the year end. The majority of bank accounts are held with HSBC plc.  
16.1. Trade and other payables  
 
2011 2010 
 £ £ 
   
Bank overdrafts  - - 
Bank loans  - - 
Finance lease liability  23,857 49,653 
 
 
 
23,857 
 
49,653 
   
Less non-current portion of finance leases (13,882) (22,538) 
   
Short-term borrowings  9,975 27,115 
   
Trade payables  1,092,069 968,006 
Accruals and other payables  717,419 619,614 
Contingent consideration – Solwise Telephony – short term element - 30,000 
Effective repayment to acquire investment – short term element 3,123 - 
Convertible loan notes – short term element 123,529 - 
Other taxes and social security costs 170,163 176,814 
   
Trade and other payables  2,116,278 1,821,549 
   
Note 12.1 contains further information on the finance lease liability.  
The fair values of the trade and other payables has not been disclosed as due to their short duration, management considers the 
carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value.  
On 30 September 2009, Pinnacle created £250,000 unsecured convertible loan notes in units of £5,000. On 30 September 2009, 
notes for a nominal value of £125,000 were issued at par. The loan notes are not transferable and may be redeemed (in whole or in 
part) by Pinnacle, at its sole discretion, at any time. The loan notes will become repayable on demand in the event of a specified 
default by Pinnacle. On 20 October 2011, £105,000 of these original loan notes were converted to equity at 15% discount to the 
mid-price at the time of the conversion. 
 
On 6 October 2011, Pinnacle created further £500,000 unsecured convertible loan notes in units of £2,000. The loan notes are not 
transferable and may be redeemed (in whole or in part) by Pinnacle, at its sole discretion, at any time. The loan notes will become 
repayable on demand in the event of a specified default by Pinnacle.  
 
All loan notes are convertible into ordinary shares by Pinnacle at any time after the second anniversary following issue, or 
alternatively by the holders of the loan notes at any time following the period of thirty days after the second anniversary of the loan 
note.  
 
 
 
Pinnacle Telecom Group plc
Page 45  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
16.1. Trade and other payables (continued) 
 
The conversion price is at a discount of 15% to the mid-market price per ordinary share as at close of business on the date five days 
after service of the relevant conversion notice, subject to a minimum of nominal value. The ordinary shares to be issued will rank pari 
passu in all respects with the ordinary shares in issue. A provision for the embedded derivative has been made in the accounts, 
representing a provision for the Group’s option to repay the loan notes in cash prior to the second anniversary. Certain shareholders 
have agreed to subscribe to additional loan notes to the value of £100,000 if the Group requires additional funding in the next twelve 
months.  
 
On 20 October 2011, the holders of £105,000 of loan notes requested that the loans be converted into shares. The directors consider 
the fair value of these loan notes to be £123,529 at 30 September 2011 taking into consideration the issue price of £105,000 at 30 
September 2009 plus a provision for the discount when the loan notes be converted into shares. Interest accrued on the loan notes at 
10% per annum, from 30 September 2009 to the earlier of the date of redemption and the date of conversion. The interest accrues on 
a day to day basis and is payable monthly in arrears. 
 
16.2. Long-term borrowings 
 
In 2010, following the acquisition of Solwise Telephony Limited and for the purpose of calculating the intangible asset under IFRS3, 
contingent consideration of £80,000 was assumed, including £50,000 relating to the financial performance of the subsidiary in the 
year to 30 September 2011. The performance criteria for the contingent consideration was not met and this amount has been 
recorded in the consolidated income statement for the year to 30 September 2011. 
 2011 
£ 
 
2010 
£ 
Convertible loan notes – long term element 15,000 133,467 
Contingent consideration – Solwise Telephony Limited – long term element - 50,000 
Finance leasing liability – long-term element  13,882 22,538 
Effective repayment to acquire investment – long term element - 3,123 
Long-term financial liabilities  28,882 209,128 
 
17. Share capital and reserves  
 
17.1. Share capital  
The share capital of Pinnacle Telecom Group plc consists of ordinary shares with a par value of £0.001 and deferred shares with a 
par value of £0.009. All ordinary shares are equally eligible to receive dividends and the repayment of capital, and represent one vote 
at the shareholders’ meeting of Pinnacle Telecom Group plc. The deferred shares carry no voting rights and are not eligible to 
receive dividends or repayment of capital.  
                                                                                       2011        2010 
Shares issued and fully paid                                                                     £           £ 
– beginning of year  5,481,009 5,316,488 
– issued during year  186,047 164,521 
Shares issued and fully paid  5,667,056 5,481,009 
Shares authorised but not issued at 30 September 3,332,944 3,518,991 
Total equity shares authorised at 30 September  9,000,000 9,000,000 
 
Pinnacle Telecom Group plc
Page 46  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
17.1. Share capital (continued) 
 
The authorised and issued share capital can be summarised as follows:  2011  2010  
Total equity shares authorised       £     £  
2,386,420,000 Ordinary shares of £0.001 each 2,386,420 2,386,420 
3,000,000,000 Ordinary shares of £0.001 each authorised 31 March 2011 3,000,000 3,000,000 
401,508,895 Deferred shares of £0.009 each  3,613,580 3,613,580 
 
9,000,000 9,000,000 
 
Allotted, called up and fully paid 
At 30 September 2009 
401,508,895 Deferred shares of £0.009 each 
1,702,907,630 Ordinary shares of £0.001 each  
164,521,428 Ordinary shares of £0.001 each issued during the year 
 
  
 
3,613,580 
1,702,908 
164,521 
 
At 30 September 2010 
 5,481,009 
 
186,046,491 Ordinary shares of £0.001 each issued during the year 
  
186,047 
 
At 30 September 2011 
  
5,667,056 
 
17.2. Share premium 
  
 
       2011  
  
2010  
 
             £  
  
£  
Balance brought forward 3,560,331 3,238,902 
Share premium on private placing for shares 483,721 321,429 
   
Balance carried forward 4,044,052 3,560,331 
 
 
17.3 Profit and loss reserve 
        2011 
£  
        2010 
£ 
   
Profit and loss account at 1 October 2010 (6,965,850) (6,695,111) 
Loss for the year (181,637) (270,739) 
   
Profit and loss account at 30 September 2011 (7,147,487) (6,965,850) 
 
17.4. Merger reserve 
The Group has taken advantage of the merger relief provisions in relation to the acquisition of Solwise Telephony Limited. The 
Merger reserve represents the excess over nominal value of the fair value of consideration received for equity shares, net of 
expenses of the share issue, in connection with acquisitions. 
 
17.5. Fair Vale Adjustment 
Movements in the fair value adjustment reserve are created when there is a difference between the fair value of the customer base 
measured using IFRS2, and the actual consideration paid for the assets of a business. No movements were recorded in the year. 
Pinnacle Telecom Group plc
Page 47  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
 
18. Income tax expenses 
The tax rebate represents: 2011  2010  
 £  £  
UK corporation tax on profits of the period  
- - 
Total current tax  
(997) - 
Adjustment for prior year taxation  - (18,904) 
 
Tax rebate  (997) (18,904) 
 
The relationship between expected tax expense based on the effective tax rate of Pinnacle Telecom Group plc at 27%  
(2010: 28%) and the tax expense actually recognised in the income statement can be reconciled as follows:  
 
 2011  2010  
 £  £  
   
Result for the year before tax  (117,316) (268,564) 
Tax rate (28% to 31/03/2011 and 26% from 01/04/2011) 27% 28% 
   
Expected tax expenses  (31,675) (75,198) 
Adjustment for:   
Non-deductible expenses 7,136 587 
Small companies relief  - 18,804 
Depreciation in excess of capital allowances  (26,474) (12,556) 
Excess management charges (30,467) 58,578 
Utilisation of tax losses  5,315 (23,151) 
Tax losses carried forward   4,290 153,643 
Adjustments on consolidation – pre-acquisition losses etc  72,872 (128,800) 
Prior year adjustments  - (10,811) 
   
Actual tax payable/(rebate) net 997 (18,904) 
 
The Group has unrecognised deferred tax assets in respect of tax losses carried forward totalling £940,206 (2010: £1,043,441). The 
Group has not yet provided deferred tax liabilities in respect of intangible assets totalling £342,310 (2010: £240,581) in accordance 
with IAS 12, due to the extent that there are unrecognised deferred tax assets in respect of losses  
 
 19. Discontinued operations 
Discontinued losses of £71,980 (2010: £21,079) in the year relate to IG Software Limited, which consist of an accrual for the 
recovery of £60,000 of a Regional Selective Assistance grant made by Scottish Enterprise in 2005, prior to the sale of the business 
in 2007 and a provision for backdated employers national insurance contributions payable to HMRC. 
 
20. Related party transactions  
As part of the acquisition of Accent Telecom UK Limited, the Group acquired a 40% share of the equity of an associated company, 
Stripe21 Limited. During the year, Accent Telecom UK Limited purchased services totalling £263,773 (2010: £239,673) from Stripe21 
Limited, recorded as cost of sales in the consolidated income statement. In addition, Stripe21 purchased telecom services from 
Accent Telecom UK Limited of £7,435 during the year of which £1,868 remained an unpaid trade receivable at year end. 
 
In addition to his remuneration, Alan Bonner received interest payments of £2,500 (2010: £2,500) during the year in accordance with 
the terms of his unsecured convertible loan notes (see note 16.2). There are no other related party transactions recorded during the 
year to 30 September 2011 or to 30 September 2010 
 
Pinnacle Telecom Group plc
Page 48  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
21. Contingent liabilities  
There were no contingent liabilities at 30 September 2011 or 30 September 2010.  
22. Capital commitments  
There were no capital commitments at 30 September 2011 or 30 September 2010.  
 
23. Risk management  
The Group finances its activities through equity, loan notes and bank funds. No speculative treasury transactions are undertaken and 
during the last two years no derivative contracts were entered into. Financial assets and liabilities include those assets and liabilities 
of a financial nature, namely cash, investments and borrowings. The Group is exposed to a variety of financial risks arising from its 
operating activities, which are monitored by the Directors.  
 
23.1. Cash and liquidity risk  
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash 
assets safely and profitably.  The Group policy throughout the year has been to ensure continuity of funding by a combination of 
loan note funding and available bank facilities.  
23.2. Interest rate risk  
The interest rate on the Group’s cash at bank is determined by reference to the bank rate. The Group has an agreed bank overdraft 
facility with HSBC of £80,000 which remained unused at the year end. (2010: £Nil). 
23.3. Capital risk management  
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the 
returns to shareholders through the organisation of cash, debt and equity balances. The capital structure of the Group consists of 
cash and cash equivalents, debt and equity attributable to equity holders of the parent, comprising issued share capital, reserves and 
retained earnings as disclosed in the statement of changes in equity on page 24.  
23.4. Credit risk  
The Group’s policy is to monitor trade and other receivables and avoid significant concentrations of credit risk. The principal credit 
risk arises from trade receivables. Aged receivables reports are reviewed monthly and any balances greater than 60 days are 
reported to the CEO. The credit control function follows a policy of sending reminder letters that start once an invoice is over 30 days 
overdue. These culminate in a legal letter with the threat of legal action. In a limited number of cases, legal action has been pursued. 
An aged analysis of receivables is shown in Note 14 to the financial statements.  
23.5. Risk Management Analysis  
The information below provides an analysis of the financial assets and liabilities within the scope of IAS 39 Financial Instruments: 
Recognition and Measurement, required by IFRS 7 Financial Instruments: Disclosure. An analysis of the principal balance sheet 
sums, relevant to an analysis of risk management, is as follows:  
  Loans and 
receivables 
 Non-financial 
assets 
 Balance Sheet 
Total  
2011  £  £  £ 
Trade and other receivables  1,576,303  -  1,576,303 
Other current assets  -  97,661  97,661 
Cash and cash equivalents  452,431  -  452,431 
       
  2,028,734  97,661  2,126,395 
       
  Loans and 
receivables 
 Non-financial 
assets 
 Balance Sheet 
Total  
2010  £  £  £ 
Trade and other receivables  1,220,871  -  1,220,871 
Other current assets  -  73,190  73,190 
Cash and cash equivalents  697,189  -  697,189 
       
  1,918,060  73,190  1,991,250 
Pinnacle Telecom Group plc
Page 49  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
22.5. Risk Management Analysis (continued) 
  
Other financial 
liabilities at  
amortised cost 
 
 
Other liabilities 
not within 
scope of  
IAS 39 
 
 
Balance Sheet  
Total 
  £  £  £ 
2011       
Trade and other payables  1,982,772  -  1,982,772 
Finance lease liability - current  9,976  -  9,976 
Convertible loan notes - current  105,000  18,529  123,529 
Convertible loan notes – non-current  15,000  -  15,000 
Finance lease liability - non-current  13,882  -  13,882 
       
  2,126,630  18,529  2,145,159 
 
 
      
  Other financial 
liabilities at  
amortised cost 
 Other liabilities 
not within 
scope of  
IAS 39 
  
Balance Sheet  
Total 
  £  £  £ 
2010       
Trade and other payables  1,764,434  80,000  1,844,434 
Finance lease liability - current  27,115  -  27,115 
Convertible loan notes - non-current  120,000  16,590  136,590 
Finance lease liability - non-current  22,538  -  22,538 
       
  1,934,087  96,590  2,030,677 
 
 
0 to 60 
days 
 
61 days to  
6 months 
6 months to 
12 months 
12 months to 
2 Years 
2 Years to  
5 Years 
Total 
 
2011 
      
Trade payables 628,443 251,403 97,320 36,151 78,752 1,092,069 
Long-term borrowings - - - - 15,000 15,000 
Finance lease liabilities 1,663 3,325 4,988 8,172 5,710 23,858 
       
 630,106 254,728 102,308 44,323 99,462 1,130,927 
       
 
 
0 to 60 
days 
61 days to  
6 months 
6 months to 
12 months 
12 months to 
2 Years 
2 Years to  
5 Years 
Total 
 
2010 
      
Trade payables 794,188 173,818 - - - 968,006 
Long-term borrowings - - - 207,090 - 207,090 
Finance lease liabilities 6,661 13,321 19,982 6,852 2,837 49,653 
       
 800,849 187,139 19,982 213,942 2,837 1,224,749 
 
 
Pinnacle Telecom Group plc
Page 50  
 
 
 
  
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
 
24. Post balance sheet events 
 
24.1 Acquisition of Online Computer Developments Limited 
On 6 October 2011, the Company acquired the entire share capital of Online Computer Developments Ltd (“OCD”), a provider of IT 
solutions to SME and mid-market customers in Scotland. The business was formed in 1994, and forms a key part of Pinnacle's 
strategy to build out its IT capability, enabling faster delivery of its cloud services proposition. The initial consideration of £20,000 was 
satisfied as £2,000 in cash on completion and £18,000 in convertible loan notes. In accordance with the provisions of the loan notes, 
the full loan note holdings were subsequently redeemed for cash at par value on 31 October 2011 and the loan notes cancelled.  
 
The sale and purchase agreement allowed for further deferred consideration to be paid, calculated in accordance with certain growth 
performance provisions for OCD for the year ending 30 September 2012, which allows the vendors to receive additional 
consideration of £90,000 of the Group’s ordinary shares. Deferred consideration will be satisfied by the issue to the Vendors of 
15,789,474 Ordinary Shares in the Group at a price per share equal to 0.57p, 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. 
 
In the year ended 28 February 2011, OCD achieved unaudited IT support and hardware revenues of £627,215 with gross profit of 
£438,751 and a net profit after tax and before dividends of £68,840. On 28 February 2011, the company had net assets of £437. Due 
to the proximity of this acquisition to the date of the financial statements, it is not practical to accurately determine the fair value of the 
identifiable assets acquired at this stage. These values will be considered in due course. 
 
24.1 Acquisition of RMS Managed ICT Security Limited 
On 10 October 2011, the Company acquired the entire share capital of RMS Managed ICT Security Limited (“RMS”), a leading 
provider of IT security software and consultancy solutions to the mid-market and public sector markets, for a total consideration of 
£468,301. The acquisition of RMS provides the Group with IT security expertise, a key part of the Group’s strategy to build out its 
cloud services proposition. 
 
At completion initial consideration of £25,000 was satisfied in cash along with the issue of a two year interest bearing convertible loan 
note for the value of £100,000. In addition, the agreement provided for additional deferred payments totaling £343,301in cash to be 
satisfied between 31 October 2011 and 25 December 2014. 
 
RMS was incorporated in November 2010, following the management buyout of the IT Security element of Redstone Managed 
Services Solutions Limited, and has subsequently not yet prepared full financial statements. The unaudited management accounts 
for the nine-month period ending 31 August 2011, shows revenues of £2,873,235 with a gross profit of £885,706 and a net loss 
before tax of £577,939. The unaudited management accounts for the nine month period ended 31 August 2011 show that RMS had 
negative net assets of £567,939 including non-current liabilities greater than 12 months totaling £526,864. Due to the proximity of this 
acquisition to the date of the financial statements, it is not practical to accurately determine the fair value of the identifiable assets 
acquired at this stage. These values will be considered in due course. 
  
25. Ultimate controlling party 
There is no ultimate controlling party. 
Pinnacle Telecom Group plc
Page 51  
 
 
 
  
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PINNACLE TELECOM GROUP PLC 
 
We have audited the parent company financial statements of 
Pinnacle Telecom Group plc for the year ended  
30 September 2011 which comprise the parent company 
balance sheet, and the related notes. The financial reporting 
framework that has been applied in their preparation is 
applicable law and United Kingdom Accounting Standards 
(United Kingdom Generally Accepted Accounting Practice). 
This report is made solely to the company’s members, as a 
body, in accordance with Chapter 3 of Part 16 of the 
Companies Act 2006. Our audit work has been undertaken 
so that we might state to the company’s members those 
matters we are required to state to them in an auditor’s 
report and for no other purpose. To the fullest extent 
permitted by law, we do not accept or assume responsibility 
to anyone other than the company and the company’s 
members as a body, for our audit work, for this report, or for 
the opinions we have formed. 
Respective responsibilities of directors and auditor 
 
As explained more fully in the Directors’ Responsibilities 
Statement on page 19, the directors are responsible for the 
preparation of the parent company financial statements and 
for being satisfied that they give a true and fair view. Our 
responsibility is to audit and express an opinion on the 
parent company financial statements in accordance with 
applicable law and International Standards on Auditing (UK 
and Ireland). Those standards require us to comply with the 
Auditing Practices Board’s (APB’s) Ethical Standards for 
Auditors. 
Scope of the audit of the financial statements 
 
A description of the scope of an audit of financial statements 
is provided on the APB's website at  
www.frc.org.uk/apb/scope/private.cfm. 
Opinion on financial statements 
 
In our opinion the parent company financial statements: 
• give a true and fair view of the state of the company's 
affairs as at 30 September;  
 
• have been properly prepared in accordance with 
United Kingdom Generally Accepted Accounting 
Practice; and 
 
• have been prepared in accordance with the 
requirements of the Companies Act 2006. 
Opinion on other matter prescribed by the Companies 
Act 2006 
 
In our opinion the information given in the Directors' Report 
for the financial year for which the financial statements are 
prepared is consistent with the parent company financial 
statements. 
Matters on which we are required to report by exception 
 
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you 
if, in our opinion: 
• adequate accounting records have not been kept by the 
parent company, or returns adequate for our audit have 
not been received from branches not visited by us; or 
• the parent company financial statements are not in 
agreement with the accounting records and returns; or 
• certain disclosures of directors’ remuneration specified 
by law are not made; or 
• we have not received all the information and explanations 
we require for our audit. 
 
Other matter 
 
We have reported separately on the group financial 
statements of Pinnacle Telecom Group plc for the year 
ended 30 September 2011.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Andrew Howie  
Senior Statutory Auditor 
for and on behalf of Grant Thornton UK LLP 
Statutory Auditor, Chartered Accountants 
1-4 Atholl Crescent 
Edinburgh 
EH3 8LQ  
20 February 2012
 
 
 
Pinnacle Telecom Group plc
Page 52  
 
 
 
  
BALANCE SHEET (PARENT COMPANY) 
as at 30 September 2011 
      
  2011  2010  
 Note £  £  
Fixed Assets        
Goodwill 4 602,791  -  
Tangible assets 5 -  -  
Fixed asset investments 6 2,416,792  2,496,792  
         
Total non-current assets  3,019,583  2,496,792  
         
Current assets      
Debtors 7 926,921  742,296  
Cash and cash equivalents  15,598  365,225  
         
Total current assets  942,449  1,107,521  
         
Creditors: amounts falling due within one year 8 (1,069,763)  (1,035,940)  
         
Net current (liabilities) / assets  (127,313)  71,581  
         
Total assets less current liabilities  2,892,269  2,568,373  
         
Creditors: amounts falling due after one year 9 (15,000)  (175,000)  
         
  2,877,269  2,393,373  
         
Capital and reserves      
Called up share capital 11 5,667,056  5,481,009  
Share premium account 12 4,044,052  3,560,331  
Merger reserve  283,357  283,357  
Profit and loss account 12 (7,117,196)  (6,931,324)  
         
Shareholders' funds 13 2,877,269  2,393,373  
           
 
Approved by the Board and authorised for issue on 20 February 2012.  
 
 
A J Bonner  
Director  
 
The accompanying accounting policies and notes form part of these financial statements.  
 
COMPANY NUMBER: 05259846 
 
 
Pinnacle Telecom Group plc
Page 53  
 
 
 
  
NOTES TO THE FINANCIAL STATEMENTS (PARENT COMPANY) 
1. Accounting policies  
 
1.1. Accounting convention  
The financial statements are prepared under the historical cost convention.  
1.2. Profit and loss account and cash flow statement  
The Parent Company has taken advantage of section 480 of the Companies Act 2006 and has not included its own profit and loss 
account and cash flow statement in the financial statements. The Parent Company’s loss for the year was £177,215  
(2010: £247,317).  
1.3. Compliance with accounting standards  
The financial statements are prepared in accordance with applicable United Kingdom Accounting Standards (United Kingdom 
Generally Accepted Accounting Practice), which have been applied consistently (except as otherwise stated).  
1.4. Tangible fixed assets and depreciation  
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less 
estimated residual value of each asset over its expected useful life, as follows:  
Computer equipment – straight line over 3 years.  
1.5. Investments  
Fixed asset investments are stated at cost less provision for diminution in value.  
1.6. Pensions  
The Company does not currently offer a pension scheme for the benefit of its employees. 
1.7. Deferred taxation  
Deferred taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for 
taxation and accounting purposes. The deferred tax balance has not been discounted.  
2. Auditor remuneration  
Fees payable to the Company’s auditor for the audit of the Parent Company’s annual accounts was £10,000 (2010: £7,000). 
3. Taxation  2011  
£  
2010  
£  
 
Factors affecting the tax charge for the year  
  
Loss on ordinary activities before taxation  (185,872) (247,317) 
multiplied by standard rate of UK corporation tax of 27% (2010: 28%) (50,185) (69,249) 
 
Effects of:  
  
Depreciation in excess of capital allowances  (95) (85) 
Tax losses carried forward 50,280 29,136 
Group relief surrendered  - 40,198 
   
 50,185 69,249 
   
 
Current tax charge 
 
- 
 
- 
   
 
Pinnacle Telecom Group plc
Page 54  
 
 
 
  
NOTES TO THE FINANCIAL STATEMENTS (PARENT COMPANY) (CONTINUED) 
4. Goodwill 
 
On 1 August 2011, as part of the acquisition of the business and assets of MacLellan IT Limited, the Group purchased goodwill of 
£602,791 in relation to the customer base, which has been accounted for in accordance FRS10. 
5. Tangible fixed assets 
£ 
 
Cost 
At 1 October 2010 and at 30 September 2011 
 
6,165 
Depreciation  
At 1 October 2010  
Charge for the year 
6,165  
- 
At 30 September 2011  - 
Net book value  
At 30 September 2011 and 30 September 2010 -  
Note: On 1 August 2011, the Group acquired tangible assets of £66,976 as part the acquisition of business and assets of MacLellan IT Limited and these were 
transferred to Pinnacle Cloud Solutions Limited at par value and are recorded in the statutory accounts of that company. 
 
 
6. Fixed asset investments  
Shares in subsidiary  
undertakings  
£  
Cost  
At 1 October 2010  6,373,599 
At 30 September 2011  6,373,599 
Provisions for diminution in value 
At 1 October 2010  
Solwise Telephony Limited – contingent consideration not payable (1) 
3,876,807 
80,000 
At 30 September 2011 3,956,807  
Net book value  
At 30 September 2011  2,416,792 
 
Note 1: In 2010, following the acquisition of Solwise Telephony Limited and for the purpose of calculating the intangible asset under 
IFRS3, contingent consideration of £80,000 was assumed, including £50,000 relating to the financial performance of the subsidiary 
in the year to 30 September 2011. The performance criteria for the contingent consideration was not met and this amount has been 
recorded in the consolidated income statement for the year to 30 September 2011. 
 
Company 
Country of registration  
or incorporation 
Shares held 
Class % 
Subsidiary undertakings    
Pinnacle Cloud Solutions Limited  
(formerly Glen Communications Limited) Scotland Ordinary 100 
Explore IT Limited England and Wales Ordinary 100 
Pinnacle Technology Consulting Limited (1) Scotland Ordinary 100 
I G Software Limited England and Wales Ordinary 100 
Pinnacle Telecom plc Scotland Ordinary/Preference 100 
Pinnacle Mobile Limited England and Wales Ordinary 100 
Sports Club Telecom Limited Scotland Ordinary 100 
Pinnacle Telecom Group plc
Page 55  
 
 
 
  
NOTES TO THE FINANCIAL STATEMENTS (PARENT COMPANY) (CONTINUED) 
6. Subsidiary undertakings (continued) 
Colloquium Limited Scotland Ordinary/Preference 100 
MacLellan IT Limited (formerly Pinnacle Data Limited) England and Wales Ordinary 100 
Straiton Group Management Limited (2) Scotland Ordinary 100 
Pinnacle Group Limited Scotland Ordinary 100 
Glen Group Limited (3) Scotland Ordinary 100 
ICT Investments Limited Scotland Ordinary 100 
Multilayer Limited (formerly Pinnacle ICT Limited) England and Wales Ordinary 100 
Straiton Resourcing Limited Scotland Ordinary 100 
Straiton Learning Services Limited Scotland Ordinary 100 
Accent Telecom UK Limited England and Wales Ordinary 100 
Sipswitch Limited England and Wales Ordinary 100 
Solwise Telephony Limited England and Wales Ordinary 100 
 
The aggregate amount of capital and reserves and the results of these undertakings for the last relevant financial year were as 
follows:  
Capital and  
reserves  
Profit/(loss)  
for the year  
2011 2011 
Company                                Principal activity  £  £  
 
Pinnacle Cloud Solutions Limited  
(formerly Glen Communications Limited) 
Telecommunications / IT services  
(2,214,161) 4,463 
Explore IT Limited * IT services  (242,394) - 
Pinnacle Technology Consulting Limited (1)  IT consultancy  804,289 - 
I G Software Limited  IT consultancy  170,715 (71,980) 
Pinnacle Telecom plc  Telecommunications  126,009 (45,110) 
Pinnacle Mobile Limited * Telecommunications  (73,401) - 
Solwise Telephony Limited Telecommunications 73 (84,143) 
Sports Club Telecom Limited * Telecommunications  33,185 - 
Accent Telecom UK Limited Telecommunications 540,456 197,447 
Sipswitch Limited Voice over Internet (26,346) (1,462) 
Colloquium Limited * ISP and telecommunications  (230,637) - 
Straiton Group Management Limited (2)  Holding company  (176,203) - 
Pinnacle Group Limited  Holding company  460,000 - 
Glen Group Limited (3) Dormant  2 - 
ICT Investments Limited  Dormant  24,522 - 
Multilayer Limited (formerly Pinnacle ICT Limited) Dormant  2 - 
MacLellan IT Limited (formerly Pinnacle Data Limited) Dormant  2 - 
Straiton Resourcing Limited  Dormant  2 - 
Straiton Learning Services Limited  Dormant  2 - 
1   Formerly Eclectic Group Limited 
2.  Formerly Eclectic Holdings Limited 
3.  Formerly Pinnacle Telecom Group Limited 
   
Note * On 30 September 2011, in order to simplify the administration of the group and reduce overheads, the assets and liabilities of the companies 
marked with an asterisk (*) above were hived-up into Pinnacle Cloud Solutions Limited (formerly Glen Communications Limited) at par value. 
Associate company 
As part of the acquisition of Accent Telecom UK Limited in 2009, the Group acquired a 40% investment in the ordinary share capital of 
Stripe21 Limited, a company registered in England and Wales. The investment in the associate company is carried using the fair value of 
the identifiable assets at 30 September 2011 and is adjusted for the Group share of revenues and expenses in the year. Stripe21 Limited 
has an accounting reference date of 30 June. 
Pinnacle Telecom Group plc
Page 56  
 
 
 
  
NOTES TO THE FINANCIAL STATEMENTS (PARENT COMPANY) (CONTINUED) 
 
7. Debtors  
2011 2010  
  £  £  
 
Trade payables 
Amounts owed by subsidiary undertakings  
 
41,818 
872,041 
 
- 
730,075 
Prepayments and accrued income  13,062 12,221 
  
926,921 
 
742,296 
 
8. Creditors: amounts falling due within one year  2011  
£  
2010  
£  
 
Trade creditors  
 
41,718 
 
47,210 
Other taxes and social security costs  65,752 62,334 
Convertible loan notes 123,529 - 
Other creditors  - 40,813 
Contingent consideration – Solwise Telephony Limited  - short term element - 30,000 
Accruals and deferred income  838,764 855,583 
 
 1,069,763 1,035,940 
 
 
9. Creditors: amounts falling due after more than one year  
2011  2010  
£  £  
Convertible loan notes 
Contingent consideration – Solwise Telephony Limited – long term element 
15,000 
- 
125,000 
50,000 
Analysis of loans  
  
Wholly repayable within five years  15,000  175,000  
 
On 30 September 2009, Pinnacle created £250,000 unsecured convertible loan notes in units of £5,000. On 30 September 2009, notes 
for a nominal value of £125,000 were issued at par. The loan notes are not transferrable and may be redeemed (in whole or in part) by 
Pinnacle, at its sole discretion, at any time. The loan notes will become repayable on demand in the event of a specified default by 
Pinnacle. 
On 6 October 2011, Pinnacle created a further £500,000 unsecured convertible loan notes in units of £2,000. The loan notes are not 
transferable and may be redeemed (in whole or in part) by Pinnacle, at its sole discretion, at any time. The loan notes will become 
repayable on demand in the event of a specified default by Pinnacle.  
 
All loan notes are convertible into ordinary shares by Pinnacle at any time after the second anniversary following issue, or alternatively by 
the holders of the loan notes at any time following the period of thirty days after the second anniversary of the loan note.  
 
Interest accrues on the loan notes at 10% per annum, from 30 September 2009 to the earlier of the date of redemption and the date of 
conversion. The interest accrues on a day to day basis and is payable monthly in arrears. Certain shareholders have agreed to subscribe 
to additional loan notes to the value of £100,000 if the group requires additional funding within the next 12 months. 
10. Pension and other post-retirement benefit commitments 
No contributions to company pension schemes were made during the year (2010: Nil). 
Pinnacle Telecom Group plc
Page 57  
 
 
 
  
NOTES TO THE FINANCIAL STATEMENTS (PARENT COMPANY) (CONTINUED) 
11. Share capital    
  
2011 
£ 
 
2010 
£  
Authorised 
2,386,420,000 Ordinary shares of £0.001 each 
3,000,000,000 Ordinary shares of £0.001 each authorised 31 March 2011 
 
2,386,420 
3,000,000 
 
2,386,420 
3,000,000 
401,508,895 Deferred shares of £0.009 each 3,613,580  3,613,580  
   
 9,000,000 9,000,000 
   
  £ 
Allotted, called up and fully paid 
At 30 September 2009 
401,508,895 Deferred shares of £0.009 each 
1,702,907,630 Ordinary shares of £0.001 each  
164,521,428 Ordinary shares of £0.001 each issued during the year 
 
  
 
3,613,580 
1,702,908 
164,521 
 
At 30 September 2010  5,481,009 
 
186,046,491 Ordinary shares of £0.001 each issued during the year 
  
186,046 
 
At 30 September 2011 
  
5,667,055 
 
12. Statement of movements on reserves  
  
 Share premium 
account  
Profit and loss 
account  
 £  £  
Balance at 1 October 2010  3,560,331 (6,931,324)  
Share Premium – premium on shares issued during the year 483,721  
Loss for the year  -  (185,872) 
 
Balance at 30 September 2011  
 
4,044,052 
 
(7,117,196) 
 
13. Reconciliation of movements in shareholders’ funds 
 
2011 
£ 
 
2010 
£ 
 
Opening shareholders’ funds at 1 October 
 
2,393,373 
 
1,985,775 
 
Loss for the financial year 
Issue of shares on placing 
Issue of shares on acquisition 
Share Premium  – premium on shares issued during the year 
Merger reserve  – premium on shares issued on acquisitions during the year 
 
(185,872) 
- 
186,047 
483,721 
- 
 
(247,317) 
128,571 
35,950 
321,429 
168,965 
 
Net increase/(depletion) in shareholders’ funds 
 
483,896 
 
407,598 
Closing shareholders’ funds at 30 September  2,877,269 2,393,373 
 
The movement in the Share Premium account for the year to 30 September 2011 relates to the excess over nominal value of the fair 
value of consideration for equity shares issued, net of expenses in connection with acquisitions acquisition of MacLellan IT Limited.  
Pinnacle Telecom Group plc
Page 58  
 
 
 
  
NOTES TO THE FINANCIAL STATEMENTS (PARENT COMPANY) (CONTINUED) 
13. Directors emoluments  
 
2011  2010  
 £  £  
Emoluments for qualifying services  147,599 193,636 
 
147,599 193,636 
 
Emoluments disclosed above include the following amounts paid to the highest paid Director:    
 
 
2011 
£ 
2010 
£ 
   
Emoluments for qualifying services  105,695 143,169 
 
 
14. Employees  
  
 
Number of employees  
  
The average monthly number of employees (including Directors) during the year was:    
 2011 2010  
 Number  Number  
Management  3  5 
 
3 5 
15. Related party transactions  
As part of the acquisition of Accent Telecom UK Limited, the Group acquired a 40% share of the equity of an associated company, 
Stripe21 Limited. During the year, Accent Telecom UK Limited purchased services totalling £263,773 (2010: £239,673) from 
Stripe21 Limited, recorded as cost of sales in the consolidated income statement. 
 
In addition to his remuneration, Alan Bonner received interest payments of £2,500 (2010: £2,500) during the year in accordance 
with the terms of his unsecured convertible loan notes (see note 16.2). There are no other related party transactions recorded 
during the year to 30 September 2011 or to 30 September 2010 
There are no other related party transactions recorded during the year to 30 September 2011 or to 30 September 2010.  
 
 
 
 
 
2011  
£ 
 
2010  
£ 
 
Employment costs 
  
Wages and Salaries 238,310 239,693 
Social security Costs 19,724 27,594 
   
 258,034 267,287 
   
Pinnacle Telecom Group plc
Page 59  
 
 
 
  
NOTICE OF ANNUAL GENERAL MEETING FOR PINNACLE TELECOM GROUP plc 
Registered in England and Wales with registered number 5259846 
 
NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of the Company will be held at the offices of Wright, 
Johnston & Mackenzie LLP, 18 Charlotte Square, Edinburgh, EH2 4DF, on 29 March 2012 at 11.30 a.m. for the purpose of 
considering and, if thought fit, passing the following resolutions, of which resolutions 1-5 will be proposed as Ordinary Resolutions 
and resolutions 6 and 7 will be proposed as a Special Resolutions: 
ROUTINE BUSINESS  - Ordinary Resolutions 
1. To receive the report of the directors and the financial statements for the year ended 30 September 2011 together with the report 
of the auditors thereon. 
2. To approve the report of the board to the members on directors' remuneration for the year ended 30 September 2011. 
3. To re-elect Mr William Allan, a director who retires by virtue of rotation and, being eligible, offers himself for re-election. 
4. To re-appoint Grant Thornton UK LLP as the auditors. 
5. To authorise the directors to agree the remuneration of the auditors. 
SPECIAL BUSINESS - Special Resolutions 
6. That: 
(a) That, in accordance with section 551 of the Companies Act 2006 (the "2006 Act"), the Directors be generally and unconditionally 
authorised to allot shares or grant rights to subscribe for or to convert any security into shares in the Company (“Rights”) in the 
Company up to an aggregate nominal amount of the unissued share capital of the Company provided that this authority shall, 
unless renewed, varied or revoked by the Company, expire on the date of the Annual General Meeting of the Company to be held in 
2013 or 15 months after the date of the passing of this resolution (whichever is the earlier) save that the Company may, before such 
expiry, make an offer or agreement which would or might require shares to be allotted or Rights to be granted and the Directors may 
allot shares or grant Rights in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution 
has expired. 
This authority is in substitution for all previous authorities conferred on the Directors in accordance with section 80 of the 
Companies Act 1985 or section 551 of the 2006 Act. 
(b) the directors of the Company be and are hereby empowered pursuant to section 570 of the 2006 Act to allot equity securities 
(within the meaning of section 560 of the 2006 Act) of the Company for cash pursuant to the general authority conferred on the 
Directors by paragraph (a) of this resolution as if section 561(1) of the 2006 Act did not apply to such allotment, provided that this 
power shall: 
(i) be limited to the allotment of equity securities up to an aggregate nominal amount of the unissued share capital of the Company; 
and 
(ii) expire on the date of the Annual General Meeting of the Company to be held in 2013 or 15 months after the date of the passing 
of this resolution (whichever is the earlier) (unless renewed, varied or revoked by the Company prior to or on that date) save that the 
Company may, before such expiry make an offer or agreement which would or might require equity securities to be allotted after 
such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the 
power conferred by this resolution has expired. 
7. That:  
That the name of the Company be and is hereby changed to Pinnacle Technology Group plc. 
Registered Office         By order of the Board 
5 Fleet Place         WJM Secretaries Limited 
London          Company Secretary 
EC4M 7RD 
 
Dated: 21 February 2012 
Pinnacle Telecom Group plc
Page 60  
 
 
 
  
NOTICE OF ANNUAL GENERAL MEETING FOR PINNACLE TELECOM GROUP (CONTINUED) 
Registered in England and Wales with registered number 5259846 
Notes: 
 
1. A member is entitled to appoint another person as his proxy to attend and speak and vote on his behalf at the meeting. A 
shareholder may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise the rights 
attached to a different share or shares held by that shareholder. The proxy need not be a member of the Company. A proxy form 
which may be used to make such appointment and give proxy instructions accompanies this notice. If you do not have a proxy form 
and believe that you should have one, or if you require additional forms, please contact Computershare Investor Services plc on 
0870 707 1017. 
 
2. To be valid a form of proxy, together with a power of attorney or other authority, if any, under which it is executed or a notarially 
certified copy thereof, must be deposited at the offices of Computershare Investor Services plc, The Pavilions, Bridgwater Road, 
Bristol BS99 6ZY not less than 48 hours before the time for holding the meeting or adjourned meeting. 
 
3. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the 
exclusion of the votes of any other joint holders. For these purposes, seniority shall be determined by the order in which the names 
stand in the register of members in respect of the joint holding. 
 
4. In the case of a corporation, the form of proxy must be executed under its common seal or signed on its behalf by a duly 
authorised attorney or duly authorised officer of the corporation. 
 
5. The Company, pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those 
shareholders registered in the register of members of the Company as at the close of business on 28 March 2012 shall be entitled 
to attend and vote, whether in person or by proxy, at the Annual General Meeting, in respect of the number of Ordinary Shares 
registered in their name at that time. Changes to entries in the register of members after the close of business on 28 March 2012 
shall be disregarded in determining the rights of any person to attend or vote at the Annual General Meeting. If the Annual General 
Meeting is adjourned, entitlements to attend and vote will be determined by reference to the register of members of the Company as 
at the close of business two days before the time of the adjourned meeting. 
 
6. Completion and return of the form of proxy will not preclude members from attending or voting in person at the meeting if they so 
wish. 
 
7. As at 20 February 2012 (being the last business day prior to the publication of this notice) the Company’s issued voting share 
capital consists of 2,089,807,730 Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company as at 
18 February 2011 are 2,089,807,730. 
Pinnacle Telecom Group plc
Page 61  
 
 
 
  
NOTICE OF ANNUAL GENERAL MEETING FOR PINNACLE TELECOM GROUP plc (CONTINUED) 
Registered in England and Wales with registered number 5259846 
EXPLANATORY NOTES TO THE RESOLUTIONS 
 
ROUTINE BUSINESS 
The following notes explain the items of routine business. 
 
Resolution 1 (Receipt of reports and accounts) 
The directors must lay the annual accounts and the respective reports of the directors and auditors before shareholders at an 
Annual General Meeting. 
Resolution 2 (To approve the directors' remuneration report)  
Shareholders are asked to approve the directors' remuneration report, which may be found in the annual report on pages 11 to 13. 
This resolution is an advisory one and no entitlement to remuneration is conditional on the resolution being passed. 
Resolution 3 (Re-election of director) 
Under the Articles of Association of the Company, one director must resign by rotation each year. William Allan has put himself up 
for resignation and is therefore standing for re-election. You are therefore asked to re-elect Mr Allan as a director of the Company. 
Resolution 4 (Appointment of auditors) 
At each general meeting at which accounts are laid before the members, the Company is required to appoint auditors to serve until 
the next such meeting. Grant Thornton UK LLP have indicated their wish to continue as the Company’s auditors. 
Resolution 5 (Agreement of auditors’ remuneration) 
The directors are seeking authority to agree the remuneration of Grant Thornton UK LLP as the Company’s auditors. 
 
SPECIAL BUSINESS 
 
In addition to the routine business of the Company, there will be the following items of special business at the Annual General 
Meeting. 
 
Resolution 6 (Authority to issue Ordinary Shares and waiver of Pre-emption Rights) 
By resolution 6(a), you are asked to give the directors authority to allot share capital up to the maximum authorised share capital. 
This authority shall remain in force until the 2013 AGM or for 15 months (whichever is earlier). 
By resolution 6(b), you are asked to give the directors authority to disapply the statutory pre-emption rights in favour of existing 
shareholders in respect of share allotments in the Company. This authority shall remain in force until the 2013 AGM or for 15 
months (whichever is earlier). 
Resolution 7 (Change of company name) 
By resolution 7, you are asked to approve the proposed change of name of the Company to Pinnacle Technology Group plc. Upon 
the approval and registration of the change of name, the Company is not intending to issue fresh share certificates, unless 
specifically requested to do so by an individual shareholder. Accordingly, following the AGM, any shareholder who desires to have 
a share certificate in the new name of the Company should send his existing certificate to the registrars, who will issue a revised 
certificate at no charge. 
 
Pinnacle Telecom Group plc
Page 62  
 
 
 
  
DIRECTORS, SECRETARY AND ADVISERS 
 
 
Directors     William Allan, Non-Executive Chairman 
      Alan J Bonner, Chief Executive Officer 
      John C Anderson, Non-Executive Director 
 
Secretary     WJM Secretaries Limited 
      302 St Vincent Street 
      Glasgow, G2 5RZ  
 
Company number                     05259846 
 
Registered office    5 Fleet Place 
      London 
      EC4M 7RD 
 
Nominated adviser and broker  Zeus Capital Limited 
      3 Ralli Court 
      West Riverside 
      Manchester 
      M3 5FT 
 
Solicitors     Charles Russell LLP 
      5 Fleet Place 
      London 
      EC4M 7RD 
 
      Wright, Johnston & Mackenzie LLP 
      302 St Vincent Street 
      Glasgow 
      G2 5RZ 
 
Registered auditors    Grant Thornton UK LLP  
      1-4 Atholl Crescent 
      Edinburgh 
      EH3 8LQ 
 
Bankers     HSBC Bank plc 
      Commercial Centre 
      St Clair House 
      Bedford Road 
      Northampton 
      NN4 7AA         
   
      Bank of Scotland 
      47 High Street 
      Dalkeith 
      Midlothian 
      EH22 1JA 
 
Registrars                 Computershare Investor Services plc 
      The Pavilions  
      Bridgwater Road 
      Bristol 
      BS99 6ZZ 
Pinnacle Telecom Group plc
Page 63