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Shares in Pinnacle Technology (LON:PINN) slumped after it failed to impress investors with its full-year results despite losses narrowing slightly and the acquisition of two new businesses.
In the year to September, sales dropped to £7.9mln from £8.4mln though losses narrowed to £1.4mln from £1.9mln.
The company said the fall in revenue was due to a 25% decline at its IT Security segment, previously reported acts of "wilful misconduct" and a 14% fall in its traditional telecommunications services revenue.
As a result, the company has decided to shift strategy by buying up two IT services firms - Ancar-B for £3.5mln and Weston Communications - for £1.5mln
To fund the deals, Pinnacle raised £4.55mln through the placing of 108mln shares at a price of 4.2p. An open offer will raise a further £250,000 at the same price, it said.
Gavin Lyons, executive chairman, and three other directors subscribed for £546,000 worth of shares in the placing.
Shares plummeted 22% to 9.75p on the news.