Pinnacle Technology has reported a £1.1 million loss for last year, after a £115,000 profit in 2011, but it now has institutional confidence in its ambitions as a Scottish growth stock.

The group, founded 15 years ago by Alan Bonner, raised £2.95m in a placing this month to fund inroads into the cloud solutions and IT security markets, alongside IT services and traditional telecoms.

It is stressing a 49% increase in revenues, 79% in recurring contracts, to £12.7m, and 61% rise in gross profit to £4m, and shrugging off the chunky £1.6m of "exceptional and restructure costs" which saw it plunge back into loss.

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Mr Bonner said: "For a small business to be capitalised in the way we are is fantastic ... I have been knocking on these doors for years but they have been bolted shut."

He said institutions now appreciated that the business was no longer new, had de-risked, and created a stable platform for growth.

Pinnacle's penny shares, which had spiked up by 25% ahead of the results to 0.42p, fell back 20% to 0.34p.

But shareholders will next month be asked to approve a 1 for 100 consolidation, which should enhance their appeal.

They will also confirm the arrival of Dr James Dodd as chairman and Dr Tom Black as non-executive director.

Bill Allan, the former Thus chief executive who is stepping down as chairman, said: "Pinnacle has been bold in building a business from core strength and acquisitions to compete more effectively in a changing telecommunications market, where business customers require a more sophisticated portfolio of services. Pinnacle now has the building blocks to compete and win."

Mr Bonner said there were "good reasons to be optimistic". He said the firm had invested £767,000 in one-off acquisition costs and had achieved underlying net earnings, including profit from acquisitions, of £515,000.

He said: "Our financial strength will enable us to continue to invest and reposition the business, and, despite the current economic conditions, we intend to make further investment in our sales teams to take advantage of the opportunities we have to increase our market share.

"While the results of our cross-selling strategy may take time to deliver, we are confident the actions we have taken to date and the strategy we are pursuing will ensure the group continues to prosper."