Pinnacle throwing off cash

Pinnacle Staffing’s first set of figures since the healthcare recruitment group was demerged from Nestor Healthcare in early September last year confirms what I suspected when I tipped the shares in February: the company threw off enough cash in the four months to the end of December to repay all but £1.2 million of the £5 million debt with which it had been endowed by Nestor. In part, that was down to the fact that Nestor kept all of Pinnacle’s trade creditors when the business was spun off, but it still demonstrates strong cash generation.

On turnover of £18 million for the four months, the company made a profit before tax of £365,000. The last months of the year are seasonally strong in healthcare recruitment, so it would be dangerous to multiply that up by three and assume annualised profits of £1 million or more. But it is a good start. Earnings per share for the three months were 0.29p. The current year has been ‘challenging’ but Pinnacle is now facing more demand for staff than it can meet. The shares have moved down to 8.5p from the 8.88p at which I tipped them here last month. They remain a buy.