2009 Has Been A Challenging Year For Pinnacle Staffing Group plc
2009 Has Been A Challenging Year For Pinnacle Staffing Group plc
Pinnacle Staffing Group plc, the healthcare recruitment group, announces its full year results for the year ended 3rd January 2010.
Operational highlights of the year include:
Transfer of all group central functions to the head office in Luton.
Establishment of the new Doctors division.
Acquisition of The Compliance Company (GB) Limited.
Substantial increase in the level of NHS demand for the services of the British Nursing Association ("BNA").
Commenting on the results, David Hope, Chief Operating Officer & Finance Director of Pinnacle said: "2009 has been a challenging year for Pinnacle where the focus of the Board has been on transforming the internal processes of the Group to make it a more robust and efficient business that is better placed to cope with the increasing regulatory demands of the temporary healthcare staffing market. The changes that we have made to the business, combined with revised pricing on the new NHS Frameworks for Nursing, have enabled us to develop further our relationships with NHS Organisations. Despite a disappointing final quarter to the year, caused in part by the severe weather in December, the level of NHS interest in using reasonably priced quality staff from BNA has been exceptional. The challenge for the business in 2010 will be to use its resources effectively to capitalise on these growth opportunities."
The Group has experienced another difficult year of trading as a result of more challenging market conditions in the UK healthcare sector. Previous hopes of being able to report a profit for the year were further hit by the adverse winter weather conditions in December which especially affected our nursing branches in Northern England and Scotland. Consequently, on 15th January 2010, the Board announced that it had embarked on a strategic review of Pinnacle's operations to establish how best to deliver shareholder value.
The results presented are for the 52 weeks ended 3rd January 2010 and the comparative figures are for the 52 weeks ended 4th January 2009. Group revenue for the period amounted to 40.2m (2008: 38.1m) a rise of approximately 5.5%. Gross margins have increased to 20.6% (2008: 19%). Total gross profit achieved was 8.3m (2008: 7.3m).
The Nursing Division had a disappointing second half to the year, delivering results below budget. On the positive side, our three brands gained positions on the new National Frameworks for Agency Nursing and we received a substantial number of enquiries from NHS Organisations interested in putting in place new service level agreements with BNA. Nevertheless, the immediate impact on revenue was muted as the number of available nurses to meet strong demand was severely limited. In some other areas, BNA encountered a temporary ban on the use of nursing agency staff by a number of NHS hospitals. Fortunately, we experienced increased demand for nursing services which were provided in patients' homes and funded by local NHS Primary Care Trusts. Overall, it was a testing time for our nursing division with our staff facing many challenges.
The purchase of The Compliance Company (GB) Ltd was completed during the year giving Pinnacle one of the best available systems for monitoring the compliance status of its workers. This is extremely important for Pinnacle as it builds on its relationship with the NHS to provide cost-effective flexible staffing solutions together with the very highest standards of training and compliance.
Pinnacle's doctors recruitment businesses, which trade under the Medic International and Holt Doctors brand names, were unable to lift their weekly commission run-rate beyond the level reached in June. Demand for junior doctors, which had been buoyed by the implementation of the European Working Time Directive at the start of August 2009, subsequently eased off. Positive progress was made in developing the sourcing of doctors internationally for permanent positions in UK hospitals.
Medical Services again performed poorly. The previous lack of investment in developing a recruitment pipeline to bring qualified overseas candidates to the UK and the failure of a new initiative to generate any additional candidates meant that the demand for qualified staff could not be met.
The invoice discounting facility provided to the operating subsidiaries of Pinnacle by Barclays Bank plc has been extended until 1st September 2010 and discussions with our bankers regarding renewal of this facility have already commenced. The guarantee which had been provided by the Executive Chairman as additional security to our bankers was released in June 2009.
Outlook and Strategic Review
As part of the ongoing review of Pinnacle's business we recognise that the nursing brands, BNA and Grosvenor, have outstanding opportunities to extend their geographical reach and to be much more effective in supplying nurses and healthcare assistants to NHS Organisations. This will mean increasing the size of certain key branches to cope with substantially increased volumes. At the same time BNA continues to have a significant number of underperforming branches which are sub-scale in terms of the number of shifts being booked and where they also lack a sufficient pool of qualified workers.
BNA has also been slow to recognise the strong underlying growth in its continuing care supplies to local Primary Care Trusts and has not, to date, devoted dedicated resource to developing this growth area. Pinnacle needs to invest in resourcing its key branches and pursuing its growth opportunities while at the same time managing the decline elsewhere in the branch network.
Medical Services has continued to see revenues decline due to the lack of a pipeline of new candidates. Our focus here will remain on supplying our existing clients with their requirements rather than investing further to try and grow the business.
The doctors business, having developed extremely well in the first six months under its new management, then saw its commission run-rate level off. The management team has plans in place to take the business to the next level, however this has necessitated significant additional investment in personnel which has added to overhead costs but which should deliver a return in the future. Pinnacle's clear focus has to be on rebuilding its nursing division which, with proper investment, can create substantial value for shareholders. Pinnacle's doctors division, now that it is established, has to demonstrate it can achieve its growth targets and generate cash to fund its further development.
The Company announced on 15th January 2010 that it was undertaking a strategic review to assess how best to deliver shareholder value. This process is ongoing and further announcements will be made, as appropriate, in due course