Sherry Fitzgerald losses up 310%

THE collapse of the Irish property market has resulted in fee and commission income at Ireland’s largest auctioneers, Sherry FitzGerald Holdings, plummeting by €25 million as losses surged by 310% to €15.55m.

The latest accounts filed with the Companies Registration Office by the company, for the 12 months to the end of December 2008, show a 38.6% – €24.98m – fall in turnover, primarily fees and commissions, from €64.95m in 2007 to €39.97m in 2008.

And pre-tax losses at the company grew to €15.55m in 2008 from €3.8m in 2007, an increase in pre-tax losses of €11.75m.

The directors’ report shows the company “reduced debt and improved its cash position” by selling off its Cork offices at 6 Lapps Quay for €5.25m in a sale and lease-back arrangement.

The offices were bought by a number of directors of the company and leased back for €275,000 a year, over 25 years.

The directors who purchased the property were Richard Lonergan, Frank Ryan, Peter Lynch and Sheila O’Flynn.

Brian McDonogh “a related party” was also involved in the purchase.

The company said 2008 was an exceptionally difficult and challenging year for the Sherry FitzGerald group as all operations were negatively impacted by the severity of the economic recession.

“The group’s residential businesses experienced very difficult trading conditions as both unit sales and average house prices fell significantly in 2008 versus 2007.

“Notwithstanding this background, the group’s brand awareness in Ireland with Sherry FitzGerald and in London with Marsh & Parsons continues to grow and the residential businesses grew market share during 2008.

“Additionally, Marsh & Parsons recorded growth in lettings commissions of 46% year-on-year,” the company’s directors said.

A significant cost-cutting programme was implemented during 2008 which reduced the number of employees in the Irish businesses by 30%, according to the accounts.

Total staff numbers at the company fell from 476 in 2007 to 404 at the end of 2008.

“The group retained its keydirectors and staff and its branch infrastructure in Ireland and London, ensuring that the group is well positioned when market conditions improve,” they added.

The directors point out that the reported losses included many non-cash charges such as depreciation, goodwill amortisation and impairment, unrealised foreign exchange losses following the weakness of sterling against the euro in 2008 and the switch to a “more conservative method” for recognising second-hand residential revenue in Ireland.

The company had bank loans of €18m at the end of 2008.