Further losses add to Grafton’s woes

FURTHER substantial losses of €1.2 million (€2.2m restated) were incurred by Grafton Recruitment in the year to end March 2010.

Despite serious cost-cutting and some job losses, the group was unable to shake off the impact of the meltdown in the Irish economy.

As a result of the ongoing losses the balance sheet is now showing a shareholders’ funds deficit of over €3m against €1.8m in 2009.

The report of the directors noted that sales for the year fell 37% to €7.6m, while the cost of sales fell from €9.5m to €6.6m over the period.

Sales generated by permanent replacements fell a massive 68% “reflecting the general decline in the employment market, while temporary placement revenues have also decreased by 34%,” the directors’ report said.

The report said the group continued its policy of cost reduction initiated in the previous year, which included a redundancy package for certain full-time workers.

The dip in sales was accompanied by a fall in the gross profit margin that was down 13% year-on-year.

That was affected, in the main, by “the significant decrease in high-margin permanent placement revenues during the year”.

Looking ahead the group said the outlook for recruitment services continues to be highly competitive in the current economic climate.

It said: “The directors are confident that appropriate steps have been taken to ensure the company is competitive going forward.”

On the financial risks, Grafton said it is now operating in the Republic of Ireland and is not subject to any currency risks going forward.

The accounts were prepared on the basis of the operations being a going concern and Grafton Recruitment International “will provide adequate finance to enable the company to meet its liabilities as they fall due for at least the next 12 months,” the report, which was signed off on 12 January 2011, said.

Grafton said it is battling to save any further loss of business to rivals by providing “added-value services to customers and by maintaining strong relationships and local representations with key customers”.

On March 10, 2010, Ernst & Young took over as accountants to the group, replacing BDO Chartered Accountants.

Grafton Recruitment was established on Dublin’s Grafton Street in 1982.

The parent group, which is located in Belfast, has more than 70 offices in 18 countries spread across Europe, Chile, China, Russia and Singapore.