‘Top-down’ restructuring at troubled recruitment firm Greatfleet since last October’s change of management has stabilised the company, although a £1.7m pre-tax loss for 2007 on sales down by 9.6% to £10.3m show there is still some way to go. Straight-talking chief executive officer Colin Gerstein notes the fall in turnover is indicative of the ‘historic culture of failure’ under the previous regime, which almost trebled the number of sales consultants to 130 and yet saw sales fall.

Gerstein’s review resulted in the business being divided into just two brand names – Longbridge Search & Selection and Qualitas People Solutions. Since most staff were ‘washed out’ and replaced with ‘higher calibre’ individuals, the key indicator of net fee income per head has nearly doubled from an average of £5,500 to almost £10,000.

A decimated balance sheet benefited from a £1.5m fundraising at 25p in March (the shares underwent a ten-for-one consolidation) that paid off old debt and has provided some working capital. Gerstein, who has built up a near-20% holding himself, admits investors had been ‘grossly misled’ but is striving to keep confidence high and is planning acquisitions and then dividend payments later on.

Earnings have yet to recover, but the stockmarket remains anxious about the company’s size and reliance on the financial services markets for its key clients. The current share price reflects past failure and should recover with the group’s fortunes. A renaissance is in progress but avoid for now.

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