Gulliver Consolidated Limited has disclosed its going concern status is in jeopardy after the supplier of steel and steel engineering products closed 2010 in a precarious financial position, aggravated by high-cost short-term debts.
For the full-year to September 30, 2010, the company’s current liabilities rose to
$5,2 million from $1,4 million during the comparable period last year against current assets of just $1,7 million, yielding a liability excess of $3,7 million.
The financial position shows that the company is operating under threat of liquidation and may find it difficult to sustain operations in the future.
The company says the going concern threat is a result of over extended negative trends in operating results since the country dollarised in February 2009.
In an abridged financial report for the period, Gulliver reported that EBTDA loss increased to $3 million from $14 237 during the comparable period the year before.
It also admitted business was still on the downside despite an improvement in the operating environment, as its fortunes depend largely on the recovery of the mining and construction sectors, currently faced with crippling recapitalisation challenges.
“The slow pace of investment in our main drivers of business, namely mining and contraction greatly, affected the group’s performance, with ‘limited’ contracts available to tender.”
Gulliver also blamed its poor performance on the lack of long-term loans, but expressed optimism 2011 could see the business experiencing a magical upturn, powered by debt-refinancing and business re-modeling strategies, which were envisaged to build on current efforts to restructure the cost base through retrenchments and other measures.
The strategies entail disposing non-core operations, debt restructuring and joint-venturing projects.
“The group is in talks with a local bank with a view to restructuring the profile of the debt,” Gulliver said.
“(The) board has reviewed the business models in the group and believes there is merit in focusing on fewer strategic business units.”