Gulf Navigation has admitted it is fighting to survive in the face of mounting losses and legal setbacks, in spite of posting improved revenues and profits for the first quarter of the year.
The Dubai-based shipping company said in its first quarter results presentation that there is “a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern”.
Gulf Navigation’s accumulated losses stood at Dh288.1 million at the end of March, representing more than half of its share capital, obliging the company to hold an extroardinary general meeting with shareholders to consult on whether to continue operations.
Following the holding of the meeting on Thursday, the company plans to reduce accumulated losses to the extent of the company’s legal reserve of Dh32.5m, and to convert certain liabilities into shares in the company.
Gulf Navigation has suffered a number of high profile setbacks over the past two years, including the seizure of two vessels by creditors following unpaid debts, and a series of arbitral awards going against it.
It remains in default on several loans, raising the possibility of further asset seizures by creditors.
The company’s struggles for survival ironically coincide with an uptick in revenues and profits for the first quarter.
Revenues increased 11.8 per cent to Dh34.5m, while net profit for the period stood at Dh4.9m for the quarter, compared with just Dh539,000 a year ago.
Gulf Navigation’s shares have similarly been unaffected, nearly doubling in value in the past month.
The company’s shares opened up 3.4 per cent in early trading on Sunday.
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