Gulf Navigation profit doubles, but debt doubts remain

Gulf Navigation’s annual profit doubled in 2015, thanks to improving tanker rates and rising revenues from its shipping services unit, even as concerns remain over its liabilities and debt obligations.

The Dubai-based shipping firm said yesterday that its net income for last year rose to Dh20.1 million, compared with Dh10m for 2014, with revenues increasing 12 per cent over the same period to Dh143.1m.

Revenue growth was strongest in the firm’s shipping services unit, which provides services including freight forwarding, ship agency and bunker coordination services, while operating revenue increased by 78 per cent to Dh29m for the year.

Despite the growth in revenue and profit, the company remains in breach of a number of covenant agreements with its lenders.

Such breaches, together with about Dh617m of current liabilities at the end of 2015, “indicate the existence of a material uncertainty which may cast significant doubt upon the ability of the group to continue as a going concern”, according to the auditors PwC.

“We are … striving to resolve disputes with the specified parties and to reach an amicable settlement which will further strengthen our financial footing and spearhead the com­pany towards the path of expansion,” Gulf Navigation’s vice chairman Salem Al Zaabi said yesterday.

Last month the company’s shareholders approved the first round of a US$60m mandatory convertible bond programme, which it hopes will help to ease pressure from its creditors.

The first tranche of bonds, worth $25m, will be offered initially to existing shareholders and subsequently to the company’s creditors.

There has been an overhaul of Gulf Navigation’s board over the course of the past month, with the resignation of company chairman Hazza Al Qahtani, and the appointment of Abu Dhabi Financial Group chief executive Jassim Alseddiqi to the board.

Mr Alseddiqi’s appointment has raised speculation that dis­tressed assets specialist ADFG, which currently holds a 6 per cent shareholding in the company, will seek to increase its stake.

The company’s shares rose 1.5 per cent in early trading.

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