Doubts expressed over Glencullen Holdings continuing as going concern

DOUBT has been cast over the ability of Apprentice star Bill Cullen’s main company Glencullen Holdings to continue as a going concern.

Losses at Glencullen Holdings totalled €8.4 million in 2008 with the company saying 2009 was also a difficult year. This follows pre-tax losses in 2007 of €18.6m.

The company’s auditors, PricewaterhouseCoopers, in a note dated December 22, 2009, doubted the company’s ability to continue as a going concern in the company’s latest set of accounts.

It said given the losses in what have been challenging conditions for the company and news that the group is in negotiations for the renewal of its financial facilities, thereare indications that “may cast significant doubt on the group’s ability to continue as a going concern”.

A going concern is a business that functions without the intention or threat of liquidation for the foreseeable future.

A note in the accounts said while 2009 has been a difficult trading year, the group has actively instigated a cost reduction programme that has “seriously reduced its cost base”.

“In addition, growth in market shares of its suppliers as a result of aggressive marketing and price strategy has already indicated significant growth in the brand in 2010.

“These factors, combined with an expected recovery of the overall market in 2010 and 2011 should result in a return to profitability of the group,” according to the accounts.

However, the accounts added that the timing of the recovery of the overall car market remains uncertain in the economic climate.

“The group is in negotiation for the renewal of their financing facilities. These negotiations are nearing finalisation and the directors are confident that the negotiations will be successful and an agreement will be reached on terms that are acceptable to the group,” the accounts said.

The note said while the group has instituted measures to cut costs, preserve cash and secure adequate finance, these circumstances create “material uncertainties over future trading results and cash flows”.

“During 2008 the group experienced adverse trading conditions as a consequence of the Government’s implementation of a poorly conceived revision of the VRT system which had a huge impact on the residual values of second-hand cars.

“The rapid downturn in the Irish economy combined with the VRT changes lead to a great uncertainty in the new and used car markets.

“The Irish car market declined significantly during 2008 and the rate of decline accelerated into 2009 where the car market reduced to levels that have not been seen since the early 80s,” the accounts read.

Staff costs in the year fell from €13.3m in 2007 to €7.3m in 2008. Turnover fell from €166.2m to €53.8m. The company had an operating loss of €6.8m from €17.5m in 2007.