Gulf Marine Services plc (LON:GMS) cautioned that there is significant doubt over the group's ability to meet debt covenant tests scheduled in June and December.
It is, however, seeking amendments to existing terms with its lenders.
“Whilst this is a material uncertainty with regards to going concern, the board believes that covenant amendments will be agreed such that it is considered appropriate and in line with current accounting standards to adopt the going concern basis,” the company said.
The company further added: “The group's projected operating performance could mean that GMS is not able to fully service the increased scheduled debt repayments from the end of Q3 2020 onwards.”
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GMS told investors that it is implementing a ‘comprehensive repositioning plan’ to address its financial performance - a three-pronged plan aims to strengthen governance, a new round of cost-cutting, and deliver a refinancing.
The financial results released today revealed a 9% increase in revenue to US$123.3mln, compared to US$112mln in 2017, though the cost of debt pushed the company to an adjusted net loss of US$5.1mln, versus a US$4.8mln profit.
Bank borrowing costs rose to US$30.6mln in 2018, up from US$22.2mln in the year before, and, the company noted that profitability was impacted by higher tax charges.
Net debt increased to US$400.5mln at the end of the financial year, up from US$372.8mln, and, it said that the figure is expected to stand at US$390mln by the end of the first quarter.
Chief executive Duncan Anderson said: “Our average daily charter rates have fallen by 38% since their peak in 2015.
“This pressure has continued into 2019 and we expect this to persist in the near term.
“A higher level of utilisation is a precursor for improvements in charter rates, but this must happen across our industry peer group as a whole before our own charter day rates can improve.”
He added: "We firmly believe that day rates will improve in due course, but in the meantime, we must focus on squeezing out better operating performance within our business, whilst also ensuring we remain well positioned to capture the upside from a recovering market.
“We have implemented two rounds of cost-cutting in the business in the last three years and have recently completed the evaluation of a third round of cost savings and efficiency opportunities.”