Westmeath-based fit-out specialist Globoserv is trading positively again after emerging from the Small Companies Administrative Rescue Process (SCARP) in March.
The company turned a profit during its last financial year, which ended in April, having cut costs significantly, halved staff numbers, and become a "more hard-nosed" business, according to managing director David Burke.
Explaining how Globoserv got into difficulty, Burke said the business "got too big too soon," and that cashflow issues snowball as "promised work never came," making the firm's debts unsustainable.
The process advisor helped Globoserv, which fits out offices, restaurants, bars, hospitals and other facilities, to write down nearly €1.4m in debt with various suppliers, and highlighted "a lot of areas that needed to be tightened up."
Burke believes the company is generally managing its contracts and cash flow much better than before SCARP.
The company now only takes on business that it is certain it will profit from ( and is "dealing in facts, not speculation"), which wasn't always the case.
In December 2023, prior to calling in the process adviser, Burke says that Globoserv had €11m in new contracts lined up, more than €9m of which then had to be voided when the company entered SCARP.
€500,000 in new finance that Burke organised upon realising the pending crisis also fell through, meaning he had a choice between shuttering the company or going through the rescue process.
Trading since 2004, Burke says Globoserv had never been in such a dire situation, and he opted to keep the business out of "loyalty" to clients and suppliers.
"There was a lot of companies that came to us and said that they have made a lot of money off us over the years, and they're happy to stand by us to try and trade out," he explains.
"It was a moral decision to [continue trading], and the practicality was there to do it again."
From revenues of €1.5m when going through the process, the company has now grown its annual turnover to nearly €4m. Globoserv also "doubled" the dividend it paid to its debtors, ie the percentage of the amount the firm owed to suppliers that it was obligated to pay, as decided by the courts.
The latest available accounts for Globoserv show the company held a deficit of €284,700 in April 2024, down from a surplus of €1.1m two years earlier, as annual losses narrowed from €1.1m to €306,300.
The accounts, which state the company's finance in the midst of SCARP, also show staff costs being cut from €3.3m to €2.8m and director remuneration coming down from €857,700 to €359,900.
The firm made a payment plan with the Revenue to pay its debt in instalments, reducing its current tax and social insurance liabilities from €223,400 to €85,600.
The company now has 20 employees, down from 42 in 2022, and it has offloaded vehicles and closed its Dublin office to ensure it is on a leaner footing going forward.
Globoserv has "been peeled back to a core, and is growing from that again," and the company has retained nearly all its clients for fit-outs as well as maintenance work, in addition to gaining new customers.
On SCARP generally, Burke is very positive, saying it has given Globoserv "another chance".
(Pic: File)
