Holden running on empty

Fairfax Media

HOLDEN ON: Holden's financial accounts depict a company in strife at the end of 2008 and auditors Deloitte duly noted its uncertain future in the company accounts.

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Holden's financial accounts depict a company in strife at the end of 2008 and auditors Deloitte duly noted its uncertain future in the company accounts.

Thanks to its deteriorating financial position and the Chapter 11 bankruptcy of its US parent company, General Motors Corporation, Deloitte said Holden was subject to "material uncertainty regarding continuation as a going concern".

Deloitte partner Clive Mottershead said Holden's "interdependence" with the now bankrupt GM, combined with the car maker's US$70 million (NZ$111.43 million) annual loss and the fact that current liabilities exceeded current assets by about US$250 million, cast uncertainty over the Australian operations.

"These conditions ... indicate the existence of a material uncertainty which may cast significant doubt about (its) ability to continue as a going concern", Mr Mottershead said.

Holden's directors, in the notes to the financial statements, say they are confident in the car maker's future, but the confidence is dependent on a series of funding initiatives falling into place, including government money to help GM - primarily from the US and Canada - and a $200 million lifeline from an unnamed third party that relates to the Australian operations and is contingent on the US parent emerging from bankruptcy.

Apart from publicised revenue of $5.8 billion and a net loss of about $70 million during 2008, the financial statements also show that obligations on the company's defined-benefits super scheme blew out by $100 million to $623 million.

Despite the prospect of government assistance in Australia, and the company's losses, Holden "upstreamed" dividend payments to its parent company GM Australia, which is in turn owned by the failed GM Corporation in the US. Last year, GM Holden paid $46.8 million to GM Australia (owned by GM Corp), down from $111.8 million the year before.

Gearing rose to 60 per cent during the year and the recession, and its impact on consumer demand, would indicate that things were unlikely to have improved much for Holden since the balance date.