REG - Gulf Marine Services - 2021 Annual Report and Notice of 2022 AGM
07/06/2022 17:45
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RNS Number : 0596O Gulf Marine Services PLC 07 June 2022
FOR IMMEDIATE RELEASE 7 June 2022
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the Group')
2021 ANNUAL REPORT AND NOTICE OF 2022 ANNUAL GENERAL MEETING
The Company advises that the 2021 Annual Report, the Notice of the 2022 Annual
General Meeting and Proxy Form are being made available to Shareholders
electronically today, 7 June 2022. The 2021 Annual Report (in pdf and ESEF
compliant format), and the Notice of 2022 Annual General Meeting will be
available shortly on the Company's website at www.gmsplc.com
(http://www.gmsplc.com) .
In accordance with LR 9.6.1, copies of the above documents have also been
submitted to the FCA's National Storage Mechanism and will shortly be
available for inspection on the National Storage Mechanism's website,
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
In accordance with Disclosure Guidance and Transparency Rule 6.3.5, additional
information is set out in the appendices to this announcement. This
information is extracted from the 2021 Annual Report. The appendices should
be read in conjunction with the Company's Full Year 2021 Results Announcement,
issued at 07:00 on 13 May 2022, RNS Number 4144L. This material is not a
substitute for reading the full 2021 Annual Report.
Mailing of the 2021 Annual Report, Notice of the 2022 Annual General Meeting
and Proxy Form to Shareholders will commence shortly.
The Company will hold its Annual General Meeting (the 'AGM') at 2:30p.m (UAE
time) on Thursday, 30 June 2022. Further details are included in the Notice of
the AGM. In light of the continued unpredictability caused by the COVID-19
Pandemic, as set out in the notice of AGM, the Board is planning to hold the
AGM with the minimum attendance required to form a quorum. As such, the Board
expects only one Director and another Company-designated shareholder
representative to be in attendance at the venue for quorum purposes in order
to conduct the business of the meeting Shareholders are therefore encouraged
to cast their votes by proxy appointing the Chairman of the meeting as proxy
to vote on their behalf.
In light of this, the AGM arrangements will be as set out below:
· The Company expects only one Director and another GMS designated
Shareholder representative to be in attendance at the venue for quorum
purposes to conduct the business of the meeting.
· No other Directors are expected to be present in person.
· There will be no update on trading or other management statements
given at the AGM.
· Shareholders are encouraged to submit questions about the business of
the AGM in advance of the meeting by email (cosec@gmsplc.com
(MAILTO:COSEC@GMSPLC.COM) ) and, in so far as relevant to the business of the
meeting, questions will be responded to by email and taken into account as
appropriate at the meeting itself.
· Voting at the AGM will be by way of a poll so that all the votes cast
in advance by Shareholders appointing the Chairman of the Meeting as their
proxy to vote on their behalf, can be taken into account. Shareholders have
one vote for each ordinary share held when voting on a poll and this procedure
ensures that every vote can be cast.
· The results of the AGM will be announced as soon as practical after
it has taken place.
Shareholders wishing to vote on any of the matters of business at the AGM are
therefore strongly encouraged to:
1. Submit their votes (as soon as possible) in advance of the meeting and
in any case, by 11.30 a.m. (UK time) on 28 June 2022 through the proxy and
electronic voting facilities and to appoint the Chairman of the meeting as
their proxy for this purpose.
2. Submit any questions in connection with the business of the meeting in
advance to the Company Secretary at cosec@gmsplc.com (mailto:cosec@gmsplc.com)
.
3. Look out for any updates in connection with the arrangements for the
AGM via RNS and on the Company's website.
Appointment of KPMG as external auditor of the Company.
At each meeting at which the Company's accounts are presented to its members,
the Company is required to appoint an external auditor to serve until the next
such meeting. The Board, on the recommendation of its Audit and Risk
Committee, recommends the appointment of KPMG as external auditor, having been
selected as such on the recommendation of the Audit and Risk Committee
following the audit tender set out on page 51 in the Report and Accounts.
KPMG will replace Deloitte LLP as the Company's auditor with effect from the
end of this meeting. Deloitte LLP did not participate in the audit tender
process, and subsequently notified the Company (as required under the Act),
that they will not be seeking reappointment as the Company's auditors at the
AGM. The notice from Deloitte LLP was accompanied by a statement that is
required to be circulated to shareholders in accordance with section 520 of
the Act, a copy of which will be circulated to shareholders.
Buy-Back and Cancellation of Deferred Shares:
Gulf Marine Services plc (the "Company") announces that it proposes to
buy-back and cancel all of the Company's deferred shares of 8 pence each in
issue (the "Deferred Shares").
The Company currently has 350,487,787 Deferred Shares in issue which shares
were created in the share capital reorganization approved in the general
meeting on 9 June 2021. The Deferred Shares are not admitted to trading,
have no voting rights and, on a return of capital on a winding up, have no
valuable economic rights. The Company is proposing to simplify its balance
sheet by buying back and cancelling the Deferred Shares in accordance with the
rights attaching to the Deferred Shares for an aggregate total consideration
of £1.00. The shareholders are now being asked to approve the form of
buy-back agreement in order to give effect to the purchase.
Appendix A
Statement of Directors' Responsibilities
The following responsibility statement is repeated here solely for the purpose
of complying with DTR 6.3.5. This statement relates to and is extracted from
page 79 of the 2021 Annual Report.
These responsibilities are for the full 2021 Annual Report and not the
extracted information presented in this announcement or otherwise.
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
· the strategic report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
· the Annual Report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
The Directors of the Company and their responsibilities as at 12 May 2022 are
set out below:
Mansour Al Alami, Executive Chairman
Hassan Heikal, Deputy Chairman, Non-executive Director
Rashed Al Jarwan, Senior Independent Non-Executive Director
Lord Anthony St John of Blestso, Independent Non-Executive Director
Charbel El Khoury, Non-Executive Director
Jyrki Koskelo, Independent Non-Executive Director
Appendix B
Principal risks and uncertainties
The following has been extracted from pages 29 to 33 of the 2021 Annual
Report:
The rating of the principal risks facing the Group in the next five years are
set out below, together with the mitigation measures. These risks are not
intended to be an exhaustive analysis of all risks.
Risk Mitigating factors and actions
1 Utilisation
Utilisation levels may be reduced by the following Modification flexibility for clients
root causes: GMS' vessels are built to be as flexible as possible allowing the Group to
compete for
• Increasing competition as other market participants
a wide share of the market, helping it to maximise utilisation levels and
increase the supply of SESVs in the markets in charter day rates. The Group is capable of modifying assets to satisfy certain
client requirements.
which GMS operates;
• Sustained lower expenditure and investment by
Continuous communication with clients
the Oil & Gas industry may result in lower levels of
The Group maintains strong relationship with its clients through continuous
maintenance being performed on existing platforms communication and a history of providing safe and reliable services.
and facilities and lower levels of construction and
capital expenditure in respect of new installations; Business segment and geographical diversity
• Reliance on a limited number of NOCs, IOCs and The Group has established businesses outside its core Middle Eastern markets
(particularly in the North Sea), and outside of oil and gas (renewables). It
international EPC clients; is continually reviewing opportunities looking to diversify its market
footprint through increasing the client base.
• Fleet capabilities may no longer match with
changing client requirements and applicable
Vessel monitoring
regulations. Failure to deliver the specifications and
The Group has procedures in place, such as the Planned Maintenance System, to
expected performance could lead to reputational ensure that the vessels undergo regular preventative maintenance. The planned
maintenance system has been upgraded to a more modern ERP, allowing overdue
damage and impact GMS' ability to win work; and maintenance to be tracked and reported regularly. The Group's robust operating
• Reduced utilisation may materially adversely affect standards result in minimal downtime.
the business, financial condition and results
of operations.
2 Inability to secure an appropriate capital structure - equity
Under the terms of the latest bank deal signed on Successful equity raise in June 2021
31 March 2021, GMS were required to raise US$ 25 The Group successfully concluded a US$ 27.8 million equity raise in June 2021,
which prevented an event of default on its loan facilities, which in turn
million by 30 June 2021, which was subsequently removed the material uncertainty as to the Group's ability to continue as a
Going Concern that was reported in the full-year 2020 results.
achieved. The Group is required to raise a further
US$ 50 million of equity by 31 December 2022 or
Focus on deleveraging
warrants will be issued entitling the Group's banks to
The net leverage ratio has significantly reduced to 5.8 times compared to 8.0
acquire 132 million shares, 11.5% of the share capital of the Company for a times
total consideration of GBP £7.9 million, or 6.0p per share. PIK interest will
also potentially accrue, only if leverage is above 4.0 times. Failure to meet in 2020. With an improving outlook for the Group's business, and a continued
the requirements of the Group's bank facilities may lead to an event of focus on deleveraging, the Group aims, without relying on a second equity
default. This would give lenders the right to accelerate repayment of the raise, to have net leverage ratio below 4.0 times by the end of 2022, in which
outstanding loans and then exercise security over the Group's assets. case PIK interest would not accrue from 2023.
Exploring all options
The Group is exploring the various contractual options available per the
current bank terms to take place by the end of 2022. As at 31 December 2021,
neither the issuance of warrants nor equity raise were ruled out. The Board
however consider the more likely outcome will be the issuance of warrants
rather than the equity raise.
3 Mena Oil and Gas Market
MENA NOCs have local content requirements as Local content requirements
part of their tender processes designed to give GMS embraces local content requirements, with a long history of operating for
NOCs in the Middle East and established offices in each of the MENA countries
preference to suppliers that commit to improving the Group operates. The Group actively manages its supply chain to ensure that
they
their local content and levels of spend and investment in-country. This may
prevent GMS from winning contracts or lead to financial loss and/or a also are focused on maximising local content and, where necessary, will work
reduction in margins on existing contracts, which will ultimately impact cash with local partners in specific markets to ensure it positions itself in the
flows and profitability. best possible position to win work. Often during the tendering process
companies with a higher
audited local content score are given the offer of first refusal to price
match any lower bids during tendering.
Market knowledge and operational expertise
The Group has a track record of established long-term relationships in the
MENA region which provides an understanding of clients' requirements and
operating standards.
4 Operations: inability to deliver safe and reliable operations
The Group may suffer commercial and reputational damage from an environmental Safety awareness
or safety incident involving employees, visitors or contractors.
Safety and reliability are top priorities and are underpinned by the HSEQ
Inadequate preparation for emergency situations, such as pandemics or management system and a strong safety-focused culture. Management ensures
geopolitical instability, could have a negative impact on the business. appropriate safety practices and procedures; disaster recovery plans and
insurance coverage of all commercial contracts are in place.
Insufficient insurance coverage may lead to
Training and compliance
financial loss.
Our employees undergo continuous training on operational best practices.
Scheduled maintenance
The Group follows regular maintenance schedules on its vessels and the
condition of the vessels is consistently monitored.
Business continuity plan
The Group has in place a business continuity management plan which it
regularly maintains.
Insurance
The Group regularly liaises with insurance brokers to ensure sufficient
coverage
is in place.
5 Liquidity and covenant compliance
The business is exposed to short-term liquidity Liquidity management
management risks arising from potential increases The Group continues to manage liquidity carefully through focusing on
receivables collections and managing the timing of supplier payments.
in interest rates, which further increase debt service
obligations, and unexpected increases in working
Cost management
capital (particularly through inability to collect
The Group has implemented a comprehensive cost reduction programme, removing
receivables). over US$ 20 million of annualised costs since inception of the programme in
2019, in order to generate higher EBITDA and increased cash to service and
repay debt. Continual review of costs and search for further efficiencies is
ongoing.
In addition, the Group's bank facilities are subject to
covenant tests based on the financial performance.
Minimising capital expenditure
Compliance with these covenants depends on GMS'
The Group is currently focused on restricting capital expenditure to essential
ability to secure ongoing work for the fleet. If GMS spending only, to ensure the safe and reliable operations of its vessels.
is unable to secure ongoing work, its financial
performance and position may be materially adversely affected and it may not Covenant compliance
comply with the covenants. In such a case, unless the banks agree otherwise,
this could lead to an event of default. This would give lenders the right to The management team and Board regularly examine future covenant compliance
accelerate repayment of the outstanding loans, and then exercise security over based on the latest forecasts and take necessary actions to avoid any
the Group's assets. potential where a future breach of covenant is forecast.
6 People
Attracting, retaining, recruiting and developing Communication and engagement
a skilled workforce is key. Communication has remained a key practice of management, especially during the
COVID-19 pandemic. Throughout the pandemic, the focus for employees has
continued to be on safety and wellbeing through working remotely, regular
testing and enhanced cleaning procedures.
Losing skills or failing to attract new talent to the
business has the potential to undermine performance.
In the current year, Rashed Al Jarwan was appointed as the new Workforce
Inadequate succession planning and lack of Engagement Director, explicitly tasked with monitoring the level of engagement
and alignment across the organisation. A hybrid town hall style meeting was
identification of critical roles may result in disruption conducted in the last quarter of 2021.
if the related personnel leave the Group.
Remuneration policy
The Short-Term Incentive Plan (STIP) is based on a single Business Scorecard
to ensure all staff are incentivised around delivering a single set of common
goals.
Equal opportunities
GMS is engaged in fair and transparent recruitment practices. It has a
zero-tolerance
policy towards discrimination and provides equal opportunities for all
employees.
Resource planning
The Group has identified all critical roles in place and have adopted
processes to ensure the smooth transition in case of changes in personnel.
Refer to the Governance Report on pages 40 to 43 for details of changes at the
Board level and assessment of what skills the new Board brings to GMS.
7 Legal, economic, and political conditions
Political instability in the regions in which GMS operates (and recruit from) Emergency response planning and insurance
may adversely affect its operations.
For all our major assets and areas of operation, the Group maintains emergency
preparedness plans. It regularly reviews the insurance cover over the Group's
assets to ensure adequate cover is in place.
The business is exposed to sudden changes in tax
compliance requirements or changes in legislation
Workforce planning and monitoring
which could lead to fines, financial loss or adversely
Workforce planning and demographic analysis is completed in order to increase
impact liquidity. diversity.
Sudden changes in inflation in regions GMS operates may adversely affect its Tax advisors
operations.
The Group engage with reputable tax advisors who monitor the impacts of
changes to tax legislation across the regions GMS operates in.
8 Compliance and regulation
Non-compliance with anti-bribery and corruption Code of Conduct
regulations could damage stakeholder relations and The Group has a Code of Conduct which includes anti-bribery and corruption
policies, and all employees are required to comply with this Code when
lead to reputational and financial loss. conducting business on behalf of the Group. Employees are required to undergo
in-house
training on anti-corruption. All suppliers are pre-notified of anti-bribery
GMS' operations are subject to international and corruption policies and required to confirm compliance with these
policies.
conventions on - and a variety of complex federal
and local laws, regulations and guidelines relating to - health, safety and
the protection of the environment. Compliance with these health, safety and Regulations
environmental conventions, laws and regulations has become increasingly
expensive, complex and stringent. Failure to appropriately identify and comply A central database is maintained that documents all of GMS' policies and
with laws and regulations, and other regulatory statutes in new and existing procedures which comply with laws and regulations within the countries in
markets, could lead to regulatory investigations. It may result in GMS failing which we operate. On specialist topics, the Group makes use of external
to win a new contract, the early termination of an existing contract or advisers, where appropriate. A dedicated Company Secretary is in place to help
exclusion from future contracts. monitor compliance, in particular with regard to UK legal and corporate
governance obligations.
External review
The internal audit function helps ensure compliance with GMS policies,
procedures,
internal controls and business processes. The Group's vessels are also audited
by external bodies such as the American Bureau of Shipping (ABS).
9 COVID-19 pandemic
The COVID-19 pandemic has presented a number Hygiene measures
of challenges. GMS has implemented extensive hygiene control and prevention measures across
the fleet and onshore offices. Clients have adopted similar measures, in many
cases
Measures introduced in jurisdictions where GMS
in compliance with strict government directives in force across the countries
operates include closing of international borders and in which the Group operates.
strict quarantine requirements for crew, which could
lead to further increased cost. These measures can COVID-19 vaccinations
change at short notice, maintaining the risk that COVID-19 vaccines are available in the majority of countries where GMS
operates and have been made available to staff, both onshore and offshore.
offshore staff will be unable to crew change. High vaccination rates across the Company have significantly reduced the
health risk to employees from catching COVID-19.
There is a health risk to staff, both onshore and
Offshore rotations
offshore, who come into contact with confirmed cases.
Crew rotations have been extended as a temporary measure to minimise impact
of quarantine requirements of some clients.
Continued COVID-19 restrictions on travel may impact GMS' ability to allow
third parties to travel to its vessels to inspect, maintain or certify
equipment onboard, which increases the risk of equipment failure and being put
off hire. Vessel maintenance
The Group has in place a strict management of change process, which ensures
the risk management process is in place is appropriate, where it has been
Existing or future contracts are delayed by our clients unable to have equipment tested, inspected or certified offshore, due to the
availability of suitably qualified personnel offshore.
as a result of interruptions in their supply chains
resulting in them being unable to carry out work
Contract delays
as planned.
Through strong relationships with its client base, GMS is in regular
communication around any operational delays that are expected that could
impact the Group. In such circumstances and with client agreement, GMS will
seek other opportunities to utilise the fleet and minimise the financial
impact on all parties.
Recovery of COVID-19-related costs
GMS are in dialogue and have strong relationships with its clients to pursue
opportunities to reclaim quarantine and other COVID-19-related expenses.
10 Cyber-crime - security and integrity
Phishing attempts result in inappropriate transactions, data leakage and Cybersecurity monitoring and defence
financial loss. The Group is at risk of loss and reputational damage through
financial cyber-crime. GMS operates multi-layer cyber-security defences which are monitored for
effectiveness to ensure they remain up to date.
GMS engages with third party specialists to provide security services.
11 Climate change
Climate change poses both transition and physical Legal & policy monitoring
risks to the Group. The Group carefully monitors legislative developments to ensure compliance
with
all relevant laws both in the UK and the Middle East. The TCFD disclosure in
The transition risks come from the decarbonisation this report explains our assessment and response to climate-related risks to
be transparent with our stakeholders.
of the global economy. This could result in changing
investor sentiment making new investors harder to find. It may bring changing
client preferences leading to reduced demand for our services. New legislation Physical infrastructure
could require us to increase reporting and possibly substitute our products
and vessels for greener alternatives. The Group monitors weather patterns to ensure conditions are suitable for our
offshore employees and vessels. Onshore buildings are designed to withstand
the heat in the Middle East.
Physical risks include rising temperatures, which could further impact working
hours, and rising sea levels, which could affect where our vessels can
operate. The physical risks also interact with Principal Risk 4 - Our ability Environmental impact
to deliver safe and reliable operations.
GMS aims to minimise its environmental impact by installing energy and water
efficiency measures. We also ensure our machinery and engines are regularly
maintained so they operate efficiently. Furthermore, we research lower carbon
alternatives, including R407 refrigerants and lube oil filtration systems, to
reduce our carbon footprint.
In 2022, we will begin calculating our Scope 3 emissions and setting targets
for the long-term reduction of our carbon emissions.
Long-term planning
GMS has a proven track record in the renewables sector which provides
versatility in our business model. Our vessels are built to be as flexible as
possible to maximise utilisation.
We are aware that we may need to consider changing sea levels and
environmental
legislation when replacing vessels that are being retired in the long term.
- Ends -
Enquiries: GMS +44 (0) 207 603 1515
Mansour Al Alami, Executive Chairman
Celicourt Communications +44 (0)20 8434 2643
Mark Antelme
Philip Dennis
Gulf Marine Services PLC's Legal Entity Identifier is 213800IGS2QE89SAJF77
www.gmsplc.com (http://www.gmsplc.com)
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