REG - Gulf Marine Services - Annual Report and Notice of AGM
28/04/2023 17:15
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RNS Number : 9475X Gulf Marine Services PLC 28 April 2023
FOR IMMEDIATE RELEASE 28 April 2023
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the Group')
2022 ANNUAL REPORT AND NOTICE OF 2023 ANNUAL GENERAL MEETING
The Company advises that the 2022 Annual Report, the Notice of the 2023 Annual
General Meeting and Form of Proxy are being made available to shareholders
electronically today, 28 April 2023. The 2022 Annual Report (in pdf and ESEF
compliant format), the Notice of 2023 Annual General Meeting and Form of Proxy
are available 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) .
Mailing of the 2022 Annual Report, Notice of the 2023 Annual General Meeting
and Form of Proxy to those shareholders having elected to receive paper copies
will commence shortly.
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 2022 Annual Report. The appendices should
be read in conjunction with the Company's Full Year 2022 Results Announcement,
issued at 07:00 on 24 April 2023, RNS Number 1404X. This material is not a
substitute for reading the full 2022 Annual Report.
The Company will hold its Annual General Meeting (the 'AGM') at 2:30 p.m. (UAE
time) on Wednesday, 7 June 2023. at Gulf Marine Services WLL, Office 403,
International Tower, 24th (Karama) Street, Abu Dhabi, United Arab Emirates.
The Board recognises that the AGM is an important event for shareholders in
the corporate calendar and is committed to ensuring that shareholders can
exercise their right to vote and ask questions in connection with this
meeting. Accordingly, for those shareholders that do not wish to attend, or
those that wish to attend and are unable to do so, questions in connection
with the business of the AGM can be submitted on reasonable notice by email to
cosec@gmsplc.com in advance of the AGM 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. We are not planning to
have a Directors' presentation at the AGM and it will be held strictly to
conduct the business of the AGM.
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
encouraged to submit their votes (as soon as possible) in advance of the
meeting and in any case, by 11.30am (UK time) on 5 June 2023 through the proxy
and electronic voting facilities and to appoint the Chairman of the meeting as
their proxy for this purpose. Further details are included in the Notice of
the AGM.
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 72 of the 2022 Annual Report.
These responsibilities are for the full 2022 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 23 April 2023
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 26 to 30 of the 2022 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 Modification Flexibility for Clients
following underlying causes: GMS' vessels are built to be as flexible as possible allowing the Group to
compete for a
wide share of the market, which enable the Group maximise utilisation levels
• Customer concentration leading to and charter
potential significant changes in our contract day rates. The Group is capable of modifying assets in order to satisfy client
requirements.
profile and pipeline. Risks of potential
To comply with LIMS (Lifting Integrity Management System) the Group have
loss of some clients to competitors. involved
engineering companies to perform technical studies on existing equipment to
extend the
• ADNOC (our client) has changed its
life of equipment (time limited).
strategy to bring SESVs in house through
the acquisition of Zakher Marine. There
Continuous Communication with Clients and Encouraging Loyalty
is a risk of other NOCs to follow suit.
The Group maintains strong relationship with its clients through continuous
communication
• Fleet capabilities may no longer match and a proven track record of providing safe and reliable services.
with changing client requirements. Clients GMS has developed plans for fleet upgrades based on the expected future
requirements
may increase the standard specification
of our clients.
required for an SESV, which might require
To develop commercial proposals that builds loyalty by incentivising customer
the Group to upgrade some of its fleet to for longer
be compliant. term contracts with a higher number of vessels used.
Business Segment and Geographical Diversity
The Group is continuously looking for opportunities to maximise the
utilisation of its
vessels.
It is continually reviewing opportunities looking to diversify its market
footprint through
increasing its global client base.
Vessel Monitoring
The Group has procedures in place, such as the Planned Maintenance System, to
ensure
that the vessels undergo regular preventative maintenance. The Planned
Maintenance
System has been upgraded to a modern ERP enabling overdue maintenance to be
tracked
and reported regularly. The Group's robust operating standards result in
minimal
operational downtime.
2 Inability to secure an appropriate capital structure
The Group is subject to increasing cost of Focus on De-leveraging
debt due to increase in interest rates global Leverage levels have significantly reduced to 4.4 times compared to 5.8 times
in 2021. With a continued focus on de-leveraging, the Group aims to have
benchmark, increase in the margin ratchet to leverage levels below
4% from 3% and introduction of PIK interest 4.0 times before the end of 2023.
from 1 January 2023. This will impact the
liquidity in the business and could impact the
share price.
As warrants were issued in January 2023, this
may impact the Group's ability to attract new
investors as there would be a potential dilution
if these warrants are exercised.
3 GCC Local Content Requirements
GCC NOCs have local content requirements Local Content Requirements
as part of their tender processes, which varies GMS embraces local content requirements, with a long history of operating for
NOCs in
for each country, designed to give preference
the GCC with offices in each of the GCC countries where the Group operates.
to suppliers that commit to improving their The Group
local content and levels of spend and actively manages its supply chain to ensure focus is put on maximising local
content and,
investment in-country. This may prevent GMS
where necessary, will collaborate with local partners in specific markets to
from winning new contracts or lead to financial ensure it positions
loss and/or a reduction in profit margins on itself in the best possible position to win work. Often during the tendering
process, companies
existing contracts, which will ultimately impact
with a higher audited local content score are given the offer of first refusal
operating cash flows and net profitability. to price match any
lower bids.
Market Knowledge and Operational Expertise
The Group has well established long-term relationships in the GCC region which
provides
an understanding of clients' requirements and operating standards.
Local Content
The Group continues to explore ways to improve its local content scores in all
the regions
in which they operate.
4 Operations: inability to deliver safe and reliable operations
The Group may suffer commercial and Safety Awareness
reputational damage from an environmental Our highest priority is providing safe and reliable operations. This is
achieved through HSEQ
or safety incident involving employees, visitors
management system and a strong safety-focused culture. Management has
or contractors. appropriate
safety practices and procedures including disaster recovery plans and
comprehensive
Inadequate preparation for situations, such
insurance cover across our fleet.
as sudden equipment failure, inability to fulfil
client requirements and unpredictable weather
Training and Compliance
could have a negative impact on the business.
Our employees undergo continuous and rigorous training on operational best
practices.
Incomprehensive insurance coverage may
lead to financial loss. Scheduled Maintenance
The Group adheres to regular maintenance schedules on its vessels to ensure
compliance
with the highest safety standard.
Business Continuity Plan
The Group has in place a business continuity management plan which it
regularly maintains
to ensure the reliability of its operations.
Management continues to review and improve the current management systems and
monitors the performance of HSEQ.
Insurance
The Group regularly consults 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 due to potential increases The Group continues to manage liquidity carefully through focusing on cash
collection from
in interest rates and inflation, which could
its customers.
impact the debt service obligations and the
Group's bank facilities covenants.
Minimising Capital Expenditure
The Group is focused on restricting capital expenditure to essential spending,
The increase in interest charges will lead but without
to reduced liquidity in the business as jeopardizing the safe and reliable operations of its vessels.
more cash will be required to meet our
banking requirements. Covenant Compliance
The management team and Board regularly examine future covenant compliance
based
Reduced liquidity could impact future
on the latest forecasts and take necessary measures to avoid any potential
operations and lead to an event of default. where a future
This would give lenders the right to accelerate breach of covenant is at risk. The Group monitors its various covenants
throughout the
repayment of the outstanding loans, and then
remaining period of the loan.
exercise security over the Group's assets.
Expedite Debt Repayment
Breach of covenant - All covenants are closely
Management is focussed on making early repayments of the bank loans to reduce
monitored as the headroom remains narrow, the
which is due to the Group's performance interest costs, improve our leverage position and meet our covenant
requirements.
being very sensitive to many internal and
external factors such as utilisation, operational
downtime, interest rates and other variables.
6 People
Attracting, retaining, recruiting and developing Communication, Training and Engagement
a skilled workforce. Communication has remained a key practice of management.
Rashed Al Jarwan is the Workforce Engagement Director for the Group, he is
explicitly
Losing skills or failing to attract new talent to
tasked with monitoring the level of engagement and alignment across the
the business has the potential to organisation.
undermine performance. During the year, the Group organized an event at Jubail Mangrove Park which is
an
educational and leisure destination. At the event, employees were recognised
for their
contributions in 2022, while some staff received Long Service Awards for
completing
either 10, 15, 20 or 25 years of service.
Remuneration Policy
The Short-Term Incentive Plan (STIP) is based on a single Business Corporate
Scorecard to
ensure all staff are aligned and 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.
Further, GMS add value through development programs, promotion from within the
organization and focus on growing talent.
Resource Planning
The Group has identified all critical roles held by individuals and have
adopted processes to
ensure the smooth transition in the event of changes in those personnel. Also,
in the short
term, the Group utilised recruitment specialists and headhunters to fulfil key
positions as the
need had arisen.
7 Legal, economic, and political conditions
Political instability in the regions in which Emergency Response Planning and Insurance
GMS operates (and recruit from) may For all our major assets and areas of operation, the Group maintains emergency
adversely affect its operations. preparedness plans. Insurance cover over the Group's assets is reviewed
regularly to ensure
sufficient cover is in place.
As the majority of crew for certain key
positions come from Eastern Europe (Russia/
Workforce Planning and Monitoring
Ukraine), Indonesia and Philippines, political
Workforce planning and demographic analysis is undertaken in order to increase
instability may hamper the recruitment, diversity
retention and deployment of personnel. within the Group.
Economic conditions such as interest rate Tax Advisors
and inflation increases will have an impact The Group engage with reputable tax advisors who regularly monitor the impacts
of changes
on the Groups' liquidity and profitability.
to tax legislation across the regions that GMS operates in.
Inflation and Interest Rates
Management is continually monitoring the liquidity position from changes in
inflation
and a focus on cost reduction. The key aim of the Group is to deleverage
through early
repayments, which will reduce the impact of interest.
8 Compliance and regulation
Non-compliance with anti-bribery and Code of Conduct
corruption regulations could be detrimental to The Group has a Code of Conduct which includes anti-bribery and corruption
policies, and
stakeholder relations and lead to reputational
all employees are required to comply with this Code when conducting business
and financial loss. on behalf
of the Group. It is mandatory for employees to undergo in-house training on
anti-corruption.
GMS' operations are subject to international
All suppliers are pre-notified of anti-bribery and corruption policies and
conventions on - and a variety of complex required to confirm
federal and local laws, regulations and their compliance with these policies.
guidelines relating to - health, safety and the
protection of the environment. Compliance Regulations
with these has become increasingly costly, A central database is maintained which documents all of GMS' policies and
procedures
complex and stringent. Failure to appropriately
which comply with laws and regulations within the countries in which GMS
identify and comply with laws and regulations, operate.
could lead to regulatory investigations. A dedicated Company Secretary is in place to help monitor compliance, in
particular
for UK legal and corporate governance obligations.
External Review
The Internal Auditors help ensure compliance with GMS policies, procedures,
internal
controls and business processes
9 COVID-19 pandemic
Despite easing of COVID-19 restrictions the The restrictions around COVID-19 have been lifted during the year. The Group
has noted
pandemic still presents some challenges.
a decrease in the number of cases through better control measures in place.
The Group remains focussed on the following areas to ensure a safe working
There are still strict quarantine requirements environment.
for crew, which could lead to further increased
cost. These measures can change at short Hygiene Measures
notice, maintaining the risk that offshore staff GMS maintains hygiene control and prevention measures across the fleet and
onshore
will be unable to crew change.
offices. The Group has maintained similar precautionary measures across the
countries
There remains health risk to staff, both in which it operates.
onshore and offshore, who come into contact
with confirmed cases. Vessel Maintenance
The Group has in place a stringent change management process, which ensures
the risk
management process in place is appropriate.
Recovery of COVID-19 Related Costs
The Group is in the process of reclaiming some quarantine and other COVID-19
related expenses.
10 Cyber-crime - security and integrity
Phishing attempts result in inappropriate Cybersecurity Monitoring and Defence
transactions, data leakage and financial loss. GMS operates multi-layer cyber-security defences which are monitored for
effectiveness
The Group is at risk of loss and reputational
to ensure they remain up to date.
damage through financial cyber-crime.
GMS engages with third party specialists to provide security services.
11 Climate change
Climate change poses both transition and Legal & Policy Monitoring
physical 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 this
The transition risks come from the report
decarbonisation of the global economy. This explains our assessment and response to climate-related risks to be
transparent with
could result in changing investor sentiment
our stakeholders.
making new investors harder to find. It may
bring changing client preferences leading to
Physical Infrastructure
reduced demand for our services.
The Group monitors weather patterns to ensure conditions are suitable for our
offshore
New legislation could require us to increase employees and vessels. Onshore buildings and offshore vessels are designed to
withstand
reporting and possibly substitute our products
the heat in the GCC region.
and vessels for greener alternatives. Physical
risks include rising temperatures, which could
Environmental Impact
further impact working hours, and rising sea
GMS aims to minimise its environmental impact by installing energy and water
levels, which could affect where our vessels efficiency
can operate. measures. We also ensure our machinery and engines are regularly maintained so
they
operate efficiently.
The physical risks also interact with Principal
In 2022, we have calculated all our scopes emissions and setting targets for
Risk 4 - Our ability to deliver safe and the long-term
reliable operations. 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
Notes to Editors:
Gulf Marine Services PLC, a company listed on the London Stock Exchange, was
founded in Abu Dhabi in 1977 and has become a world leading provider of
advanced self‐propelled self‐elevating support vessels (SESVs). The fleet
serves the oil, gas and renewable energy industries from its offices in the
United Arab Emirates, Saudi Arabia and Qatar. The Group's assets are capable
of serving clients' requirements across the globe, including those in the
Middle East, Southeast Asia, West Africa, North America, the Gulf of Mexico
and Europe. The GMS fleet of 13 SESVs is amongst the youngest in the industry,
with an average age of 12 years. The vessels support GMS's clients in a broad
range of offshore oil and gas platform refurbishment and maintenance
activities, well intervention work and offshore wind turbine maintenance work
(which are opex‐led activities), as well as offshore oil and gas platform
installation and decommissioning and offshore wind turbine installation (which
are capex‐led activities). The SESVs are categorised by size ‐ K‐Class
(Small), S‐Class (Mid) and E‐Class (Large) ‐ with these capable of
operating in water depths of 45m to 80m depending on leg length. The vessels
are four‐legged and are self‐ propelled, which means they do not require
tugs or similar support vessels for moves between locations in the field; this
makes them significantly more cost‐effective and time‐efficient than
conventional offshore support vessels without self‐propulsion. They have a
large deck space, crane capacity and accommodation facilities (for up to 300
people) that can be adapted to the requirements of the Group's clients. Gulf
Marine Services PLC's Legal Entity Identifier is 213800IGS2QE89SAJF77
www.gmsuae.com (http://www.gmsuae.com)
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