REG - Gulf Marine Services - Final Results
09/04/2025 07:00
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RNS Number : 2828E Gulf Marine Services PLC 09 April 2025
April 09, 2025
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the Group')
2024 Financial Results
Gulf Marine Services PLC ("GMS" or the "Company"), a leading provider of
self‐propelled, self‐elevating support vessels to the offshore energy
industry, is pleased to announce its full year financial results for the year
to 31 December 2024.
2024 Overview
2022 2023 2024 2024 versus 2023 change
US$m US$m US$m
Revenue 133.2 151.6 167.5 +10%
Adjusted EBITDA 71.5 87.5 100.4 +15%
Net profit for the year 25.4 42.1 38.3 -9%
Average fleet utilisation 88% 94% 92% -2%
Underlying G&A expenses as percentage of revenue 7.8% 7.1% 6.8% 0%
Net leverage ratio 4.4:1 3.05:1 2:1 -34%
Net bank debt 315.8 267.3 201.2 -25%
2024 Financial Highlights
· Group concluded the refinancing of US$ 300.0 million loan facility (US$ 250.0
million term loan amortised over five years and US$ 50.0 million working
capital facility), denominated in United Arab Emirates Dirhams (AED).
· Net bank debt down to US$ 201.2 million (2023: US$ 267.3 million). Net
leverage ratio reduced to 2.0 times (2023: 3.05 times).
· Revenue increased by 10% to US$ 167.5 million (2023: US$ 151.6 million) driven
by the improvement in fleet average day rates across all vessel classes.
· Adjusted EBITDA increased by 15% to US$ 100.4 million (2023: US$ 87.5 million)
driven by increase in revenue. Adjusted EBITDA margin also increased to 60%
(2023: 58%).
· Finance expenses drops by 25% to US$ 23.5 million (2023: US$ 31.4 million),
driven by the lower level of gross debt, the cessation of 250 basis points
(bps) PIK interest and a reduction of the margin rate by 90 bps when the
Group's net leverage ratio passed below 4:1 as of March 2023, and a further
reduction in the margin by 10 bps when the net leverage ratio passed below 3:1
as of March 2024. Additional reduction in margin rate is expected due to
successful refinancing at better terms.
· The Group reported a net profit of US$ 38.3 million (2023: US$ 42.1 million).
· Cost of sales as a percentage of revenue is down 3% points to 51% (2023: 54%).
· Underlying general and administrative expenses as a percentage of revenue is
down to 6.8% (2023: 7.1%).
· Net reversal of impairment of US$ 9.2 million (2023:US$ 33.4 million)
reflecting continuous improvement in market conditions.
· Impact of changes in the fair value of the derivative decreased to US$ 5.3
million (2023: US$ 11.1 million), due to lower number of outstanding warrants
offset by an increase in share price of the Company.
2024 Operational Highlights
· New charters and extensions secured during the year totalled 23.8 years (2023:
8.4 years).
· Strong operational efficiency is maintained with average fleet utilisation of
92% (2023: 94%).
· Average day rates increased to US$ 33.1k (2023: US$ 30.3k) with improvements
across all vessel classes.
· Consistent low operational downtime of 1.0% (2023: 0.8%).
· Lost Time Injury Rate (LTIR) remaining at zero for 2024, while Total
Recordable Injury Rate (TRIR) further reduced to zero (2023: 0.18).
2025 Strategic Progress and Outlook
· Adjusted EBITDA guidance is set at US$ 100 million to US$ 108 million for
2025. We are in the process of assessing the 2026 adjusted EBITDA guidance.
· Target utilisation for 2025 currently stands at 96%.
· Anticipate continued improvement on day rates as our vessel demand outstrips
supply on the back of a strong pipeline of opportunities.
· Average secured day rates are 6% higher than 2024 actual levels.
See Glossary.
1 Adjusted EBITDA - Represents operating profit after adding back
depreciation, amortisation, non-operational items and impairment charges or
deducting reversal of impairment. This measure provides additional information
in assessing the Group's underlying performance that management can more
directly influence in the short term and is comparable from year to year. A
reconciliation of this measure is provided in Note 29 to the consolidated
financial statements.
2 Net bank debt - Represents total bank borrowings (excluding
unamortised issue costs) less cash.
3 Net leverage ratio - Represents the ratio of net bank debt to adjusted
EBITDA.
4 Underlying G&A expenses - Represents general and administrative
costs excluding depreciation, amortisation and other exceptional costs. A
reconciliation of this measure is provided in Note 29 to the consolidated
financial statements.
5 Adjusted EBITDA margin - Represents adjusted EBITDA divided by
revenue.
6 Average fleet utilisation - Represents the percentage of available
days in a relevant period during which the fleet of Self Elevating Support
Vessels (SESVs) is under contract and in respect of which a customer is paying
a day rate for the charter of the SESVs.
7 Lost time injury rate - Represents the lost time injury rate per
200,000 man hours which is a measure of the frequency of injuries requiring
employee absence from work for a period of one or more days.
8 Total recordable injury rate - Represents the frequency of recordable
injuries per 200,000 man hours and includes all our onshore and offshore
personnel and subcontracted personnel.
Chairman's Review
Focus on resilience and agility to deliver shareholder value
As we continue to navigate the dynamic landscape of our industry, our goal
remains on ensuring sustainable resilience and on delivering long-term value
to shareholders. The successful refinancing at improved terms this year
reaffirms our ability to deliver on our commitments and highlights the
progress GMS has achieved over recent years. Our focus continues to be on
further reducing the debt as well as providing a balanced capital allocation,
maximising business opportunities, and growing shareholder value.
Group Performance
The Group continued to improve its financial performance, driven by sustained
high utilisation and increased average day rates across the fleet which rose
to US$ 33.1k, up from previous year's US$ 30.3k. The growth in revenue
resulted in improved adjusted EBITDA of US$ 100.4 million (2023: US$ 87.5
million). This is in line with the revised guidance of US$ 98.0 million to US$
100.0 million. This was achieved by our operational performance in optimising
financial results.
Capital Structure and Liquidity
As part of our strategic focus on resilience and agility, we reduced the net
leverage ratio to 2.0x as of 31 December 2024 (31 December 2023: 3.05x). This
improvement was driven by a reduction in net bank debt to US$ 201.2 million
(31 December 2023: US$ 267.3 million) and improved EBITDA performance for the
year.
In December 2024, the Group concluded the refinancing of a US$ 300.0 million
loan facility, comprising of a US$ 250.0 million term loan amortised over five
years and a US$ 50.0 million working capital facility, denominated in United
Arab Emirates Dirhams (AED). The refinancing was secured at more favourable
interest rates, reducing financing costs and enhancing the Group's flexibility
in capital allocation. This is testimony to the confidence our lenders have in
our strategy and outlook and underscores our financial resilience, allowing us
to effectively manage key risks, as outlined in the risk matrix, while
advancing our deleveraging efforts and pursuing growth opportunities.
Our future dividend policy allocating 20%-30% of the annual adjusted net
profit for distributions to shareholders, through a dividend and /or potential
share buybacks, provided other plans permit and that loan covenants are fully
met, was announced during the year. Key to the sustainability of the
business is maintaining financial stability. The combination of accelerated
debt reduction and EBITDA growth will expedite our commitment to implementing
our shareholder rewards program.
We have substantially increased our investor relations program leading to
improved share liquidity over recent years and broadening our global
shareholder network.
Business Development
The Group secured 7 new contracts and extended 5 existing ones, totalling 23.8
years in aggregate. This is an improvement on 2023 where 4 new contracts and
extended 4 existing ones, totalling 8.4 years in aggregate. We also secured a
new contract for an additional vessel in Europe, further strengthening its
presence in the offshore wind sector. As a result of these contract wins and
extensions, the Group achieved a backlog of US$ 570 million on 01 April 2025.
This backlog sets the path towards generating future value for the
shareholders. On top of our owned fleet of 13 vessels in the Middle East and
Europe, we are also currently operating an additional leased vessel in the
Middle East.
Governance
As a Board, following the successful deleveraging and restructuring of the
Group over past years, we continue to focus on growing shareholder value by
delivering medium and long-term sustainable growth of the business as well as
maintaining our commitment towards stakeholder interests.
Our Audit and Risk Committee, led by Jyrki Koskelo, has focussed on
the proactive mitigation and management of internal and external risks as
well as public reporting and internal audit, ensuring full accountability and
transparency. Within the Group, we continue to regularly review our policies
and procedures on transparent and ethical business practices, including a
Code of Conduct review for employees and stakeholders. This includes a regular
review of our ESG (Environmental, Social, and Governance) policies including
sustainability practices and community engagement.
Our Remuneration Committee, led by Lord Anthony St John, oversees remuneration
across the Group, aligned with our strategic objectives and operational
requirements. Lord St John also ensures strong independent representation and
balance within the Board in his roles of Senior Independent Director and
non-executive Director for Workforce Engagement.
In September 2024, Mr. Hassan Heikal, a non-independent non‐executive
Director of the Company, stepped down from the Board. On behalf of the Board,
I would like to thank him for the input and guidance he provided to the Board
and the Group.
Safety Standards and Operational Excellence
We are very focussed on strict adherence to maintaining safety and regular
maintenance of our fleet and crew as well as the well-being of everyone at
GMS. This includes those with whom we work, and others who are impacted by
our activities, ensuring that we uphold the highest standards.
I am pleased to report that the Group has achieved a Lost Time Injury Rate
(LTIR) of zero for both 2023 and 2024, with no cases requiring medical
treatment or restricted work duties. Total Recordable Injury Rate (TRIR)
reduced from 0.18 in 2023 to zero in 2024. These metrics are significantly
better than the industry average.
We remain committed to continuous improvement in our systems and processes and
will proactively engage our employees to ensure our offshore operations uphold
the highest safety standards, consistent with the expectations of our
stakeholders.
We continue to maintain strong operational efficiency, with a utilisation rate
of 92% (2023: 94%), reflecting our commitment to optimising fleet performance
and maximising asset utilisation. Additionally, we have maintained a low
operational downtime of 1.0% (2023: 0.8%), demonstrating our focus on
minimising disruptions and ensuring consistent service delivery.
Task Force on Climate-Related Financial Disclosures
We fully comply with LR 9.8.6(8)R requirements by ensuring that our
climate-related financial disclosures are closely aligned with the
recommendations of the Task Force on Climate-Related Financial Disclosures
(TCFD) proactively monitoring the impact of climate change to our business.
We conduct comprehensive climate scenario analyses to evaluate potential
transition and physical risks to our operations over the short, medium and
long term. This enables us to better understand and prepare for impacts of
climate change, ensuring that these considerations are deeply embedded within
our enterprise risk assessment framework.
As part of our commitment to robust governance, we hold annual risk management
workshops attended by the myself and other Directors, where climate-related
risks and mitigation strategies are a key focus.
Outlook
While offshore services sector continues a positive trajectory, and
adaptability to potential future cycle changes remains essential. With a
strong focus on operational excellence and safety, we aim to be
well-positioned to navigate cyclical shifts and seize future opportunities.
Our priority is to strengthen resilience and agility by improving our balance
sheet and fulfilling our commitment to delivering long-term value to
shareholders.
With 96% secured utilisation and improved day rates for 2025, we look forward
to another year of strong financial performance with our adjusted EBITDA
guidance for 2025 of between US$ 100.0 million and US$ 108.0 million.
We thank our shareholders for their ongoing support.
Mansour Al Alami
Executive Chairman
08 April 2025
Financial Review
2024 2023 2022
US$m US$m US$m
Revenue 167.5 151.6 133.2
Gross profit 89.6 102.8 60.5
Adjusted EBITDA 100.4 87.5 71.5
Net impairment reversal 9.2 33.4 7.8
Net profit for the year 38.3 42.1 25.4
Revenue and Segmental Profit/Loss
The Group's revenue has grown steadily since 2020. In 2024, the Group posted
10% increase in revenue, reaching US$ 167.5 million compared to the previous
year's US$ 151.6 million. This growth was mainly due to increase in average
days rates, partially offset by a slight decrease in fleet average
utilisation.
Average utilisation slightly decreased by two percentage points to 92% from
94% in 2023, demonstrating strong operational efficiency. Notably, E-class
vessel utilisation improved to 97% (2023: 91%), offsetting decreases in
S-class at 91% (2023: 95%) and K-Class at 90% (2023: 96%).
Average day rates across the fleet increased by 9% to US$ 33.1k compared to
the previous year's US$ 30.3k, with improvements across all vessel classes.
Qatar, the United Arab Emirates (UAE) and Saudi Arabia remain the largest
market, representing 89% (2023: 91%) of total revenue. The remaining 11%
(2023: 9%) of revenue is earned from the renewables market in Europe.
Cost of Sales, Reversal of Impairment and Administrative Expenses
Cost of sales as a percentage of revenue decreased by three percentage points
to 51% compared to 54% reported in 2023.
As a result of continued improved market conditions and reduced cost of
capital, net impairment reversal of US$ 9.2 million (2023: US$ 33.4 million)
was recognised based on the impairment assessment to Group's fleet. Refer to
Note 5 in the consolidated financial statements for further details.
Underlying general & administrative expenses (which excludes depreciation,
amortisation and other exceptional costs) as a percentage of revenue is down
to 6.8% (2023: 7.1%). Reported general and administrative expenses amounted
to US$ 17.0 million, up from US$14.6 million in 2023, driven by increased
staff costs and other expenses.
Adjusted EBITDA
The growth in revenue translated into an improved Adjusted EBITDA of US$ 100.4
million (2023: US$ 87.5 million). This is in line with our revised guidance of
US$ 98 million to US$ 100 million. The adjusted EBITDA margin has also
increased to 60% (2023: 58%). Adjusted EBITDA is considered an appropriate and
comparable measure showing underlying performance, that management are able to
influence. Please refer to Note 29 for further details.
1 Adjusted EBITDA - Represents operating profit after adding back
depreciation, amortisation, non-operational items and impairment charges or
deducting reversal of impairment. This measure provides additional information
in assessing the Group's underlying performance that management is more
directly able to influence in the short term and on a basis comparable from
year to year. A reconciliation of this measure is provided in Note 29 to the
financial statements.
2 Underlying G&A - Represents general and administrative expenses
excluding depreciation and amortisation, and other exceptional costs. A
reconciliation of this measure is provided in Note 29 to the financial
statements.
Finance Expense and Fair Value of Warrants
Finance expenses were 25% lower in 2024 (US$ 23.5 million down from US$ 31.4
million in 2023), driven by the lower level of gross debt, the cessation of
250 basis points (bps) PIK interest and a reduction of the margin rate by 90
bps when the Group's net leverage ratio dropped below 4:1 as of March 2023,
and a further reduction in the margin by 10 bps when the net leverage ratio
passed below 3:1 as of March 2024. An additional reduction in the margin rate
is expected due to the successful refinancing.
Further, the accounting driven impact of changes in fair value of the
derivative (the warrants issued to the lenders) decreased to US$ 5.3 million
(2023: US$ 11.1 million), due to the lower number of outstanding warrants
offset by an increase in share price of the Company. The Company expects the
entire amount of liability on derivative financial instruments amounting to
US$ 9.2 million will be reversed (either in equity or profit or loss) in 2025,
when the warrants are either exercised or when they expire on 30 June 2025.
Earnings
The Group posted a net profit of US$ 38.3 million (2023: US$ 42.1 million).
The decrease in net profit was mainly due to lower net reversal of impairments
and higher tax expenses. Such impact was partially offset by higher revenue,
lower finance expense and accounting impact of changes in fair value of
derivatives as explained above.
Capital Expenditure
The Group's capital expenditure relating to drydocking and improvements of the
vessels decreased to US$ 8.8 million (2023: US$ 11.3 million). GMS believes
that the level of capital expenditure is suitable and directed to essential
outlays.
Cash Flow and Liquidity
During the year, the Group delivered higher operating cash flows of US$ 103.6
million (2023: US$ 94.4 million). This increase is primarily from higher
revenues generated during the year while improving the collections from
clients and overall working capital management.
The net cash outflow from investing activities decreased to US$ 8.8 million
(2023: US$ 12.8 million), mainly due to lower capital expenditure.
The Group's net cash outflow from financing activities was US$ 63.5 million
(2023: US$ 85.2 million), mainly comprising of net repayments to the banks and
certain transaction costs related to refinancing amounting to US$ 39.9 million
(2023: US$ 54.2 million) and interest payment of US$ 21.6 million (2023: US$
27.4 million). At 31 December 2024, the Group has cash and cash equivalents of
US$ 40.0 million, which was utilised subsequent to reporting period to fund
the total prepayment of US$ 40.3 million towards the new term loan. Cash
inflow from financing activities relates to the net funds received on issuance
of share capital amounting to US$ 3.8 million due to warrants being
exercised.
The Group concluded the refinancing of US$ 300.0 million loan facility (US$
250.0 million term loan amortised over five years and US$ 50.0 million working
capital facility), denominated in United Arab Emirates Dirhams (AED).
Balance Sheet
Total non-current assets at 31 December 2024 decreased to US$ 608.3 million
(2023: US$ 621.0 million), mainly due to depreciation charge of US$ 31.5
million (2023: US$ 31.3 million). The decrease is partially offset by the
capital expenditure of US$ 8.8 million (2023: US$ 11.3 million) representing
cost of planned equipment upgrades and dry-docking of vessels, as well as the
net impairment reversal of US$ 9.2 million (2023: US$ 33.4 million) on some of
the Group's vessels.
Total current assets increased to US$ 74.8 million (2023: US$ 47.4 million) as
a result of higher cash and cash equivalents of US$ 40.0 million (2023: US$
8.7 million) and prepayments, advances and other receivables amounting to US$
9.2 million (2023: US$ 8.1 million). The Group was able to prepay US$ 40.3
million towards the new term loan subsequent to the reporting period. Further,
total trade receivables decreased to US$ 25.6 million (2023: US$ 30.6 million)
due to improved collections and an additional charge of expected credit losses
to a client which entered administration during 2023.
Total liabilities decreased by US$ 37.6 million to US$ 300.4 million (US$
338.1 million), mainly due to reduction in bank borrowings amounting to US$
39.9 million, and the decrease in the derivative financial instruments by US$
5.1 million as a result of partial exercise by the warrants holder offset by
the increase in the fair value of the remaining warrants. This was offset by
the higher income tax payable, trade and other payables and lease liabilities
by US$ 7.1 million.
The Group is in a net current liability position as of 31 December 2024,
amounting to US$ 25.7 million (2023: US$ 52.1 million). Management closely
monitors the Group's liquidity position including focus on the forecasted
short-term cash flows. This is to ensure that there would be sufficient
liquidity to meet the Group's current liabilities, in particular, the current
portion of the bank borrowings which represents the principal repayments due
over the next 12 months. Loan prepayments are being made after ensuring that
forecasted cash inflows are sufficient to meet the Group's short-term
obligations.
The increase in equity mainly reflects the net profit achieved during the
year. Further, share capital and share premium increased by a total of US$
14.2 million due to issuance of shares and release of warrants liability as
they are being exercised.
Net Bank Debt and Borrowings
At the end of December 2024, the Group completed the refinancing of US$ 300.0
million loan facility (US$ 250.0 million term loan amortised over five years
and US$ 50.0 million working capital facility), denominated in United Arab
Emirates Dirhams (AED). The working capital facility expires alongside the
main debt facility in December 2029. The refinancing was secured at a more
favourable interest margin as compared to the previous debt facility.
Net bank debt reduced to US$ 201.2 million (2023: US$ 267.3 million). This was
a result of the management's commitment to continue its deleveraging journey.
Going Concern
The Group has a reasonable expectation of its ability to continue as going
concern for the foreseeable future. With four consecutive years of reported
profit and a forecast of continued positive operating cash flows, particularly
in light of the market outlook, the Group remains well-positioned for
sustained success.
The Group's forecast indicates that its refinanced debt facility, combined
with high utilisation at higher day rates and pipeline, will provide
sufficient liquidity for its requirements for at least the next 12 months and
accordingly, the consolidated financial statements for the Group have been
prepared on the Going Concern basis. For further details please refer the
Going Concern disclosure in Note 3 of the consolidated financial statements.
Related Party Transactions
During the year, there were related party transactions for overhauling
services of US$ 0.4 million (2023: US$ 2.4 million), catering services of US$
0.1 million (2023: US$ 0.6 million), and laboratory services of US$ 15k (2023:
US$ 18k) with affiliates of MZI Holding Limited, the Group's largest
shareholder (24.46%).
All related party transactions disclosed herein have been conducted at arm's
length and entered into after a competitive bidding process. This process
ensures that the terms and conditions of such transactions are fair,
reasonable, and comparable to those that would be available in similar
transactions with unrelated third parties.
Further details can be found on Note 23 of the consolidated financial
statements.
Adjusting Items
The Group presents adjusted results, in addition to the statutory results, as
the Directors consider that they provide a useful indication of performance. A
reconciliation between the adjusted non-GAAP and statutory results is provided
in Note 29 of the consolidated financial statements.
Alex Aclimandos
Chief Financial Officer
08 April 2025
Notes 2024 2023
US$'000 US$'000
Revenue 28,31 167,494 151,603
Cost of sales (85,079) (81,987)
Impairment loss of property and equipment 5,28 (9,394) (3,565)
Reversal of impairment of property and equipment 5,28 18,621 36,993
Expected credit losses 9 (2,006) (207)
Gross profit 89,636 102,837
General and administrative expenses (17,028) (14,645)
Operating profit 72,608 88,192
Finance income 32 89 221
Impact of change in fair value of warrants 11 (5,348) (11,077)
Finance expense 33 (23,517) (31,431)
Foreign exchange loss, net 34 (674) (987)
Other income 23 12
Profit for the year before taxation 43,181 44,930
Taxation charge for the year 8 (4,921) (2,862)
Net profit for the year 38,260 42,068
Other comprehensive income - items that may be reclassified to profit or loss:
Net hedging gain reclassified to the profit or loss 33 - 279
Net exchange (loss) / gain on translation of foreign operations (90) 343
Total comprehensive income for the year 38,170 42,690
Profit attributable to:
Owners of the Company 37,976 41,342
Non-controlling interest 18 284 726
38,260 42,068
Total comprehensive income attributable to:
Owners of the Company 37,886 41,964
Non-controlling interest 18 284 726
38,170 42,690
Earnings per share:
Basic (cents per share) 30 3.61 4.07
Diluted (cents per share) 30 3.39 3.92
All results are derived from continuing operations in each year. There are no
discontinued operations in either year.
The attached notes 1 to 36 form an integral part of these consolidated
financial statements.
Notes 2024 2023
US$'000 US$'000
ASSETS
Non-current assets
Property and equipment 5 592,233 606,412
Dry docking expenditure 6 11,867 11,204
Right-of-use assets 7 4,225 3,347
Total non-current assets 608,325 620,963
Current assets
Trade receivables 9 25,575 30,646
Prepayments, advances and other receivables 10 9,229 8,057
Cash and cash equivalents 12 40,007 8,666
Total current assets 74,811 47,369
Total assets 683,136 668,332
EQUITY AND LIABILITIES
Capital and reserves
Share capital - Ordinary 13 31,472 30,117
Capital redemption reserve 13 46,445 46,445
Share premium account 13 111,995 99,105
Restricted reserve 14 272 272
Group restructuring reserve 15 (49,710) (49,710)
Capital contribution 16 9,177 9,177
Translation reserve 17 (2,632) (2,542)
Retained earnings 17 232,679 194,703
Attributable to the owners of the Company 379,698 327,567
Non-controlling interest 18 2,998 2,714
Total equity 382,696 330,281
Current liabilities
Trade and other payables 20 37,795 35,054
Current tax liability 10,430 7,032
Bank borrowings - scheduled repayments within one year 21 39,597 41,500
Lease liabilities 22 3,503 1,623
Derivative financial instruments 11 9,192 14,275
Total current liabilities 100,517 99,484
Non-current liabilities
Provision for employees' end of service benefits 19 2,640 2,395
Bank borrowings - scheduled repayments more than one year 21 196,425 234,439
Lease liabilities 22 858 1,733
Total non-current liabilities 199,923 238,567
Total liabilities 300,440 338,051
Total equity and liabilities 683,136 668,332
The consolidated financial statements were approved by the Board of Directors
and authorised for issue on
08 April 2025. Registered Company 08860816. They were signed on its behalf by:
Mansour Al Alami
Executive Chairman
The attached notes 1 to 36 form an integral part of these consolidated
financial statements.
Share capital - Ordinary Capital redemption reserve Share premium Restricted reserve Group restructuring reserve Share based payment reserve Capital contribution Cash flow hedge reserve Translation Retained earnings Attributable to the owners of the Company Non-controlling interest Total equity
account reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000
At 1 January 2023 30,117 46,445 99,105 272 (49,710) 3,632 9,177 (279) (2,885) 149,712 285,586 1,988 287,574
Profit for the year − − − − − − − − − 41,342 41,342 726 42,068
Other comprehensive income for the year
Net hedging gain on interest hedges reclassified to the profit or loss − − − − − − − 279 − − 279 − 279
Exchange differences on foreign operations − − − − − − − − 343 − 343 − 343
Total comprehensive income for the year − − − − − − − 279 343 41,342 41,964 726 42,690
Transactions with owners of the Company
Share based payment charge − − − − − 17 − − − − 17 − 17
Transfer of share option reserve − − − − − (3,649) − − − 3,649 − − −
Total transactions with owners of the Company − − − − − (3,632) − − − 3,649 17 − 17
At 31 December 2023 30,117 46,445 99,105 272 (49,710) − 9,177 − (2,542) 194,703 327,567 2,714 330,281
Profit for the year − − − − − − − − − 37,976 37,976 284 38,260
Other comprehensive income for the year
Exchange differences on foreign operations − − − − − − − − (90) − (90) − (90)
Total comprehensive income for the year − − − − − − − − (90) 37,976 37,886 284 38,170
Transactions with owners of the Company
Issue of share capital 1,355 − 12,973* − − − − − − − 14,328 − 14,328
Share issuance costs − − (83) − − − − − − − (83) − (83)
Total transactions with owners of the Company 1,355 − 12,890 − − − − − − − 14,245 − 14,245
At 31 December 2024 31,472 46,445 111,995 272 (49,710) − 9,177 − (2,632) 232,679 379,698 2,998 382,696
*Addition to share premium amount reflects cash proceeds US$ 2.5m and release
of warrants liability of US$ 10.4m upon exercise of warrants.
Refer to Notes 13 to 17 for description of each reserve.
The attached notes 1 to 36 form an integral part of these consolidated
financial statements.
Notes 2024 2023
US$'000 US$'000
Operating activities
Profit for the year 38,260 42,068
Adjustments for:
Depreciation of property and equipment 5 26,194 24,297
Finance expenses 23,511 31,431
Impact of change in fair value of warrants 11 5,348 11,077
Amortisation of dry-docking expenditure 6 5,324 4,687
Depreciation of right-of-use assets 7 4,641 3,188
Amortisation of borrowings issue cost 6 -
Income tax expense 8 4,921 2,862
Net charge of expected credit losses 9 2,006 207
End of service benefits charge 19 525 723
Impairment loss 5 9,394 3,565
Reversal of impairment 5 (18,621) (36,993)
End of service benefits paid 19 (280) (468)
Interest income 32 (89) (221)
Other income (23) (12)
Cash flows from operating activities before movement in working capital 101,117 86,411
Changes in:
- trade and other receivables 1,893 2,003
- trade and other payables 2,949 8,140
Cash generated from operations 105,959 96,554
Taxation paid (2,399) (2,151)
Net cash generated from operating activities 103,560 94,403
Investing activities
Payments for additions of property and equipment (2,788) (3,459)
Dry docking spend excluding drydock accruals (6,070) (9,550)
Interest received 89 221
Net cash used in investing activities (8,769) (12,788)
Financing activities
Proceeds from issue of share capital on exercise of warrants 3,897 -
Share issuance cost (83) -
Proceeds from bank borrowings 35 241,189 2,000
Payment of borrowings issue cost 35 (5,173) -
Repayment of bank borrowings 35 (275,939) (56,174)
Interest paid on bank borrowings 35 (21,612) (27,428)
Principal elements of lease payments 35 (4,478) (3,330)
Settlement of derivatives 35 - 327
Other finance expenses paid (790) (374)
Interest paid on leases 35 (461) (245)
Net cash used in financing activities (63,450) (85,224)
Net increase / (decrease) in cash and cash equivalents 31,341 (3,609)
Cash and cash equivalents at the beginning of the year 8,666 12,275
Cash and cash equivalents at the end of the year 12 40,007 8,666
Non - cash transactions
Recognition of right-of-use assets 5,519 3,231
Addition / (reversal) to capital accruals - 867
(Decrease) / increase in drydock accruals (83) 2,590
Release of derivative liability (10,431) -
The attached notes 1 to 36 form an integral part of these consolidated
financial statements.
1 General information
Gulf Marine Services PLC ("GMS" or "the Company") is a company which is
limited by shares and is registered and incorporated in England and Wales on
24 January 2014. The Company is a public limited company with operations
mainly in the Arabian Peninsula region and Europe. The address of the
registered office of the Company is 107 Hammersmith Road, London, United
Kingdom, W14 0QH. The registered number of the Company is 08860816. The
shareholder pattern of the Group is disclosed in the annual report.
The principal activities of GMS and its subsidiaries (together referred to as
"the Group") are chartering and operating a fleet of specially designed and
built vessels. All information in the notes relate to the Group, not the
Company unless otherwise stated.
The Company and its subsidiaries are engaged in providing self-propelled,
self-elevating support vessels, which provide a stable platform for delivery
of a wide range of services throughout the total lifecycle of offshore oil,
gas and renewable energy activities and which are capable of operations in the
Arabian Peninsula, Europe and other regions.
The financial information for the year ended 31 December 2023 does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for that year has been delivered to the
Registrar of Companies. The independent auditor's report on the full financial
statements for the year ended
31 December 2023 was unqualified, did not draw attention to any matters by way
of emphasis and did not include a statement under Section s498 (2) or (3) of
the 2006 Companies Act.
The preliminary announcement does not constitute the Group's statutory
accounts for the year ended 31 December 2024, but is derived from those
accounts. Statutory accounts for the year ended 31 December 2024 were approved
by the Directors on 08 April 2025 and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The independent
auditor's report on those financial statements was unqualified, did not draw
attention to any matters by way of emphasis and did not include a statement
under Section s498 (2) or (3) of the 2006 Companies Act.
The 2024 Annual Report will be posted to shareholders in advance of the Annual
General Meeting.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRSs"), this announcement does
not itself contain sufficient information to comply with the disclosure
aspects of IFRSs.
The consolidated preliminary announcement of the Group has been prepared in
accordance with IFRSs, IFRIC interpretations and the Companies Act 2006
applicable to companies reporting under IFRSs. The consolidated financial
information has been prepared under the historical cost convention, as
modified by the revaluation of derivative financial instruments at fair value.
2 Adoption of new and revised International Financial
Reporting Standards (IFRS)
The accounting policies and methods of computation adopted in the preparation
of these consolidated financial statements are consistent with those followed
in the preparation of the Group's consolidated annual financial statements for
the year ended 31 December 2023, except for the adoption of new standards and
interpretations effective as at 1 January 2024.
2 Adoption of new and revised International Financial
Reporting Standards (IFRS) (continued)
New and revised IFRSs
The following new and revised IFRSs have been adopted in these consolidated
financial statements. The application of these new and revised IFRSs has not
had any material impact on the amounts reported for the current and prior
years but may affect the accounting for future transactions or arrangements.
Effective for
annual periods
beginning on or after
Amendments to IAS 1 Classification of Liabilities as Current or Non-Current 1 January 2024
and Non-Current Liabilities with Covenants
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements 1 January 2024
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback 1 January 2024
New and revised IFRSs in issue but not yet effective
At the date of authorisation of these consolidated financial statements, the
following new and revised IFRSs were in issue but not yet effective:
Effective for
annual periods
beginning on or after
Amendments to IAS 21 Lack of Exchangeability 1 January 2025
Amendments to IFRS 9 and IFRS 7 Classification and Measurement of Financial 1 January 2026
Instruments
Annual improvements to IFRS Accounting Standards - Volume 11 1 January 2026
IFRS 18 Presentation and Disclosure in Financial Statements 1 January 2027
IFRS 18 will replace IAS 1 for reporting periods commencing on or after 1
January 2027. The following key changes will apply;
1. Operating profit will be defined as a residual capturing all income and
expenses not classified as investing or financing items.
2. The operating profit line will be the start of the cash flow statement.
3. Additional disclosures will be included in the accounts on management
defined performance measures.
4. Enhanced guidance is provided on how to group items in the primary
financial statements and the notes.
The company is still assessing the impact of the new standard with respect to
the structure of the income statement and how information is grouped in the
financial statements including items labeled as other.
IFRS 19 Subsidiaries without Public Accountability Disclosures 1 January 2027
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Optional
Investor and its Associate or Joint Venture
Management anticipates that these new standards, interpretations and
amendments will be adopted in the Group's consolidated financial statements as
and when they are applicable and the impact of adoption of these new
standards, interpretations and amendments is currently being assessed on the
consolidated financial statements of the Group before the period of initial
application.
3 Material accounting policies
The Group's material accounting policies adopted in the preparation of these
consolidated financial statements are set out below. Except as noted in Note
2, these policies have been consistently applied to each of the years
presented.
Statement of compliance
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006.
Basis of preparation
The consolidated financial statements have been prepared on the historical
cost basis, except for derivative financial instruments that are measured at
fair values at the end of each reporting period. Historical cost is generally
based on the fair value of the consideration given in exchange for assets.
For financial reporting purposes, fair value measurements are categorised into
Level 1, 2 or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
· Level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date;
· Level 2 inputs are inputs, other than quoted prices included within Level 1,
that are observable for the asset or liability, either directly or indirectly;
and
· Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies adopted are set out below.
Going concern
The Directors have assessed the Group's financial position through to June
2026 and hold a reasonable expectation of its ability to continue as going
concern for the foreseeable future. With four consecutive years of reported
profit and a forecast of continued positive operating cash flows, particularly
in light of the market outlook, the Group remains well-positioned for
sustained success.
In December 2024, the Group completed the refinancing of a US$ 300.0 million
(AED 1,101.5 million) loan facility (comprising a US$ 250.0 million (AED 924.0
million) term loan amortised over five years and a US$ 50.0 million (AED 177.5
million) working capital facility), denominated in United Arab Emirates
Dirhams (AED). The working capital facility includes a cash commitment of US$
20.0 million (31 December 2023: US$ 20.0 million), but if no cash is drawn,
the full facility remains available for performance bonds and guarantees. The
working capital facility expires alongside the main debt facility in December
2029. The three banks, two of which are current lenders, have an equal
participation in the term loan and in the working capital facility.
The refinancing was secured at a more favourable interest rate, which is based
on EIBOR plus a margin. The margin is determined by a ratchet depending on
leverage levels. The improved terms will lower financing costs and enhance the
Group's flexibility in capital allocation.
The Group closely monitors its liquidity and is expected to meet its
short-term obligations over the next twelve months. Subsequent to the year
end, the Group made prepayments of US$ 40.3 million towards its bank
borrowings. The loan prepayments were made after taking into account the
forecast cashflows for 2025.
3 Material accounting policies (continued)
Going concern (continued)
The forecast used for Going Concern reflects management's key assumptions
including those around vessel utilisation, vessel day rates on a
vessel-by-vessel basis. Specifically, these assumptions are:
· average day rates across the fleet are assumed to be US$ 34.8k for the
18-month period to 30 June 2026;
· 92% forecast utilisation for the 18-month period to 30 June 2026;
· pipeline of tenders and opportunities for new contracts that would commence
during the forecast period.
A downside case was prepared using the following assumptions:
· no work-to-win during the 18-months period to 30 June 2026;
· options for five vessel contracts are not exercised by the customers during
the 18-months period to 30 June 2026;
· 16 percentage points reduction in utilisation for the 18-months period to 30
June 2026;
· interest rate on EIBOR to remain at current levels.
Based on the above scenario, the Group would not be in breach of its current
term loan facility. The downside case is considered to be severe, but it would
still leave the Group with sufficient liquidity and in compliance with the
covenants under the Group's banking facilities throughout the assessment
period.
In addition to the above downside sensitivity, the Directors have also
considered a reverse stress test, where EBITDA has been sufficiently reduced
to breach debt covenant. This scenario assumes a substantial increase in
operational downtime to 19%, compared to the base case cashflows with a 2.5%
operational downtime. The significant increase in operational downtime for the
forecast period would result in breach of the Debt Service Cover ratios.
However, it is important to note, that GMS has reported annual operational
downtime of less than 2.5% over the past five years.
Should circumstances arise that differ from the Group's projections, the
Directors believe that a number of mitigating actions can be executed
successfully in the necessary timeframe to meet debt repayment obligations as
they become due and in order to maintain liquidity. Potential mitigating
actions include the vessels off hire for prolonged periods could be cold
stacked to minimise operating costs on these vessels which has been factored
into the downside case. Additional mitigations could be considered including
but not limited to reduction in overhead costs, relaxation/waiver from
covenant compliance and rescheduling of repayments with lenders.
Management is aware of the broader operating context and acknowledges the
potential impact of climate change on the Group's consolidated financial
statements. However, it is anticipated that climate change will have limited
effect during the going concern assessment period.
After considering reasonable risks and potential downsides, the Group's
forecasts suggest that its bank facilities, combined with high utilization at
higher day rates and a pipeline of near-term opportunities for additional
work, will provide sufficient liquidity to meet its needs in the foreseeable
future. Accordingly, the consolidated financial statements for the Group for
the year ended 31 December 2024 have been prepared on a going concern basis.
Basis of consolidation
These consolidated financial statements incorporate the financial statements
of GMS and subsidiaries controlled by GMS. The Group has assessed the control
which GMS has over its subsidiaries in accordance with IFRS 10 Consolidated
Financial Statements, which provides that an investor controls an investee
when the investor is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns
through its power over the investee.
3 Material accounting policies (continued)
Details of GMS's subsidiaries at 31 December 2024 and 2023 are as follows:
Proportion of Ownership Interest
Name Place of Registration Registered Address 2024 2023 Type of Activity
Gulf Marine Services W.L.L. United Arab Emirates Office 403, International Tower, 24(th) Karama Street, P.O. Box 46046, Abu 100% 100% Marine Contractor
Dhabi, United Arab Emirates
Gulf Marine Services W.L.L. - Qatar Branch Qatar 22 Floor, Office 22, Tornado Tower, Majilis Al Tawoon Street, P.O. Box 27774, 100% 100% Marine Contractor
Doha, Qatar
GMS Global Commercial Invt LLC United Arab Emirates Office 403, International Tower, 24(th) Karama Street, P.O. Box 46046, Abu 100% 100% General Investment
Dhabi, United Arab Emirates
Gulf Marine Middle East FZE United Arab Emirates ELOB, Office No. E-16F-04, P.O. Box 53944, Hamriyah Free Zone, Sharjah 100% 100% Operator of offshore barges
Gulf Marine Saudi Arabia Co. Limited Saudi Arabia King Fahad Road, Al Khobar, 75% 75% Operator of offshore barges
Eastern Province , P.O. Box 31411 Kingdom Saudi Arabia
Gulf Marine Services LLC Qatar 41 Floor, Tornado Tower, West Bay, Doha, Qatar, POB 6689 100% 100% Marine Contractor
Gulf Marine Services (UK) Limited United Kingdom c/o MacKinnon's, 14 Carden Place, Aberdeen, AB10 1UR 100% 100% Operator of offshore barges
GMS Jersey Holdco. 1* Limited Jersey 12 Castle Street, St. Helier, Jersey, JE2 3RT 100% 100% General Investment
GMS Jersey Holdco. 2 Limited Jersey 12 Castle Street, St. Helier, Jersey, JE2 3RT 100% 100% General Investment
Offshore Holding Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Holding Company
of Panama
Offshore Logistics Invt SA** Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, 100% 100% Dormant
Republic of Panama
Offshore Accommodation Invt SA** Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Dormant
of Panama
3 Material accounting policies (continued)
Basis of consolidation (continued)
Proportion of Ownership Interest
Name Place of Registration Registered Address 2024 2023 Type of Activity
Offshore Jack-up Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Owner of Barge "Kamikaze"
of Panama
Offshore Structure Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Owner of Barge "Kikuyu"
of Panama
Offshore Craft Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Owner of Barge "GMS Endeavour"
of Panama
Offshore Maritime Invt SA** Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Dormant
of Panama
Offshore Tugboat Invt SA** Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Dormant
of Panama
Offshore Boat Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Owner of Barge "Kawawa"
of Panama
Offshore Kudeta Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Owner of Barge "Kudeta"
of Panama
GMS Endurance Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Owner of Barge "Endurance"
of Panama
GMS Enterprise Investment SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Owner of Barge "Enterprise"
of Panama
3 Material accounting policies (continued)
Basis of consolidation (continued)
Proportion of Ownership Interest
Name Place of Registration Registered Address 2024 2023 Type of Activity
GMS Sharqi Investment SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, 100% 100% Owner of Barge "Sharqi"
Republic of Panama
GMS Scirocco Investment SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, 100% 100% Owner of Barge "Scirocco"
Republic of Panama
GMS Shamal Investment SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, 100% 100% Owner of Barge "Shamal"
Republic of Panama
GMS Keloa Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, 100% 100% Owner of Barge "Keloa"
Republic of Panama
GMS Pepper Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, 100% 100% Owner of Barge "Pepper"
Republic of Panama
GMS Evolution Invt SA Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, 100% 100% Owner of Barge "Evolution"
Republic of Panama
GMS Phoenix Investment SA** Panama Bloc Office Hub, Fifth Floor, Santa Maria Business District, Panama, Republic 100% 100% Dormant
of Panama
Gulf Marine Services (Asia) Pte. Limited Singapore 1 Scotts Road, #21-07, Shaw Centre, Singapore, 228208 100% 100% Operator of offshore barges
Gulf Marine Services (Asia) Pte. Limited - Qatar branch Qatar 22 Floor, Office 22, Tornado Tower, Majilis Al Tawoon Street, P.O. Box 27774, 100% 100% Operator of offshore barges
Doha, Qatar
* Held directly by Gulf Marine Services PLC.
** These dormant subsidiaries wound up on 29 January 2025.
3 Material accounting policies (continued)
Basis of consolidation (continued)
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated statement of profit or loss and other
comprehensive income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the results of subsidiaries to bring
their accounting policies in line with those used by other members of the
Group. All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. The interests of non-controlling shareholders are
initially measured either at fair value or at the non-controlling interests'
proportionate share of the fair value of the acquiree's identifiable net
assets. The choice of measurement basis is made on an
acquisition-by-acquisition basis. Subsequent to acquisition, the carrying
amount of non-controlling interests is the amount of those interests at
initial recognition plus the non-controlling interests' share of subsequent
changes in equity. Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests having a
deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amounts of
the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to owners of the Group.
Acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The consideration for each acquisition is measured at the
aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are recognised
in profit or loss as incurred. Fair value is determined as the amount for
which an asset could be exchanged, or a liability transferred, between
knowledgeable, willing parties in an arm's length transaction.
The acquiree's identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3 (2008) are recognised at
their fair value at the acquisition date.
When the Group loses control of a subsidiary, the profit or loss on disposal
is calculated as the difference between (i) the aggregate of the fair value of
the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests. Amounts
previously recognised in other comprehensive income in relation to the
subsidiary are accounted for (i.e. reclassified to profit or loss or
transferred directly to retained earnings) in the same manner as would be
required if the relevant assets or liabilities were disposed of. The fair
value of any investment retained in the former subsidiary at the date when
control is lost is regarded as the fair value on initial recognition for
subsequent accounting under IFRS 9 Financial Instruments: Recognition and
Measurement or, when applicable, the cost on initial recognition of an
investment in an associate or jointly controlled entity.
Revenue recognition
The Group recognises revenue from contracts with customers as follows:
· Charter revenue;
· Lease income;
· Revenue from messing and accommodation services;
· Manpower income;
· Maintenance income;
· Contract mobilisation revenue;
· Contract demobilisation revenue; and
· Sundry income.
Revenue is measured as the fair value of the consideration received or
receivable for the provision of services in the ordinary course of business,
net of trade discounts, volume rebates, and sales taxes excluding amounts
collected on behalf of third parties. Revenue is recognised when control of
the services is transferred to the customer.
3 Material accounting policies (continued)
Revenue recognition (continued)
Consequently, revenue for the provision of services is recognised either:
· Over time during the period that control incrementally transfers to the
customer and the customer simultaneously receives and consumes the benefits.
The Group has applied the practical expedient and recognises revenue over time
in accordance with IFRS 15 i.e. the amount at which the Group has the right to
invoice clients.
· Wholly at a single point in time when GMS has completed its performance
obligation.
Revenue recognised over time
The Group's activities that require revenue recognition over time includes the
following performance obligation:
Performance obligation 1 - Charter revenue, contract mobilisation revenue,
revenue from messing and accommodation services, and manpower income
Chartering of vessels, mobilisations, messing and accommodation services and
manpower income are considered to be a combined performance obligation as they
are not separately identifiable and the Group's clients cannot benefit from
these services on their own or together with other readily available
resources. This performance obligation, being the service element of client
contracts, is separate from the underlying lease component contained within
client contracts which is recognised separately.
Revenue is recognised for certain mobilisation related reimbursable costs.
Each reimbursable item and amount is stipulated in the Group's contract with
the customer. Reimbursable costs are included in the performance obligation
and are recognised as part of the transaction price, because the Group is the
primary obligor in the arrangement, has discretion in supplier selection and
is involved in determining product or service specifications.
Performance obligation 2 - Sundry income
Sundry income that relates only specifically to additional billable
requirements of charter hire contracts are recognised over the duration of the
contract. For the component of sundry income that is not recognised over time,
the performance obligation is explained below.
Revenue recognised at a point in time
The Group's activities that require revenue recognition at a point in time
include the following performance obligations.
Performance obligation 1 - Contract demobilisation revenue
Lump-sum fees received for equipment moves (and related costs) as part of
demobilisations are recognised when the demobilisation has occurred at a point
in time.
Performance obligation 2 - Sundry income
Sundry Income includes handling charges, which are applied to costs incurred
by the Group and subsequently billed to the customer. Revenue is recognised
when it is billed to the customer, as this is when the performance obligation
is fulfilled, and control has passed to the customer.
Deferred and accrued revenue
Clients are typically billed on the last day of specific periods that are
contractually agreed upon. Where there is delay in billing, accrued revenue is
recognised in trade and other receivables for any services rendered where
clients have not yet been billed (see Note 9).
As noted above, lump sum payments are sometimes received at the outset of a
contract for equipment moves or modifications. These lump sum payments give
rise to deferred revenue in trade and other payables (see Note 20).
3 Material accounting policies (continued)
Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of
the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for certain short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low value assets.
Low value assets have a low value purchase price when new, typically $5,000 or
less, and include items such as tablets and personal computers, small items of
office furniture and telephones. For these leases, the Group recognises the
lease payments as an operating expense on a straight-line basis over the term
of the lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are consumed.
Leases of operating equipment linked to commercial contracts are recognised to
match the length of the contract even where the contract term is less than 12
months.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
Group's incremental borrowing rate. This is the rate that would be available
on a loan with similar conditions to obtain an asset of a similar value. Lease
payments included in the measurement of the lease liability comprise:
· Over time during the period that control incrementally transfers to the
customer and the customer simultaneously receives and consumes the benefits.
The Group has applied the practical expedient and recognises revenue over time
in accordance with IFRS 15 i.e. the amount at which the Group has the right to
invoice clients.
· Fixed lease payments (including in-substance fixed payments), less any lease
incentives receivable;
· Variable lease payments that depend on an index or rate, initially measured
using the index or rate at the commencement date;
· The amount expected to be payable by the lessee under residual value
guarantees;
· The exercise price of purchase options, if the lessee is reasonably certain to
exercise the options; and
· Payments of penalties for terminating the lease if the lease term reflects the
exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated
statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right-of-use asset) whenever:
· The lease term has changed or there is a significant event or change in
circumstances resulting in a change in the assessment of exercise of a
purchase option, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate.
· The lease payments change due to changes in an index or rate or a change in
expected payment under a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised lease payments using an
unchanged discount rate (unless the lease payments change is due to a change
in a floating interest rate, in which case a revised discount rate is used).
· A lease contract is modified and the lease modification is not accounted for
as a separate lease, in which case the lease liability is remeasured based on
the lease term of the modified lease by discounting the revised lease payments
using a revised discount rate at the effective date of the modification.
There were no such remeasurements made during the year (2023: nil).
The right-of-use assets comprise the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day, less
any lease incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment
losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a
leased asset, restore the site on which it is located or restore the
underlying asset to the condition required by the terms and conditions of the
lease, a provision is recognised and measured under IAS 37. To the extent that
the costs relate to a right-of-use asset, the costs are included in the
related right-of-use asset, unless those costs are incurred to produce
inventories.
3 Material accounting policies (continued)
Leases (continued)
The Group as lessee (continued)
Right-of-use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right-of-use asset reflects that the Group
expects to exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated
statement of financial position. The Group applies IAS 36 to determine whether
a right-of-use asset is impaired and accounts for any identified impairment
loss as described in the 'Property and Equipment' policy.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease
components, and instead account for any lease and associated non-lease
components as a single arrangement. The Group has not used this practical
expedient. For a contract that contains a lease component and one or more
additional lease or non-lease components, the Group allocates the
consideration in the contract to each lease component on the basis of the
relative stand-alone price of the lease component and the aggregate
stand-alone price of the non-lease components.
The Group as a lessor
At inception or on modification of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of their relative stand‑ alone prices.
When the Group acts as a lessor, it determines at lease inception whether each
lease is a finance lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the
lease transfers substantially all of the risks and rewards incidental to
ownership of the underlying asset. If this is the case, then the lease is a
finance lease; if not, then it is an operating lease. As part of this
assessment, the Group considers certain indicators such as whether the lease
is for the major part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the
head lease and the sub‑lease separately. It assesses the lease
classification of a sub‑lease with reference to the right‑of‑use asset
arising from the head lease, not with reference to the underlying asset. If a
head lease is a short‑term lease to which the Group applies the exemption
described above, then it classifies the sub‑lease as an operating lease.
The Group's contracts with clients contain an underlying lease component
separate to the service element. These leases are classified as operating
leases and the income is recognised on a straight line basis over the term of
the lease.
The Group applies IFRS 15 to allocate consideration under each component based
on its standalone selling price. The standalone selling price of the lease
component is estimated using a market assessment approach by taking the market
rate, being the contract day rate and deducting all other identifiable
components, creating a residual amount deemed to be the lease element.
Property and equipment
Property and equipment is stated at cost which includes capitalised borrowing
costs less accumulated depreciation and accumulated impairment losses (if
any). The cost of property and equipment is their purchase cost together with
any incidental expenses of acquisition. Subsequent expenditure incurred on
vessels is capitalised where the expenditure gives rise to future economic
benefits in excess of the originally assessed standard of performance of the
existing assets.
The costs of contractual equipment modifications or upgrades to vessels that
are permanent in nature are capitalised and depreciated in accordance with the
Group's fixed asset capitalisation policy. The costs of moving equipment while
not under contract are expensed as incurred.
Depreciation is recognised so as to write-off the cost of property and
equipment less their estimated residual values over their useful lives, using
the straight-line method. The estimated residual values of vessels and related
equipment are determined taking into consideration the expected scrap value of
the vessel, which is calculated based on the weight and the market rate of
steel at the time of asset purchase.
3 Material accounting policies (continued)
Property and equipment (continued)
If the price per unit of steel at the balance sheet date varies significantly
from that on date of purchase, the residual value is reassessed to reflect
changes in market value.
The estimated useful lives used for this purpose are:
Vessels* 35 years
Vessel spares, fittings and other equipment* 3 - 20 years
Others** 3 - 5 years
Taking into consideration independent professional advice, management
considers the principal estimated useful lives of vessels for the purpose of
calculating depreciation to be 35 years from the date of construction of the
vessel.
*Depreciation of these assets is charged to cost of sales.
** Depreciation of these assets is charged to general and administrative
expenses.
The estimated useful lives, residual values and depreciation method are
reviewed at each year end, with the effect of any changes in estimate
accounted for on a prospective basis.
The gain or loss arising on the disposal or retirement of an item of property
and equipment is determined as the difference between the sale proceeds and
the carrying amount of the asset and is recognised within administrative
expenses in the profit or loss. The depreciation charge for the year is
allocated between cost of sales and administrative expenses, depending on the
usage of the respective assets.
Dry docking
Dry docking costs are costs of repairs and maintenance incurred on a vessel to
ensure compliance with applicable regulations and to maintain certification
for vessels. The cost incurred for periodical dry docking or major overhauls
of the vessels are identified as a separate inherent component of the vessels.
These costs depreciate on a straight-line basis over the period to the next
anticipated dry docking being approximately 30 months. Costs incurred outside
of the dry docking period which relate to major works, overhaul / services,
that would normally be carried out during the dry docking, as well as surveys,
inspections and third party maintenance (which are part of the dry docking) of
the vessels are initially treated as capital work-in-progress ("CWIP") of the
specific vessel. Following the transfer of these balances to property and
equipment, depreciation commences at the date of completion of the survey.
Costs associated with equipment failure are recognised in the profit and loss
as incurred.
Capital work-in-progress
Properties and vessels under the course of construction, are carried at cost,
less any recognised impairment loss. Cost includes professional fees and, for
qualifying assets, borrowing costs capitalised in accordance with the Group's
accounting policy. Depreciation of these assets, on the same basis as other
property assets, commences when the assets are ready for their intended use.
Impairment of tangible assets
At the end of each reporting period, the Group reviews the carrying amounts of
its tangible assets to determine whether there is any indication that those
assets have suffered an impairment loss or impairment reversal.
If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any).
When it is not possible to estimate the recoverable amount of an individual
asset, the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs. The Group also has separately identifiable
equipment (corporate assets) which are typically interchangeable across
vessels and where costs can be measured reliably. When a reasonable and
consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated
to the smallest group of cash-generating units for which a reasonable and
consistent allocation basis can be identified.
3 Material accounting policies (continued)
Property and equipment (continued)
Impairment of tangible assets (continued)
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate. The discount rate
reflects risk free rates of returns as well as specific adjustments for
country risk in the countries the Group operates in, adjusted for a Company
specific risk premium, to determine an appropriate discount rate.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the
asset (or a cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in
which they are incurred.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash
flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognised as
an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
Employees' end of service benefits
In accordance with Labour Laws of some of the countries in which we operate,
the Group is required to provide for End of Service Benefits for certain
employees.
The only obligation of the Group with respect to end of service benefits is to
make the specified lump-sum payments to employees, which become payable when
they leave the Group for reasons other than gross misconduct but may be paid
earlier at the discretion of the Group. The amount payable is calculated as a
multiple of a pre-defined fraction of basic salary based on the number of full
years of service.
To meet the requirement of the laws of the countries in which we operate, a
provision is made for the full amount of end of service benefits payable to
qualifying employees up to the end of the reporting period. The provision
relating to end of service benefits is disclosed as a non-current liability.
The provision has not been subject to a full actuarial valuation or discounted
as the impact would not be material.
The actual payment is typically made in the year of cessation of employment of
a qualifying employee but may be pre-paid. If the payment is made in the year
of cessation of employment, the payment for end of service benefit will be
made as a lump-sum along with the full and final settlement of liability to
the employee.
3 Material accounting policies (continued)
Employees' end of service benefits (continued)
The total expense recognised in profit or loss of US$ 0.5 million (2023: US$
0.7 million) (Note 19) represents the current period cost for the end of
service benefit provision made for employees in accordance with the labour
laws of companies where we operate.
Foreign currencies
The Group's consolidated financial statements are presented in US Dollars
(US$), which is also the functional currency of the Company. All amounts have
been rounded to the nearest thousand, unless otherwise stated. For each
entity, the Group determines the functional currency and items included in the
financial statements of each entity are measured using that functional
currency.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing at the
dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which
they arise, except for exchange differences on monetary items receivable from
or payable to a foreign operation for which settlement is neither planned nor
likely to occur, which form part of the net investment in a foreign operation,
and which are recognised in the foreign currency translation reserve and
recognised in profit or loss on disposal of the net investment.
For the purpose of presenting consolidated financial information, the assets
and liabilities of the Group's subsidiaries are expressed in US$ using
exchange rates prevailing at the end of the reporting period. Income and
expense items are translated at the average exchange rates for the period,
unless exchange rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive income and
accumulated in equity (attributed to non-controlling interests as
appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group's entire
interest in a foreign operation, or a disposal involving loss of control over
a subsidiary that includes a foreign operation, loss of joint control over a
jointly controlled entity that includes a foreign operation, or loss of
significant influence over an associate that includes a foreign operation),
all of the accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss. Any exchange
differences that have previously been attributed to non-controlling interests
are derecognised, but they are not reclassified to profit or loss.
Adjusting items
Adjusting items are significant items of income or expense in cost of sales,
general and administrative expenses, and net finance costs, which individually
or, if of a similar type, in aggregate, are relevant to an understanding of
the Group's underlying financial performance because of their size, nature or
incidence. Adjusting items together with an explanation as to why management
consider them appropriate to adjust are disclosed separately in Note 29. The
Group believes that these items are useful to users of the Group's
consolidated financial statements in helping them to understand the underlying
business performance through alternate performance measures that are used to
derive the Group's principal non-GAAP measures of adjusted Earnings Before
Interest, Taxes, Depreciation, and Amortisation ("EBITDA"), adjusted EBITDA
margin, adjusted gross profit/(loss), adjusted operating profit/(loss),
adjusted net profit/(loss) and adjusted diluted earnings/(loss) per share, all
of which are before the impact of adjusting items and which are reconciled
from operating profit/(loss), profit/(loss) before taxation and diluted
earnings/(loss) per share. Adjusting items include but are not limited to
reversal of impairment credits/(impairment charges), restructuring costs,
exceptional legal & tax costs, and non-operational finance related costs.
3 Material accounting policies (continued)
Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on taxable profit for each subsidiary based
on the jurisdiction in which it operates. Current tax comprises the expected
tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The
amount of current tax payable or receivable is the best estimate of the tax
amount expected to be paid or received that reflects uncertainty related to
income taxes, if any. It is measured using tax rates enacted or substantively
enacted at the reporting date.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying
amounts of the assets and liabilities in the consolidated financial statements
and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary
differences.
Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities at the
time of the transaction (i) affects neither accounting nor taxable profit or
loss and (ii) does not give rise to equal taxable and deductible temporary
differences.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised based on tax
laws and rates that have been enacted or substantively enacted at the
reporting date. Deferred tax is charged or credited in the profit or loss,
except when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set-off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Share based payments
Long term incentive plans
The fair value of an equity instrument is determined at the grant date based
on market prices if available, taking into account the terms and conditions
upon which those equity instruments were granted. If market prices are not
available for share awards, the fair value of the equity instruments is
estimated using a valuation technique to derive an estimate of what the price
of those equity instruments would have been at the relevant measurement date
in an arm's length transaction between knowledgeable, willing parties.
Equity-settled share-based payments to employees are measured at the fair
value of the instruments, using a binomial model together with Monte-Carlo
simulations as at the grant date, and is expensed over the vesting period. The
value of the expense is dependent upon certain key assumptions including the
expected future volatility of the Group's share price at the date of grant.
The fair value measurement reflects all market based vesting conditions. The
impact of the revision of the original estimates, if any, is recognised in
profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to equity reserves.
3 Material accounting policies (continued)
Financial assets
Financial assets including derivatives are classified, at initial recognition,
and subsequently measured at amortised cost, fair value through other
comprehensive income, or fair value through profit or loss.
The Group has the following financial assets: cash and cash equivalents and
trade and other receivables (excluding prepayments and advances to suppliers).
These financial assets are classified at amortised cost.
The classification of financial assets at initial recognition depends on the
financial asset's contractual cash flow characteristics and the Group's
business model for managing them. With the exception of trade receivables that
do not contain a significant financing component or for which the Group has
applied the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs.
Trade receivables that do not contain a significant financing component or for
which the Group has applied the practical expedient are measured at the
transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost
or fair value through other comprehensive income ("OCI"), it needs to give
rise to cash flows that are solely payments of principal and interest ("SPPI")
on the principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Group's business model for managing financial assets refers to how it
manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within
a time frame established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e. the date that the
Group commits to purchase or sell the asset.
The Group measures financial assets at amortised cost if both of the following
conditions are met:
· the financial asset is held within a business model with the objective to hold
financial assets in order to collect contractual cash flows; and
· the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
As the business model of the Group is to hold financial assets to collect
contractual cashflows, they are held at amortised cost.
Financial assets at amortised cost are subsequently measured using the
effective interest rate ("EIR") method and are subject to impairment. Gains
and losses are recognised in profit or loss when the asset is derecognised,
modified or impaired.
Cash and cash equivalents
Cash and cash equivalents include balances held with banks with original
maturities of three months or less and cash on hand.
Trade receivables
Trade receivables represent the Group's right to an amount of consideration
that is unconditional (i.e. only the passage of time is required before the
payment of the consideration is due).
3 Material accounting policies (continued)
Financial assets (continued)
Impairment of financial assets
The Group recognises an allowance for expected credit losses ("ECLs") for all
financial assets that are measured at amortised cost or debt instruments
measured at fair value through other comprehensive income. ECLs are based on
the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted
at the EIR.
For trade and other receivables and accrued revenue, the Group applies a
simplified approach.
For trade receivables and accrued revenue, the Group recognises loss
allowances based on lifetime ECLs at each reporting date.
The Group has established a provision matrix that is based on its historical
credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
The provision rates are grouped together based on days due for various
customer segments that have similar loss patterns (geography, customer type
and rating and coverage by letters of credit and other forms of credit
insurance).
The Group had an expected credit loss provision of US$ 4.2 million as at 31
December 2024
(31 December 2023: US$ 2.2 million), refer to Note 9 for further details.
The Group considers a financial asset to move into stage 3 and be in default
when there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been affected.
Evidence that a financial asset is credit impaired includes the following
observable data:
· significant financial difficulty of the issuer or counterparty; or
· default or delinquency in interest or principal payments; or
· it becoming probable that the borrower will enter bankruptcy or financial
reorganisation.
A financial asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to
the cash flows from the asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of ownership of the asset to
another entity. If the Group neither transfers nor retains substantially all
the risks and rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Group retains
substantially all the risks and rewards of ownership of a transferred
financial asset, the Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.
3 Material accounting policies (continued)
Financial liabilities and equity instruments (continued)
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Group are recorded at the proceeds received, net of direct issue
costs.
Financial liabilities
The Group's financial liabilities include trade and other payables,
derivatives, lease liabilities and bank borrowings. All financial liabilities
are classified at amortised cost unless they can be designated as at Fair
Value Through Profit or Loss ("FVTPL").
Derivatives that are not designated and effective as hedging instruments are
classified as financial liabilities and are held at FVTPL. Derivatives held at
FVTPL are initially recognised at fair value at the date a derivative contract
is entered into and are subsequently remeasured to their fair value at the end
of each reporting period with the resulting gain or loss recognised in profit
or loss immediately.
Trade and other payables, bank borrowings, lease liabilities, amounts due to
related parties and contract liabilities are classified at amortised cost and
are initially measured at fair value, net of transaction costs. They are
subsequently measured at amortised cost using the EIR method, with interest
expense recognised based on its effective interest rate, except for short-term
payables or when the recognition of interest would be immaterial.
The EIR method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The EIR
is the rate that exactly discounts estimated future cash payments through the
expected life of the financial liability, or, where appropriate, a shorter
period.
The Group's loan facility is a floating rate financial liability. The Group
treats the loan as a floating rate financial liability and performs periodic
estimations to reflect movements in market interest rates and alters the
effective interest rate accordingly.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire. The difference between
the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in the consolidated statement of
profit or loss.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference between the carrying amount of the financial
liability derecognised and the consideration paid is recognised in the
consolidated statement of profit or loss and other comprehensive income.
When an existing financial liability is replaced by another on terms which are
not substantially modified, the exchange is deemed to be a continuation of the
existing liability and the financial liability is not derecognised.
Derivative financial instruments
The Group uses derivative financial instruments, such as interest rate swaps,
to hedge its interest rate risks. Such derivative financial instruments are
initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
For the purpose of hedge accounting, hedges are classified as cash flow hedges
when hedging the exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction or the foreign currency
risk in an unrecognised firm commitment.
At the inception of a hedge relationship, the Group formally designates and
documents the hedge relationship to which it wishes to apply hedge accounting
and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the
hedged item, the nature of the risk being hedged and how the Group will assess
whether the hedging relationship meets the hedge effectiveness requirements
(including the analysis of sources of hedge ineffectiveness and how the hedge
ratio is determined).
3 Material accounting policies (continued)
Financial liabilities and equity instruments (continued)
Derivative financial instruments (continued)
A hedging relationship qualifies for hedge accounting if it meets all of the
following effectiveness requirements:
· there is 'an economic relationship' between the hedged item and the hedging
instrument;
· the effect of credit risk does not 'dominate the value changes' that result
from that economic relationship;
· the hedge ratio of the hedging relationship is the same as that resulting from
the quantity of the hedged item that the Group actually hedges and the
quantity of the hedging instrument that the Group actually uses to hedge that
quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are
accounted for as described below:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is
recognised in other comprehensive income ("OCI") and accumulated in the cash
flow hedge reserve, while any ineffective portion is recognised immediately in
the consolidated statement of profit or loss and other comprehensive income.
The cash flow hedge reserve is adjusted to the lower of the cumulative gain or
loss on the hedging instrument and the cumulative change in fair value of the
hedged item.
The ineffective portion relating for cash flow hedges are recognised in
finance expenses in the profit or loss.
The Group designates interest rate swaps ("IRS") as hedging instruments. The
Group designates the change in fair value of the entire derivative contracts
in its cash flow hedge relationships.
For cash flow hedges, the amount accumulated in OCI is reclassified to profit
or loss as a reclassification adjustment in the same period or periods during
which the hedged cash flows affect profit or loss. The amount remaining in the
cashflow hedge reserve is reclassified to profit or loss as reclassification
adjustments in the same period or periods during which the hedged expected
future cashflows affected profit or loss. The Group reclassify amounts
remaining in the cashflow hedge reserve on a time apportionments basis.
If cash flow hedge accounting is discontinued, the amount that has been
accumulated in OCI must remain in accumulated OCI if the hedged future cash
flows are still expected to occur. Otherwise, the amount will be immediately
reclassified to profit or loss as a reclassification adjustment. After
discontinuation, once the hedged cash flow occurs, any amount remaining in
accumulated OCI must be accounted for depending on the nature of the
underlying transaction as described above.
Warrants
The Group measures the warrants issued at fair value with changes in fair
value recognised in the profit or loss.
4 Key sources of estimation uncertainty and critical
accounting judgements
In the application of the Group's accounting policies, which are described in
Note 3, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
In applying the Group's accounting policies during the year, there was one
critical accounting judgement relating to a subsidiary of the Group that
received a tax assessment from the Saudi tax authorities (ZATCA) for an amount
related to the transfer pricing of our inter-group bareboat agreement. While
the Directors, guided by the Group's tax advisors, believe that the Group has
complied with the relevant tax legislation and a zero balance is due, an
appropriate provision for this case has been recognised for a potential
outcome in an attempt to reach an amicable solution. Further details of the
tax assessment are disclosed in Note 8.
4 Key sources of estimation uncertainty and critical
accounting judgements (continued)
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The key assumptions concerning the future, and other key sources of estimation
uncertainty that may have a significant risk of causing a material adjustment
to the carrying value of assets and liabilities within the next financial year
are outlined below:
Impairment and reversal of previous impairment of property and equipment
The Group obtained an independent valuation of its vessels as at 31 December
2024 for the purpose of its banking covenant compliance requirements. However,
consistent with prior years, management does not consider these valuations to
represent a reliable estimate of the fair value for the purpose of assessing
the recoverable value of the Group's vessels, noting that there have been
limited, if any, "willing buyer and willing seller" transactions of similar
vessels in the current offshore vessel market on which such values could
reliably be based. Due to these inherent limitations, management concluded
that recoverable amount should be based on value in use.
Management carried out an impairment assessment of property and equipment for
year ended 31 December 2024. Following this assessment, management determined
that the recoverable amounts of the cash generating units to which items of
property and equipment were allocated, being vessels and related assets, were
most sensitive to future day rates, vessel utilisation and discount rate. It
is reasonably possible that changes to these assumptions within the next
financial year could require a material adjustment of the carrying amount of
the Group's vessels.
Management does not expect an assumption change of more than 10% in aggregate
for the entire fleet within the next financial year, and accordingly, believes
that a 10% sensitivity to day rates and utilisation is appropriate. Further,
for discount rate, management does not expect an assumption change of more
than 1% and accordingly, believes that a 1% sensitivity to discount rate is
appropriate.
As at 31 December 2024, the total carrying amount of the property and
equipment, drydocking expenditure, and right of use assets subject to
estimation uncertainty was US$ 608.3 million (2023: US$ 621.0 million). Refer
to Note 5 for further details including sensitivity analysis.
Impairment of financial assets
The Group recognises an allowance for expected credit losses ("ECLs") for all
financial assets that are measured at amortised cost or debt instruments
measured at fair value through other comprehensive income. ECLs are based on
the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted
at the EIR.
Management carried out an impairment assessment of trade receivables and
contract assets for the year ended
31 December 2024. Following this assessment, management considered the
following criteria for impairment:
Evidence that a financial asset is credit impaired includes the following
observable data:
· significant financial difficulty of the issuer or counterparty; or
· default or delinquency in interest or principal payments; or
· it becoming probable that the borrower will enter bankruptcy or financial
reorganisation.
A financial asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
Management concluded that the Group had an expected credit loss provision
expense of US$ 2.0 million
(2023: US$ 0.2 million), refer to Notes 9 for further details.
Fair valuation of Warrants
Management commissioned an independent valuation expert to measure the fair
value of the warrants, which was determined using Monte Carlo option-pricing
model. Inputs used in conducting the Monte-Carlo simulation are the impact of
movements in both the USD/GBP exchange rate, and the price per ordinary share
over the life of the warrants. The simulation considers sensitivity by
building models of possible results by substituting a range of values. The
increase in fair value of the warrants is primarily due to increase in share
price and its volatility. A 10% change in share price will increase or
decrease the valuation by US$ 1.5 million. A 10% change in share price
volatility will increase or decrease the valuation by US$ 7k.
5 Property and equipment
Vessels Capital work-in-progress Vessel spares, fitting and other equipment Others Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2023 898,200 6,766 60,234 2,250 967,450
Additions − 4,326 − − 4,326
Transfers − (523) 523 − −
At 31 December 2023 898,200 10,569 60,757 2,250 971,776
Additions − 2,788 − − 2,788
Transfers − (3,502) 3,502 − −
At 31 December 2024 898,200 9,855 64,259 2,250 974,564
5 Property and equipment (continued)
Vessels Capital work-in-progress Vessel spares, fitting and other equipment Others Total
US$'000 US$'000 US$'000 US$'000 US$'000
Accumulated depreciation and impairment
At 1 January 2023 348,515 2,845 21,219 1,916 374,495
Depreciation expense (Note 34) 20,900 − 3,252 145 24,297
Impairment charge 3,565 − − − 3,565
Reversal of impairment (36,993) − − − (36,993)
At 31 December 2023 335,987 2,845 24,471 2,061 365,364
Depreciation expense (Note 34) 22,379 − 3,673 142 26,194
Impairment charge 9,394 − − − 9,394
Reversal of impairment (18,621) − − − (18,621)
At 31 December 2024 349,139 2,845 28,144 2,203 382,331
Carrying amount
At 31 December 2024 549,061 7,010 36,115 47 592,233
At 31 December 2023 562,213 7,724 36,286 189 606,412
Depreciation amounting to US$ 26.2 million (2023: US$ 24.3 million) has been
charged to the statement of profit or loss and other comprehensive income, of
which US$ 26.1 million (2023: US$ 24.2 million) was allocated to cost of sales
(Note 29). The remaining balance of the depreciation charge is included in
general and administrative expenses (Note 29).
Vessels with a total net book value of US$ 549.1 million (2023: US$ 562.2
million), have been mortgaged as security for the loans extended by the
Group's banking syndicate (Note 21).
5 Property and equipment (continued)
Impairment
In accordance with the requirements of IAS 36 - Impairment of Assets, the
Group assesses at each reporting period if there is any indication an
additional impairment would need to be recognised for its vessels and related
assets, or if the impairment loss recognised in prior periods no longer exists
or had decreased in quantum. Such indicators can be from either internal or
external sources. In circumstances in which any indicators of impairment or
impairment reversal are identified, the Group performs a formal impairment
assessment to evaluate the carrying amounts of the Group's vessels and their
related assets, by comparing against the recoverable amount to identify any
impairments or reversals. The recoverable amount is the higher of the vessels
and related assets' fair value less costs to sell and value in use.
Based on the impairment assessment reviews conducted in previous years,
management recognised impairment losses of US$ 59.1 million and US$ 87.2
million in the years 2019 and 2020, respectively. As a result of improvements
in day rates, utilisation, market outlook and reduction of discount rate,
historical impairment losses of US$ 14.9 million, US$ 21.0 million and US$
37.0 million on various vessels were subsequently reversed in financial years
2021, 2022 and 2023, respectively. During the financial years 2022 and 2023,
additional impairment losses of US$ 13.2 million and
US$ 3.6 million were also recognised on certain vessels, resulting in overall
net impairment reversals of US$ 7.8 million and US$ 33.4 million for those
years, respectively.
As at 31 December 2024, and in line with IAS 36 requirements, management
concluded that a formal impairment assessment was required. Factors considered
by management included favourable indicators, including an improvement in
utilization, day rates, an increase in market values of vessels and decrease
in interest rate, and unfavourable indicators including the market
capitalization of the Group remaining below the book value of the Group's
equity.
The Group obtained an independent valuation of its vessels as at 31 December
2024 for the purpose of its banking covenant compliance requirements. However,
consistent with prior years, management does not consider these valuations to
represent a reliable estimate of the fair value for the purpose of assessing
the recoverable value of the Group's vessels, noting that there have been
limited, if any, "willing buyer and willing seller" transactions of similar
vessels in the current offshore vessel market on which such values could
reliably be based. Due to these inherent limitations, management has again
concluded that recoverable amount should be based on value in use.
The impairment review was performed for each cash-generating unit, by
identifying the value in use of each vessel and of spares fittings,
capitalised dry-docking expenditure, capital work in progress and right-of-use
assets relating to operating equipment used on the fleet, based on
management's projections of future utilisation, day rates and associated cash
flows.
The projection of cash flows related to vessels and their related assets is
complex and requires the use of a number of estimates, the primary ones being
future day rates, vessel utilisation and discount rate.
In estimating the value in use, management estimated the future cash inflows
and outflows to be derived from continuing use of each vessel and its related
assets for the next four years based on its latest forecasts. The terminal
value cash flows (i.e., those beyond the 4-year period) were estimated based
on historic mid-cycle day rates and utilisation levels calculated by looking
back as far as 2014, when the market was at the top of the cycle through to
2022 levels as the industry starts to emerge out of the bottom of the cycle,
adjusted for anomalies. The terminal value cash flow assumptions are applied
until the end of the estimated useful economic life of each vessel, which is
consistent with the prior year. Such long-term forecasts also take account of
the outlook for each vessel having regard to their specifications relative to
expected customer requirements and about broader long-term trends including
climate change.
5 Property and equipment (continued)
Impairment (continued)
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate. The discount rate of 11.98%
(2023: 12.93%) is computed on the basis of the Group's weighted average cost
of capital. The cost of equity incorporated in the computation of the discount
rate is based on the industry sector average betas, risk-free rate of return
as well as Group specific risk premium reflecting any additional risk factors
relevant to the Group. The cost of debt is based on the Group's actual cost of
debt and the effective cost of debt reported by the peer group as at 31
December 2024. The weighted average is computed based on the industry capital
structure.
The impairment review led to the recognition of a net impairment reversal of
US$ 9.2 million
(2023: US$ 33.43 million). The key reason for the reversal is further
improvement in general market conditions compared to prior year and a decrease
in discount rate from 12.93% to 11.98% predominantly due to reduction in the
cost of debt of the Group.
In accordance with the Companies Act 2006, section 841(4), the following has
been considered:
a) the Directors have considered the value of some/all of the fixed assets of the
Group without revaluing them; and
b) the Directors are satisfied that the aggregate value of those assets are not
less than the aggregate amount at which they were stated in the Group's
accounts.
Details of the impairment reversal by cash-generating unit, along with the
associated recoverable amount reflecting its value in use, are provided
below:
Impairment Recoverable Impairment Recoverable
reversal / (Impairment) amount reversal / (Impairment) amount
Cash Generating Unit (CGUs) 2024 2024 2023 2023
US$'000 US$'000 US$'000 US$'000
E-Class -1 - 89,296 12,414 94,441
E-Class -2 404 59,257 (3,565) 62,481
E-Class -3 - 88,128 907 79,985
E-Class -4 14,099 98,435 6,584 88,582
E-class 14,503 335,116 16,340 325,489
S-Class -1 - 61,870 4,462 61,092
S-Class -2 - 64,196 - 67,067
S-Class -3 - 65,065 - 68,787
S-class - 191,131 4,462 196,946
K-Class -1 (1,168) 14,750 1,773 16,264
K-Class -2 3,287 18,859 1,102 17,033
K-Class -3 (4,402) 14,018 2,025 18,353
K-Class -4 (1,168) 14,992 4,464 16,268
K-Class -5 (2,656) 18,361 1,321 22,047
K-Class -6 831 50,190 1,941 51,075
K-class (5,276) 131,170 12,626 141,040
Total 9,227 657,417 33,428 663,475
5 Property and equipment (continued)
Impairment (continued)
The table below compares the long-term day rate and utilization assumptions
used to project future cash flows from 2029 onward (the terminal value) with
the contracted rates secured for 2025:
Day rate change % on 2025 levels Utilisation change %
Vessels class on 2025 levels
E-Class CGUs 21% -12%
S-Class CGUs -7% -1%
K-Class CGUs -9% -24%
The below table compares the long-term day rate and utilisation assumptions
used to forecast future cash flows during the year ended 31 December 2024
against the Group's long-term assumptions in the impairment assessment
performed as at 31 December 2023:
Day rate change % on 2024 levels Utilisation change %
Vessels class on 2024 levels
E-Class CGUs -0.5% 1.7%
S-Class CGUs 0.0% 0.0%
K-Class CGUs 0.0% -4.7%
The impairment reversal recognised on E-Class vessels reflect further
increases in short-term assumptions on day rates and utilisation relative to
the Group's previous forecasts. The forecast of 21% increase in day rates
relative to 2025 reflects improving market conditions coupled with a limited
supply of vessels with the capabilities of the
E-Class such as their large crane capacities and superior leg length. As these
vessels are the most capable of all the vessels in the fleet it is anticipated
they will be able to demand higher day rates and utilization going forward.
The net impairment recognised on the Group's K-Class vessels primarily
reflects the changes short-term forecast day rates and utilisation. When
reviewing the longer-term assumptions, the Group has assumed a lower day rate
and utilisation for terminal values to reflect higher competition in the
market for smaller vessels.
Key assumption sensitivities
The Group has conducted an analysis of the sensitivity of the impairment test
to reasonable possible changes in the key assumptions (long-term day rates,
utilisation and pre-tax discount rates) used to determine the recoverable
amount for each vessel as follows:
Day rates
Day rates higher by 10% Day rates lower by 10%
Vessels class Impact (in US$ million) Number of vessels impacted Impact (in US$ million) Number of vessels impacted
(Impairment)/ impairment reversal of* (Impairment)/ impairment reversal of*
E-Class CGUs 28.4 2.0 (11.8) 2.0
S-Class CGUs - - (5.1) 1.0
K-Class CGUs 11.7 5.0 (33.6) 6.0
Total fleet 40.1 7.0 (50.5) 9.0
*This reversal of impairment / (impairment charge) is calculated on carrying
values before the adjustment for impairment reversals in 2024.
There would be incremental impairment reversal of US$ 30.9 million and
impairment charge of US$ 59.7 million for the 10% increase and decrease in day
rates assumption respectively. The additional effect of impairment charge on
corporate assets would be US$ 2.6 million, only under the reduced day rates
sensitivity.
The total recoverable amounts of the Group's vessels as at 31 December 2024
would have been US$ 768.8 million under the increased day rates sensitivity
and US$ 546.0 million for the reduced day rate sensitivity. With a 7%
reduction in day rates, the recoverable amount would equal the carrying value
of the vessels.
5 Property and equipment (continued)
Impairment (continued)
Key assumption sensitivities (continued)
Utilisation
Utilisation higher by 10% Utilisation lower by 10%
Vessels class Impact (in US$ million) Number of vessels impacted Impact (in US$ million) Number of vessels impacted
(Impairment)/ impairment reversal of* (Impairment)/ impairment reversal of*
E-Class CGUs 24.9 2.0 (11.8) 2.0
S-Class CGUs - - (5.1) 1.0
K-Class CGUs 8.5 5.0 (33.6) 6.0
Total fleet 33.4 7.0 (50.5) 9.0
*This reversal of impairment / (impairment charge) is calculated on carrying
values before the adjustment for impairment reversals in 2024.
There would be incremental impairment reversal of US$ 24.3 million and
impairment charge of US$ 59.7 million for the 10% increase and decrease in
utilisation assumption respectively. The additional effect of impairment
charge on corporate assets would be US$ 2.6 million, only under the reduced
utilisation sensitivity.
The total recoverable amounts of the Group's vessels as at 31 December 2024
would have been US$ 736.3 million under the increased utilisation sensitivity
and US$ 546.0 million for the reduced utilisation sensitivity. With a 7%
reduction in utilisation, the recoverable amount would equal the carrying
value of the vessels.
Management would not expect an assumption change of more than 10% across all
vessels within the next financial year, and accordingly, believes that a 10%
sensitivity to day rates and utilisation is appropriate.
Discount rate
An additional sensitivity analysis was conducted by adjusting the pre-tax
discount rate upwards and downwards by 100 basis points (1%). Given that the
change in the discount rate from the previous year is less than 100 basis
points, such sensitivity was deemed appropriate for this analysis.
Discount rate higher by 1% Discount rate lower by 1%
Vessels class Impact (in US$ million) Number of vessels impacted Impact (in US$ million) Number of vessels impacted
(Impairment)/ impairment reversal of* (Impairment)/ impairment reversal of*
E-Class CGUs 3.9 2.0 20.1 2.0
S-Class CGUs - - - -
K-Class CGUs (11.4) 6.0 (2.0) 5.0
Total fleet (7.5) 8.0 18.1 7.0
*This (impairment charge) / impairment reversal is calculated on carrying
values before the adjustment for impairment reversals in 2024.
There would be incremental impairment charge of US$ 16.8 million and
impairment reversal of US$ 8.9 million for the 10% increase and decrease in
pre-tax discount rate assumption respectively.
The total recoverable amounts of the vessels as at 31 December 2024 would have
been US$ 701.8 million under the reduced discount rate sensitivity and US$
617.9 million for the increased discount rate sensitivity.
6 Dry docking expenditure
The movement in dry docking expenditure is summarised as follows:
2024 2023
US$'000 US$'000
At 1 January 11,204 8,931
Expenditure incurred during the year 5,987 6,960
Amortised during the year (Note 34) (5,324) (4,687)
At 31 December 11,867 11,204
7 Right-of-use assets
Buildings Communications equipment Operating equipment Total
US$'000 US$'000 US$'000 US$'000
Cost
At 1 January 2023 2,448 251 10,496 13,195
Additions 519 894 1,818 3,231
Derecognition of fully depreciated assets - -
(567) (567)
At 31 December 2023 2,967 1,145 11,747 15,859
Additions 240 1,233 4,046 5,519
Derecognition of fully depreciated assets (2,020) -
(10,885) (12,905)
At 31 December 2024 1,187 2,378 4,908 8,473
Accumulated depreciation
At 1 January 2023 1,867 251 7,706 9,824
Depreciation for the year 574 106 2,508 3,188
Derecognition of fully depreciated assets - (500) (500)
-
At 31 December 2023 2,441 357 9,714 12,512
Depreciation for the year 475 721 3,445 4,641
Derecognition of fully depreciated assets (2,020)
- (10,885) (12,905)
At 31 December 2024 896 1,078 2,274 4,248
Carrying amount
At 31 December 2024 291 1,300 2,634 4,225
At 31 December 2023 526 788 2,033 3,347
The consolidated statement of profit or loss and other comprehensive income
includes the following amounts relating to leases.
2024 2023
US$'000 US$'000
Depreciation of right of use assets (Note 34) 4,641 3,188
Expense relating to short term leases or leases of low value assets (Note 34) 260 228
Lease charges included in operating activities 4,901 3,416
Interest on lease liabilities (Note 33) 461 245
Lease charges included in profit before tax 5,362 3,661
The total cash outflow for leases amounted to US$ 5.2 million for the year
ended 31 December 2024
(2023: US$ 3.8 million).
8 Taxation charge for the year
Tax is calculated at the rates prevailing in the respective jurisdictions in
which the Group operates. The overall effective rate is the aggregate of taxes
paid in jurisdictions where income is subject to tax (being principally Qatar,
the United Kingdom, Saudi Arabia and United Arab Emirates), divided by the
Group's profit.
2024 2023
US$'000 US$'000
Profit from operations before tax 43,181 44,930
Tax at the UK corporation tax rate of 25% (2023: 23.5%) 10,795 10,568
Effect of different tax rates in overseas jurisdictions (849) (13,461)
Expense not deductible for tax purposes 7,323 2,413
Overseas taxes 1,698 1,714
Increase in unrecognised deferred tax 1,764 1,113
Prior year tax adjustments 2,236 630
Income not taxable for tax purposes (18,046) (115)
Total tax charge 4,921 2,862
During the year, the tax rates on profits were 10% in Qatar (2023: 10%), 25%
in the United Kingdom (2023: 23.52%), 20% in Saudi Arabia (2023: 20%) and 9%
in United Arab Emirates (2023: nil) applicable to the portion of profits
generated from respective jurisdictions. The Group also incurred 2.5% Zakat
tax (an obligatory tax to donate 2.5% of retained earnings each year) on the
portion of profits generated in Saudi Arabia (2023: 2.5%).
The Group incurs 5% withholding tax on remittances from Saudi Arabia (2023:
5%). The withholding tax included in the current tax charge amounted to US$
1.9 million (2023: US$ 1.6 million).
The Group expects the overall effective tax rate in the future to vary
according to local tax law changes in jurisdictions which incur taxes, as well
as any changes to the share of Group's profits or losses which arise in tax
paying jurisdictions.
At the consolidated statement of financial position date, the Group has unused
tax losses of US$ 38.2 million (2023: US$ 30.2 million), arising from UK
operations, available for offset against future profits with an indefinite
expiry period. Only one E-class vessel operates in UK with one more expected
to operate from 2026. Based on the projections, there are insufficient future
taxable profits to justify the recognition of a deferred tax asset. On this
basis no deferred tax asset has been recognised in the current or prior year.
The unrecognised deferred tax asset calculated at the substantively enacted
rate in the UK of 25% amounts to US$ 9.5 million as at 31 December 2024 (2023:
US$ 7.6 million).
Any changes to estimates relating to prior periods are presented in the "prior
year tax adjustments" above.
Factors affecting current and future tax charges
United Kingdom (UK)
In the Spring Budget 2021, the UK Government announced that from 01 April 2023
the corporation tax rate would increase to 25%. Deferred taxes at the balance
sheet date have been measured using these enacted tax rates as disclosed in
these consolidated financial statements.
The future effective tax rate of the Group could be impacted by changes in tax
law, primarily increasing corporation tax rates and increasing withholding
taxes applicable to the Group.
8 Taxation charge for the year (continued)
United Arab Emirates (UAE)
On 9 December 2022, the UAE Ministry of Finance released Federal Decree-Law
No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax
Law or the Law) to enact a Federal Corporate Tax regime in the UAE. This Law
has become effective for accounting periods beginning on or after 1 June 2023.
The Group's UAE operations are subject to a 9% corporation tax rate with
effect from 01 January 2024 for income exceeding AED 375,000 (US$ 102,000).
GMS has considered deferred tax implications in the preparation of these
consolidated financial statements in respect of property and equipment and
potential timing differences that could give rise to a deferred tax liability.
There are currently no UAE tax laws that would impact treatment of
depreciation and amortisation of property, plant and equipment, that would
result in such a timing difference. Hence, management has concluded that no
adjustments to these consolidated financial statements are necessary.
Kingdom of Saudi Arabia
A subsidiary of the Group received a tax assessment from the Saudi tax
authorities (ZATCA) for an amount of
US$ 9.2 million (including delay fines) related to the transfer pricing of
inter-group bareboat agreement, for the period from 2017 to 2019. The Group
has currently filed an appeal with the Tax Violations and Disputes Appellate
Committee (TVDAC) against the assessment raised by ZATCA. The Directors have
considered the claim, including consideration of third-party tax advice
received. Noticing the claim retrospectively applied on the financial year
2017, in respect of a law which was issued in 2019, which applied a "tested
party" assessment different to that supported by the Group tax advisors and
using an approach which the Directors (supported by their tax advisors)
consider to be inconsistent with the principles set out in the KSA transfer
price guidelines, the Directors believe that the Group has complied with the
relevant tax legislation. Nevertheless, during 2023, to reach an amicable
solution, the Group had also filed a settlement application with the Alternate
Dispute Resolution Committee (ADRC), which subsequently requested a settlement
offer. The Directors have submitted a settlement proposal and are currently
awaiting a response from the ADRC.
Appropriate provisions for this case have been recorded in the financial
statements reflecting the directors current best estimate of the outflows in
line with IFRIC 23. The directors will continue to keep this matter under
review.
9 Trade receivables
2024 2023
US$'000 US$'000
Trade receivables (gross of allowances) 29,807 32,872
Less: Allowance for expected credit losses (4,232) (2,226)
Trade receivables 25,575 30,646
Gross trade receivables, amounting to US$ 29.8 million (2023: US$ 32.9
million), have been assigned as security against the loans extended by the
Group's banking syndicate (Note 21).
Trade receivables disclosed above are measured at amortised cost. Credit
periods are granted on a client by client basis. The Group does not hold any
collateral or other credit enhancements over any of its trade receivables nor
does it have a legal right of offset against any amounts owed by the Group to
the counterparty. For details of the calculation of expected credit losses,
refer to Note 3.
Impairment has been considered for accrued revenue but is not considered
material.
9 Trade receivables (continued)
The movement in the allowance for ECL and bad and doubtful receivables during
the year was as follows:
2024 2023
US$'000 US$'000
At 1 January 2,226 2,019
Net charge of expected credit losses (Note 34) 2,006 207
At 31 December 4,232 2,226
Trade receivables are considered past due once they have passed their
contracted due date. The net charge of expected credit loss provision during
the year was US$ 2.0 million (2023: US$ 0.2 million).
Management carried out an impairment assessment of trade receivables for the
year ended 31 December 2024 and concluded that the Group had an expected
credit loss provision of US$ 4.2 million as at 31 December 2024
(31 December 2023: US$ 2.2 million).
During January 2023, a customer entered administration. The Group had traded
with this customer in the past and accordingly, had recorded an allowance for
50% of the balance receivable in the previous year. During the year, the Group
recognised allowance for the remaining 50% of the balance.
Included in the Group's trade receivables balance are receivables with a gross
amount of US$ 4.4 million
(2023: US$ 4.1 million) which are past due for 30 days or more at the
reporting date. At 31 December, the analysis of Trade receivables is as
follows:
Number of days past due
Current < 30 days 31-60 days 61-90 days 91-120 days > 120 days Total
US$'000 US'000 US'000 US'000 US'000 US'000 US'000
Trade receivables 23,933 1,513 - - - 4,361 29,807
Less: Allowance for expected credit losses (97) (5) - - - (4,130) (4,232)
Net trade receivables 2024 23,836 1,508 - - - 231 25,575
Trade receivables 28,714 26 - - - 4,132 32,872
Less: Allowance for expected credit losses (110) - - - - (2,116) (2,226)
Net trade receivables 2023 28,604 26 - - - 2,016 30,646
Six customers (2023: seven) account for 99% (2023: 99%) of the total trade
receivables balance (see revenue by segment information in Note 28). When
assessing credit risk, ongoing assessments of customer credit and liquidity
positions are performed.
10 Prepayments, advances and other receivables
2024 2023
US$'000 US$'000
Accrued revenue 4,237 2,656
Prepayments 2,073 3,557
Deposits* 95 86
Advances to suppliers 2,824 1,758
At 31 December 9,229 8,057
* Deposits include bank guarantee deposits of US$ 39K (2023: US$ 39K).
Guarantee deposits are paid by the Group for employee work visas under UAE
labour laws.
11 Derivative financial instruments
Warrants
Under the terms of the Group's old loan facility, the Group was required to
issue warrants to its previous lenders as GMS had not raised US$ 50.0 million
of equity by 31 December 2022.
On 2 January 2023, as the US$ 50.0 million equity raise did not take place,
therefore 87,621,947 warrants were issued to the previous lenders. Based on
the final report prepared by a Calculation Agent, the warrants give right to
their holders to acquire 137,075,773 shares at an exercise price of 5.75 pence
per share for a total consideration of GBP £7.9 million. Warrant holders will
have the right to exercise their warrants up to the end of the term of the
loan facility, being 30 June 2025.
During the year, 34,218,700 warrants were exercised by the holders resulting
in issuance of 53,531,734 new ordinary shares with a nominal value of 2p per
share and share premium of 3.75p per share. The fair value of the warrants
that were exercised was recalculated at the time of exercise. The fair value
of 34,218,700 warrant exercised was calculated at US$ 10.4 million. This fair
value is added to the actual cash raised of US$ 3.9 million, in line with
Companies Act 2006 to give a total increase in share capital and share premium
of US$ 14.3 million. Issue costs of US$83k have been reduced from the share
premium account. Shares issued as a result of the exercise of warrants were
ordinary shares with identical rights and privileges as the existing shares of
the Group.
Management commissioned an independent valuation expert to measure the fair
value of the outstanding warrants as of 31 December 2024, which was determined
using Monte Carlo option-pricing model that takes into consideration the
impact of movements in both the USD/GBP exchange rate, and the price per
ordinary share, over the life of the warrants. The simulation considers
sensitivity by building models of possible results by substituting a range of
values. Warrants valuation represents a Level 3 fair value measurement under
the IFRS 13 hierarchy. The fair value of the 53,403,247 outstanding warrants
as at 31 December 2024 was US$ 9.2 million (31 December 2023: US$ 14.3 million
for 87,621,947 warrants). On a per warrant basis, 31 December 2024 valuation
stands at US$ 0.172 per warrant representing a 5.3% increase from the 31
December 2023 valuation of US$ 0.163 per warrant, which is primarily
attributable to increase in the share price of the Company. The share price
increased from 14.5 pence as at 31 December 2023 to 15.1 pence as at 31
December 2024. A 10% change in share price will increase or decrease the
valuation by US$ 1.5 million. A 10% change in share price volatility will
increase or decrease the valuation by US$ 7k.
Interest Rate Swap
The Group had an Interest Rate Swap (IRS) arrangement, originally in place,
with a notional amount of US$ 50.0 million. The remaining notional amount
hedged under the IRS as at 31 December 2024 was nil (31 December 2023: nil).
The IRS hedged the risk of variability in interest payments by converting a
floating rate liability to a fixed rate liability. The IRS arrangement matured
during the year 2023, therefore, the fair value of the IRS as at 31 December
2024 was nil (31 December 2023: nil). In 2020 cash flows of the hedging
relationship for the IRS were not highly probable and, therefore, hedge
accounting was discontinued from that point.
IFRS 13 fair value hierarchy
Apart from warrants, the Group has no other financial instruments that are
classified as Level 3 in the fair value hierarchy in the current year that are
determined by reference to significant unobservable inputs. There have been no
transfers of assets or liabilities between levels of the fair value hierarchy.
There are no non-recurring fair value measurements.
11 Derivative financial instruments (continued)
Derivative financial instruments are made up as follows:
Interest rate swap
Warrants Total
US$'000 US$'000 US$'000
At 1 January 2024 - (14,275) (14,275)
Derecognition of warrants exercised - 10,431 10,431
Impact of change in fair value of warrants - (5,348) (5,348)
As at 31 December 2024 - (9,192) (9,192)
Interest rate swap
Warrants Total
US$'000 US$'000 US$'000
At 1 January 2023 386 (3,198) (2,812)
Net loss on changes in fair value of interest rate swap (59) - (59)
Final settlement of derivatives (327) - (327)
Impact of change in fair value of warrants - (11,077) (11,077)
As at 31 December 2023 - (14,275) (14,275)
12 Cash and cash equivalents
2024 2023
US$'000 US$'000
Interest bearing
Held in UAE banks 1,901 1,422
Non-interest bearing
Held in UAE banks 36,486 964
Held in banks outside UAE 1,620 6,280
Total cash and cash equivalents 40,007 8,666
13 Share capital and other reserves
Ordinary shares at £0.02 per share
Number of ordinary shares Ordinary
shares
(Thousands) US$'000
At 1 January 2024 1,016,415 30,117
Issue of share capital (Note 11) 53,531 1,355
As at 31 December 2024 1,069,946 31,472
Number of ordinary shares Ordinary
shares
(Thousands) US$'000
At 1 January 2023 1,016,415 30,117
As at 31 December 2023 1,016,415 30,117
Capital redemption reserve
Number of ordinary shares Capital redemption reserve
(Thousands) US$'000
At 1 January 2024 350,488 46,445
As at 31 December 2024 350,488 46,445
Share premium
Number of ordinary shares Share premium account
(Thousands) US$'000
At 1 January 2024 1,016,415 99,105
Issue of share capital (Note 11) 53,531 12,973
Share issue cost - (83)
As at 31 December 2024 1,069,946 111,995
Prior to an equity raise on 28 June 2021 the Group underwent a capital
reorganisation where all existing ordinary shares with a nominal value of 10
pence per share were subdivided and re-designated into 1 ordinary share with a
nominal value of 2 pence and 1 deferred share with a nominal value of 8 pence
each. The previously recognised share capital balance relating to the old 10p
ordinary shares was allocated pro rata to the new subdivided 2p ordinary
shares and 8p deferred shares. The deferred shares had no voting rights and no
right to the profits generated by the Group. On winding-up or other return of
capital, the holders of deferred shares had extremely limited rights, if any.
The Group had the right but not the obligation to buyback all of the deferred
shares for an amount not exceeding £1.00 in aggregate, which with the
shareholders approval, was completed on 30 June 2022. Accordingly, 350,487,787
deferred shares were cancelled. Following the cancellation of the Deferred
shares on 30 June 2022, a transfer of $46.4 million was made from Share
capital - Deferred to a Capital redemption reserve. There was no dilution to
the shares ownership as a result of the share reorganisation.
Under the Companies Act, a share buy‑back by a public company can only be
financed through distributable reserves or the proceeds of a fresh issue of
shares made for the purpose of financing a share buyback. The Company had
sufficient reserves to purchase the Deferred shares for £1.00.
The Group has issued ordinary share capital on the exercise of previously
issued warrants to its lenders which
has resulted in issuance of ordinary shares of 53,531,734 on 31 May 2024
(refer Note 11).
14 Restricted reserve
The restricted reserve of US$ 0.3 million (2023: US$ 0.3 million) represents
the statutory reserves of certain subsidiaries. As required by the Commercial
Companies Law in the countries where those entities are established, 10% of
profit for the year is transferred to the statutory reserve until the reserve
equals 50% of the share capital. Following a recent change to the Regulations
of Companies in Kingdom of Saudi Arabia, apportions can cease when the reserve
equals 30% instead of 50% of the share capital, although the subsidiary
continues to maintain this at 50%. This reserve is not available for
distribution. No amounts were transferred to this reserve during the year
ended 31 December 2024 (2023: US$ nil).
15 Group restructuring reserve
The Group restructuring reserve arose on consolidation under the pooling of
interests (merger accounting) method used for the Group restructuring. Under
this method, the Group was treated as a continuation of GMS Global Commercial
Investments LLC (the predecessor parent Company) and its subsidiaries. At the
date the Company became the new parent company of the Group via a
share-for-share exchange, the difference between the share capital of GMS
Global Commercial Investments LLC and the Company, amounting to US$ 49.7
million
(2023: US $49.7 million), was recorded in the books of Gulf Marine Services
PLC as a Group restructuring reserve. This reserve is non-distributable.
16 Capital contribution
The capital contribution reserve is as follows:
2024 2023
US$'000 US$'000
At 31 December 9,177 9,177
During 2013, US$ 7.8 million was transferred from share appreciation rights
payable to capital contribution as, effective 1 January 2013, the shareholders
have assumed the obligation to settle the share appreciation rights. An
additional charge in respect of this scheme of US$ 1.4 million was made in
2014. The total balance of US$ 9.2 million is not available for distribution.
17 Translation reserve and retained earnings
Foreign currency translation reserve represents differences on foreign
currency net investments arising from the re-translation of the net
investments in overseas subsidiaries.
Retained earnings include the accumulated realised and certain unrealised
gains and losses made by the Group.
18 Non-controlling interest
The movement in non-controlling interest is summarised as follows:
2024 2023
US$'000 US$'000
At 1 January 2,714 1,988
Share of profit for the year 284 726
At 31 December 2,998 2,714
18 Non-controlling interest (continued)
The following table summarises the information relating to the subsidiary that
has material non -controlling interest, before any intra‑group eliminations.
2024 2023
US$'000 US$'000
Statement of financial position information:
Non-current assets 340 129
Current assets 18,750 16,408
Non-current liabilities (24) (18)
Current liabilities (10,346) (6,952)
Net assets 8,720 9,567
Net assets attributable to non-controlling interests 2,998 2,714
Statement of profit or loss and other comprehensive income information:
Revenue 41,900 38,088
(Loss) / profit after tax and zakat (842) 1,306
Total (loss) / comprehensive income (842) 1,306
Profit allocated to non-controlling interests 284 726
Statement of cashflow information:
Cash flows from operating activities (4,203) (1,162)
Cash flows from financing activities (dividends: nil) (842) (795)
Net decrease in cash and cash equivalents (5,045) (1,957)
19 Provision for employees' end of service benefits
In accordance with Labour Laws of some of the countries where the Group
operates, it is required to provide for end of service benefits for certain
employees. The movement in the provision for employees' end of service
benefits during the year was as follows:
2024 2023
US$'000 US$'000
At 1 January 2,395 2,140
Provided during the year 525 723
Paid during the year (280) (468)
At 31 December 2,640 2,395
20 Trade and other payables
2024 2023
US$'000 US$'000
Trade payables 18,767 13,213
Due to related parties (Note 23) 531 962
Accrued expenses 14,916 16,090
Deferred revenue 2,856 3,546
VAT payable 295 392
Other payables 430 851
37,795 35,054
No interest is payable on the outstanding balances. Trade and other payables
are all current liabilities.
21 Bank borrowings
Secured borrowings at amortised cost are as follows:
2024 2023
US$'000 US$'000
Term loans 241,189 273,939
Less: Unamortised issue costs (5,167) -
236,022 273,939
Working capital facility (utilised) - 2,000
236,022 275,939
At the end of the reporting period, all bank borrowings are unhedged.
The movement of the bank borrowings during the year are as follows:
2024 2023
US$'000 US$'000
At 1 January 275,939 328,085
Repayment of bank borrowings (275,939) (56,174)
Additional bank borrowings 241,189 2,000
Unamortised issue costs incurred (5,173) -
Amortisation of issue costs 6 -
Payment in kind interest - 2,028
At 31 December 236,022 275,939
On 30 December 2024, the Group completed refinancing of its bank borrowings.
The purpose of the refinancing is primarily to settle in full all the amounts
outstanding under the previous debt facility (which was scheduled to mature on
30 June 2025) as well as to fund the fees and expenses in relation to this
transaction. Management determined that this refinancing transaction is a new
loan (rather than modification of the existing loan), thus, the new debt
obligation is recognised and the previous debt facility was extinguished.
Bank borrowings are presented in the consolidated statement of financial
position as follows:
2024 2023
US$'000 US$'000
Non-current portion
Bank borrowings 196,425 234,439
Current portion
Bank borrowings - scheduled repayments within one year 39,597 39,500
Working capital facility - 2,000
236,022 275,939
The principal terms of the new debt facility are as follows:
· The facility is denominated in UAE Dirhams (AED) and will consist of a term
loan of AED 924.0 million (US$ 250.0 million) and revolving credit facility of
AED 177.5 million (US$ 50.0 million).
· The term loan will have a tenor of five years, where 80% of the term loan is
payable in 19 equal quarterly instalments and the remaining 20% is payable on
maturity.
21 Bank borrowings (continued)
· The facility is denominated in UAE Dirhams (AED) and will consist of a term
loan of AED 924.0 million (US$ 250.0 million) and revolving credit facility of
AED 177.5 million (US$ 50.0 million).
· The facility is secured by mortgage of 13 vessels owned by the Group with a
net book value of US$ 549.1 million (Note 5), including the assignment of
trade receivables amounting to US$ 29.8 million (Note 9), bank balance
amounting to US$ 40.0 million (Note 12) and insurance proceeds.
· The facility is subject to certain financial covenants such as Interest Cover,
Debt Service Cover, Gearing Ratio and Senior Net Leverage which are to be
tested every six months. The financial covenant related to Security Cover is
tested annually. All applicable financial covenants under the Group's debt
facility were met as of 31 December 2024 and are expected to be compliant in
the next 12 months.
Subsequent to the reporting period, the Group has made prepayments of US$ 40.3
million towards its term loan.
The principal terms of the previous facility, as well as the related
securities as at 31 December 2023 were as follows:
· The facility's main currency was US$ repayable with a Secured Overnight
Financing Rate (SOFR) plus a margin based on a ratchet depending on leverage
levels. The facility was expiring by June 2025.
· The revolving working capital facility amounts to US$ 40.0 million. US$ 25.0
million of the working capital facility was allocated to performance bonds and
guarantees and US$ 15.0 million allocated to funded portion, of which US$ 2.0
million was utilised as of 31 December 2023.
· During the first quarter of 2023, the Group had accrued PIK amounting to US$ 2
million. However, on the succeeding quarter, the Group had achieved a
reduction in the net leverage ratio to below 4.0, and PIK was no longer
accrued. Further, as a result, the margin rate on the loan had decreased from
4% to 3.1%.
· The facility was secured by mortgages over its whole fleet with a net book
value at 31 December 2023 of US$ 562.2 million. Additionally, gross trade
receivables amounting to US$ 32.9 million have been assigned as security
against the loans extended by the Group's banking syndicate (Note 9).
· The Group also provided security against gross cash balances, being cash
balances amounting to US$ 8.7 million at 31 December 2023 (Note 12) before the
restricted amounts related to visa deposits held with the Ministry of Labour
in the UAE which are included in deposits. These had been assigned as security
against the loans extended by the Group's banking syndicate.
· As an equity raise of US $50.0 million did not take place by 31 December 2022,
87.6 million warrants were issued on 2 January 2023, giving debt holders the
right to 137,075,773 million shares at a strike price of 5.75 pence per share.
The warrants will expire in June 2025, which was the original maturity of the
facility.
· The facility was subject to certain financial covenants including: Debt
Service Cover, Interest Cover, and Net Leverage Ratio, which were tested
bi-annually in June and December. There were additional covenants relating
to general and administrative costs, capital expenditure and Security Cover
(loan to value) which were tested annually in December. Further, there were
restrictions to payment of dividends until the net leverage ratio falls below
4.0 times, a level reached in second quarter of 2023. All applicable financial
covenants under the Group's debt facility were compliant till the repayment of
the facility.
21 Bank borrowings (continued)
Outstanding amount
Current Non-current Total Security Maturity
US$'000 US$'000 US$'000
31 December 2024:
Term loan - scheduled repayments within one year 40,632 - 40,632
Secured December 2029
Term loan - scheduled repayments within more than one year - 200,557 200,557
Secured December 2029
Unamortised issue costs (1,035) (4,132) (5,167)
Secured December 2029
39,597 196,425 236,022
31 December 2023:
Term loan - scheduled repayments within one year 39,500 - 39,500 Secured June 2025
Term loan - scheduled repayments within more than one year - 234,439 234,439 Secured June 2025
Working capital facility - scheduled repayment within one year 2,000 - 2,000 Secured June 2025
41,500 234,439 275,939
22 Lease liabilities
2024 2023
US$'000 US$'000
As at 1 January 3,356 3,522
Recognition of new lease liability additions 5,512 3,231
Interest on lease liabilities (Note 33) 461 245
Principal element of lease payments (4,478) (3,330)
Derecognition of lease liability (29) (67)
Interest paid (461) (245)
As at 31 December 4,361 3,356
Maturity analysis:
Year 1 3,503 1,623
Year 2 858 1,297
Year 3 - 5 - 436
4,361 3,356
Split between:
Current 3,503 1,623
Non - current 858 1,733
4,361 3,356
23 Related party transactions
Related parties comprise the Group's major shareholders, Directors and
entities related to them, companies under common ownership and/or common
management and control, their partners and key management personnel. Pricing
policies and terms of related party transactions are approved by the Group's
Board.
Balances and transactions between the Group and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note.
Key management personnel:
As at 31 December 2024, there were 2.6 million shares held by Directors (31
December 2023: 2.6 million).
Related parties
The Group's principal subsidiaries are outlined in Note 3. The related parties
comprising of the Group's major shareholders are outlined in the Directors
Report in the annual report. The other related parties during the year were:
Partner in relation to UAE Operations Relationship
National Catering Company Limited WLL Affiliate of a significant shareholder of the Company
Sigma Enterprise Company LLC Affiliate of a significant shareholder of the Company
Aman Integrated Solutions LLC Affiliate of a significant shareholder of the Company
23 Related party transactions (continued)
The amounts outstanding to National Catering Company Limited WLL as at 31
December 2024 was nil
(2023: US$ 0.5 million) included in trade and other payables (Note 20).
The amount outstanding to Sigma Enterprise Company LLC as at 31 December 2024
was US$ 0.5 million (2023: US$ 0.5 million) included in trade and other
payables (Note 20).
The amounts outstanding to Aman Integrated Solutions LLC as at 31 December
2024 was US$ 18k (2023: US$ 3k) included in trade and other payables (Note
20).
During 2024, there were no transactions with Seafox international or any of
its subsidiaries (2023: nil).
Significant transactions with the related party during the year:
2024 2023
US$'000 US$'000
National Catering Company Limited WLL - Catering services 86 581
Sigma Enterprise Company LLC - Vessel maintenance and overhaul services 440 2,372
Aman Integrated Solutions LLC - Laboratory services 15 18
Compensation of key management personnel
The remuneration of Directors and other members of key management personnel
during the year were as follows:
2024 2023
US$'000 US$'000
Short-term benefits 1,192 983
End of service benefits 26 24
1,218 1,007
Compensation of key management personnel represents the charge to the profit
or loss in respect of the remuneration of the executive and non-executive
Directors. At 31 December 2024, there were four executive and non-executive
Directors (2023: four). Further details of remuneration of the Board and key
management personnel relating to 2024 are contained in the Directors'
Remuneration Report in the annual report.
24 Contingent liabilities
At 31 December 2024, the banks acting for Gulf Marine Middle East FZE, one of
the subsidiaries of the Group, had issued performance bonds amounting to US$
31.1 million (31 December 2023: US$ 19.6 million), all of which were
counter-indemnified by other subsidiaries of the Group.
25 Commitments
2024 2023
US$'000 US$'000
Capital commitments 6,678 7,825
Capital commitments comprise mainly capital expenditure, which has been
contractually agreed with suppliers for future periods for equipment or the
upgrade of existing vessels.
26 Financial instruments
Categories of financial instruments
2024 2023
US$'000 US$'000
Financial assets:
Current assets at amortised cost:
Cash and cash equivalents (Note 12) 40,007 8,666
Trade receivables and other receivables (Note 9,10)* 29,907 33,388
Total financial assets 69,914 42,054
*Trade and other receivables exclude prepayments and advances to suppliers.
2024 2023
US$'000 US$'000
Financial liabilities:
Derivatives recorded at FVTPL:
Warrants (Note 11) 9,192 14,275
Financial liabilities recorded at amortised cost:
Trade and other payables (Note 20)* 34,644 31,116
Lease liabilities (Note 22) 4,361 3,356
Current bank borrowings - scheduled repayments within one year 39,597 41,500
(Note 21)
Non-current bank borrowings - scheduled repayments more than one year 196,425 234,439
(Note 21)
Total financial liabilities 284,219 324,686
* Trade and other payables excludes amounts of deferred revenue and VAT
payable.
The following table combines information about the following;
· Fair values of financial instruments (except financial instruments when
carrying amount approximates their fair value); and
· Fair value hierarchy levels of financial liabilities for which fair value was
disclosed.
2024 2023
US$'000 US$'000
Financial liabilities:
Recognised at level 3 of the fair value hierarchy:
Warrants (Note 11) 9,192 14,275
26 Financial instruments (continued)
Categories of financial instruments (continued)
The fair value of financial instruments classified as level 3 are, in certain
circumstances, measured using valuation techniques that incorporate
assumptions that are not evidenced by the prices from observable current
market transactions in the same instrument and are not based on observable
market data.
The fair value of the Group's warrants at 31 December 2024 has been arrived at
on the basis of a valuation carried out at that date by a third- party expert,
an independent valuer not connected with the Group. The valuation conforms to
International Valuation Standards. The fair value was determined using a
Monte-Carlo simulation.
Favourable and unfavourable changes in the value of financial instruments are
determined on the basis of changes in the value of the instruments as a result
of varying the levels of the unobservable parameters, quantification of which
is judgmental. There have been no transfers between Level 2 and Level 3 during
the years ended 31 December 2024 and 31 December 2023.
Capital risk management
The Group manages its capital to support its ability to continue as a going
concern while maximising the return on equity. The Group does not have a
formalised optimal target capital structure or target ratios in connection
with its capital risk management objectives. The capital structure of the
Group consists of net bank debt and total equity. The Group continues to take
measures to de-leverage the Company and intends to continue to do so in the
coming years.
Material accounting policies
Details of the material accounting policies and methods adopted, including the
criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument are disclosed in Note 3 to
the consolidated financial statements.
Financial risk management objectives
The Group is exposed to the following risks related to financial instruments -
credit risk, liquidity risk, interest rate risk and foreign currency risk.
Management actively monitors and manages these financial risks relating to the
Group.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group and arises
principally from the Group's trade and other receivables and cash and cash
equivalents.
The Group has adopted a policy of dealing when possible, with creditworthy
counterparties while keen to maximize utilization for its vessels.
Cash balances held with banks are assessed to have low credit risk of default
since these banks are highly regulated by the central banks of the respective
countries. At the year-end, cash at bank and in hand totaled US$ 40.0 million
(2023: US$ 8.7 million), deposited with banks with Fitch short-term ratings of
F2 to F1+ (Refer to Note 12).
26 Financial instruments (continued)
Credit risk management (continued)
Concentration of credit risk arises when a number of counterparties are
engaged in similar business activities, or activities in the same geographic
region, or have similar economic features that would cause their ability to
meet contractual obligations to be similarly affected by changes in economic,
political or other conditions. Concentration of credit risk indicates the
relative sensitivity of the Group's performance to developments affecting a
particular industry or geographic location. During the year, vessels were
chartered to 5 companies in the Arabian Peninsula region and 1 company in
Europe, including NOCs and engineering, procurement and construction ("EPC")
contractors.
At 31 December 2024, 6 companies in specific regions accounted for 99% (2023:
9 companies in specific regions accounted for 99%) of the outstanding trade
receivables.
The credit risk on liquid funds is limited because the funds are held by banks
with high credit ratings assigned by international agencies.
The amount that best represents maximum credit risk exposure on financial
assets at the end of the reporting period, in the event counterparties failing
to perform their obligations generally approximates their carrying value.
The Group considers cash and cash equivalents and trade and other receivables
which are neither past due nor impaired to have a low credit risk and an
internal rating of 'performing'. Performing is defined as a counterparty that
has a stable financial position and which there are no past due amounts.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors. The Group manages liquidity risk by seeking to maintain sufficient
facilities to ensure availability of funds for forecast and actual cash flow
requirements.
The table below summarises the maturity profile of the Group's financial
liabilities. The contractual maturities of the Group's financial liabilities
have been determined on the basis of the remaining period at the end of the
reporting period to the contractual maturity date. The maturity profile is
monitored by management to assist in ensuring adequate liquidity is
maintained. Refer to Going Concern in Note 3.
26 Financial instruments (continued)
Liquidity risk management (continued)
The maturity profile of the assets and liabilities at the end of the reporting
period based on contractual repayment arrangements was as follows:
Contractual cash flows
Interest rate Total 1 to 3 4 to 12 months 2 to 5
Carrying amount months years
31 December 2024 US$'000 US$'000 US$'000
US$'000 US$'000
Non-interest bearing financial liabilities
Trade and other payables* 34,644 34,644 34,644 - -
Interest bearing financial liabilities 7.87%-8.6%
Bank borrowings- principal 236,022 241,189 10,158 30,474 200,557
Interest on bank borrowings - 41,138 4,016 10,548 26,574
Lease liabilities 4,361 4,631 991 2,753 887
Interest on lease liabilities - 221 73 119 29
275,027 321,823 49,882 43,894 228,047
Interest rate Total 4 to 12 2 to 5
Carrying amount 1 to 3 months Years
months
US$'000 US$'000 US$'000 US$'000
US$'000
31 December 2023
Non-interest bearing financial liabilities
Trade and other payables* 31,116 31,116 31,116 - -
Interest bearing financial liabilities 8.6%-9.2%
Bank borrowings- principal 275,939 275,939 4,000 37,500 234,439
Interest on bank borrowings 133 32,984 5,955 17,164 9,865
Lease liabilities 3,356 3,356 618 1,155 1,583
Interest on lease liabilities - 251 60 110 81
310,544 343,646 41,749 55,929 245,968
*Trade and other payables excludes amounts of deferred revenue and VAT
payable.
In addition to above table, capital commitments are expected to be settled in
next twelve months.
Interest rate risk management
The Group is exposed to cash flow interest rate risk on its bank borrowings.
The Group enters into floating interest rate instruments for the same.
Further, the Group had an Interest Rate Swap (IRS) arrangement, originally in
place, with a notional amount of US$ 50.0 million. The remaining notional
amount hedged under the IRS as at 31 December 2024 was nil (31 December 2023:
nil). The IRS hedged the risk of variability in interest payments by
converting a floating rate liability to a fixed rate liability. The IRS
arrangement was matured during the year 2023, therefore, the fair value of the
IRS as at 31 December 2024 was nil (31 December 2023: nil). In 2020 cash flows
of the hedging relationship for the IRS were not highly probable and,
therefore, hedge accounting was discontinued from that point.
26 Financial instruments (continued)
Foreign currency risk management
The majority of the Group's transactions are denominated in US Dollars, UAE
Dirhams, Euros and Pound Sterling. As the UAE Dirham, Saudi Riyal and Qatari
Riyal are pegged to the US Dollar, balances in UAE Dirham, Saudi Riyal and
Qatari Riyal are not considered to represent significant currency risk.
Transactions in other foreign currencies entered into by the Group are
short-term in nature and therefore management considers that the currency risk
associated with these transactions is limited.
The carrying amounts of the Group's significant foreign currency denominated
monetary assets include cash and cash equivalents and trade receivables and
liabilities include trade payables. The amounts at the reporting date are as
follows:
Assets Liabilities
31 December 31 December
2024 2023 2024 2023
US$'000 US$'000 US$'000 US$'000
US Dollars 46,218 21,912 9,025 3,421
UAE Dirhams 9,402 1,154 239,278* 6,482
Saudi Riyals 2,065 8,531 1,037 1,307
Pound Sterling 381 12 1,077 2,003
Euros 7,210 6,141 - -
Qatari Riyals 4,371 3,694 455 -
69,647 41,444 250,872 13,213
*Includes bank borrowings.
At 31 December 2024, if the exchange rate of the currencies other than the UAE
Dirham, Saudi Riyal and Qatari Riyal had increased/decreased by 10% against
the US Dollar, with all other variables held constant, the Group's profit for
the year would have been higher/lower by US$ 0.7 million (2023: higher/lower
by US$ 0.4 million) mainly as a result of foreign exchange loss or gain on
translation of Euro and Pound Sterling denominated balances.
27 Dividends
There was no dividend declared or paid in 2024 (2023: nil). No final dividend
in respect of the year ended
31 December 2024 is expected to be proposed at the 2024 AGM. Our future
dividend policy allocating 20%-30% of the annual adjusted net profit for
distributions to shareholders, through a dividend and /or potential share
buybacks, provided other plans permit and that loan covenants are fully met,
was announced during the year.
28 Segment reporting
The Group has identified that the Directors and senior management team are the
chief operating decision makers in accordance with the requirements of IFRS 8
'Operating Segments'. Segment performance is assessed based upon adjusted
gross profit/(loss), which represents gross profit/(loss) before depreciation
and amortisation and loss on impairment of assets. The reportable segments
have been identified by Directors and senior management based on the size and
type of asset in operation.
The operating and reportable segments of the Group are six K-Class vessels,
three S-Class vessels and four E-Class vessels.
All of these operating segments earn revenue related to the hiring of vessels
and related services including charter hire income, messing and accommodation
services, personnel hire and hire of equipment. The accounting policies of the
operating segments are the same as the Group's accounting policies described
in Note 3.
Revenue Gross profit before adjustments for depreciation, amortisation and impairment
charges
2024 2023 2024 2023
US$'000 US$'000 US$'000 US$'000
E-Class vessels 71,799 60,955 52,269 41,864
S-Class vessels 42,286 35,018 30,141 23,217
K-Class vessels 53,409 55,630 31,381 33,375
167,494 151,603 113,791 98,456
Depreciation charged to cost of sales (26,052) (24,153)
Amortisation charged to cost of sales (5,324) (4,687)
Expected credit losses (2,006) (207)
Adjusted gross profit 80,409 69,409
Impairment loss (9,394) (3,565)
Reversal of impairment 18,621 36,993
Gross profit 89,636 102,837
Finance expense (23,517) (31,431)
Impact of change in fair value of warrants (5,348) (11,077)
Other general and administrative expenses (17,028) (14,645)
Foreign exchange loss, net (674) (987)
Other income 23 12
Finance income 89 221
Profit for the year before taxation 43,181 44,930
Segment revenue reported above represents revenue generated from external
customers. There were no inter-segment sales in the years.
Segment assets and liabilities, including depreciation, amortisation and
additions to non-current assets (other than vessels), are not reported to the
key decision makers on a segmental basis and are therefore, not disclosed.
Information about major customers
During the year, five customers (2023: four) individually accounted for more
than 10% of the Group's revenues. The related revenue figures for these major
customers, the identity of which may vary by year, was US$ 41.9 million, US$
39.1 million, US$ 36.4 million, US$ 26.1 million and 18.4 US$ million (2023:
US$ 49.7 million, US$ 38.1 million, US$ 25.3 million and US$ 15.4 million).
28 Segment reporting (continued)
Geographical segments
Revenue by geographical segment is based on the geographical location of the
customer as shown below.
2024 2023
US$'000 US$'000
United Arab Emirates 44,684 58,452
Saudi Arabia 41,900 38,088
Qatar 62,492 40,680
Total - Arabian Peninsula region 149,076 137,220
Total - Europe 18,418 14,383
Worldwide Total 167,494 151,603
Type of work
The Group operates in both the oil and gas and renewables sector. Revenues are
driven from both client's operating and capital expenditure. Details are shown
below.
2024 2023
US$'000 US$'000
Oil and Gas 149,076 137,220
Renewables 18,418 14,383
Total 167,494 151,603
Reversal of impairment of US$ 14.5 million and impairment charge of US$ 5.3
million was recognised in respect of property and equipment (Note 5) (2023:
Reversal of impairment of US$ 37.0 million and impairment charge of US $ 3.6
million) attributable to the following reportable segments:
2024 2023
US$'000 US$'000
E-Class vessels (14,503) (16,340)
S-Class vessels - (4,462)
K-Class vessels 5,276 (12,626)
(9,227) (33,428)
E-Class vessels S-Class vessels K-Class vessels Total
US$'000 US$'000 US$'000 US$'000
2024
Depreciation charged to cost of sales 13,881 5,834 6,337 26,052
Amortisation charged to cost of sales 1,848 1,810 1,666 5,324
(Reversal of impairment charge) / impairment charge - net (14,503) - 5,276 (9,227)
2023
Depreciation charged to cost of sales 12,892 5,660 5,601 24,153
Amortisation charged to cost of sales 2,035 692 1,960 4,687
Net reversal of impairment (16,340) (4,462) (12,626) (33,428)
29 Presentation of adjusted non-GAAP results
The following table provides a reconciliation between the Group's adjusted
non-GAAP and statutory financial results:
Year ended 31 December 2024 Year ended 31 December 2023
Adjusted non-GAAP results Adjusting items Statutory total Adjusted non-GAAP results Adjusting items Statutory total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 167,494 - 167,494 151,603 - 151,603
Cost of sales
- Vessel operating expenses before depreciation, amortisation and impairment (53,703) - (53,703) (53,147) - (53,147)
- Depreciation and amortisation (31,376) - (31,376) (28,840) - (28,840)
Expected credit losses (2,006) - (2,006) (207) - (207)
Net reversal of impairment* - 9,227 9,227 - 33,428 33,428
Gross profit 80,409 9,227 89,636 69,409 33,428 102,837
General and administrative
- Amortisation (4,641) - (4,641) (3,188) - (3,188)
- Depreciation (145) - (145) (145) - (145)
- Other administrative costs (11,366) - (11,366) (10,727) - (10,727)
- Exceptional items / legal costs** - (876) (876) - (585) (585)
Operating profit 64,257 8,351 72,608 55,349 32,843 88,192
Finance income 89 - 89 221 - 221
Finance expense (23,517) - (23,517) (31,431) - (31,431)
Impact of change in fair value of warrants (5,348) - (5,348) (11,077) - (11,077)
Other income 23 - 23 12 - 12
Foreign exchange loss, net (674) - (674) (987) - (987)
Profit before taxation 34,830 8,351 43,181 12,087 32,843 44,930
Taxation (charge)/credit
- Taxation charge (2,613) - (2,613) (2,329) - (2,329)
- Exceptional tax expense** - (2,308) (2,308) - (533) (533)
Profit for the year 32,217 6,043 38,260 9,758 32,310 42,068
Profit attributable to:
Owners of the Company 31,933 6,043 37,976 9,032 32,310 41,342
Non-controlling interests 284 - 284 726 - 726
Earnings per share (basic) 3.04 0.58 3.61 0.89 3.18 4.07
Earnings per share (diluted) 2.85 0.54 3.39 0.86 3.06 3.92
Supplementary non
statutory information
Operating profit 64,257 8,351 72,608 55,349 32,843 88,192
Add: Depreciation and amortisation 36,162 - 36,162 32,173 - 32,173
Adjusted EBITDA 100,419 8,351 108,770 87,522 32,843 120,365
* The reversal of impairment / impairment charge on certain vessels have been
added back to gross profit to arrive at adjusted gross profit for the year
ended 31 December 2024 and 2023 (refer to Note 5 for further details).
Management has adjusted this due to the nature of the transaction which it
believes is not directly related to operations management are able to
influence. This measure provides additional information on the core
profitability of the Group.
** These exceptional items / legal cost and exceptional tax expense relates to
expected tax outcomes.
29 Presentation of adjusted non-GAAP results (continued)
Year ended 31 December 2024 Year ended 31 December 2023
Adjusted non-GAAP results Adjusting items Statutory total Adjusted non-GAAP results Adjusting items Statutory total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cashflow reconciliation:
Profit for the year 32,217 6,043 38,260 9,758 32,310 42,068
Adjustments for:
Net reversal of impairment* - (9,227) (9,227) - (33,428) (33,428)
Amortisation of borrowings issue cost 6 - 6 - - -
Finance expenses 23,511 - 23,511 31,431 - 31,431
Impact of change in fair value of warrants 5,348 - 5,348 11,077 - 11,077
Other adjustments ** 40,035 3,184 43,219 34,145 1,118 35,263
Cash flow from operating activities before movement in working capital 101,117 - 101,117 86,411 - 86,411
Change in trade and other receivables 1,893 - 1,893 2,003 - 2,003
Change in trade and other payables 2,949 - 2,949 8,140 - 8,140
Cash generated from operations 105,959 - 105,959 96,554 - 96,554
Income tax paid (2,399) - (2,399) (2,151) - (2,151)
Net cash flows from operating activities 103,560 - 103,560 94,403 - 94,403
Net cash flows used in investing activities (8,769) - (8,769) (12,788) - (12,788)
Other finance expenses paid (790) - (790) (374) - (374)
Payment of borrowings issue cost (5,173) - (5,173) - - -
Other cash flows used in financing activities (57,487) - (57,487) (84,850) - (84,850)
Net cash flows used in financing activities (63,450) - (63,450) (85,224) - (85,224)
Net change in cash and cash equivalents 31,341 - 31,341 (3,609) - (3,609)
*The reversal of impairment / impairment charge on certain vessels and related
assets have been added back to cash flow from operating activities before
movement in working capital for the year ended 31 December 2024 and 2023
(refer to Note 5 for further details).
**These exceptional items / legal cost and exceptional tax expense relates to
expected tax outcomes.
30 Earnings per share
2024 2023
Profit for the purpose of basic and diluted earnings per share being profit 37,976 41,342
for the year attributable to Owners of the Company (US$'000)
Profit for the purpose of adjusted basic and diluted earnings per share 31,933 9,032
(US$'000) (Note 29)
Weighted average number of shares ('000) 1,050,932 1,016,415
Weighted average diluted number of shares in issue ('000) 1,120,919 1,055,003
Basic earnings per share (cents) 3.61 4.07
Diluted earnings per share (cents) 3.39 3.92
Adjusted earnings per share (cents) 3.04 0.89
Adjusted diluted earnings per share (cents) 2.85 0.86
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company (as disclosed in the statement of comprehensive
income) by the weighted average number of ordinary shares in issue during the
year.
Adjusted earnings per share is calculated on the same basis but uses the
profit for the purpose of basic earnings per share (shown above) adjusted by
adding back the non-operational items, which were recognised in the
consolidated statement of profit or loss and other comprehensive income (Note
29). The adjusted earnings per share is presented as the Directors consider it
provides an additional indication of the underlying performance of the Group.
Diluted earnings per share is calculated by dividing the profit attributable
to equity holders of the Company by the weighted average number of ordinary
shares in issue during the year, adjusted for the weighted average effect of
outstanding warrants and LTIPs during the year.
Adjusted diluted earnings per share is calculated on the same basis but uses
adjusted profit (Note 29) attributable to equity holders of the Group.
The following table shows a reconciliation between the basic and diluted
weighted average number of shares:
2024 2023
'000s '000s
Weighted average basic number of shares in issue 1,050,932 1,016,415
Weighted average effect of warrants 69,987 38,588
Weighted average diluted number of shares in issue 1,120,919 1,055,003
31 Revenue
All revenue in the above table is in scope of IFRS 15 with the exception of
lease income which is in scope of IFRS 16.
2024 2023
US$'000 US$'000
Charter hire 75,902 76,111
Lease income 67,857 57,073
Messing and accommodation 12,755 9,173
Manpower income 6,673 5,418
Mobilisation and demobilisation 3,712 2,255
Sundry income 595 1,573
167,494 151,603
Revenue recognised - over time 166,816 149,871
Revenue recognised - point in time 678 1,732
-
167,494 151,603
Included in mobilisation and demobilisation income is an amount of US$ 3.5
million (2023: US$ 0.6 million) that was included as deferred revenue at the
beginning of the financial year.
Lease income:
2024 2023
US$'000 US$'000
Maturity analysis:
Year 1 87,739 68,207
Year 2 61,892 56,551
Year 3* 54,545 26,305
Year 4* 34,650 24,895
Year 5* 11,693 22,449
250,519 198,407
*Presented in comparative financial statements as "Year 3-5 US$ 73,649K".
Further descriptions on the above types of revenue have been provided in Note
3.
32 Finance income
2024 2023
US$'000 US$'000
Bank interest 89 221
33 Finance expense
2024 2023
US$'000 US$'000
Interest on bank borrowings 21,612 29,456
Gain on IRS reclassified to profit or loss - 279
Loss on changes in fair value of interest rate swap (Note 11) - 59
Interest on lease liabilities (Note 22) 461 245
Other finance expenses 1,438 1,392
Amortisation of borrowings issue cost 6 -
23,517 31,431
34 Profit for the year
The profit for the year is stated after charging/(crediting):
2024 2023
US$'000 US$'000
Total staff costs (see below) 33,643 31,230
Depreciation of property and equipment (Note 5) 26,194 24,297
Amortisation of dry-docking expenditure (Note 6) 5,324 4,687
Depreciation of right-of-use assets (Note 7) 4,641 3,188
Net charge of expected credit losses (Note 9) 2,006 207
Auditor's remuneration (see below) 960 1,127
Foreign exchange loss - net 674 987
Other income (23) (12)
Expense relating to short term leases or leases of low value assets (Note 7) 260 228
Reversal of impairment loss - net (Note 5) (9,227) (33,428)
The average number of full time equivalent employees (excluding non-executive
Directors) by geographic area was:
2024 2023
Number Number
Arabian Peninsula Region 659 598
Rest of the world 30 30
689 628
The total number of full-time equivalent employees (including executive
Directors) as at 31 December 2024 was 727 (31 December 2023: 660). The number
of full-time employees increased in the year due to an increase in offshore
headcount from the second half of the year.
Their aggregate remuneration comprised:
2024 2023
US$'000 US$'000
Wages and salaries 33,071 30,477
End of service benefit (Note 19) 525 723
Share based payment charge - 17
Employment taxes* 47 13
33,643 31,230
*Employment taxes include nil (2023: US $ 6K) in respect of social security
costs for our crew working in France.
The analysis of the auditor's remuneration is as follows:
2024 2023
US$'000 US$'000
Group audit fees 710 700
Overruns and out of pocket expenses in relation to 2023 Group audit - 177
Subsidiary audit fees 100 100
Total audit fees 810 977
Audit-related assurance services 150 150
Total fees 960 1,127
35 Changes in liabilities arising from financing
activities
The table below details changes in the Group's liabilities arising from
financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or
future cash flows will be, classified in the Group's consolidated statement of
cash flows as cash flows from financing activities.
Bank borrowings
Derivatives Lease liabilities (Note 21)
(Note 11) (Note 22)
US$'000 US$'000 US$'000
At 1 January 2023 2,812 3,522 328,085
Financing cash flows
Repayment of bank borrowings - - (56,174)
Working capital facility - - 2,000
Principal elements of lease payments - (3,330) -
Settlement of derivatives 327 - -
Interest paid - (245) (27,428)
Total financing cashflows 327 (3,575) (81,602)
Non-cash changes:
Recognition of new lease liability additions - 3,231 -
Derecognition of lease liability - (67) -
Interest on lease liabilities (Note 33) - 245 -
Interest on bank borrowings (Note 33) - - 29,456
Net gain on change in fair value of IRS (Note 11) 59 - -
Impact of change in fair value of warrants (Note 11) 11,077 - -
Total non-cash changes 11,136 3,409 29,456
At 31 December 2023 14,275 3,356 275,939
Financing cash flows
Repayment of bank borrowings - - (275,939)
Proceeds from bank borrowings - - 241,189
Payment of borrowings issue costs - - (5,173)
Principal elements of lease payments - (4,478) -
Interest paid - (461) (21,612)
Total financing cashflows - (4,939) (61,535)
Non-cash changes:
Recognition of new lease liability additions - 5,512 -
Derecognition of lease liability - (29) -
Interest on lease liabilities (Note 33) - 461 -
Interest on bank borrowings (Note 33) - - 21,612
Amortisation of borrowings issue costs - - 6
Derecognition of warrants exercised (Note 11) (10,431) - -
Impact of change in fair value of warrants (Note 11) 5,348 - -
Total non-cash changes (5,083) 5,944 21,618
At 31 December 2024 9,192 4,361 236,022
36 Events after the reporting period
Subsequent to the period end:
· The Group made prepayments towards the bank borrowings of US$ 40.3 million.
· 38,353,361 warrants were exercised by the holders resulting in issuance of
59,999,998 new ordinary shares.
· Certain governments have announced the introduction of increased tariffs on
imports. The announcement has caused instability in financial markets and has
increased the risk of recession, inflation and increases in cost of debt. The
situation is rapidly evolving. The announcement of tariffs is considered a
non-adjusting post reporting date event. An estimate of the impact of recently
announced tariffs cannot be made currently. While we expect that the future
demand for SESV's to remain overall unchanged, our plans to increase
resilience to secure GMS through a potential downturn of the economy are more
than ever crucial. Management is constantly and closely monitoring the
developments.
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