REG - Gulf Marine Services - Interim results for the six months ended 30/06/22
26/09/2022 07:00
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RNS Number : 5245A Gulf Marine Services PLC 26 September 2022
26 September 2022
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the Group')
Interim results for the six months ended 30 June 2022
GMS, a leading provider of advanced self-propelled, self-elevating support
vessels serving the offshore oil, gas and renewables industries, is pleased to
announce its Interim Results for the six months ended 30 June 2022 (H1 2022).
Overview
H1 2022 H1 2021
US$ m US$ m
Revenue 66.4 51.4
Gross profit 27.4 16.4
EBITDA(1) 37.3 26.5
Profit for the period after tax 13.1 2.0
H1 Highlights
· EBITDA guidance for 2022 remains at US$ 70 - 80 million
o forecasted utilisation of 86% for H2 which supports the 2022 EBITDA guidance
· H1 2022 revenue increased by 29% to US$ 66.4 million (H1 2021: US$
51.4 million), driven by
o increased utilisation for H1 2022 to 89% (H1 2021: 77%) with notable
improvements in E-Class vessels at 87% (H1 2021: 57%)
o increased H1 2022 average day rates to $27.2k (H1 2021: US$ 25.5k)
· H1 2022 EBITDA increased to US$ 37.3 million (H1 2021: US$ 26.5
million) due to an increase in revenue and a continued focus on costs savings
· H1 2022 Net profit after tax was US$ 13.1 million (H1 2021 US$ 2.0
million) mainly driven by an increase in revenue. Gross profit margin improved
to 41% (H1 2021: 32%)
· Net debt(1) reduced by US$ 29.9 million to US$ 341.4 million (31
December 2021: US$ 371.3 million) as the Group continues its focus on
deleveraging
Outlook
· As demand in the market continues to grow, the Group anticipates
improvements in day rates and utilisation, albeit at a slower pace than
originally envisaged
· Secured backlog was US$ 163.3 million at 30 June 2022 (30 June 2021:
US$ 215.4 million), which reflects the unwinding of long term contracts
commenced prior to 2021 and partially offset by additional contract awards
announced over the last 12 months
· Contract awards announced in H1 2022 have a combined total charter
period of 2.6 years (H1 2021: 3.4 years), the Group is currently working on
new potential contracts to improve the backlog
(1) This represents an Adjusted Performance Measure (APM) as defined in the
Glossary which is included in Note 23 to the interim consolidated Financial
Statements.
Mansour Al Alami, Executive Chairman, GMS said:
"I am pleased to report GMS operational results for first half of the year
which provides us a solid platform for achieving our full year EBITDA
guidance. The first half performance reflected higher day rates, improved
utilisation and efforts made on continuous cost savings. We will realise the
benefits of improved day rates on new contract awards announced during H1
2022. As the Middle Eastern market continues to increase production, we
expect an increase in demand for our sector, which in turn will lead to an
increase in day rates and utilisation over time."
Alex Aclimandos
Chief Financial Officer
Gulf Marine Services PLC
23 September 2022
Enquiries:
Gulf Marine Services PLC
Mansour Al Alami Tel: +44 (0)20 7603 1515
Executive Chairman
Celicourt Communications Tel: +44 (0) 208 434 2643
Mark Antelme
Philip Dennis
Notes to Editors:
Gulf Marine Services PLC, a company listed on the London Stock Exchange, was
founded in Abu Dhabi in 1977 and has become a world leading provider of
advanced self-propelled self-elevating support vessels (SESVs). The fleet
serves the oil, gas and renewable energy industries from its offices in the
United Arab Emirates, Saudi Arabia and Qatar. The Group's assets are capable
of serving clients' requirements across the globe, including those in the
Middle East, Southeast Asia, West Africa, North America, the Gulf of Mexico
and Europe.
The GMS fleet of 13 SESVs is amongst the youngest in the industry, with an
average age of eleven years. The vessels support GMS's clients in a broad
range of offshore oil and gas platform refurbishment and maintenance
activities, well intervention work and offshore wind turbine maintenance work
(which are opex-led activities), as well as offshore oil and gas platform
installation and decommissioning and offshore wind turbine installation (which
are capex-led activities).
The SESVs are categorised by size - K-Class (Small), S-Class (Mid) and E-Class
(Large) - with these capable of operating in water depths of 45m to 80m
depending on leg length. The vessels are four-legged and are self-propelled,
which means they do not require tugs or similar support vessels for moves
between locations in the field; this makes them significantly more
cost-effective and time-efficient than conventional offshore support vessels
without self-propulsion. They have a large deck space, crane capacity and
accommodation facilities (for up to 300 people) that can be adapted to the
requirements of the Group's clients.
Gulf Marine Services PLC's Legal Entity Identifier is 213800IGS2QE89SAJF77
www.gmsplc.com
Disclaimer
The content of the Gulf Marine Services PLC website should not be considered
to form a part of or be incorporated into this announcement.
Chairman's Review
Group performance
Revenue for the period increased to US$ 66.4 million (H1 2021: US$ 51.4
million), mainly driven by an increase in day rates to US$ 27.2k (H1 2021: US$
25.5k) and by an increase in utilisation to 89% (H1 2021: 77%).
Vessel operating expenses increased to US$ 23.5 million (H1 2021: US$ 20.2
million), driven by an increase in rechargeable expenses relating to catering
services coupled with increased utilisation during the period. General and
administrative expenses also increased to US$ 5.8 million (H1 2021:US$ 4.9
million), reflecting higher professional fees, and other one-time expenses.
H1 2022 EBITDA stood at US$ 37.3 million (H1 2021: US$ 26.5 million), which
was driven by an increase in utilisation, improved day rates and continuous
focus on cost savings.
During H1 2022, two new contract awards were announced by to the Group for
K-Class vessels, where average day rates were 32% higher than their previous
contracts.
GMS reported a profit after tax during H1 2022 of US$ 13.1 million (H1 2021:
US$ 2.0 million). This is mainly a result of the increased EBIDTA coupled with
reduced finance expenses.
Capital structure and liquidity
The net leverage ratio has reduced to 4.56 times (31 December 2021: 5.79
times) due to a reduction in the net debt to US$ 341.4 million (31 December
2021: US$ 371.3 million) combined with improved EBITDA. The Group remains
dedicated to its deleveraging journey.
As described in the 2021 annual report, the Group's current bank terms are to
raise US$ 50 million equity before the end of the year or, if failing to do
so, to issue of 87.6 million warrants giving potential rights to 134 million
shares at a specific price if exercised. The position as at 30 June 2022
remains the same as that described in the 2021 annual report and neither of
the two contractual scenarios have been ruled out. The Board considers the
likelihood of issuance of warrants to be more likely than not.
Outlook
The Group anticipates seeing continued improvements in day rate and
utilisation levels however this is expected to be more gradual over time.
Secured backlog is US$ 163.3 million as at 30 June 2022
(30 June 2021: US$ 215.4 million). The Group is currently working on a number
of projects that will have a favourable impact on its backlog.
We are pleased to be able to reconfirm our 2022 EBITDA guidance of US$ 70-80
million.
Mansour Al Alami
Executive Chairman
23 September 2022
Financial Review
H1 2022 H1 2021
US$ m US$ m
Revenue 66.4 51.4
Gross profit 27.4 16.4
EBITDA(1) 37.3 26.5
Profit for the period after tax 13.1 2.0
Summary
Revenue increased to US$ 66.4 million, (H1 2021: US$ 51.4 million), mainly
driven by an increase in both utilisation and average day rates.
EBITDA increased by 41% to US$ 37.3 million, (H1 2021: US$ 26.5 million), with
the EBITDA margin increasing to 56% (H1 2021: 52%) mainly driven by the
increase in utilisation, day rates and a continuous focus on costs savings.
Net profit has continued its positive trend, increasing to US$ 13.1 million
(H1 2021: US$ 2.0 million). This was mainly achieved by the increased EBITDA
and EBITDA margin partially offset by increase in tax expense provision due to
increased activity in taxable jurisdictions.
Net debt(1) has reduced by US$ 29.9 million to US$ 341.4 million (31 December
2021: US$ 371.3 million) as the Group continues deleveraging.
Improved trading performance has translated to a significant increase in cash
generated for operating activities by 91% to US$ 42.2 million (H1 2021: US$
22.1 million).
(1) This represents an Adjusted Performance Measure (APM) as defined in the
Glossary which is included in Note 23 to the interim consolidated Financial
Statements
Revenue and segmental profit
The table below shows the contribution to revenue and segment gross profit
made by each vessel class during the period.
Revenue Segmental gross profit
(US$'000)
Vessel Class
H2 2022 H1 2021 H2 2022 H1 2021
E-Class vessels 26,751 15,000 17,355 8,736
S-Class vessels 17,037 16,168 11,890 10,634
K-Class vessels 22,609 20,225 13,708 11,822
Total 66,397 51,393 42,953 31,192
Revenue in H1 2022 increased by 29% to US$ 66.4 million (H1 2021: US$ 51.4
million) following an increase in overall utilisation to 89% (H1 2021: 77%).
Utilisation increased across all three vessel classes with a notable increase
in E-Class vessels achieving 87% in the period (H1 2021: 57%). Both K- and S-
Class vessels utilisation also increased to 85% and 99% respectively (H1 2021:
82% and 95% respectively). S-Class utilisation increased to 99% (H1 2021:
95%) as a result of certain vessels being off hire in H1 2021 for drydocking
activities.
K-Class utilisation marginally increased to 85% (H1 2021: 82%) due to off-hire
time for scheduled maintenance in H1 2021.
Average charter day rates also saw an increase by 7% in the period to US$
27.2k (H1 2021: US$ 25.5k). This increase is mainly driven by a mix factor
resulting from more expensive vessels having higher utilization and as such
weighing more on the average.
Cost of sales and general and administrative expenses
Cost of sales increased by US$ 4.0 million to US$ 39.0 million (H1 2021: US$
35 million) which reflected an increase in rechargeable expenses relating to
catering services as well as a higher utilisation in H1 2022.
General and Administration expenses increased by 18% to US$ 5.8 million (H1
2021: US$ 4.9 million) reflecting higher professional fees, and other one-time
expenses.
Other costs
Finance expenses in the period were US$ 7.3 million (H1 2021: US$ 8.0
million). Interest costs on borrowings reduced to US$ 6.8 million (H1 2021 US$
11.4 million), mainly as a result of the refinancing in H1 2021 which impacted
the Group's effective interest rate. Higher interest cost in the comparative
period was partially offset with a net gain of US$ 3.1 million on revision of
debt facility, comprising of a fair value gain of US$ 6.3 million offset by
the costs to acquire the new loan facility which amounted to US$ 3.2 million.
A net foreign exchange gain of US$ 0.2 million in H1 2022 (H1 2021: loss of
US$ 0.7 million) arose from favourable movements in exchange rates of the
Pound Sterling against the US Dollar.
Tax expense increased to US$ 1.5 million (H1 2021: US$ 0.9 million) mainly due
to an increase in activity in taxable jurisdictions combined with a higher
withholding tax charge.
Cash flow and liquidity
The Group's net cash generated from operating activities increased to US$ 42.2
million (H1 2021: US$ 22.1 million) which reflected a strong operational
performance during the period. The net cash outflow from investing activities
for H1 2022 decreased to US$ 3.7 million (H1 2021: US$ 8.9 million)
representing a higher capital expenditure incurred in 2021 to upgrade the
vessels entering new contracts.
The Group's net cash outflow from financing activities during the period
increased to US$ 36.7 million
(H1 2021: US$ 7.8 million). The Group made debt repayments of US$ 28 million
(H1 2021: US$ 24.5 million) which was comprised of US$ 15 million payments
towards the working capital facility and US$ 13 million towards its term
loans. The comparative period reflected cash inflows of US$ 27.8 million in
relation to proceeds from the issuance of shares, which was partially offset
by share issue and refinancing costs totalling US$ 4.6 million.
Balance sheet
Total current assets at 30 June 2022 were US$ 53.6 million (31 December 2021:
US$ 57.1 million). The decline reflects a better management of trade
receivable balance resulting in reduction of US$ 6.6 million, which is
partially offset by payments made towards our long-term debt and an increase
to cash and cash equivalents of US$ 1.8 million. Total current liabilities
increased to US$ 59.3 million (31 December 2021: US$ 53.0 million) primarily
as a result of an increase in accrued operational expenses through increased
utilisation. Further, the Group's embedded derivative of US$ 1.4 was
reclassified to current liabilities as warrants are expected to be issued on 2
January 2023. While the current assets are lower than current liabilities, the
group expects to honour all its liabilities. For further details please refer
to the Going Concern disclosure within Note 2 of the interim condensed
consolidated financial statements.
Total non-current assets at 30 June 2022 were US$ 607.1 million (31 December
2021: US$ 617.2 million). The decline is due to depreciation and amortisation
charged on non-current assets of US$ 15.8 million. This was offset by capital
expenditure of US$ 5.5 million for class surveys and upgrades to the vessels.
Total non-current liabilities reduced to US$ 326.4 million (31 December 2021:
US$ 358.7 million) primarily due to the repayment of
US$ 28 million (H1 2021: US$ 24.5 million) towards bank borrowings.
During H1 2022, the shareholders approved an agreement to buy back and cancel
all the 350,487,787 Deferred shares that had arisen from the capital
reorganization in 2021, for the aggregate consideration of £1.
On 30 June 2022, the buyback was completed, and the shares were subsequently
cancelled. Following the cancellation of the Deferred shares, a transfer of
$46.4 million was made from Share capital - Deferred to a Capital redemption
reserve within the equity section of the statement of financial position.
Total equity increased to US$ 275 million (31 December 2021: US$ 262.7
million), largely attributable to a movement in retained earnings during the
period.
Going concern
Management have assessed the Group's financial position for a period of not
less than 12 months from the date of approval of the half year results and
have a reasonable expectation that the Group will be able to continue in
operational existence for the foreseeable future.
The Group's forecasts, having taken into consideration reasonable risks and
downsides, indicate that its bank facilities along with order book of
contracted work and a strong pipeline of near-term opportunities for
additional work will provide sufficient liquidity for its requirements for the
foreseeable future and the Group will remain in compliance with the covenants
under the Group's banking facilities throughout the period until the end of
September 2023. Accordingly, these consolidated interim financial statements
for the Group have been prepared on a going concern basis. For further details
please refer to the Going Concern disclosure within Note 2 of the interim
condensed consolidated financial statements.
Related party transactions
During the period there were related party transactions with the minority
shareholder of GMS Saudi Arabia Ltd, a subsidiary of the Group for the
provision of safety equipment on some of our vessels and office space
totalling US$ 0.3 million (H1 2021: US$ 0.3 million) and with National
Catering Company Limited WLL, an affiliate of a significant shareholder of the
Company, for Catering services totalling US$ 0.3 million (H1 2021: Nil).
Risks and uncertainties
There are a number of risks and uncertainties which could have a material
impact on the Group's performance over the remaining six months of 2022. The
Directors do not consider that the principal risks and uncertainties have
materially changed since the last publication of the Annual Report for the
year ended 31 December 2021. A detailed explanation of the risks summarised
below, and how the Group seeks to mitigate the risks, can be found on pages 28
to 33 of the 2021 annual report which is available at www.gmsuae.com
(http://www.gmsuae.com/) .
· Utilisation and Local content requirement - The Group relies on a
limited number of blue-chip clients that may expose it to losses if these
relationships breakdown. Middle East and North Africa (MENA) NOCs have
introduced local content requirements as part of their tender processes
designed to giving preference to suppliers that commit to improving their
local content and levels of spend which may prevent GMS from winning contracts
or lead to financial loss and/or a reduction in margins on existing contracts,
which will ultimately impact cash flows and profitability.
· Inability to secure an appropriate capital structure - A continuing
low share price may prevent GMS from raising sufficient levels of equity to
recapitalise the business.
· Operations: inability to deliver safe and reliable operations - The
Group may suffer commercial and reputational damage from an environmental or
safety incident involving employees, visitors or contractors. Inadequate
preparation for emergency situations, such as pandemics or geopolitical
instability, could have a negative impact on the business. Insufficient
insurance coverage may lead to financial loss.
· Liquidity and covenant compliance - The business is exposed to
short-term liquidity management risks arising from potential increases in
interest rates, which further increase debt service obligations, and
unexpected increases in working capital. In addition, the Group's bank
facilities are subject to covenant tests based on the financial performance.
Compliance with these covenants depends on GMS' ability to secure ongoing work
for the fleet. If GMS is unable to secure ongoing work, its financial
performance and position may be adversely affected, and it may not comply with
the covenants. In such a case, unless the banks agree otherwise, this could
lead to an event of default. This would give lenders the right to accelerate
repayment of the outstanding loans, and then exercise security over the
Group's assets.
· People - Losing skilled workforce or failing to attract new talent
into our business has the potential to undermine performance.
· Legal, economic and political conditions - Political instability in
the regions in which GMS operates (and recruit from) may adversely affect its
operations. The business is exposed to sudden changes in tax compliance
requirements or changes in legislation which could lead to fines, financial
loss or adversely impact liquidity. Sudden changes in inflation in regions GMS
operates may adversely affect its operations.
· Compliance and Regulation - Failure to appropriately identify and
comply with laws and regulations, and other regulatory statutes in new and
existing markets, could lead to regulatory investigations. It may result in
GMS failing to win a new contract, the early termination of an existing
contract or exclusion from future contracts.
· COVID-19 pandemic - Although the impact of the COVID-19 pandemic
appears to be subsiding, it may still pose a number of operational challenges
to the Group such as increased cost due to strict quarantine requirements for
crew, health risk to staff and delay in existing or future contracts as a
result of interruptions in their supply chains.
· Cyber-crime - security and integrity - Phishing attempts result in
inappropriate transactions, data leakage and financial loss. The Group is at
risk of loss and reputational damage through financial cyber-crime.
· Climate change - Climate change poses both transition and physical
risks to the Group. Transition risks come from the decarbonisation of the
global economy which could result in changing investor sentiment making new
investors harder to find. It may bring changing client preferences leading to
reduced demand for our services. New legislation could require us to increase
reporting and possibly substitute our products and vessels for greener
alternatives. Physical risks include rising temperatures, which could further
impact working hours, and rising sea levels, which could affect where our
vessels can operate.
RESPONSIBILITY STATEMENT
Financial information for the period ended 30 June 2022.
We confirm to the best of our knowledge:
a) the condensed set of financial statements, which has been prepared in
accordance with the applicable set of accounting standards, gives a true and
fair view of the assets, liabilities, financial position and profit or loss of
Gulf Marine Services plc and its undertakings, included in the consolidation
as a whole as required by DTR 4.2.4R;
b) the interim management report includes a fair review of the information
required by DTR 4.2.7R; and
c) the interim management report includes a fair review of the information
required by DTR 4.2.8R.
By order of the Board
Mansour Al Alami
Alex Aclimandos
Executive Chairman
Chief Financial Officer
23 September 2022
23
September 2022
INDEPENDENT REVIEW REPORT TO GULF MARINE SERVICES PLC (THE "ENTITY")
Conclusion
We have been engaged by the Entity to review the Entity's condensed set of
consolidated financial statements in the half-yearly financial report for the
six months ended 30 June 2022 which comprises the condensed consolidated
statement of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity, the condensed
consolidated statement of cash flows, a summary of significant accounting
policies and other explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2022 is not
prepared, in all material respects in accordance with International Accounting
Standard 34 Interim Financial Reporting ("IAS 34") as contained in the UK
adopted International Accounting Standards and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the
UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
We read the other information contained in the half-yearly financial report to
identify material inconsistencies with the information in the condensed set of
consolidated financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If we become
aware of any apparent material misstatements or inconsistencies we consider
the implications for our report.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Entity to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Entity will continue in operation.
INDEPENDENT REVIEW REPORT TO GULF MARINE SERVICES PLC (THE "ENTITY")
(continued)
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
The directors are responsible for preparing the condensed set of consolidated
financial statements included in the half-yearly financial report in
accordance with IAS 34 as adopted for use in the UK.
As disclosed in note 3, the annual financial statements of the Entity for the
year ended 31 December 2021 are prepared in accordance with UK-adopted
international accounting standards.
In preparing the condensed set of consolidated financial statements, the
directors are responsible for assessing the Entity's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend
to liquidate the Entity or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express to the Entity a conclusion on the condensed
set of consolidated financial statements in the half-yearly financial report
based on our review.
Our conclusion, including our conclusions relating to going concern, are based
on procedures that are less extensive than audit procedures, as described in
the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Entity in accordance with the terms of our
engagement to assist the Entity in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Entity
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Entity for our review work, for this
report, or for the conclusions we have reached.
KPMG
23 September 2022
Chartered Accountants
1 Harbourmaster Place,
IFSC,
Dublin 1,
Ireland.
GULF MARINE SERVICES PLC
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30 June 2022
Six months period ended 30 June Year ended
31 December
2022 2021 2021
US$'000 US$'000 US$'000
Notes (Unaudited) (Unaudited) (Audited)
Revenue 3,7 66,397 51,393 115,127
Cost of sales (39,021) (35,007) (69,460)
Reversal of impairment 9 - - 14,959
Gross profit 27,376 16,386 60,626
General and administrative expenses (5,819) (4,883) (12,272)
Operating profit 21,557 11,503 48,354
Finance income 8 6 9
Finance expenses 8 (7,290) (7,986) (14,463)
Foreign exchange gain/(loss), net 240 (698) (1,002)
Other income 66 20 28
Profit for the period/year before taxation 14,581 2,845 32,926
Taxation charge for the period/year 5 (1,471) (851) (1,707)
Profit for the period/year 13,110 1,994 31,219
Other comprehensive income/(expense) - items that may be reclassified to
profit or loss:
Net hedging gain reclassified to the profit or loss 140 139 278
Exchange differences on translating foreign operations (1,031) 89 (91)
Total comprehensive income for the year 12,219 2,222 31,406
Profit attributable to:
Owners of the Company 13,097 1,882 31,001
Non-controlling interests 13 112 218
13,110 1,994 31,219
Total comprehensive income attributable to:
Owners of the Company 12,206 2,110 31,188
Non-controlling interests 13 112 218
12,219 2,222 31,406
Earnings per share
Basic (cents per share) 6 1.29 0.52 4.48
Diluted (cents per share) 6 1.28 0.51 4.46
All results are derived from continuing operations in each period/year. There
are no discontinued operations in either period/year.
The accompanying notes form an integral part of these condensed consolidated
financial statements.
GULF MARINE SERVICES PLC
Condensed Consolidated Balance Sheet
as at 30 June 2022
30 June 31 December
Notes 2022 2021
US$'000 US$'000
ASSETS
Non-current assets
Property and equipment 9 595,704 605,526
Dry docking expenditure 10 9,526 8,799
Right-of-use assets 1,824 2,884
Total non-current assets 607,054 617,209
Current assets
Trade receivables 11 35,440 41,948
Prepayments, advances and other receivables 12 8,012 6,969
Derivative financial instruments 16 70 -
Cash and cash equivalents 10,057 8,271
Total current assets 53,579 57,188
Total assets 660,633 674,397
EQUITY AND LIABILITIES
Capital and reserves
Share capital - Ordinary 13 30,117 30,117
Share capital - Deferred 13 - 46,445
Capital redemption reserve 14 46,445 -
Share premium account 99,105 99,105
Group restructuring reserve (49,710) (49,710)
Restricted reserve 272 272
Share based payment reserve 3,691 3,648
Capital contribution 9,177 9,177
Cash flow hedge reserve (418) (558)
Translation reserve (3,117) (2,086)
Retained earnings 137,483 124,386
Attributable to the Owners of the Company 273,045 260,796
Non-controlling interests 1,925 1,912
Total equity 274,970 262,708
Current liabilities
Trade and other payables 22,008 19,455
Current tax liability 6,701 5,669
Bank borrowings 15 28,048 26,097
Lease liabilities 1,126 1,817
Derivative financial instruments 16 1,384 -
Total current liabilities 59,267 53,038
Non-current liabilities
Provision for employees' end of service benefits 2,251 2,322
Bank borrowings 15 323,429 353,429
Lease liabilities 716 1,107
Derivative financial instruments 16 - 1,793
Total non-current liabilities 326,396 358,651
Total liabilities 385,663 411,689
Total equity and liabilities 660,633 674,397
The accompanying notes form an integral part of these condensed consolidated
financial statements.
GULF MARINE SERVICES PLC
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June 2022 Share capital - Ordinary Share capital - Deferred Share premium account Group restructuring reserve Share based payment reserve Capital contribution Cash flow hedge reserve Translation Attributable to the owners of the Company Total
Capital redemption reserve Non- controlling interests equity
Reserve Restricted Retained
reserve earnings
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'0-00 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2022 30,117 46,445 - 99,105 (49,710) 272 3,648 9,177 (558) (2,086) 124,386 260,796 1,912 262,708
Profit for the period - - - - - - - - - - 13,097 13,097 13 13,110
Other comprehensive income for the period
Net hedging gain on interest hedges reclassified to the profit or loss
- - - - - - - - 140 - - 140 - 140
Exchange differences on foreign operations
- - - - - - - - - (1,031) - (1,031) - (1,031)
Total comprehensive income for the period
- - - - - - - - 140 (1,031) 13,097 12,206 13 12,219
Transactions with owners of the Company
Share based payment charge - - - - - - 43 - - - - 43 - 43
Buyback and cancellation of deferred shares (Note 13, 14)
- (46,445) 46,445 - - - - - - - - - - -
Total transactions with owners of the Company
- (46,445) 46,445 - - - 43 - - - - 43 - 43
As at 30 June 2022 30,117 - 46,445 99,105 (49,710) 272 3,691 9,177 (418) (3,117) 137,483 273,045 1,925 274,970
As at 1 January 2021 58,057 - - 93,080 (49,710) 272 3,740 9,177 (836) (1,995) 93,385 205,170 1,694 206,864
Profit for the period - - - - - - - - - - 1,882 1,882 112 1,994
Other comprehensive income for the period
Net hedging gain on interest hedges reclassified to the profit or loss
- - - - - - - - 139 - - 139 - 139
Exchange differences on foreign operations
- - - - - - - - - 89 - 89 - 89
Total comprehensive income for the period
- - - - - - - - 139 89 1,882 2,110 112 2,222
Transactions with owners of the Company
Capital reorganisation (Note 13) (46,445) 46,445 - - - - - - - - - - - -
Issue of share capital (Note 13) 18,505 - - 9,253 - - - - - - - 27,758 - 27,758
Share issue costs (Note 13) - - - (3,228) - - - - - - - (3,228) - (3,228)
Share based payment charge - - - - - - (53) - - - - (53) - (53)
Cash settlement of Long-Term Incentive Plans (LTIPs)
- - - - - - (74) - - - - (74) - (74)
Total transactions with owners of the Company
(27,940) 46,445 - 6,025 - - (127) - - - - 24,403 - 24,403
As at 30 June 2021 30,117 46,445 - 99,105 (49,710) 272 3,613 9,177 (697) (1,906) 95,267 231,683 1,806 233,489
The accompanying notes form an integral part of these condensed consolidated
financial statements.
·
GULF MARINE SERVICES PLC
Condensed Consolidated Statement of Cash Flows
for the period ended 30 June 2022
Six-month period ended 30 June Year ended
31 December
2022 2021 2021
US$'000 US$'000 US$'000
Net cash generated from operating activities (Note 17) 42,205 22,114 40,511
Investing activities
Payments for additions of property and equipment (1,885) (6,130) (7,898)
Dry docking expenditure paid (1,831) (2,740) (3,609)
Interest received 8 6 9
Net cash used in investing activities (3,708) (8,864) (11,498)
Financing activities
Bank borrowings received - 2,000 2,000
Repayment of bank borrowings (28,049) (24,492) (30,983)
Proceeds from issue of shares (Note 13) - 27,758 27,758
Share issue costs paid (Note 13) - (1,431) (3,228)
Principal elements of lease payments (1,174) (1,087) (2,342)
Cash settlement of LTIPs - (74) -
Payment of costs associated with borrowings (148) (3,170) (3,615)
Settlement of derivatives (Note 16) (369) (537) (1,033)
Interest paid (6,971) (6,752) (13,097)
Net cash used in financing activities (36,711) (7,785) (24,540)
Net increase in cash and cash equivalents 1,786 5,465 4,473
Cash and cash equivalents at the beginning of the period/year 8,271 3,798 3,798
Cash and cash equivalents at the end of the period/year 10,057 9,263 8,271
Non-cash transactions
Recognition of deferred shares - 46,445 46,445
Transfer of deferred shares to 46,445 - -
capital redemption reserve
Recognition of right-of-use asset 92 419 1,955
Net movement for capital accruals in relation to additions of property and 136 11 408
equipment
Net movement of drydock accruals 1,664 426 302
The accompanying notes form an integral part of these condensed consolidated
financial statements.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022
1 Corporate information
Gulf Marine Services PLC ("GMS" or the "Company") is a Company which is
registered and was incorporated in England and Wales on 24 January 2014. The
Company is a public limited liability company with operations mainly in the
Middle East, North Africa and Europe. The address of the registered office of
the Company is 107 Hammersmith Road, London, W14 0QH. The registered number
of the Company is 08860816.
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 Group is engaged in providing self-propelled, self-elevating support
vessels (SESVs) that present 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 Middle East and
other regions.
The condensed consolidated financial statements of the Group for the six-month
period ended
30 June 2022 were authorised for issue on 23 September 2022. The condensed
consolidated financial statements do not comprise statutory accounts within
the meaning of Section 434 of the Companies Act 2006. The condensed
consolidated financial statements have been reviewed, not audited.
The Group issued statutory financial statements for the year ended 31 December
2021, which were prepared in accordance with UK adopted International
Accounting Standards in conformity with requirements of the Companies Act
2006. Those financial statements were approved by the Board of Directors on 12
May 2022. The report of the auditor on those accounts did not contain any
statement under section 498(2) or 498(3) of the Companies Act 2006. The
information for the year to 31 December 2021 contained in these condensed
consolidated accounts has been extracted from the latest published audited
financial statements. A copy of the statutory accounts for year ended
31 December 2021 has been delivered to the Registrar of Companies.
2 Significant accounting policies
The accounting policies and methods of computation adopted in the preparation
of these condensed consolidated financial statements are consistent with those
followed in the preparation of the Group's annual financial statements for the
year ended 31 December 2021 as disclosed in the Annual Report, except for the
adoption of new standards and interpretations effective as of 1 January 2022,
which are described in more details below.
The condensed consolidated financial statements have been prepared on the
historical cost basis, except for certain financial instruments that are
measured at fair values at the end of each reporting period. The Group's
management considers that the fair value of financial assets, financial
liabilities and lease liabilities approximates their carrying amounts.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
2 Significant accounting policies (continued)
Basis of preparation
The annual consolidated financial statements of the Group will be prepared in
accordance with
UK adopted International Accounting Standards in conformity with requirements
of the Companies Act 2006. The interim set of condensed consolidated financial
statements included in this half-yearly financial report has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority and with International Accounting Standard (IAS)
34 Interim Financial Reporting as adopted by the United Kingdom.
The condensed consolidated financial statements do not include all the
information required for full annual consolidated financial statements and
should be read in conjunction with the Group's audited consolidated financial
statements for the year ended 31 December 2021. In addition, results for the
six-month period ended 30 June 2022 are not necessarily indicative of the
results that may be expected for the financial year ending 31 December 2022.
The condensed consolidated statement of comprehensive income for the six-month
period ended 30 June 2022 is not affected significantly by seasonality of
results.
Going concern
The Group's Directors have assessed the Group's financial position for a
period of not less than
12 months from the date of approval of the half year results and have a
reasonable expectation that the Group will be able to continue in operational
existence for the foreseeable future.
The Group was in a net current liability position as at 30 June 2022 amounting
to US$ 5.7 million
(31 December 2021: net current assets of US$ 4.2 million). The Group has US$
10.1 million of available resources comprising cash and cash equivalents and
it has an available undrawn working capital facility of US$ 13.5 million (31
December 2021: US$ 3.5 million) as at the at the reporting date.
The Group is expected to continue to generate positive operating cash flows
for the foreseeable future and has in place a committed working capital
facility of US$ 45.0 million (31 December 2021:US$ 50.0 million), of which US$
25.0 million (31 December 2021: US$ 25.0 million) can be utilised to support
the issuance of performance bonds and guarantees, of which US$ 12.5 million
(31 December 2021:
US$ 11.6 million) was utilised for this purpose as of 30 June 2022 (refer Note
18). The balance of
US$ 20 million can be utilised to draw down cash. During the period, the
working capital facility was reduced by US$ 5 million under the terms of the
facility agreement. US$ 6.5 million of this facility was utilised as of 30
June 2022 (31 December 2021: US$ 21.5 million), leaving US$ 13.5 million (31
December 2021: US$ 3.5 million) available for drawdown. The working capital
facility expires alongside the main debt facility in June 2025. (refer Note
15)
The Group's current bank terms are to raise US$ 50 million equity before the
end of the year or, if failing to do so, to issue of 87.6 million warrants
giving potential rights to 134 million shares at a specific price if
exercised. The position as at 30 June 2022 remains the same as that described
in the 2021 annual report and neither of the two contractual scenarios have
been ruled out. The Board considers the likelihood of issuance of warrants to
be more likely than not. If leverage is above 4.0x at
31 December 2022, PIK interest would accrue at a rate defined within the
Glossary. The Group's cashflow forecasts used for the Going Concern assessment
includes PIK interest for the first six months of 2023.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
2 Significant accounting policies (continued)
Going concern (continued)
The Group's forecasts, having taken into consideration reasonable risks and
downsides, indicate that its bank facilities along with order book of
contracted work and a strong pipeline of near-term opportunities for
additional work will provide sufficient liquidity for its requirements for the
foreseeable future and the Group will remain in compliance with the covenants
under the Group's banking facilities throughout the period until the end of
September 2023, Accordingly, these consolidated interim financial statements
for the Group have been prepared on a going concern basis.
GMS continues to remain cognisant of the wider context in which it operates
and the impact that climate change could have on the financial statements of
the Group. The impact of climate change is expected to be insignificant in the
going concern assessment period.
While the current situation regarding the war in Ukraine and Russian sanctions
remains uncertain, the Group believes that the potential impact of the war,
border closures and resulting sanctions will not have a significant impact on
its operations. Nevertheless, the Group's core market is middle east which is
expected to invest heavily in shallow water production capacity over the
coming decade which will drive demand for offshore marine services.
New and amended standards adopted by the Group
The following new and revised IFRSs have been adopted in these condensed
consolidated financial statements.
· COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to
IFRS 16)
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS
37)
· Annual Improvements to IFRS Standards 2018-2020
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
· Reference to the Conceptual Framework (Amendments to IFRS 3)
The application of these new and revised IFRSs has not had any material impact
on the amounts reported for the current and prior periods and did not require
any retrospective adjustments but may affect the accounting for future
transactions or arrangements. The full revised accounting policies applicable
from 1 January 2022 will be provided in the Group's annual financial
statements for the year ending 31 December 2022.
At the date of the condensed consolidated interim financial statements, the
following other standards, amendments and Interpretations have not been
effective and have not been early adopted by the Group:
· Classification of Liabilities as Current or Noncurrent - Amendments
to IAS 1
· IFRS 17 Insurance Contracts
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of Accounting Estimate - Amendments to IAS 8
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
These new and amended standards are not expected to have a significant impact
on the Group's condensed consolidated interim financial information.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
3 Segment reporting
The segment information provided to the chief operating decision makers for
the operating and reportable segments for the period include the following:
Segment adjusted
Revenue gross profit/(loss)*
6 months ended 30 June 31 December 6 months ended 30 June 31
December
2022 2021 2021 2022 2021 2021
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
K-Class vessels 22,609 20,225 43,027 13,708 11,822 26,214
S-Class vessels 17,037 16,168 33,420 11,890 10,634 22,590
E-Class vessels 26,751 15,000 38,680 17,355 8,736 25,104
_______ _______ _______ _______ _______ _______
Total 66,397 51,393 115,127 42,953 31,192 73,908
_______ _______ _______ _______ _______ _______
Less:
Depreciation charged to cost of sales (11,787) (11,306) (22,738)
Amortisation charged to cost of sales (3,790) (3,500) (5,503)
Reversal of impairment (refer Note 9) - - 14,959
_______ _______ _______
Gross profit 27,376 16,386 60,626
General and administrative expenses (5,819) (4,883) (12,272)
Finance income 8 6 9
Finance expense (refer Note 8) (7,290) (7,986) (14,463)
Foreign exchange gain/(loss), net 240 (698) (1,002)
Other income 66 20 28
_______ _______ _______
Profit before taxation 14,581 2,845 32,926
*See Glossary.
Segment revenue reported above represents revenue generated from external
customers. There were no inter-segment sales in either of the periods. Segment
assets and liabilities, including depreciation, amortisation and additions to
non-current assets, are not reported to the chief operating decision maker on
a segmental basis and, therefore, are not disclosed.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
4 Presentation of adjusted non-GAAP results
The following table provides a reconciliation between the statutory and
non-statutory financial results:
Six months ended 30 June 2022 Six months ended 30 June 2021
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
Non-GAAP results
Non-GAAP results Items(3) Total items(3) total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 66,397 - 66,397 51,393 - 51,393
Cost of sales
- Cost of sales before
depreciation,
amortisation and (23,444) - (23,444) (20,201) - (20,201)
impairment
Segmented Gross profit 42,953 - 42,953 31,192 - 31,192
-Depreciation and amortisation (15,577) - (15,577) (14,806) - (14,806)
Gross profit 27,376 - 27,376 16,386 - 16,386
General and administrative
-Depreciation and amortisation (186) - (186) (227) - (227)
-Other administrative costs (5,633) - (5,633) (4,656) - (4,656)
Operating profit 21,557 - 21,557 11,503 - 11,503
Finance income 8 - 8 6 - 6
Finance expense (7,290) - (7,290) (6,261) - (6,261)
Cost to acquire new bank facility(1)
- - - - (3,165) (3,165)
Fair value adjustment on recognition of new debt facility(2)
- - - - 1,440 1,440
Other income 66 - 66 20 - 20
Foreign exchange gain/(loss), net
240 - 240 (698) - (698)
Profit/(loss) before taxation 14,581 - 14,581 4,570 (1,725) 2,845
Taxation charge (1,471) - (1,471) (851) - (851)
Net profit after tax 13,110 - 13,110 3,719 (1,725) 1,994
Profit attributable to
Owners of the Company 13,097 - 13,097 3,607 (1,725) 1,882
Non-controlling interests 13 - 13 112 - 112
Profit per share (Basic) 1.29 - 1.29 1.00 (0.48) 0.52
Supplementary non-statutory information
Operating profit 21,557 - 21,557 11,503 - 11,503
Add: Depreciation and amortisation charges
15,763 - 15,763 15,033 - 15,033
Non-GAAP EBITDA(3) 37,320 - 37,320 26,536 - 26,536
(1)Costs incurred to arrange a new bank facility have been added back to
Profit/(loss) before taxation to arrive at adjusted net profit(3) for the
period ended 30 June 2021. This measure provides additional information in
assessing the Group's total performance that management is more directly able
to influence and on a basis comparable from period to period.
(2)The fair value adjustment on recognition of the new loan has been added
back to loss before taxation to arrive at adjusted net profit(3) for the
period ended 30 June 2021. This measure provides additional information in
assessing the Group's total performance that management is more directly able
to influence and on a basis comparable from period to period.
(3)Please see Glossary for definition.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
5 Taxation
Tax is calculated at the rates prevailing in the respective jurisdictions in
which the Group operates. The overall effective rate is the weighted average
of the expected taxes to be paid in each jurisdiction. Income is subject to
tax including withholding tax on Revenue and Corporation tax on Profit for the
year in each taxable jurisdiction (being principally Qatar, the United Kingdom
and Saudi Arabia). The Group effective tax rate was 14.8% for the period ended
June 2022 (Six months ended June 2021: 9.13%).
The current tax charge of US$ 1.5 million (six-month period ended June 2021:
US$ 0.9 million) included withholding tax amounting to US$ 0.9 million
(six-month period ended June 2021: US$ 0.6 million).
A subsidiary of the Group received a tax assessment from the Saudi tax
authorities (ZATCA) for an amount of US$ 7.3 million related to the transfer
pricing of our inter-group bareboat agreement, for the period from 2017 to
2019. The Group has filed an appeal with the Tax Violations and Dispute
Resolution Committee (TVDRC) 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 from 2010 in
respect of a law which was issued in 2019, which applied a "tested party"
assessment different to that supported by our tax advisors and using an
approach which the Directors (supported by its tax advisors) consider to be
inconsistent with the principles set out in the KSA transfer price guidelines,
the Directors are confident that the Group has complied with the relevant tax
legislation. On that basis, the Directors have not made a provision for the
current or any future potential assessments of a similar nature.
6 Earnings per share
6 months ended 30 June 6 months ended 30 June Year ended
31 December
2022 2021 2021
Earnings for the purpose of calculating the basic and diluted earnings per 13,097 1,882 31,001
share being profit for the period attributable to Owners of the Company
(US$'000)
Earnings for the purpose of calculating the adjusted basic and diluted profit 13,097 3,607 17,768
per share (US$'000) (Note 4)
Weighted average number of shares ('000) 1,016,415 361,525 691,661
Weighted average diluted number of shares ('000) 1,019,646 366,064 695,753
Basic earnings per share (cents) 1.29 0.52 4.48
Diluted earnings per share (cents) 1.28 0.51 4.46
Adjusted earnings per share (cents) 1.29 1.00 2.57
Adjusted diluted earnings per share (cents) 1.28 0.99 2.55
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
6 Earnings per share (continued)
Basic earnings per share is calculated by dividing the earnings attributable
to equity holders of the Company for the period (as disclosed in the condensed
consolidated statement of comprehensive income) by the weighted average number
of ordinary shares in issue during the period. For the comparative
period/year, the deferred shares were not included in any of the Earnings per
share calculations as they did not have a right to dividends.
Adjusted earnings per share is calculated on the same basis as basic earnings
but uses the adjusted profit attributable to equity holders of the Company for
the period (refer Note 4). 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 earnings attributable
to owners of the Company for the period by the weighted average number of
ordinary shares in issue during the period adjusted for the weighted average
effect of LTIP's during the period.
Adjusted diluted earnings per share is calculated on the same basis but uses
adjusted profit (refer Note 4) attributable to the equity shareholders of the
Company.
The following table shows a reconciliation between basic and diluted average
number of shares:
30 June 30 June 2021 31 December 2021
2022 000's 000's
000's
Weighted average basic number of shares in issue 1,016,415 361,525 691,661
Weighted average effect of LTIP's 3,231 4,539 4,092
Weighted average diluted number of shares in issue 1,019,646 366,064 695,753
The warrants are anti-dilutive thus not included in the calculation.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
7 Revenue
30 June 30 June
2022
2021
US$'000 US$'000
Charter hire 34,433 29,309
Lease income 22,492 16,699
Messing and accommodation 6,705 3,418
Maintenance service 1,677 1,398
Mobilisation and demobilization 670 511
Sundry income 420 59
66,397 51,394
8 Finance expenses
30 June 30 June
2022
2021
US$'000 US$'000
Interest on bank borrowings 6,796 11,411
Interest on finance leases 51 77
Other finance expenses 413 334
Recognition of embedded derivative for contract to issue warrants
- 926
Derecognition of embedded derivative for contract to issue warrants
- (1,890)
Net loss on changes in fair value of embedded derivative for contract to issue
warrants (Note 16)
667 256
Loss on derivatives reclassified through profit and loss 140 139
Gain on revision of debt facility - (6,332)
Net gain on changes in fair value of interest rate swap (Note 16)
(777) (100)
Cost to acquire new bank facility - 3,165
7,290 7,986
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
9 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$'000
Cost
Balance as at 1 January 2022 896,871 5,042 60,234 1,967 964,114
Additions - 2,021 - - 2,021
Transfers 1,372 (1,655) - 283 -
Balance as at 30 June 2022 898,243 5,408 60,234 2,250 966,135
Accumulated Depreciation and impairment
Balance at 1 January 2022 335,938 2,845 18,018 1,787 358,588
Depreciation expense 10,179 - 1,607 57 11,843
Balance as at 30 June 2022 346,117 2,845 19,625 1,844 370,431
Net Book Value as at 30 June 2022 552,126 2,563 40,609 406 595,704
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
9 Property and equipment (continued)
Vessels Capital work-in-progress Vessel spares, fitting and other equipment Others Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance as at 1 January 2021 890,012 3,927 59,902 1,967 955,808
Additions − 8,306 − − 8,306
Transfers 6,859 (7,191) 332 − −
Balance as at 31 December 2021 896,871 5,042 60,234 1,967 964,114
Accumulated Depreciation and impairment
Balance at 1 January 2021 331,405 2,845 14,774 1,707 350,731
Depreciation expense 19,492 − 3,244 80 22,816
Reversal of impairment (14,959) − − − (14,959)
Balance as at 31 December 2021 335,938 2,845 18,018 1,787 358,588
Net Book Value as at 31 December 2021 560,933 2,197 42,216 180 605,526
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
10 Dry docking expenditure
30 June 31 December
2022
2021
US$'000 US$'000
At 1 January 8,799 10,391
Expenditure incurred during the period/year 3,495 3,911
Amortised during the period/year (2,768) (5,503)
9,526 8,799
11 Trade receivables
30 June 31 December
2022
2021
US$'000 US$'000
Trade receivables 35,572 42,143
Less: Allowances for trade receivables (132) (195)
35,440 41,948
12 Prepayments, advances and other receivables
30 June 31 December
2022
2021
US$'000 US$'000
Prepayments 4,070 3,663
Advances to suppliers 2,211 808
Accrued revenue 1,325 1,170
Deposits 406 406
Other receivables - 922
8,012 6,969
13 Share capital
Ordinary shares at £0.02 per share
Number of ordinary shares
('000) US$'000
At 1 January 2022 1,016,415 30,117
As at 30 June 2022 1,016,415 30,117
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
13 Share capital (continued)
Number of ordinary shares
('000) US$'000
At 1 January 2021 350,488 58,057
Placing of new shares 665,927 18,505
Capital reorganisation - (46,445)
At 31 December 2021 1,016,415 30,117
As part of the equity raise on 28 June 2021 the Company issued 665,926,795 new
ordinary shares with a nominal value of 2 pence per share at 3 pence per share
with the additional pence per share being recognised in the share premium
account. As a result, total equity of
US$ 27.76 million (GBP £19.98 million) was raised of which $18.51 million
(GBP £13.32 million) was recognised in the share capital account and $9.25
million (GBP £6.66 million) was recognised in share premium account. Issue
costs amounting to US$ 3.2 million had been deducted from the share premium
account.
Deferred shares at £0.08 per share
Number of ordinary shares
('000) US$'000
At 1 January 2022 350,488 46,445
Buyback and cancellation of deferred shares (350,488) (46,445)
At 30 June 2022 - -
Number of ordinary shares
('000) US$'000
At 1 January 2021 - -
Capital reorganisation 350,488 46,445
At 31 December 2021 350,488 46,445
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
13 Share capital (continued)
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. 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.
During the 2022 AGM, shareholders approved an agreement describing the buyback
and cancellation of the Deferred shares of the Company pursuant to which, for
the aggregate consideration of £1.00, the Company purchased all of the
deferred shares arising from its 2021 capital reorganization. Under the
Companies Act a share buy‑back by a public company (such as the 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.
On 30 June 2022, following the buyback, 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 (refer Note 14).
The Group has Long Term Incentive Plans ("LTIPs") granted to senior
management, managers, and senior offshore officers and which may result in
increase in issued share capital in future (refer Note 20).
14 Capital redemption reserve
The capital redemption reserve with a value of US $46.4 million, (2021: nil)
was created on
30 June 2022 when the Company purchased and then cancelled 350,487,787
deferred ordinary shares (refer Note 13). The capital redemption reserve is
not distributable.
15 Bank borrowings
Bank borrowings relate to the bank facility provided by a group of six banks,
which comprises of term loans and amounts available under revolving working
capital facilities. Secured borrowings at amortised cost are as follows:
30 June 31 December
2022
2021
US$'000 US$'000
Term loans 344,977 358,026
Working capital facility* 6,500 21,500
351,477 379,526
*During the period, the Group made repayments of US$15 million (2021: Nil)
towards working capital facility, of which US$13.5 million was early settled.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
15 Bank Borrowings (continued)
Bank borrowings are split between hedged and unhedged amounts as follows:
30 June 31 December
2022
2021
US$'000 US$'000
Economically hedged bank borrowings 26,923 30,769
Unhedged bank borrowings 324,554 348,757
351,477 379,526
Bank borrowings are presented in the condensed consolidated balance sheet as
follows:
30 June 31 December
2022
2021
US$'000
US$'000
Non-current
Bank borrowings 323,429 353,429
Current
Bank borrowings - scheduled repayments within one year 28,048 26,097
351,477 379,526
Net debt as at the end of the period/year was as follows:
30 June 31 December
2022
2021
US$'000 US$'000
Bank borrowings net of issue costs 351,477 379,526
Less: Cash and cash equivalents (10,057) (8,271)
Total 341,420 371,255
On 31 March 2021, the Group amended the terms of its loan facility with its
banking syndicate. The amended terms (see below) were significantly different
compared to the original loan. Management determined that the Group's loan
facility was substantially modified and accordingly the old loan facility was
extinguished, and the new facility recognised.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
15 Bank Borrowings (continued)
The principal terms of the outstanding facility as at 30 June 2022 are as
follows:
· The facility's main currency is US$ and is repayable with a LIBOR
plus margin at 3% up to
31 December 2022 at which point margin is based on a ratchet depending on
leverage levels.
· The revolving working capital facility amounts to US$ 45.0 million
(2021: US$ 50.0 million). USD$ 25.0 million (2021: US$ 25.0 million) of the
working capital facility is allocated to performance bonds and guarantees and
US$ 20.0 million (2021: US$ 25 million) is allocated to cash of which US$ 6.5
million was drawn as at 30 June 2022 (31 December 2021 US$ 21.5 million),
leaving US$ 13.5 million available for drawdown (31 December 2021: US$ 3.5
million). The working capital facility expires alongside the main debt
facility in June 2025.
· The facility remains secured by mortgages over its whole fleet, with
a net book value at 30 June 2022 of US$ 552.1 million (31 December 2021: US$
560.9 million) (Note 9). Additionally, gross trade receivables, amounting to
US$ 35.6 million (31 December 2021: US$ 42.1 million) have been assigned as
security against the loans extended by the Group's banking syndicate(Note11).
· The Group has also provided security against gross cash balances,
being cash balances amounting to US$ 10.1 million (31 December 2021: US$ 8.3
million) before the restricted amounts related to visa deposits held with the
Ministry of Labour in the UAE of US$ 39K (2021: US$ 39K) included in trade and
other receivables which have been assigned as security against the loans
extended by the Group's banking syndicate.
· The amended terms contain contingent conditions such that if an
additional equity raise of US $50.0 million does not take place by 31 December
2022, PIK interest would potentially accrue, only if leverage is above 4.0x
(refer to the Glossary for PIK interest rates) and warrants would be due to
the banking syndicate. refer to Note 16 for details of the valuation of the
contract to issue warrants.
The facility is subject to certain financial covenants including; Debt Service
Cover; Interest Cover; and Net Leverage Ratio; which are tested bi-annually in
June and December. As at 30 June 2022 the Group were required to achieve a
net leverage ratio lower than 6.5x, interest cover with a minimum ratio of
2.25x and service cover with a minimum ratio of 1.2x. There are also
additional covenants relating to general and administrative costs, capital
expenditure and Security Cover (loan to value) which are tested annually in
December. In addition, there are restrictions to payment of dividends until
the net leverage ratio falls below 4.0 times. However, even if the net
leverage exceeds 4.0 times it would not be a breach of covenant. All
applicable financial covenants assigned to the Group's debt facility were met
as of 30 June 2022.
Management considers the carrying amount of the Group's bank borrowings
approximates its fair value as at 30 June 2022.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
16 Derivative financial instruments
Embedded derivatives - contract to issue warrants
Under the terms of Group's previous loan facility, the Group was required to
issue warrants to its lenders if GMS had not raised US$ 75.0 million of equity
by no later than 31 December 2020. As this term was not expected to be met, an
embedded derivative liability was recognised for the obligation to issue the
warrants. On 01 January 2021, this had a value of US$ 1.4 million, which had
increased to US$ 1.9 million by March 2021.
In March 2021, the Group amended the terms of its loan facility, as mentioned
in Note 15, and additional time was granted to raise equity before warrants
were required to be issued to its lenders. The previous obligation to issue
warrants to the bank was waived, and a contingent requirement to issue
warrants to banks was introduced. The amended terms required US$ 25.0 million
of equity to be raised by 30 June 2021 otherwise the Group would be in
default, and a further US$ 50.0 million to be raised by 31 December 2022. The
Company was subsequently successful with the requirement to raise the first
tranche of equity (refer Note 13). If the second tranche equity raise does not
take place, by 31 December 2022, there will not be an event of default (unlike
the first tranche equity raise), however, warrants will be issued to lenders.
As the new terms of the loan facility contained separate distinguishable terms
with a contingent requirement to issue warrants to banks, management
determined the debt facility to contain an embedded derivative. The Group was
required to recognise the embedded derivative at fair value. Management
commissioned an independent valuation expert to measure the fair value of the
warrants, which was determined using Monte Carlo simulations. The simulation
considers sensitivity by building models of possible results by substituting a
range of values. This represents a Level 3 fair value measurement under the
IFRS 13 hierarchy. The fair value of the liability as at 30 June 2022 was US$
1.4 million (31 December 2021 US$ 0.7 million). As the derivative is due to be
settled within 12 months, the balance recognised as a current liability as at
30 June 2022.
Under these facilities, the Group is required to raise a further US$ 50
million of equity by
31 December 2022 or issue 87.6 million warrants entitling the banking
syndicate to acquire
134 million shares at a strike/exercise price of 6.0 pence per share for a
total consideration of GBP £8 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.
Interest Rate Swap
The Group entered into an Interest Rate Swap (IRS) on 30 June 2018 to hedge a
notional amount of US$ 50.0 million. The remaining notional amount hedged
under the IRS as at 30 June 2022 was US$ 26.9 million (31 December 2021: US$
30.8million). The IRS hedges the risk of variability in interest payments by
converting a floating rate liability to a fixed rate liability. The fair value
of the IRS as at 30 June 2022 was an asset value of US$ 0.07 million (31
December 2021: liability of US$ 1.1 million). In 2020 cash flows of the
hedging relationship for the IRS were not highly probable and, therefore,
hedge accounting was discontinued from this point. In 2020 cash flows of the
hedging relationship were not highly probable and, therefore, hedge accounting
was discontinued from this point. The remaining balance in the cash flow hedge
reserve relates to the balance to be recycled to the profit and loss following
the discontinuation of the hedge relationship.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
16 Derivative financial instruments (continued)
Interest Rate Swap (continued)
The fair value measurement of the interest rate swap was determined by
independent valuers with reference to quoted market prices, discounted cash
flow models and recognised pricing models as appropriate. They represent
Level 2 fair value measurements under the IFRS 13 hierarchy.
IFRS 13 fair value hierarchy
Apart from the contract to issue warrants, the Group has no other financial
instruments that are classified as Level 3 in the fair value hierarchy 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.
Derivative financial instruments are made up as follows:
Interest rate swap Embedded derivative
Total
US$'000 US$'000 US$'000
At 1 January 2022 (1,076) (717) (1,793)
Net gain on changes in fair value of interest rate swap 777 - 777
Settlement of derivatives 369 - 369
Net loss on changes in fair value of embedded derivative - (667) (667)
At 30 June 2022 70 (1,384) (1,314)
Interest rate swap Embedded derivative
Total
US$'000 US$'000 US$'000
At 1 January 2021 (2,387) (1,449) (3,836)
Net gain on changes in fair value of interest rate swap 278 - 278
Settlement of derivatives 1,033 - 1,033
Derecognition of embedded derivative warrants - 1,890 1,890
Initial recognition of embedded derivative - (926) (926)
Net loss on changes in fair value of embedded derivative - (232) (232)
At 31 December 2021 (1,076) (717) (1,793)
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
17 Notes to the Condensed Consolidated Statement of Cash Flows
Six-month period ended 30 June Year ended
31 December
2022 2021 2021
US$'000 US$'000 US$'000
Profit for the period 13,110 1,994 31,219
Adjustments for:
Depreciation of property and equipment (Note 9) 11,843 11,353 22,816
Amortisation of dry-docking expenditure (Note 10) 2,768 2,563 5,503
Amortisation of right-of-use asset 1,152 1,117 2,411
Reversal of impairment (Note 9) - - (14,959)
Income tax expense (Note 5) 1,471 851 1,707
End of service benefits charge 48 350 678
End of service benefits paid (119) (355) (546)
Movement in ECL provision during the period/year (63) (30) 62
Share based payment credit/(charge) 43 (53) (18)
Finance income (8) (6) (9)
Finance expenses (Note 8) 7,290 7,986 14,463
Other income (66) (20) (28)
Cash flow from operating activities before 37,469 25,750 63,299
movement in working capital
Changes in trade receivables 6,571 (2,804) (17,936)
Changes in prepayments, advances and other receivables
(1,538) 2,719 846
Changes in trade and other payables 142 (3,103) (4,849)
Cash generated from operations 42,644 22,562 41,360
Taxation paid (439) (448) (849)
Net cash generated from operating activities 42,205 22,114 40,511
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
18 Contingent liabilities
At 30 June 2022, the banks acting for Gulf Marine Services FZE, one of the
subsidiaries of the Group, had issued performance bonds amounting to US$ 12.5
million (31 December 2021:
US$ 11.6 million), all of which were counter-indemnified by other subsidiaries
of the Group.
19 Capital commitments
30 June 31 December
2022
2021
US$'000 US$'000
Contractual capital commitments 6,616 6,832
Capital commitments comprise mainly capital expenditure, which has been
contractually agreed with suppliers for future periods for equipment or the
refurbishment of existing vessels.
20 Long term incentive plans
The Group has Long Term Incentive Plans ("LTIPs") which were granted to senior
management, managers and senior offshore officers.
The employment condition attached to the Groups LTIP's is that each eligible
employee of the Company must remain in employment during the three-year
vesting period. For 2019 and 2020 awards, LTIPs were aligned to Company's
share performance. The release of these shares was conditional upon continued
employment and market vesting conditions.
During the period ended 30 June 2022, additional LTIPs awards were granted to
the Chairman and Senior Management. The awards will vest over three years
subject to the same employment conditions described above and performance
conditions being met in 2024 based on defined ranges. There is an underpin
condition such that no awards will vest if the debt leverage in the Group
exceeds 4.0 times EBITDA at 31 December 2022 excluding any issue of equity
during the year.
Equity-settled share-based payments were measured at fair value at the date of
grant. The fair value determined, using the Binomial Probability Model
together with Monte Carlo simulations, at the grant date of equity-settled
share-based payments, is expensed on a straight-line basis over the vesting
period, based on an estimate of the number of shares that will ultimately
vest. The fair value of each award was determined by taking into account the
performance conditions, the term of the award, the share price at grant date,
the expected price volatility of the underlying share and the risk-free
interest rate for the term of the award.
Non-market vesting conditions were taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period was based
on the number of awards that eventually vest. Any market vesting conditions
were factored into the fair value of the share-based payment granted.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
20 Long term incentive plans (continued)
To the extent that share-based payments are granted to employees of the
Group's subsidiaries without charge, the share-based payment is capitalised as
part of the cost of investment in subsidiaries.
The number of share awards granted by the Group during the period is given in
the table below:
30 June 31 December
2022
2021
At the beginning of the period 2,499,714 6,573,229
Granted in the period 9,460,000 -
Cash settled in the period - (1,854,298)
Forfeited in the period (109,296) (2,219,217)
At the end of the period 11,850,418 2,499,714
The weighted average remaining contractual life for the vesting period
outstanding as at 30 June 2022 was 2.49 years (31 December 2021: 0.5 years).
The weighted average fair value of shares granted during the period to 30 June
2022 was US$ 0.057 million (31 December 2021: US$ nil).
LTIP LTIP LTIP
Grant date 14 Jun 2022 29 May 2020 15 Nov 2019
Share price £0.06 £0.09 £0.08
Exercise price £0.00 £0.00 £0.00
Expected volatility 102% 120% 102.79%
Risk-free rate 2.17% 0.01% 0.48%
Expected dividend yield 0.00% 0.00% 0.00%
Vesting period 3 years 3 years 3 years
Award life 3 years 3 years 3 years
The expected share price volatility of Gulf Marine Services PLC shares was
determined taking into account the historical share price movements for a
three-year period up to the grant date (and of each of the companies in the
comparator group). The risk-free return was determined from similarly dated
zero coupon UK government bonds at the time the share awards were granted,
using historical information taken from the Bank of England's records.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
21 Related party transactions
Significant transactions with related parties during the period were as
follows:
30 June
2022
30 June
US$'000
2021
US$'000
Rentals of property from Abdulla Fouad 50 54
Rentals of breathing equipment from Abdulla Fouad 280 241
Catering services for vessel Pepper from National Catering Company Limited WLL
281 -
Abdulla Fouad is a partner and minority shareholder in GMS Saudi Arabia Ltd, a
subsidiary of the Group. Amounts due to Abdulla Fouad as at 30 June 2022 was
US$ 0.4 million (31 December 2021: US 0.1 million). National Catering Company
Limited WLL is an affiliate of a significant shareholder of the Company.
Amounts due to National Catering Company Limited WLL, as at 30 June 2022 was
US$ 0.3 million (31 December 2021: US$ 0.1 million).
22 Events after the reporting period
There were no subsequent events of impact to these Condensed Consolidated
Financial Statements after the reporting period.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2022 (continued)
23 Glossary
Alternative Performance Measure (APMs) - An APM is a financial measure of
historical or future financial performance, financial position, or cash flows,
other than a financial measure defined or specified in the applicable
financial reporting framework.
APMs are non-GAAP measures that are presented to provide readers with
additional financial information that is regularly reviewed by management and
the Directors consider that they provide a useful indicator of underlying
performance. Adjusted results are also an important measure providing useful
information as they form the basis of calculations required for the Group's
covenants. However, this additional information presented is not uniformly
defined by all companies including those in the Group's industry. Accordingly,
it may not be comparable with similarly titled measures and disclosures by
other companies. Additionally, certain information presented is derived from
amounts calculated in accordance with IFRS but is not itself an expressly
permitted GAAP measure. Such measures should not be viewed in isolation or as
an alternative to the equivalent GAAP measure. In response to the Guidelines
on APMs issued by the European Securities and Markets Authority (ESMA), we
have provided additional information on the APMs used by the Group.
Adjusted diluted earnings per share - represents the adjusted earnings
attributable to equity holders of the Company for the period divided by the
weighted average number of ordinary shares in issue during the period,
adjusted for the weighted average effect of share options outstanding during
the period. The adjusted earnings attributable to equity shareholders of the
Company is used for the purpose of basic gain per share adjusted by adding
back impairment charges (deduction of reversal of impairment during the year
2021), and costs to acquire new bank facilities. This measure provides
additional information regarding earnings per share attributable to the
underlying activities of the business. A reconciliation of this measure is
provided in Note 4 and 6.
Adjusted net profit - represents net profit after adding back costs of
renegotiating bank terms. This measure provides additional information in
assessing the Group's total performance that management is more directly able
to influence and, on a basis, comparable from year to year. A reconciliation
of this measure is provided in note 4 of these results.
Average fleet utilisation - represents the percentage of available days in a
relevant period during which the fleet of SESVs is under contract and in
respect of which a customer is paying a day rate for the charter of the SESVs.
Average fleet utilisation is calculated by adding the total contracted days in
the period of each SESV, divided by the total number of days in the period
multiplied by the number of SESVs in the fleet.
Cost of sales excluding depreciation and amortisation- represents cost of
sales excluding depreciation and amortisation. This measure provides
additional information of the Group's cost for operating the vessels. A
reconciliation is shown below:
30 June 30 June 2021
2022
US$'000 US$'000
Statutory cost of sales 39,021 35,007
Less: depreciation and amortisation (15,577) (14,806)
23,444 20,201
EBITDA - represents earnings before interest, tax, depreciation and
amortisation, which represents operating profit after adding back depreciation
and amortisation. This measure provides additional information of the
underlying operating performance of the Group.
A reconciliation of this measure is provided in Note 4.
Margin - revenue less cost of sales before depreciation, amortization and
impairment as identified in Note 4 of the consolidated interim financial
statements.
Net bank debt - represents the total bank borrowings less cash and cash
equivalents. This measure provides additional information of the Group's
financial position.
A reconciliation is shown below:
30 June 31 December
2022
2021
US$'000 US$'000
Statutory bank borrowings 351,477 379,526
Less: cash and cash equivalents (10,057) (8,271)
341,420 371,255
Net cash flow before debt service - the sum of cash generated from operations
and investing activities.
Segment adjusted gross profit - represents gross profit after adding back
depreciation, amortisation and impairment charges or reversal of impairment
charges. This measure provides additional information on the core
profitability of the Group attributable to each reporting segment. A
reconciliation of this measure is provided in Note 3.
Underlying performance - day to day trading performance that management are
directly able to influence in the short term
OTHER DEFINITIONS
Average day rates we calculate the average day rates by dividing total charter hire revenue per
month by total hire days per month throughout the year and then calculating a
monthly average.
Backlog represents firm contracts and extension options held by clients. Backlog
equals (charter day rate x remaining days contracted) + ((estimated average
Persons On Board x daily messing rate) x remaining days contracted)
+contracted remaining unbilled mobilisation and demobilisation fees. Includes
extension options.
Borrowing rate LIBOR plus margin.
Calendar days takes base days at 365 and only excludes periods of time for construction and
delivery time for newly constructed vessels.
Costs capitalised represent qualifying costs that are capitalised as part of a cost of the
vessel rather than being expensed as they meet the recognition criteria of IAS
16 Property, Plant and Equipment.
Day rates rate per day charge to customers per hire of vessel as agreed in the contract.
Demobilisation fee paid for the vessel re-delivery at the end of a contract, in which client
is allowed to offload equipment and personnel.
DEPS/DLPS diluted earnings/losses per share.
Employee retention percentage of staff who continued to be employed during the year (excluding
retirements and redundancies) taken as number of resignations during the
period/ year divided by the total number of employees at the period/year end.
EPC engineering, procurement and construction.
ESG environmental, social and governance.
Finance service the aggregate of
a) Net finance charges for that period; and
b) All scheduled payments of principal and any other schedule payments in the
nature of principal payable by the Group in that period in respect of
financing:
i) Excluding any amounts falling due in that period under any overdraft,
working capital or revolving facility which were available for simultaneous
redrawing under the terms of that facility;
ii) Excluding any amount of PIK that accretes in that period;
iii) Including the amount of the capital element of any amounts payable
under any Finance Lease in respect of that period; and
iv) Adjusted as a result of any voluntary or mandatory prepayment
Debt Service Cover represents the ratio of Adjusted EBITDA to debt service.
GMS core fleet consists of 13 SESVs, with an average age of ten years.
Interest Cover represents the ratio of Adjusted EBITDA to Net finance charges.
IOC Independent Oil Company.
KPIs Key performance indicators.
Lost Time Injuries any workplace injuries sustained by an employee while on the job that prevents
them from being able to perform their job for a period of one or more days.
Lost Time Injury Rate (LTIR) 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.
LIBOR London Interbank Offered Rate.
Mobilisation fee paid for the vessel readiness at the start of a contract, in which client
is allowed to load equipment and personnel.
Net finance charges represents finance charges as defined by the terms of the Group's banking
facility for that period less interest income for that period.
Net leverage ratio represents the ratio of net bank debt to Adjusted EBITDA.
NOC National Oil Company.
OSW Offshore Wind.
PIK Payment In Kind. Under the banking documents dated 31 March 2021, PIK is
calculated at 5.0% per annum on the total term facilities outstanding amount
and reduces to:
a 2.5% per annum when Net Leverage is between 4.0X and 5.0x
b Nil when Net Leverage reduces below 4.0x
PIK stops accruing at the PIK end date which is the earlier of leverage
falling below 4.0X or loans being discharged.
Restricted work day case (RWDC) any work-related injury other than a fatality or lost work day case which
results in a person being unfit for full performance of the regular job on any
day after the occupational injury.
Secured day rates day rates from signed contracts firm plus options held by clients.
Secured utilisation contracted days of firm plus option periods of charter hire from existing
signed contracts.
Security Cover (loan to value) the ratio (expressed as a percentage) of Total Net Bank Debt at that time to
the Market Value of the Secured Vessels.
SESV Self-Elevating Support Vessels.
SG&A spend means that the selling, general and administrative expenses calculated on an
accruals basis should be no more than the SG&A maximum spend for any
relevant period.
Total Recordable Injury Rate (TRIR) calculated on the injury rate per 200,000 man hours and includes all our
onshore and offshore personnel and subcontracted personnel. Offshore personnel
are monitored over a 24-hour period.
Underlying G&A underlying general and administrative (G&A) expenses excluding
depreciation and amortisation, restructuring costs, and exceptional legal
costs.
Utilisation the percentage of calendar days in a relevant period during which an SESV is
under contract and in respect of which a customer is paying a day rate for the
charter of the SESV.
Vessel operating expense Cost of sales before depreciation, amortisation and impairment, refer to Note
4.
Warrants Under the banking documents date 31 March 2021, if Warrants are issued on 1
July 2021 because of the failure to raise US$ 25 million by 30 June 2021, half
of the issued warrants vest on that date. The other half will only vest on 2
January 2023 if there is a failure to raise US$ 50 million. If warrants are
issued on 2 January 2023 because of the failure to raise US$ 50 million all of
the issued warrants vest on the same date. All warrants to expire on 30 June
2025 (maturity date of the facilities).
Cautionary Statement
This announcement includes statements that are forward-looking in nature. All
statements other than statements of historical fact are capable of
interpretation as forward-looking statements. These statements may generally,
but not always, be identified by the use of words such as 'will', 'should',
'could', 'estimate', 'goals', 'outlook', 'probably', 'project', 'risks',
'schedule', 'seek', 'target', 'expects', 'is expected to', 'aims', 'may',
'objective', 'is likely to', 'intends', 'believes', 'anticipates', 'plans',
'we see' or similar expressions. By their nature these forward-looking
statements involve numerous assumptions, risks and uncertainties, both general
and specific, as they relate to events and depend on circumstances that might
occur in the future.
Accordingly, the actual results, operations, performance or achievements of
the Company and its subsidiaries may be materially different from any future
results, operations, performance or achievements expressed or implied by such
forward-looking statements, due to known and unknown risks, uncertainties and
other factors. Neither Gulf Marine Services PLC nor any of its subsidiaries
undertake any obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or other information.
No part of this announcement constitutes, or shall be taken to constitute, an
invitation or inducement to invest the Company or any other entity and must
not be relied upon in any way in connection with any investment decision. All
written and oral forward-looking statements attributable to the Company or to
persons acting on the Company's behalf are expressly qualified in their
entirety by the cautionary statements referred to above.
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