REG - Gulf Marine Services - Interim results
31/08/2023 07:00
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RNS Number : 8638K Gulf Marine Services PLC 31 August 2023
August 31, 2023
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the Group')
Listed on the London Stock Exchange
Announcement of Interim results for the six months ended 30 June 2023
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 2023 (H1 2023).
Overview
H1 2023 H1 2022
US$ m US$ m Change
Revenue 74.3 66.4 +12%
Gross profit 34.8 27.4 +27%
EBITDA(1) 44.3 37.3 +19%
Profit for the period after tax 8.7 13.1 -34%
Net Leverage Ratio(2) 3.75:1 4.56:1 -18%
H1 Financial and Operational Highlights:
· Net leverage ratio on June 30, 2023 at 3.75:1 (31 December 2022:
4.42:1).
· The company achieved revenue of US$ 74.3 million for the first half
of 2023, reflecting an increase of 12% compared to the same period last year
(H1 2022: US$ 66.4 million). The increase in revenue is driven by:
o An increased utilisation for H1 2023 to 93% (H1 2022: 89%) with notable
improvements in K-Class vessels at 95% (H1 2022: 85%).
o An increased H1 2023 average day rates to $30.3k (H1 2022: US$ 27.2k) driven
mainly by our E-Class vessels.
· Gross profit margin improved to 47% (H1 2022: 41%) as cost of sales
and G&A remained relatively flat.
· H1 2023 EBITDA increased 19% to US$ 44.3 million (H1 2022: US$
37.3 million) driven by the increase in revenue.
· Net profit attributable to shareholders for the first half of 2023
amounted to US$ 8.7 million, reflecting a reduction of 34% year-on-year, (H1
2022 US$ 13.1 million), as increase in financing costs of US$ 10.9 million
more than offset the results obtained from operations.
· Basic Earnings Per Share (EPS): The Basic earnings per share for the
period stood at US$ 0.82, as compared to US$ 1.29 in the first half of 2022.
· Net debt(1) lowered by US$ 21.5 million to US$ 294.3 million (31
December 2022: US$ 315.8 million) as the Group continues its focus on
deleveraging.
(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.
2 This represents an Adjusted Performance Measure (APM) as defined in the
Glossary.
Outlook:
· EBITDA guidance for 2023 is projected to be in the range of US$ 77 -
85 million, being USD 2.0 million higher on both the lower and the higher ends
of the previous estimate, supported by an improved forecasted utilisation for
H2.
· Demand in the market remains strong due to a combination of high
market activity and limited vessel availability. As such, The Group
anticipates utilisation levels to improve in the second half of 2023.
· Secured backlog was US$ 301.4 million on 30 June 2023 (30 June 2022:
US$ 163.3 million), which reflects the additional contract awards announced
over the last 12 months.
· Contract awards announced in H1 2023 have a combined total charter
period of 2.4 years (H1 2022: 2.6 years), the Group is currently working on
new potential contracts to improve the backlog.
Mansour Al Alami, Executive Chairman, GMS said:
"We are pleased to forecast an increased EBITDA guidance for the current year,
driven by robust utilization, enhanced rates and a solid performance in the
first half of the year. It is worth noting that these positive prospects
coexist with the risks we face daily, being operational challenges,
inflationary pressures, and the burden of debt service charges, all of which
are being monitored closely. The Group reiterates its commitment to continue
its deleveraging journey."
Alex Aclimandos
Chief Financial Officer
Gulf Marine Services PLC
Enquiries:
Gulf Marine Services PLC
Mansour Al Alami Tel: +44 (0)20 7603 1515
Executive Chairman
Celicourt Communications Tel: +44 (0) 20 7770 6424
Mark Antelme
Philip Dennis
Ali AlQahtani
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 GCC,
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 12% to US$ 74.3 million (H1 2022: US$ 66.4
million), driven by an 11% increase in average day rates to US$ 30.3k/day
(H1 2022: US$ 27.2k/day) and by an increase in overall utilisation to 93% (H1
2022: 89%).
Vessel operating expenses increased to US$ 24.7 million (H1 2022: US$ 23.5
million), mainly driven by increased utilisation during the period. Cost of
sales marginally decreased by US$ 0.1 million to US$ 39.0 million (H1 2022:
US$ 39.1 million), as a reduction in depreciation and amortisation expense to
US$ 14.8 million (H1 2022: US$ 15.5 million) offset increase in operating
expenses.
General and administrative expenses were at US$ 6.1 million (H1 2022: US$ 5.8
million).
We were able to deliver a 19% increase in H1 2023 EBITDA to US$ 44.3 million
(H1 2022: US$ 37.3 million), which was driven by an increase in utilisation
and improved day rates.
Profit after tax during H1 2023 was US$ 8.7 million (H1 202 2: US$ 13.1
million) as the increase in interest expense of US$ 10.9 million more than
offset the increase in EBITDA.
During H1 2023, contract awards were announced by the Group for both E-Class
and K-Class vessels reflecting the continuing demand for our vessels.
Capital structure and liquidity
The net leverage ratio on 30 June 2023 again declined to 3.75 times (31
December 2022: 4.42 times), driven by a reduction in the net debt to US$ 294.3
million (31 December 2022: US$ 315.8 million) combined with improved trailing
twelve months EBITDA. The Group remains dedicated to its deleveraging journey.
As described in the 2022 Annual Report, as the Group elected not to raise US$
50.0 million of equity by the end of 2022, it issued on 2 January 2023 87.6
million warrants giving potential rights to 137 million shares if exercised,
as per the terms of its agreement with the Lenders. The strike price was
determined by an external Calculation Agent to be at 5.75 pence per share.
Outlook
The Group anticipates continued strong demand for its vessels in the second
half of the year. Secured backlog increased to US$ 301.4 million on 30 June
2023 (30 June 2022: US$ 163.3 million).
We are now projecting a higher EBITDA than previously indicated and we are
changing the EBITDA guidance for 2023 to be in the range of US$ 77 - 85
million.
Mansour Al Alami
Executive Chairman
30 August 2023
Financial Review
H1 2023 H1 2022
US$ m US$ m Change
Revenue 74.3 66.4 +12%
Gross profit 34.8 27.4 +27%
EBITDA(1) 44.3 37.3 +19%
Profit for the period after tax 8.7 13.1 -34%
Net Leverage Ratio(2) 3.75 4.56 -18%
Summary
Revenue increased 12% to US$ 74.3 million, (H1 2022: US$ 66.4 million), driven
by an increase in both utilisation and average day rates.
EBITDA increased by 19% to US$ 44.3 million, (H1 2022: US$ 37.3 million), with
the EBITDA margin increasing to 60% (H1 2022: 56%) driven by the increase in
utilisation and day rates.
Pressure on Net profit remained high in H1 2023. Despite a 19% growth in
EBITDA, net profit was down 34% to US$ 8.7 million (H1 2022: US$ 13.1
million), attributable to increase in finance expenses. Interest expense
increased firstly due to an increase in LIBOR rates on our bank loan, secondly
due to PIK interest costs that was an obligation to our Lenders due to the net
leverage ratio exceeding 4.0 times as at 31 December 2022, and also due to an
increase in margin rate on the loan from 3% to 4% effective from the first
quarter of 2023. As of the second quarter of 2023, PIK ceased to accrue.
Net debt(1) was reduced by US$ 21.5 million to US$ 294.3 million (31 December
2022: US$ 315.8 million) as the Group continues its journey of deleveraging.
Cash generated from operating activities of US$ 42.1 million remained almost
flat versus the same period a year ago (H1 2022: US$ 42.2 million). Net cash
outflows from financing activities saw an increase of 27% to US$ 46.7 million
(H1 2022: US$ 36.7 million) due to higher interest paid on borrowings, higher
quarterly repayment of the loan, along with prepayments made towards the bank
loan.
(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
2 This represents an Adjusted Performance Measure (APM) as defined in the
Glossary
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$'000)
Vessel Class
H1 2023 H1 2022 H1 2023 H1 2022
E-Class vessels 28,813 26,751 19,850 17,355
S-Class vessels 17,691 17,037 12,407 11,890
K-Class vessels 27,781 22,609 17,305 13,708
Total revenue 74,285 66,397
* Before depreciation and amortization
Revenue in H1 2023 increased by 12% to US$ 74.3 million (H1 2022: US$ 66.4
million) following an increase in overall utilisation to 93% (H1 2022: 89%).
There was a 22.8% increase in the revenue generated from K-Class vessels
achieving 95% utilisation in the period (H1 2022: 85%), which was due to
downtime of certain vessels in H1 2022 for contracts that went back-on hire in
the second half of 2022. Benefiting from improved day rates, revenue from
S-Class increased 4% despite S-Class utilisation marginally decreasing to 96%
(H1 2022: 99%), due to off-hire time for scheduled maintenance in H1 2023.
Also benefiting from improved day rates, revenue from E-Class increased 8%
despite utilisation remaining unchanged at 87% (H1 2022: 87%).
Average charter day rates also saw an increase by 11% in the period to US$
30.3k (H1 2022: US$ 27.2k). This increase is mainly attributable to a 22%
increase in our E-Class average day rate from H1 2022, with 7% and 5%
increases in average day rates for our K-Class and S-Class vessels
respectively from H1 2022.
Cost of sales and general and administrative expenses
Cost of sales marginally decreased by US$ 0.1 million to US$ 39.0 million (H1
2022: US$ 39.1 million), of which operating expenses comprises US $24.7
million (H1 2022: US$ 23.5 million) which reflects higher utilisation levels
in H1 2023. This was mostly offset by the other component of cost of sales
being a reduction in depreciation and amortisation expense to US$ 14.8 million
(H1 2022: US$ 15.6 million).
Included in operating expenses is an expense provision for expected credit
losses of US$ 0.5 million (H1 2022: credit US$ 0.1 million) for some of our
GCC based customers.
General and Administration expenses remained steady at US$ 6.1 million (H1
2022: US$ 5.8 million) reflecting the Group's continuous aim to manage its
costs.
Other costs
Finance expenses in the period were US$ 18.2 million (H1 2022: US$ 7.3
million). Interest costs on borrowings increased to US$ 16.5 million (H1 2022
US$ 6.8 million), mainly as a result of the increase in LIBOR interest rate
from the second half of 2022 to date, PIK interest costs of US$ 2.0 million,
and an increase in margin rate on the loan from 3% to 4% effective from the
first quarter of 2023. Moving forward, our margin rate is lowered to 3.1% and
PIK will not accrue. Finance expenses in the comparative period were reduced
by a gain of US$ 1.1 million on changes in fair value of our interest rate
swap arrangement on our loan.
A net foreign exchange loss of US$ 0.6 million in H1 2023 (H1 2022: gain of
US$ 0.2 million) arose from unfavorable movements in exchange rates of the
Pound Sterling against the US Dollar.
Tax expense decreased to US$ 1.3 million (H1 2022: US$ 1.5 million), of which
US$ 0.1 million decrease is attributable to a lower withholding tax charge and
US$ 0.1 million reduction is attributable to a decrease in activity in taxable
jurisdictions.
Cash flow and liquidity
The Group's net cash generated from operating activities remained steady at
US$ 42.1 million (H1 2022: US$ 42.2 million). The net cash outflow from
investing activities for H1 2023 decreased to US$ 2.6 million
(H1 2022: US$ 3.7 million).
The Group's net cash outflow from financing activities during the period
increased to US$ 46.7 million
(H1 2022: US$ 36.7 million). The Group made debt repayments of US$ 28.6
million (H1 2022: US$ 28.0 million). Interest on bank borrowings during H1
2023 amounted to US$ 16.3 million (H1 2022: US$ 6.9 million), which included
US$ 2.0 million for PIK interest. The increase in interest on bank borrowings
was due to the increase in LIBOR interest rate compared to the prior period as
well as the increase in term margin.
Balance sheet
Total current assets at 30 June 2023 were US$ 52.7 million (31 December 2022:
US$ 53.6 million). Trade receivables increased in line with increase in
revenue and stood at US$ 37.6m (31 December 2022: US$ 33.2 million),
emphasizing our continuing efforts on cash collection. Trade receivables are
net of the recognition of a charge during 2022 of US$ 1.9 million for the
bankruptcy of a client. The Group has reassessed the position of the client
which remains the same as of the prior year end. Prepayments have increased to
US$ 5.4m (31 December 2022: US$ 3.1 million). The aggregate increase in trade
receivables and prepayments of US$ 6.7 million was offset by the decrease of
cash and cash equivalents of US$ 7.2 million.
Total current liabilities increased to US$ 88.7 million (31 December 2022: US$
69.3 million) partly due to an increase in trade payables, an increase in
accrued expenses and deferred revenue. As per our contractual obligation
with our Lenders repayment of our bank borrowings due within one year
increased by US$ 10.0 million. Further, the Group's derivative financial
instrument was revalued to US$ 3.9 million (31 December 2022: US$ 3.2
million). While the current assets are lower than current liabilities, the
group expects to honour all its liabilities as they fall due and the accounts
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.
Total non-current assets as at 30 June 2023 were US$ 596.2 million (31
December 2022: US$ 605.3 million). The decline is due to US$ 15.5 million
depreciation and amortisation charges on non-current assets (year ended 31
December 2022: US$ 31.9 million). This was offset by capital expenditure of
US$ 5.4 million comprising expenses for equipment upgrades for the vessels and
dry-docking expenditure. Total non-current liabilities reduced to US$ 263.3
million (31 December 2022: US$ 301.9 million) primarily due to the repayment
of US$ 28.6 million (H1 2022: US$ 28.0 million) towards bank borrowings and
US$ 10.0 million (H1 2022: US$ nil) reclassified to current liabilities as per
our contractual obligation with our Lenders for repayment of our bank
borrowings.
As of June 30, 2023, net leverage ratio reached 3.75 times (31 December 2022:
4.42 times).
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 30 June 2023 amounting to
US$ 36.0 million
(31 December 2022: US$ 15.8 million). The Group is aware that the increase in
debt servicing will continue to be a hurdle, closely monitors its liquidity
and expects to meet its short-term obligations. During the period, the Group
made a loan prepayment of US$ 23.2 million which reduced the current assets
(cash) and the non-current liabilities (bank loan) at the period end, leading
to a reduction in the current ratio. The loan prepayment was made after taking
into account the forecast net cashflows in the foreseeable future.
The Group's forecasts, having taken into consideration reasonable risks and
downsides, indicate that its current bank facilities along with the secured
backlog and a strong pipeline of near-term opportunities for additional work
will provide sufficient liquidity for its requirements for the foreseeable
future and accordingly these condensed consolidated financial statements for
the Group for the current period 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 National Catering
Company Limited WLL, an affiliate of a significant shareholder of the Company,
for Catering services totaling US$ 0.4 million (H1 2022: US$ 0.3 million) and
with Sigma Enterprise Company LLC, an affiliate of a significant shareholder
of the Company, for the provision of equipment and overhaul services totaling
US$ 0.2 million (H1 2022: 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 2023. The
Directors do not consider that the principal risks and uncertainties have
materially changed since the publication of the Annual Report for the year
ended 31 December 2022. A detailed explanation of the risks summarised
below, and how the Group seeks to mitigate the risks, can be found on pages 26
to 30 of the 2022 Annual Report which is available at www.gmsplc.com
(http://www.gmsplc.com) .
· Utilisation and Local content requirement - The Group relies on a
limited number of clients that may expose it to losses if these relationships
breakdown. GCC region NOCs have 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 operating cash flows and net
profitability.
· Inability to secure an appropriate capital structure - The Group
is subject to increasing cost of debt due to increase in interest rates global
benchmark which will impact the liquidity in the business and the ability to
deleverage. This can impact the share price.
· 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 situations, such as sudden equipment failure, inability to fulfil client
requirements and unpredictable weather could have a negative impact on the
business.
Risks and uncertainties (continued)
· Liquidity and covenant compliance - The business is exposed to
short-term liquidity management risks due to potential increases in interest
rates and inflation, which could impact the debt service obligations and the
Group's bank facilities' covenants. The increase in interest charges will lead
to reduced liquidity in the business as more cash will be required to meet our
banking requirements. Reduced liquidity could impact future operations and
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. All bank covenants are closely monitored as the headroom
remains narrow, which is due to the Group's performance being very sensitive
to many internal and external factors such as utilisation, operational
downtime, interest rates and other variables.
· 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 in terms of recruitment, retention and deployment of personnel.
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. Economic conditions such as interest rate and inflation
increases will also have an impact on the Groups' liquidity and profitability.
· 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. Non-compliance with
laws and regulations could be detrimental to stakeholder relations leading to
reputational and financial loss.
· 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 2023.
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
30 August 2023
30
August 2023
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 2023 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 2023 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 1, the annual financial statements of the Entity for the
year ended 31 December 2022 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
30 August 2023
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 2023
Six months period ended 30 June Year ended
31 December
2023 2022 2022
US$'000 US$'000 US$'000
Notes (Unaudited) (Unaudited) (Audited)
Revenue 3,7 74,285 66,397 133,157
Cost of sales (38,954) (39,084) (78,587)
Impairment loss - - (13,192)
Reversal of impairment losses 9 - - 20,980
Expected credit losses - net of recoveries (548) 63 (1,824)
Gross profit 34,783 27,376 60,534
General and administrative expenses (6,098) (5,819) (13,212)
Operating profit 28,685 21,557 47,322
Finance income 74 8 11
Finance expenses 8 (18,187) (7,290) (20,137)
Foreign exchange gain/(loss), net (617) 240 (138)
Other income 12 66 68
Profit for the period/year before taxation 9,967 14,581 27,126
Taxation charge for the period/year 5 (1,256) (1,471) (1,724)
Profit for the period/year 8,711 13,110 25,402
Other comprehensive income/(expense) - items that may be reclassified to
profit or loss:
Net hedging gain reclassified to the profit or loss 279 140 279
Exchange differences on translating foreign operations 305 (1,031) (799)
Total comprehensive income for the year 9,295 12,219 24,882
Profit attributable to:
Owners of the Company 8,336 13,097 25,326
Non-controlling interests 375 13 76
8,711 13,110 25,402
Total comprehensive income attributable to:
Owners of the Company 8,920 12,206 24,806
Non-controlling interests 375 13 76
9,295 12,219 24,882
Earnings per share
Basic (cents per share) 6 0.82 1.29 2.49
Diluted (cents per share) 6 0.82 1.28 2.47
All results are derived from continuing operations in each period/year. There
are no discontinued operations in either period/year.
The accompanying notes form an integral part of these condensed consolidated
financial statements.
GULF MARINE SERVICES PLC
Condensed Consolidated Balance Sheet
as at 30 June 2023
30 June 31 December
2023 2022
US$'000 US$'000
Notes (Unaudited) (Audited)
ASSETS
Non-current assets
Property and equipment 9 582,970 592,955
Dry docking expenditure 10 10,089 8,931
Right-of-use assets 3,165 3,371
Total non-current assets 596,224 605,257
Current assets
Trade receivables 11 37,557 33,179
Prepayments, advances and other receivables 12 10,033 7,722
Derivative financial instruments 16 - 386
Cash and cash equivalents 5,119 12,275
Total current assets 52,709 53,562
Total assets 648,933 658,819
EQUITY AND LIABILITIES
Capital and reserves
Share capital - Ordinary 13 30,117 30,117
Capital redemption reserve 14 46,445 46,445
Share premium account 99,105 99,105
Group restructuring reserve (49,710) (49,710)
Restricted reserve 272 272
Share based payment reserve - 3,632
Capital contribution 9,177 9,177
Cash flow hedge reserve - (279)
Translation reserve (2,580) (2,885)
Retained earnings 161,694 149,712
Attributable to the Owners of the Company 294,520 285,586
Non-controlling interests 2,363 1,988
Total equity 296,883 287,574
Current liabilities
Trade and other payables 36,632 27,979
Current tax liability 6,625 6,321
Bank borrowings - scheduled repayments within one year 15 40,000 30,000
Lease liabilities 1,600 1,845
Derivative financial instruments 16 3,850 3,198
Total current liabilities 88,707 69,343
Non-current liabilities
Provision for employees' end of service benefits 2,303 2,140
Bank borrowings - scheduled repayments more than one year 15 259,434 298,085
Lease liabilities 1,606 1,677
Total non-current liabilities 263,343 301,902
Total liabilities 352,050 371,245
Total equity and liabilities 648,933 658,819
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 2023 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 2023 30,117 - 46,445 99,105 (49,710) 272 3,632 9,177 (279) (2,885) 149,712 285,586 1,988 287,574
Profit for the period - - - - - - - - - - 8,336 8,336 375 8,711
Other comprehensive income for the period
Net hedging gain on interest hedges reclassified to the profit or loss
- - - - - - - - 279 - - 279 - 279
Exchange differences on foreign operations
- - - - - - - - - 305 - 305 - 305
Total comprehensive income for the period
- - - - - - - - 279 305 8,336 8,920 375 9,295
Transactions with owners of the Company
Share based payment charge - - - - - - 14 - - - 14 - 14
Transfer of share option reserve - - - - - - (3,646) - - - 3,646 - - -
Total transactions with owners of the Company - - - - - - (3,632) - - - 3,646 14 - 14
As at 30 June 2023 30,117 - 46,445 99,105 (49,710) 272 - 9,177 - (2,580) 161,694 294,520 2,363 296,883
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
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 2023
Six-month period ended 30 June Year ended
31 December
2023 2022 2022
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
Net cash generated from operating activities (Note 17) 42,069 42,205 82,565
Investing activities
Payments for additions of property and equipment (2,127) (1,885) (3,345)
Dry docking expenditure paid (521) (1,831) (2,970)
Interest received 74 8 11
Net cash used in investing activities (2,574) (3,708) (6,304)
Financing activities
Repayment of bank borrowings (28,601) (28,049) (51,445)
Principal elements of lease payments (1,828) (1,174) (2,524)
Cash settlement of LTIPs - - (61)
Payment of costs associated with borrowings (148) (148) (148)
Settlement of derivatives (Note 16) 327 (369) (384)
Interest paid on bank borrowings (16,264) (6,920) (17,525)
Interest paid on leases (137) (51) (170)
Net cash used in financing activities (46,651) (36,711) (72,257)
Net (decrease) / increase in cash and cash equivalents 4,004
(7,156) 1,786
Cash and cash equivalents at the beginning of the period/year 12,275 8,271 8,271
Cash and cash equivalents at the end of the period/year 5,119 10,057 12,275
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 2023
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
Gulf Cooperation Council (GCC) 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 GCC and other
regions.
The condensed consolidated financial statements of the Group for the six-month
period ended
30 June 2023 were authorised for issue on 30 August 2023. 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 consolidated financial statements for the year
ended 31 December 2022, which were prepared in accordance with UK adopted
International Accounting Standards in conformity with requirements of the
Companies Act 2006. Those consolidated financial statements were approved by
the Board of Directors on 23 April 2023. The report of the auditor on those
consolidated financial statements did not contain any statement under section
498(2) or 498(3) of the Companies Act 2006. A copy of the statutory
consolidated financial statements for year ended 31 December 2022 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 2022 as disclosed in the Annual Report, except for the
adoption of new standards and interpretations effective as of 01 January 2023,
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 2023 (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 2022. In addition, results for the
six-month period ended 30 June 2023 are not necessarily indicative of the
results that may be expected for the financial year ending 31 December 2023.
The condensed consolidated statement of comprehensive income for the six-month
period ended 30 June 2023 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 2023 amounting
to US$ 36.0 million
(31 December 2022: US$ 15.8 million). The Group closely monitors its liquidity
and is expected to meet its short-term obligations. During the period, the
Group made a loan prepayment of
US$ 23.2 million. The loan prepayment was made after taking into account the
forecast cashflows in the second half of 2023.
The Group has US$ 5.1 million of available resources comprising cash and cash
equivalents at the reporting date and it has an available undrawn working
capital facility of US$ 15.0 million
(31 December 2022: US$ 20.0 million) as at the at the reporting date. During
the period, the working capital facility was reduced by US$ 5 million. The
working capital facility expires alongside the main debt facility in June 2025
(refer Note 15).
The Group has been successful in achieving a drop in net leverage ratio to
below 4.0 and the PIK has stopped to accrue as of the second quarter of 2023.
Consequently, going forward, the cost of bank borrowings will witness a
reduction of 340 basis points. The interest cost savings and improved
profitability resulting from the lower interest expenses will positively
impact the Group's financial position. Further, with enhanced cash flow and
debt servicing capability, the Group can meet its financial obligations more
efficiently, reducing the risk of liquidity constraints.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
2 Significant accounting policies (continued)
Going concern (continued)
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.
The Group's forecasts, having taken into consideration reasonable risks and
downsides, indicate that its current bank facilities along with the secured
backlog and a strong pipeline of near-term opportunities for additional work
will provide sufficient liquidity for its requirements for the foreseeable
future and accordingly these condensed consolidated financial statements for
the Group for the current period have been prepared on a going concern basis.
New and amended standards adopted by the Group
The following new and revised IFRSs have been adopted in these condensed
consolidated financial statements.
· Classification of liabilities as current or non-current
(Amendments to IAS 1), effective for annual periods beginning on or after 1
January 2023.
· IFRS 17 Insurance Contracts, effective for annual periods
beginning on or after 1 January 2023.
· Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 Making Materiality Judgements - Disclosure of Accounting
Policies, effective for annual periods beginning on or after 1 January 2023.
· Amendments to IAS 8 Accounting Policies Changes in Accounting
Estimates and Errors-Definition of Accounting Estimates, effective for annual
periods beginning on or after 1 January 2023.
· Amendments to IAS 12 Income Taxes - Deferred Tax related to
Assets and Liabilities arising from a Single Transaction, effective for annual
periods beginning on or after 1 January 2023.
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 2023 will be provided in the Group's annual financial
statements for the year ending 31 December 2023.
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:
· Amendments to IAS 1 Presentation of Financial Statements -
Classification of Liabilities as Current or Non-current, , effective for
annual periods beginning on or after 1 January 2024.
· Amendments to IFRS 10 Consolidated Financial Statements and IAS
28 Investments in Associates and Joint Ventures - Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture
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 2023 (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*
6 months ended 30 June 31 December 6 months ended 30 June 31 December
2023 2022 2022 2023 2022 2022
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
K-Class vessels 27,781 22,609 48,036 17,305 13,708 27,827
S-Class vessels 17,691 17,037 51,135 12,407 11,890 23,899
E-Class vessels 28,813 26,751 33,986 19,850 17,355 30,200
_______ _______ _______
Total revenue 74,285 66,397 133,157
_______ _______ _______
Less:
Depreciation charged to cost of sales (12,032) (11,787) (23,567)
Amortisation charged to cost of sales (2,747) (3,790) (5,613)
Impairment loss - - (13,192)
Reversal of impairment (refer Note 9) - - 20,980
_______ _______ _______
Gross profit 34,783 27,376 60,534
General and administrative expenses (6,098) (5,819) (13,212)
Finance income 74 8 11
Finance expense (refer Note 8) (18,187) (7,290) (20,137)
Foreign exchange (loss)/gain, net (617) 240 (138)
Other income 12 66 68
_______ _______ _______
Profit before taxation 9,967 14,581 27,126
*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 2023 (continued)
4 Presentation of non-GAAP results
The following table provides a reconciliation between the statutory and
non-statutory financial results:
Six months ended 30 June
2023 2022
US$'000 US$'000
Revenue 74,285 66,397
Cost of sales
- Cost of sales before depreciation, amortisation and impairment (24,723) (23,444)
Gross profit before depreciation, amortization & impairment 49,562 42,953
-Depreciation and amortisation (14,779) (15,577)
Gross profit 34,783 27,376
General and administrative
-Depreciation and amortisation (801) (186)
-Other administrative costs (5,297) (5,633)
Operating profit 28,685 21,557
Finance income 74 8
Finance expense (18,187) (7,290)
Other income 12 66
Foreign exchange (loss)/gain, net
(617) 240
Profit before taxation 9,967 14,581
Taxation charge (1,256) (1,471)
Net profit after tax 8,711 13,110
Profit attributable to
Owners of the Company 8,336 13,097
Non-controlling interests 375 13
Earnings per share (Basic) 0.82 1.29
Supplementary non-statutory information
Operating profit 28,685 21,557
Add: Depreciation and amortisation charges
15,580 15,763
EBITDA(1) 44,265 37,320
(1)Please see Glossary for definition.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (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 12.6% for the period ended
June 2023 (Six months ended June 2022: 14.8%).
The current tax charge of US$ 1.3 million (six-month period ended June 2022:
US$ 1.5 million) included withholding tax amounting to US$ 1 million
(six-month period ended June 2022: US$ 0.9 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 their 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. On that basis, the Directors have not made a provision for the
current or any future potential assessments of a similar nature.
On 9 December 2022, the UAE Ministry of Finance released the Federal
Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (the
Law) to enact a Federal corporate tax (CT) regime in the UAE. The CT regime
will become effective for accounting periods beginning on or after 1 June
2023.
The Cabinet of Ministers Decision No. 116/2022 effective from 2023, specifies
the threshold of income over which the 9% tax rate would apply and
accordingly, the Law is now considered to be substantively enacted. A rate of
9% will apply to taxable income exceeding AED 375,000, a rate of 0% will apply
to taxable income not exceeding AED 375,000 and a rate of 0% on qualifying
income of free zone entities.
GMS has considered deferred tax implications in the preparation of these
condensed consolidated financial statements in respect of property, plant 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 amortization of property, plant and equipment, that would
result in such a timing difference.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
6 Earnings per share
6 months ended 30 June 6 months ended 30 June Year ended
31 December
2023 2022 2022
Earnings for the purpose of calculating the basic and diluted earnings per 8,336 13,097 25,326
share being profit for the period attributable to Owners of the Company
(US$'000)
Earnings for the purpose of calculating the adjusted basic and diluted profit 8,336 13,097 17,538
per share (US$'000) (Note 4)
Weighted average number of shares ('000) 1,016,415 1,016,415 1,016,415
Weighted average diluted number of shares ('000) 1,016,415 1,019,646 1,024,124
Basic earnings per share (cents) 0.82 1.29 2.49
Diluted earnings per share (cents) 0.82 1.28 2.47
Adjusted earnings per share (cents) 0.82 1.29 1.73
Adjusted diluted earnings per share (cents) 0.82 1.28 1.71
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.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
6 Earnings per share (continued)
The following table shows a reconciliation between basic and diluted average
number of shares:
30 June 30 June 2022 31 December 2022
2023 000's 000's
000's
Weighted average basic number of shares in issue 1,016,415 1,016,415 1,016,415
Weighted average effect of LTIP's - 3,231 7,709
Weighted average diluted number of shares in issue 1,016,415 1,019,646 1,024,124
The warrants are excluded from the calculation due to their anti-dilutive
nature, which stems from the fact that the Group's average share price over
the six-month period has remained lower than the warrants' exercise price.
7 Revenue
30 June 30 June
2023
2022
US$'000 US$'000
Charter hire 36,759 34,433
Lease income 28,305 22,492
Messing and accommodation 4,640 6,705
Maintenance service 2,709 1,677
Mobilisation and demobilization 820 670
Sundry income 1,052 420
74,285 66,397
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
8 Finance expenses
30 June 30 June
2023
2022
US$'000 US$'000
Interest on bank borrowings 16,493 6,796
Interest on finance leases 137 51
Other finance expenses 567 413
Net loss on changes in fair value warrants (Note 16) 652 667
Loss on derivatives reclassified through profit and loss 279 140
Net (loss) / gain on changes in fair value of interest rate swap (Note 16)
59 (777)
18,187 7,290
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
9 Property and equipment
Vessels Vessel spares, fitting and other equipment Others Capital work-in-progress Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance as at 1 January 2023 898,200 60,234 2,250 6,766 967,450
Additions - - - 2,117 2,117
Balance as at 30 June 2023 898,200 60,234 2,250 8,883 969,567
Accumulated Depreciation and impairment
Balance at 1 January 2023 348,515 21,219 1,916 2,845 374,495
Depreciation expense 10,450 1,579 73 - 12,102
Balance as at 30 June 2023 358,965 22,798 1,989 2,845 386,597
Net Book Value as at 30 June 2023 539,235 37,436 261 6,038 582,970
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
9 Property and equipment (continued)
Vessels Vessel spares, fitting and other equipment Others Capital work-in-progress Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance as at 1 January 2022 896,871 60,234 1,967 5,042 964,114
Additions - - - 3,336 3,336
Transfers 1,329 - 283 (1,612) -
Balance as at 31 December 2022 898,200 60,234 2,250 6,766 967,450
Accumulated Depreciation and impairment
Balance at 1 January 2022 335,938 18,018 1,787 2,845 358,588
Depreciation expense 20,365 3,201 129 - 23,695
Impairment charge 13,192 - - - 13,192
Reversal of impairment (20,980) - - - (20,980)
Balance as at 31 December 2022 348,515 21,219 1,916 2,845 374,495
Net Book Value as at 31 December 2022 549,685 39,015 334 3,921 592,955
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
10 Dry docking expenditure
30 June 31 December
2023
2022
US$'000 US$'000
At 1 January 8,931 8,799
Expenditure incurred during the period/year 3,296 5,745
Amortised during the period/year (2,138) (5,613)
10,089 8,931
11 Trade receivables
30 June 31 December
2023
2022
US$'000 US$'000
Trade receivables 40,124 35,198
Less: Allowances for bad and doubtful debt provision (2,452) (1,921)
Less: Allowance for expected credit losses (115) (98)
Net trade receivables 37,557 33,179
12 Prepayments, advances and other receivables
30 June 31 December
2023
2022
US$'000 US$'000
Prepayments 5,353 3,137
Advances to suppliers 2,944 3,197
Accrued revenue 1,651 1,303
Deposits 85 85
10,033 7,722
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
13 Share capital
Ordinary shares at £0.02 per share
Number of ordinary shares
('000) US$'000
At 1 January 2023 1,016,415 30,117
As at 30 June 2023 1,016,415 30,117
Number of ordinary shares
('000) US$'000
At 1 January 2022 1,016,415 30,117
As at 30 June 2022 1,016,415 30,117
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$'000
Number of ordinary shares
('000) US$'000
At 1 January 2022 350,488 46,445
Buyback and cancellation of deferred shares (350,488) (46,445)
At 30 June 2022 and 2023 - -
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (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 $46.4 million was made from Share capital - Deferred to a
Capital redemption reserve (refer Note 14).
14 Capital redemption reserve
The capital redemption reserve with a value of US$ 46.4 million 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.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
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
2023
2022
US$'000 US$'000
Term loans 299,434 328,085
Working capital facility* - -
299,434 328,085
*The revolving working capital facility amounts to US$ 40.0 million (31
December 2022: US$ 45.0 million). US$ 25.0 million (31 December 2022: US$ 25.0
million) of the working capital facility is allocated to performance bonds and
guarantees and US$ 15.0 million (31 December 2022: US$ 20 million) is
allocated to cash which was repaid in full during 2022, leaving US$ 15.0
million available for drawdown (31 December 2022: US$ 20.0 million). The
working capital facility expires alongside the main debt facility in June
2025.
Bank borrowings are split between hedged and unhedged amounts as follows:
30 June 31 December
2023
2022
US$'000 US$'000
Economically hedged bank borrowings - 23,077
Unhedged bank borrowings 299,434 305,008
299,434 328,085
Bank borrowings are presented in the condensed consolidated balance sheet as
follows:
30 June 31 December
2023
2022
US$'000 US$'000
Non-current
Bank borrowings 259,434 298,085
Current
Bank borrowings - scheduled repayments within one year 40,000 30,000
299,434 328,085
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
15 Bank Borrowings (continued)
Net debt as at the end of the period/year was as follows:
30 June 31 December
2023
2022
US$'000 US$'000
Bank borrowings net of issue costs 299,434 328,085
Less: Cash and cash equivalents (5,119) (12,275)
Total 294,315 315,810
The principal terms of the outstanding facility as at 30 June 2023 are as
follows:
· The facility's main currency is US$ and is repayable with three
months LIBOR plus a margin based on a ratchet depending on leverage levels.
· As of the second quarter of 2023, the Group has achieved a
reduction in the net leverage ratio to below 4.0, and PIK is no longer
accrued. Moving forward, the margin rate on the loan has been decreased to
from 4% to 3.1%.
· Following the cessation of the LIBOR on 30 June 2023, the
reference rate in the Common Terms Agreement will be the Secured Overnight
Financing Rate (SOFR) as the new benchmark rate. While the decision has been
primarily agreed upon with the banks, the formal documentation is still
underway.
· The facility remains secured by mortgages over its whole fleet
with a net book value at
30 June 2023 of US$ 539.2 million (31 December 2022: US$ 549.7 million) (Note
5). Additionally, gross trade receivables, amounting to US$ 40.1 million (31
December 2022: US$ 35.2 million) have been assigned as security against the
loans extended by the Group's banking syndicate.
· The Group has also provided security against gross cash balances,
being cash balances amounting to US$ 5.2 million (31 December 2022: US$ 12.3
million) before the restricted amounts related to visa deposits held with the
Ministry of Labour in the UAE, which are included in other receivables. These
have been assigned as security against the loans extended by the Group's
banking syndicate.
· As an equity raise of US $50.0 million did not take place by 31
December 2022, 87.6 million warrants were issued on 2 January 2023, giving
right to 137,075,773 million shares at a strike price of 5.75 pence per share.
The facility is subject to certain financial covenants including; Debt Service
Cover; Interest Cover; and Net Leverage Ratio; which are tested bi-annually in
June and December. As at 30 June 2023 the Group were required to achieve a
net leverage ratio lower than 5.4x, interest cover with
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
15 Bank Borrowings (continued)
a minimum ratio of 2.5x and service cover with a minimum ratio of 1.2x. All
applicable financial covenants assigned to the Group's debt facility were met
as of 30 June 2023.
Management considers the carrying amount of the Group's bank borrowings
approximates its fair value as at 30 June 2023.
The Group is exposed to cash flow interest rate risk on its bank borrowings
which are subject to floating interest rates. The sensitivity analyses below
have been determined based on the exposure to interest rates for
non-derivative instrument at the end of the reporting period. For floating
rate liabilities, the analysis is prepared assuming the amount of liability
outstanding at the end of the reporting period was outstanding for the whole
period.
If interest rates had been 100 basis points higher/lower and all other
variables were held constant, the profit for the period ended 30 June 2023
would decrease/increase by US$ 1.5 million. This is mainly attributable to the
Group's exposure to interest rates on its variable rate borrowings.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
16 Derivative financial instruments
Warrants
Under the terms of the Group's loan facility, the Group was required to issue
warrants to its 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 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.
Management commissioned an independent valuation expert to measure the fair
value of the warrants, which was determined using Monte Carlo statistical
method. 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 derivative as at 30 June 2023 was US$ 3.8 million (31 December 2022 US$
3.2 million). A 10% change in share price will increase or decrease the
valuation by US$ 0.4 million.
Interest Rate Swap
The Group had an Interest Rate Swap (IRS) arrangement, originally in place, to
hedge a notional amount of US$ 50.0 million. The remaining notional amount
hedged under the IRS as at 30 June 2023 was US$ nil (31 December 2022: US$
23.1 million). The IRS hedges the risk of variability in interest payments by
converting a floating rate liability to a fixed rate liability. As the IRS
arrangement was closed before the period end, the fair value of the IRS as at
30 June 2023 was US$ nil (31 December 2022: asset value of US$ 0.4 million).
In 2020 cash flows of the hedging relationship for the IRS were not highly
probable and, therefore, hedge accounting was discontinued from that point.
Historically, 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 represented Level 2 fair value measurements under the IFRS 13 hierarchy.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
16 Derivative financial instruments (continued)
Interest Rate Swap (continued)
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
Warrants Total
US$'000 US$'000 US$'000
At 1 January 2023 386 (3,198) (2,812)
Net gain on changes in fair value of interest rate swap (59) - (59)
Final settlement of derivatives (327) - (327)
Net loss on changes in fair value of warrants - (652) (652)
At 30 June 2023 - (3,850) (3,850)
Interest rate swap
Warrants Total
US$'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 1,078 -
1,078
Settlement of derivatives 384 - 384
Net loss on changes in fair value of warrants - (2,481) (2,481)
At 31 December 2022 386 (3,198) (2,812)
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
17 Notes to the Condensed Consolidated Statement of Cash Flows
Six-month period ended 30 June Year ended
31 December
2023 2022 2022
US$'000 US$'000 US$'000
Profit for the period 8,711 13,110 25,402
Adjustments for:
Depreciation of property and equipment (Note 9) 12,102 11,843 23,695
Amortisation of dry-docking expenditure (Note 10) 2,138 2,768 5,613
Amortisation of right-of-use asset 1,340 1,152 2,635
Impairment loss - - 13,192
Reversal of impairment (Note 9) - - (20,980)
Income tax expense (Note 5) 1,256 1,471 1,724
End of service benefits charge 336 48 270
Movement in ECL provision during the period/year 531 (63) 1,921
Recovery of ECL provision 17 - (96)
Share based payment credit/(charge) 14 43 45
Finance income (74) (8) (11)
Finance expenses (Note 8) 18,187 7,290 20,137
Other income (12) (66) (68)
Cash flow from operating activities before 37,588 73,479
movement in working capital 44,546
Changes in trade receivables (4,926) 6,571 5,610
Changes in prepayments, advances and other receivables
(2,120) (1,538) -
Changes in trade and other payables 5,693 142 5,005
Cash generated from operations 43,193 42,763 84,094
Taxation paid (952) (439) (1,077)
End of service benefits paid (172) (119) (452)
Net cash generated from operating activities 42,069 42,205 82,565
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
18 Contingent liabilities
At 30 June 2023, the banks acting for Gulf Marine Services FZE, one of the
subsidiaries of the Group, had issued performance bonds amounting to US$ 19
million (31 December 2022:
US$ 18 million), all of which were counter-indemnified by other subsidiaries
of the Group.
19 Capital commitments
30 June 31 December
2023
2022
US$'000 US$'000
Contractual capital commitments 6,567 6,221
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 had 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 was 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. There were no LTIP awards granted
during 2021.
During the period ended 30 June 2023, the market vesting conditions for the
LTIP awards granted in 2020 were not met, and all LTIP awards issued in 2020
were forfeited.
During the year ended 31 December 2022, additional LTIPs awards were granted
to the Chairman and Senior Management. The awards were to vest over three
years subject to the same employment conditions described above and
performance conditions being met in 2024 based on defined ranges. There was an
underpin condition such that no awards would vest if the debt leverage in the
Group exceeded 4.0 times EBITDA at 31 December 2022. As this criterion had not
been met all LTIP awards issued in 2022 were forfeited.
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 statistical method, 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.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
20 Long term incentive plans (continued)
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.
The movement of the share awards of the Group during the period is given in
the table below:
30 June 31 December
2023
2022
At the beginning of the period 1,176,014 2,499,714
Granted in the period - 9,460,000
Cash settled in the period - (921,310)
Forfeited in the period (1,176,014) (9,862,390)
At the end of the period - 1,176,014
The weighted average remaining contractual life for the vesting period
outstanding as at 30 June 2023 was nil years (31 December 2022: 0.1 years).
The weighted average fair value of shares granted during the period to 30 June
2023 was US$ nil (31 December 2022: US$ 0.057 million).
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
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
20 Long term incentive plans (continued)
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.
21 Related party transactions
Significant transactions with related parties during the period were as
follows:
30 June 2023 30 June 2022
US$'000 US$'000
Catering services for vessel Pepper from
National Catering Company Limited WLL
402 281
Vessel maintenance and overhaul services from Sigma Enterprise Company LLC
156 -
Related party balances included in trade and other payables are as follows:
30 June 2023 31 December 2022
US$'000 US$'000
National Catering Company Limited WLL 1,020 820
Sigma Enterprise Company LLC 719 1,849
Aman Integrated Solutions LLC 14 -
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 2023 (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 or writeback of impairment loss, 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.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
23 Glossary (continued)
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.
Adjusted EBITDA - represents operating profit after adding back depreciation,
amortisation, non-operational items, impairment charges or reversal of
impairment charges. 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.
Adjusted EBITDA margin - represents adjusted EBITDA divided by revenue. This
measure provides additional information on underlying performance as a
percentage of total revenue derived from the Group.
Adjusted gross profit/(loss) - represents gross profit/loss after deducting
reversal of impairment/adding back impairment charges. This measure provides
additional information on the core profitability of the Group. A
reconciliation of this measure is provided in Note 4.
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
2023
2022
US$'000 US$'000
Statutory cost of sales 38,954 39,084
Less: depreciation and amortisation (Note 4) (14,779) (15,577)
24,175 23,507
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
23 Glossary (continued)
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.
In the current and comparative six months period there were no non-operational
items or impairment charges or reversal of impairment charges and therefore
EBITDA is equivalent to adjusted EBITDA.
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
2023
2022
US$'000 US$'000
Bank borrowings 299,434 328,085
Less: cash and cash equivalents (5,119) (12,275)
294,315 315,810
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.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
23 Glossary (continued)
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.
GCC Gulf Cooperation Council
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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