TIDMGMS

RNS Number : 6327A

Gulf Marine Services PLC

02 June 2021

 
 
         FOR IMMEDIATE RELEASE           2 June 2021 
 

Gulf Marine Services PLC

('Gulf Marine Services', 'GMS', 'the Company' or 'the Group')

2020 ANNUAL REPORT AND NOTICE OF 2021 ANNUAL GENERAL MEETING

The Company advises that the 2020 Annual Report, the Notice of the 2021 Annual General Meeting and Proxy Form are being made available to Shareholders electronically today, 2 June 2021. The 2020 Annual Report and the Notice of 2021 Annual General Meeting will be available shortly on the Company's website at www.gmsplc.com .

In accordance with Listing Rule 9.6.1R, copies of these documents are being submitted to the UK Listing Authority via a National Storage Mechanism and will shortly be available to the public for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

In accordance with Disclosure Guidance and Transparency Rule 6.3.5, additional information is set out in the appendices to this announcement. This information is extracted from the 2020 Annual Report. The appendices should be read in conjunction with the Company's Full Year 2020 Results Announcement , issued at 07:00 on 14 May 2021, RNS Number 5086Z . This material is not a substitute for reading the full 2020 Annual Report.

Mailing of the 2020 Annual Report, Notice of the 2021 Annual General Meeting and Proxy Form to Shareholders will commence shortly.

The Company will hold its Annual General Meeting (the 'AGM') at 2:30p.m (UAE time) on Wednesday, 30 June 2021. Further details are included in the Notice of the AGM. Due to the continued unpredictability caused by the COVID-19 Pandemic and uncertainty relating to the lifting of the coronavirus restrictions as set out in the letter accompanying the notice of AGM, Shareholders and others are unlikely to be able to attend the AGM in person and are therefore strongly encouraged not to attend and to cast their votes by proxy appointing the Chairman of the meeting as proxy to vote on their behalf.

In light of the coronavirus restrictions, the AGM arrangements will be as set out below:

-- The Company expects only one Director and another GMS designated Shareholder representative to be in attendance at the venue for quorum purposes to conduct the business of the meeting.

   --    No other Directors will be present in person. 

-- Shareholders are unlikely to be permitted to attend the Company's AGM in person and, if they attempt to do so, may be refused entry to the meeting in line with current coronavirus restrictions and under the Company's Articles.

   --    There will be no update on trading or other management statements given at the AGM. 

-- Shareholders are encouraged to submit questions about the business of the AGM in advance of the meeting by email ( cosec@gmsplc.com ) and, in so far as relevant to the business of the meeting, questions will be responded to by email and taken into account as appropriate at the meeting itself.

-- Voting at the AGM will be by way of a poll so that all the votes cast in advance by Shareholders appointing the Chairman of the Meeting as their proxy to vote on their behalf, can be taken into account. Shareholders have one vote for each ordinary share held when voting on a poll and this procedure ensures that every vote can be cast.

   --    The results of the AGM will be announced as soon as practical after it has taken place. 

Shareholders wishing to vote on any of the matters of business at the AGM are therefore strongly encouraged to:

1. Submit their votes (as soon as possible) in advance of the meeting and in any case, by 11.30 a.m. (UK time) on 28 June 2021 through the proxy and electronic voting facilities and to appoint the Chairman of the meeting as their proxy for this purpose.

2. Submit any questions in connection with the business of the meeting in advance to the Company Secretary at cosec@gmsplc.com .

3. Look out for any updates in connection with the arrangements for the AGM via RNS and on the Company's website.

Appendix A

Statement of Directors' Responsibilities

The following responsibility statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from page 75 of the 2020 Annual Report.

These responsibilities are for the full 2020 Annual Report and not the extracted information presented in this announcement or otherwise.

We confirm that to the best of our knowledge:

-- the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

-- the strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

-- the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

The Directors of the Company and their responsibilities as at 21 May 2021 are set out below:

Mansour Al Alami, Executive Chairman

Hassan Heikal, Non-Executive Deputy Chairman

Rashed Al Jarwan, Senior Independent Non-Executive Director

Jyrki Koskelo, Independent Non-Executive Director

Appendix B

Principal risks and uncertainties

The following has been extracted from pages 21 to 24 of the 2020 Annual Report:

The rating of the principal risks facing the Group in the short to medium term are set out below, together with the mitigation measures. These risks are not intended to be an exhaustive analysis of all risks.

 
       Risk                                                     Mitigating factors and actions 
 
         1 Utilisation 
                                                         ----------------------------------------------------- 
       Utilisation levels may be reduced                        Modification flexibility for clients 
        by the following root causes:                            GMS' vessels are built to be as 
        -- Increasing competition as other                       flexible as possible allowing the 
        market participants increase the supply                  Company to compete for a wide share 
        of SESVs in the markets in which GMS                     of the market, helping it to maximise 
        operates;                                                utilisation levels and charter day 
        -- Sustained lower expenditure and                       rates. The Group is capable of modifying 
        investment by the oil and gas industry                   assets to satisfy client requirements. 
        may result in lower levels of maintenance 
        being performed on existing platforms                    Continuous communication with clients 
        and facilities and lower levels of                       The Group maintains strong relationship 
        construction and capital expenditure                     with its clients through continuous 
        in respect of new installations;                         communication and a history of providing 
        -- Reliance on a limited number of                       safe and reliable services. 
        NOCs, IOCs and international EPC clients; 
        -- Fleet capabilities may no longer                      Business segment and geographical 
        match with changing client requirements.                 diversity 
        Failure to deliver the specifications                    The Group has established businesses 
        and expected performance could lead                      outside its core Middle Eastern 
        to reputational damage and impact                        markets (particularly in the North 
        GMS' ability to win work; and                            Sea), and outside of oil and gas 
        -- Reduced utilisation may materially                    (renewables). It is continually 
        adversely affect our business, financial                 reviewing opportunities looking 
        condition and results of operations.                     to diversify its market footprint 
                                                                 through increasing the client base. 
 
                                                                 Vessel monitoring 
                                                                 The Group has procedures in place, 
                                                                 such as the Planned Maintenance 
                                                                 System, to ensure that the vessels 
                                                                 undergo regular preventative maintenance. 
                                                                 The Group's robust operating standards 
                                                                 result in minimal downtime. 
                                                         ----------------------------------------------------- 
 
         2 Inability to secure an appropriate 
         capital structure - equity 
                                                         ----------------------------------------------------- 
       Under the terms of the latest bank                       Renegotiation of bank facilities 
        deal signed on 31 March 2021, GMS                        The Group recently announced improved 
        is required to raise US$ 25 million                      terms on its bank facilities and 
        by 30 June 2021 and a total of US$                       plans for raising a minimum of US$ 
        75 million by 31 December 2022. Failure                  25 million of new equity (net) by 
        to do this would lead to an inadequate                   30 June 2021, with the remaining 
        capital structure and a potential                        balance of up to US$ 75 million 
        event of default.                                        in total by the end of 2022. The 
                                                                 need to obtain shareholder approval 
                                                                 and raise the first tranche of US$ 
                                                                 25 million of equity by 30 June 
                                                                 2021 to avoid an event of default 
                                                                 indicates a material uncertainty 
                                                                 that may cast significant doubt 
                                                                 as to the Group's ability to continue 
                                                                 as a going concern. Notwithstanding 
                                                                 this material uncertainty, the Directors 
                                                                 believe that there is good reason 
                                                                 to believe that there will be sufficient 
                                                                 shareholder support to complete 
                                                                 the first equity raise on time. 
                                                                 Refer to Note 3 of the consolidated 
                                                                 financial statements. 
 
                                                                 Beyond that, the Board is focused 
                                                                 on sustaining operational excellence 
                                                                 while enhancing performance and 
                                                                 utilisation of GMS' assets to explore 
                                                                 and secure new opportunities. This 
                                                                 will be key to driving improved 
                                                                 profitability and cash flow, which 
                                                                 is expected to deliver shareholder 
                                                                 confidence and a higher share price. 
                                                         ----------------------------------------------------- 
 3 Mena Oil and Gas Market 
                                                         ----------------------------------------------------- 
       MENA NOCs have local content requirements                Local content requirements 
        as part of their tender processes                        GMS embraces local content requirements, 
        designed to give preference to suppliers                 with a long history of operating 
        that commit to improving their local                     for NOCs in the Middle East and 
        content and levels of spend and investment               established offices in each of the 
        in-country. This may prevent GMS from                    MENA countries the Group operates. 
        winning contracts or lead to financial                   The Group actively manages its supply 
        loss and/or a reduction in margins                       chain to ensure that they also are 
        on existing contracts, which will                        focused on maximising local content 
        ultimately impact cash flows and profitability.          and where necessary will work with 
                                                                 local partners in specific markets 
                                                                 to ensure it positions itself in 
                                                                 the best possible position to win 
                                                                 work. Often during the tendering 
                                                                 process companies with a higher 
                                                                 audited local content score are 
                                                                 given the offer of first refusal 
                                                                 to price match any lower bids 
                                                                 during tendering. 
 
                                                                 Market knowledge and operational 
                                                                 expertise 
                                                                 The Group has a track record of 
                                                                 established long-term relationships 
                                                                 in the MENA region which provides 
                                                                 an understanding of clients' requirements 
                                                                 and operating standards. 
                                                         ----------------------------------------------------- 
 4 Operations: inability to deliver 
  safe and reliable operations 
                                                         ----------------------------------------------------- 
       The Group may suffer commercial and                      Safety awareness 
        reputational damage from an environmental                Safety and reliability are top priorities 
        or safety incidents involving employees,                 and are underpinned by the HSEQ 
        visitors or contractors.                                 management 
                                                                 system and a strong safety-focused 
        The physical risk of climate change,                     culture. Management ensures appropriate 
        such as natural disasters or extreme                     safety 
        weather events may impact our ability                    practices and procedures; disaster 
        to operate. Inadequate preparation                       recovery plans and insurance cover 
        for emergency situations, such as                        of all commercial contracts in place. 
        pandemics, geopolitical instability, 
        could have a negative impact on the                      All of our vessels are designed 
        business.                                                to withstand extreme weather events 
                                                                 as specified by the Class Society. 
        Insufficient insurance coverage may 
        lead to financial loss.                                  Training and compliance 
                                                                 Our employees undergo continuous 
                                                                 training on operational best practices. 
 
                                                                 Scheduled maintenance 
                                                                 The Group follows regular maintenance 
                                                                 schedules on its vessels and the 
                                                                 condition of the vessels is consistently 
                                                                 monitored. 
 
                                                                 Business continuity plan 
                                                                 The Group has in place a business 
                                                                 continuity management plan which 
                                                                 it regularly maintains. 
 
                                                                 Insurance 
                                                                 The Group regularly liaises with 
                                                                 insurance brokers to ensure sufficient 
                                                                 coverage is in place. 
                                                         ----------------------------------------------------- 
 5 Liquidity and covenant compliance 
                                                         ----------------------------------------------------- 
       The business is exposed to short-term                    Liquidity management 
        liquidity management risks arising                       The Group continues to manage liquidity 
        from potential increases in interest                     carefully through focusing on receivables 
        rates, which further increase debt                       collections and managing the timing 
        service obligations, and unexpected                      of supplier payments. 
        increases in working capital (particularly 
        through inability                                        Cost management 
        to collect receivables).                                 The Group has implemented a comprehensive 
                                                                 cost reduction programme, removing 
        In addition, the Group's bank facilities                 over US$ 20 million of annualised 
        are subject to covenant tests based                      costs in order to generate higher 
        on the financial performance. Compliance                 EBITDA and increased cash to service 
        with these covenants depends on GMS'                     debt. Continual review of costs 
        ability to secure ongoing work for                       and search for further efficiencies 
        the fleet. If GMS is unable to do                        is ongoing. 
        so the financial performance and position 
        may be materially adversely affected                     Minimising capital expenditure 
        and it may not comply with the covenants.                The Group is focused on restricting 
        In such a case, unless the                               capital expenditure to essential 
        banks agree otherwise this could lead                    spending only, to ensure the safe 
        to an event of default. This would                       and reliable operations of its vessels. 
        give lenders the right to accelerate 
        repayment of the outstanding loans,                      Covenant compliance 
        and then exercise                                        The management team and Board regularly 
        security over the Group's assets.                        examine future covenant compliance 
                                                                 based on the latest forecasts and 
                                                                 take necessary actions to avoid 
                                                                 any potential where a future breach 
                                                                 of covenant is forecast. 
                                                         ----------------------------------------------------- 
 6 People 
                                                         ----------------------------------------------------- 
       Attracting, retaining, recruiting                        Communication and engagement 
        and developing a skilled workforce                       Communication has remained a key 
        is key.                                                  practice of management, especially 
                                                                 during the COVID-19 pandemic. During 
        Losing skills or failing to attract                      the year, the focus for employees 
        new talent to the business has the                       has been on safety and wellbeing 
        potential to undermine performance.                      through working remotely, regular 
                                                                 testing and enhanced cleaning procedures. 
        Inadequate succession planning and 
        lack of identification of critical                       In 2021, Rashed Al Jarwan was appointed 
        roles may result in disruption if                        as the new Workforce Engagement 
        the related personnel leave the Group.                   Director, explicitly tasked with 
                                                                 monitoring the level of engagement 
                                                                 and alignment across the organisation. 
 
                                                                 Remuneration Policy 
                                                                 The Short-Term Incentive Plan (STIP) 
                                                                 is based on a single Business Scorecard 
                                                                 to ensure all staff are incentivised 
                                                                 around delivering a single set of 
                                                                 common goals. 
 
                                                                 Equal opportunities 
                                                                 GMS is engaged in fair and transparent 
                                                                 recruitment practices. It has a 
                                                                 zero-tolerance policy towards discrimination, 
                                                                 and provides equal opportunities 
                                                                 for all employees. 
 
                                                                 Resource planning 
                                                                 The Group is in the process of identifying 
                                                                 critical roles and preparing plans 
                                                                 to ensure smooth transition in case 
                                                                 of changes in personnel. 
 
                                                                 Refer to the Governance Report on 
                                                                 pages 34 to 37 for details of changes 
                                                                 at the Board level and assessment 
                                                                 of what skills the new Board brings 
                                                                 to GMS. 
                                                         ----------------------------------------------------- 
 7 Legal, economic, and political conditions 
                                                         ----------------------------------------------------- 
       Political instability in the regions                     Emergency response planning and 
        in which GMS operates (and recruit                       insurance 
        from) may adversely affect its operations.               For all our major assets and areas 
                                                                 of operation, the Group maintains 
                                                                 emergency 
                                                                 preparedness plans. It regularly 
                                                                 reviews the insurance cover over 
                                                                 the Group's assets 
                                                                 to ensure adequate cover is in place. 
 
                                                                 Workforce planning and monitoring 
                                                                 Workforce planning and demographic 
                                                                 analysis is completed in order to 
                                                                 increase diversity. 
                                                         ----------------------------------------------------- 
       8 Compliance and regulation 
                                                         ----------------------------------------------------- 
       Non-compliance with anti-bribery and                     Code of Conduct 
        corruption regulations could damage                      The Group has a Code of Conduct 
        stakeholder relations and lead to                        which includes anti-bribery and 
        reputational and financial loss.                         corruption policies, and all employees 
                                                                 are required to comply with this 
        GMS' operations are subject to international             Code when conducting business on 
        conventions on - and a variety of                        behalf of the Group. Employees are 
        complex federal and local laws, regulations              required to undergo in-house training 
        and guidelines relating to                               on anti-corruption. All suppliers 
        - health, safety and the protection                      are pre-notified of anti-bribery 
        of the environment. Compliance with                      and corruption policies, and required 
        these health, safety and environmental                   to confirm compliance with these 
        conventions, laws and regulations                        policies. 
        has become increasingly expensive, 
        complex and stringent. Failure to                        Regulations 
        appropriately identify and comply                        A central database is maintained 
        with laws and regulations, and other                     which documents all of GMS' policies 
        regulatory statutes in new and existing                  and procedures which comply with 
        markets, could lead to regulatory                        laws and regulations within the 
        investigations. It may result in GMS                     countries in which we operate. On 
        failing to win a new contract, the                       specialist topics, the Group makes 
        early termination of an existing contract                use of external advisers, where 
        or exclusion from future contracts.                      appropriate. A dedicated Company 
                                                                 Secretary is in place to help monitor 
                                                                 compliance, in particular with regard 
                                                                 to UK legal and corporate governance 
                                                                 obligations. 
 
                                                                 External review 
                                                                 The Internal Audit function helps 
                                                                 ensure compliance with GMS policies, 
                                                                 procedures, 
                                                                 internal controls and business processes. 
                                                                 The Group's vessels are also audited 
                                                                 by external bodies such as the American 
                                                                 Bureau of Shipping (ABS). 
                                                         ----------------------------------------------------- 
 9 COVID-19 pandemic 
                                                         ----------------------------------------------------- 
       The COVID-19 pandemic has presented                      Hygiene measures 
        a number of challenges.                                  GMS implemented extensive hygiene 
                                                                 control and prevention measures 
        Measures introduced in jurisdictions                     across the fleet and onshore offices. 
        where GMS operates, include closing                      Clients have adopted similar measures, 
        of international borders and strict                      in many cases in compliance with 
        quarantine requirements for crew,                        strict government directives in 
        which could lead to further increased                    force across the countries in which 
        cost. These measures can change at                       the Group operates. 
        short notice, maintaining the risk 
        that offshore staff will be unable                       COVID-19 vaccinations 
        to crew change.                                          COVID-19 vaccines are available 
                                                                 in some of the countries where GMS 
        There is a health risk to staff, both                    operates and have been made available 
        onshore and offshore, who come into                      to staff, both onshore and offshore. 
        contact with confirmed cases. 
                                                                 Offshore rotations 
        COVID-19 restrictions on travel may                      Crew rotations have been extended 
        impact GMS' ability to allow third                       as a temporary measure to minimise 
        parties to travel to its vessels to                      impact of quarantine requirements 
        inspect, maintain or certify equipment                   of some clients. 
        onboard, which increases the risk 
        of equipment failure and being put                       Vessel maintenance 
        off hire.                                                The Group has in place a strict 
                                                                 management of change process, which 
        Existing or future contracts are delayed                 ensures where it has been unable 
        by our clients as a result of interruptions              to have equipment tested, inspected 
        in their supply chains resulting in                      or certified offshore, due to the 
        them being unable to carry out work                      availability of suitably qualified 
        as planned.                                              personnel offshore, that an appropriate 
                                                                 risk management process is in place. 
 
                                                                 Contract delays 
                                                                 Through strong relationships with 
                                                                 its client base, GMS is in regular 
                                                                 communication around any operational 
                                                                 delays that are expected that could 
                                                                 impact the Group. In such circumstances 
                                                                 and with client agreement, GMS will 
                                                                 seek other opportunities to utilise 
                                                                 the fleet and minimise the financial 
                                                                 impact on all parties. 
                                                         ----------------------------------------------------- 
 
         10 Cyber-crime - security and integrity 
                                                         ----------------------------------------------------- 
       Phishing attempts result in inappropriate                Cybersecurity monitoring and defence 
        transactions, data leakage and financial                 GMS operates multi-layer cyber-security 
        loss. The Group is at risk of loss                       defences which are monitored for 
        and reputational damage through financial                effectiveness to ensure they remain 
        cyber-crime.                                             up to date. 
 
                                                                 GMS engages with third party specialists 
                                                                 to provide security services. 
                                                         ----------------------------------------------------- 
 

- Ends -

 
 Enquiries: GMS 
  Mansour Al Alami, Executive 
  Chairman                           +44 (0) 207 603 1515 
 
       Celicourt Communications 
       Mark Antelme 
       Philip Dennis                  +44 (0)20 8434 2643 
 
 
 

Gulf Marine Services PLC's Legal Entity Identifier is 213800IGS2QE89SAJF77

www.gmsplc.com

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