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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