TIDMGMS
RNS Number : 0596O
Gulf Marine Services PLC
07 June 2022
FOR IMMEDIATE RELEASE 7 June 2022
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the
Group')
2021 ANNUAL REPORT AND NOTICE OF 2022 ANNUAL GENERAL MEETING
The Company advises that the 2021 Annual Report, the Notice of
the 2022 Annual General Meeting and Proxy Form are being made
available to Shareholders electronically today, 7 June 2022. The
2021 Annual Report (in pdf and ESEF compliant format), and the
Notice of 2022 Annual General Meeting will be available shortly on
the Company's website at www.gmsplc.com .
In accordance with LR 9.6.1, copies of the above documents have
also been submitted to the FCA's National Storage Mechanism and
will shortly be available for inspection on the National Storage
Mechanism's website,
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 2021 Annual
Report. The appendices should be read in conjunction with the
Company's Full Year 2021 Results Announcement , issued at 07:00 on
13 May 2022, RNS Number 4144L . This material is not a substitute
for reading the full 2021 Annual Report.
Mailing of the 2021 Annual Report , Notice of the 2022 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 Thursday, 30 June 2022. Further details are
included in the Notice of the AGM. In light of the continued
unpredictability caused by the COVID-19 Pandemic, as set out in the
notice of AGM, the Board is planning to hold the AGM with the
minimum attendance required to form a quorum. As such, the Board
expects only one Director and another Company-designated
shareholder representative to be in attendance at the venue for
quorum purposes in order to conduct the business of the meeting
Shareholders are therefore encouraged to cast their votes by proxy
appointing the Chairman of the meeting as proxy to vote on their
behalf.
In light of this, 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 are expected to be present in person.
-- 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 2022
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.
Appointment of KPMG as external auditor of the Company.
At each meeting at which the Company's accounts are presented to
its members, the Company is required to appoint an external auditor
to serve until the next such meeting. The Board, on the
recommendation of its Audit and Risk Committee, recommends the
appointment of KPMG as external auditor, having been selected as
such on the recommendation of the Audit and Risk Committee
following the audit tender set out on page 51 in the Report and
Accounts. KPMG will replace Deloitte LLP as the Company's auditor
with effect from the end of this meeting. Deloitte LLP did not
participate in the audit tender process, and subsequently notified
the Company (as required under the Act), that they will not be
seeking reappointment as the Company's auditors at the AGM. The
notice from Deloitte LLP was accompanied by a statement that is
required to be circulated to shareholders in accordance with
section 520 of the Act, a copy of which will be circulated to
shareholders.
Buy-Back and Cancellation of Deferred Shares:
Gulf Marine Services plc (the "Company") announces that it
proposes to buy-back and cancel all of the Company's deferred
shares of 8 pence each in issue (the "Deferred Shares").
The Company currently has 350,487,787 Deferred Shares in issue
which shares were created in the share capital reorganization
approved in the general meeting on 9 June 2021. The Deferred Shares
are not admitted to trading, have no voting rights and, on a return
of capital on a winding up, have no valuable economic rights. The
Company is proposing to simplify its balance sheet by buying back
and cancelling the Deferred Shares in accordance with the rights
attaching to the Deferred Shares for an aggregate total
consideration of GBP1.00. The shareholders are now being asked to
approve the form of buy-back agreement in order to give effect to
the purchase.
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 79 of the 2021 Annual Report.
These responsibilities are for the full 2021 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 12
May 2022 are set out below:
Mansour Al Alami , Executive Chairman
Hassan Heikal , Deputy Chairman, Non-executive Director
Rashed Al Jarwan , Senior Independent Non-Executive Director
Lord Anthony St John of Blestso , Independent Non-Executive
Director
Charbel El Khoury , Non-Executive Director
Jyrki Koskelo , Independent Non-Executive Director
Appendix B
Principal risks and uncertainties
The following has been extracted from pages 29 to 33 of the 2021
Annual Report:
The rating of the principal risks facing the Group in the next
five years 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 GMS' vessels are built to be as
root causes: flexible as possible allowing the
-- Increasing competition as other Group to compete for
market participants a wide share of the market, helping
increase the supply of SESVs in the it to maximise utilisation levels
markets in and charter day rates. The Group
which GMS operates; is capable of modifying assets to
-- Sustained lower expenditure and satisfy certain client requirements.
investment by
the Oil & Gas industry may result Continuous communication with clients
in lower levels of The Group maintains strong relationship
maintenance being performed on existing with its clients through continuous
platforms communication and a history of providing
and facilities and lower levels of safe and reliable services.
construction and
capital expenditure in respect of Business segment and geographical
new installations; diversity
-- Reliance on a limited number of The Group has established businesses
NOCs, IOCs and outside its core Middle Eastern
international EPC clients; markets (particularly in the North
-- Fleet capabilities may no longer Sea), and outside of oil and gas
match with (renewables). It is continually
changing client requirements and applicable reviewing opportunities looking
regulations. Failure to deliver the to diversify its market footprint
specifications and through increasing the client base.
expected performance could lead to
reputational Vessel monitoring
damage and impact GMS' ability to The Group has procedures in place,
win work; and such as the Planned Maintenance
-- Reduced utilisation may materially System, to ensure that the vessels
adversely affect undergo regular preventative maintenance.
the business, financial condition The planned maintenance system has
and results been upgraded to a more modern ERP,
of operations. allowing overdue maintenance to
be tracked and reported regularly.
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 Successful equity raise in June
deal signed on 2021
31 March 2021, GMS were required to The Group successfully concluded
raise US$ 25 a US$ 27.8 million equity raise
million by 30 June 2021, which was in June 2021, which prevented an
subsequently event of default on its loan facilities,
achieved. The Group is required to which in turn removed the material
raise a further uncertainty as to the Group's ability
US$ 50 million of equity by 31 December to continue as a Going Concern that
2022 or was reported in the full-year 2020
warrants will be issued entitling results.
the Group's banks to
acquire 132 million shares, 11.5% Focus on deleveraging
of the share capital of the Company The net leverage ratio has significantly
for a total consideration of GBP GBP7.9 reduced to 5.8 times compared to
million, or 6.0p per share. PIK interest 8.0 times
will also potentially accrue, only in 2020. With an improving outlook
if leverage is above 4.0 times. Failure for the Group's business, and a
to meet the requirements of the Group's continued focus on deleveraging,
bank facilities may lead to an event the Group aims, without relying
of default. This would give lenders on a second equity raise, to have
the right to accelerate repayment net leverage ratio below 4.0 times
of the outstanding loans and then by the end of 2022, in which case
exercise security over the Group's PIK interest would not accrue from
assets. 2023.
Exploring all options
The Group is exploring the various
contractual options available per
the current bank terms to take place
by the end of 2022. As at 31 December
2021, neither the issuance of warrants
nor equity raise were ruled out.
The Board however consider the more
likely outcome will be the issuance
of warrants rather than the equity
raise.
-----------------------------------------------------
3 Mena Oil and Gas Market
-----------------------------------------------------
MENA NOCs have local content requirements Local content requirements
as GMS embraces local content requirements,
part of their tender processes designed with a long history of operating
to give for NOCs in the Middle East and
preference to suppliers that commit established offices in each of the
to improving MENA countries the Group operates.
their local content and levels of The Group actively manages its supply
spend and investment in-country. This chain to ensure that they
may prevent GMS from winning contracts also are focused on maximising local
or lead to financial loss and/or a content and, where necessary, will
reduction in margins on existing contracts, work with local partners in specific
which will ultimately impact cash markets to ensure it positions itself
flows and profitability. 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 incident involving employees, and are underpinned by the HSEQ
visitors or contractors. management system and a strong safety-focused
Inadequate preparation for emergency culture. Management ensures appropriate
situations, such as pandemics or geopolitical safety practices and procedures;
instability, could have a negative disaster recovery plans and insurance
impact on the business. coverage of all commercial contracts
are in place.
Insufficient insurance coverage may
lead to Training and compliance
financial loss. 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 The Group continues to manage liquidity
management risks arising from potential carefully through focusing on receivables
increases collections and managing the timing
in interest rates, which further increase of supplier payments.
debt service
obligations, and unexpected increases Cost management
in working The Group has implemented a comprehensive
capital (particularly through inability cost reduction programme, removing
to collect over US$ 20 million of annualised
receivables). costs since inception of the programme
in 2019, in order to generate higher
In addition, the Group's bank facilities EBITDA and increased cash to service
are subject to and repay debt. Continual review
covenant tests based on the financial of costs and search for further
performance. efficiencies is ongoing.
Compliance with these covenants depends
on GMS' Minimising capital expenditure
ability to secure ongoing work for The Group is currently focused on
the fleet. If GMS restricting capital expenditure
is unable to secure ongoing work, to essential spending only, to ensure
its financial the safe and reliable operations
performance and position may be materially of its vessels.
adversely affected and it may not
comply with the covenants. In such Covenant compliance
a case, unless the banks agree otherwise, The management team and Board regularly
this could lead to an event of default. examine future covenant compliance
This would give lenders the right based on the latest forecasts and
to accelerate repayment of the outstanding take necessary actions to avoid
loans, and then exercise security any potential where a future breach
over the Group's assets. of covenant is forecast.
-----------------------------------------------------
6 People
-----------------------------------------------------
Attracting, retaining, recruiting Communication and engagement
and developing Communication has remained a key
a skilled workforce is key. practice of management, especially
during the COVID-19 pandemic. Throughout
Losing skills or failing to attract the pandemic, the focus for employees
new talent to the has continued to be on safety and
business has the potential to undermine wellbeing through working remotely,
performance. regular testing and enhanced cleaning
Inadequate succession planning and procedures.
lack of
identification of critical roles may In the current year, Rashed Al Jarwan
result in disruption was appointed as the new Workforce
if the related personnel leave the Engagement Director, explicitly
Group. tasked with monitoring the level
of engagement and alignment across
the organisation. A hybrid town
hall style meeting was conducted
in the last quarter of 2021.
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 has identified all critical
roles in place and have adopted
processes to ensure the smooth transition
in case of changes in personnel.
Refer to the Governance Report on
pages 40 to 43 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
The business is exposed to sudden emergency preparedness plans. It
changes in tax regularly reviews the insurance
compliance requirements or changes cover over the Group's assets to
in legislation ensure adequate cover is in place.
which could lead to fines, financial
loss or adversely Workforce planning and monitoring
impact liquidity. Workforce planning and demographic
analysis is completed in order to
Sudden changes in inflation in regions increase diversity.
GMS operates may adversely affect
its operations. Tax advisors
The Group engage with reputable
tax advisors who monitor the impacts
of changes to tax legislation across
the regions GMS operates in.
-----------------------------------------------------
8 Compliance and regulation
-----------------------------------------------------
Non-compliance with anti-bribery and Code of Conduct
corruption The Group has a Code of Conduct
regulations could damage stakeholder which includes anti-bribery and
relations and corruption policies, and all employees
lead to reputational and financial are required to comply with this
loss. Code when conducting business on
behalf of the Group. Employees are
GMS' operations are subject to international required to undergo in-house
conventions on - and a variety of training on anti-corruption. All
complex federal suppliers are pre-notified of anti-bribery
and local laws, regulations and guidelines and corruption policies and required
relating to - health, safety and the to confirm compliance with these
protection of the environment. Compliance policies.
with these health, safety and environmental
conventions, laws and regulations Regulations
has become increasingly expensive, A central database is maintained
complex and stringent. Failure to that documents all of GMS' policies
appropriately identify and comply and procedures which comply with
with laws and regulations, and other laws and regulations within the
regulatory statutes in new and existing countries in which we operate. On
markets, could lead to regulatory specialist topics, the Group makes
investigations. It may result in GMS use of external advisers, where
failing to win a new contract, the appropriate. A dedicated Company
early termination of an existing contract Secretary is in place to help monitor
or exclusion from future contracts. 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 GMS has implemented extensive hygiene
of challenges. control and prevention measures
across
Measures introduced in jurisdictions the fleet and onshore offices. Clients
where GMS have adopted similar measures, in
operates include closing of international many cases
borders and in compliance with strict government
strict quarantine requirements for directives in force across the countries
crew, which could in which the Group operates.
lead to further increased cost. These
measures can COVID-19 vaccinations
change at short notice, maintaining COVID-19 vaccines are available
the risk that in the majority of countries where
offshore staff will be unable to crew GMS operates and have been made
change. available to staff, both onshore
and offshore. High vaccination rates
There is a health risk to staff, both across the Company have significantly
onshore and reduced the health risk to employees
offshore, who come into contact with from catching COVID-19.
confirmed cases.
Offshore rotations
Continued COVID-19 restrictions on Crew rotations have been extended
travel may impact GMS' ability to as a temporary measure to minimise
allow third parties to travel to its impact
vessels to inspect, maintain or certify of quarantine requirements of some
equipment onboard, which increases clients.
the risk of equipment failure and
being put off hire. Vessel maintenance
The Group has in place a strict
Existing or future contracts are delayed management of change process, which
by our clients ensures the risk management process
as a result of interruptions in their is in place is appropriate, where
supply chains it has been unable to have equipment
resulting in them being unable to tested, inspected or certified offshore,
carry out work due to the availability of suitably
as planned. qualified personnel offshore.
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.
Recovery of COVID-19-related costs
GMS are in dialogue and have strong
relationships with its clients to
pursue opportunities to reclaim
quarantine and other COVID-19-related
expenses.
-----------------------------------------------------
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.
-----------------------------------------------------
11 Climate change
-----------------------------------------------------
Climate change poses both transition Legal & policy monitoring
and physical The Group carefully monitors legislative
risks to the Group. developments to ensure compliance
with
The transition risks come from the all relevant laws both in the UK
decarbonisation and the Middle East. The TCFD disclosure
of the global economy. This could in this report explains our assessment
result in changing and response to climate-related
investor sentiment making new investors risks to be transparent with our
harder to find. It may bring changing stakeholders.
client preferences leading to reduced
demand for our services. New legislation Physical infrastructure
could require us to increase reporting The Group monitors weather patterns
and possibly substitute our products to ensure conditions are suitable
and vessels for greener alternatives. for our offshore employees and vessels.
Onshore buildings are designed to
Physical risks include rising temperatures, withstand the heat in the Middle
which could further impact working East.
hours, and rising sea levels, which
could affect where our vessels can Environmental impact
operate. The physical risks also interact GMS aims to minimise its environmental
with Principal Risk 4 - Our ability impact by installing energy and
to deliver safe and reliable operations. water efficiency measures. We also
ensure our machinery and engines
are regularly maintained so they
operate efficiently. Furthermore,
we research lower carbon
alternatives, including R407 refrigerants
and lube oil filtration systems,
to reduce our carbon footprint.
In 2022, we will begin calculating
our Scope 3 emissions and setting
targets for the long-term reduction
of our carbon emissions.
Long-term planning
GMS has a proven track record in
the renewables sector which provides
versatility in our business model.
Our vessels are built to be as flexible
as possible to maximise utilisation.
We are aware that we may need to
consider changing sea levels and
environmental
legislation when replacing vessels
that are being retired in the long
term.
-----------------------------------------------------
- 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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