TIDMGMS
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
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US$ m US$ m Change
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Revenue 74.3 66.4 +12%
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Gross profit 34.8 27.4 +27%
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EBITDA(1) 44.3 37.3 +19%
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Profit for the period after tax 8.7 13.1 -34%
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Net Leverage Ratio(2) 3.75:1 4.56:1 -18%
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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 Tel: +44 (0)20 7603
Mansour Al Alami 1515
Executive Chairman
Celicourt Communications Tel: +44 (0) 20 7770
Mark Antelme 6424
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
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US$ m US$ m Change
======== ======= ======
Revenue 74.3 66.4 +12%
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Gross profit 34.8 27.4 +27%
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EBITDA(1) 44.3 37.3 +19%
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Profit for the period after tax 8.7 13.1 -34%
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Net Leverage Ratio(2) 3.75 4.56 -18%
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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$'000) H1 2023 H1 2022 H1 2023 H1 2022
Vessel Class
E-Class vessels 28,813 26,751 19,850 17,355
S-Class vessels 17,691 17,037 12,407 11,890
K-Class vessels 27,781 22,609 17,305 13,708
---------------- ------- -------
Total revenue 74,285 66,397
---------------- ------- -------
* Before depreciation and amortization
Revenue in H1 2023 increased by 12% to US$ 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.
-- 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.
INDEPENT 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
C ondensed Consolidated Statement of Comprehensive Income
for the period ended 30 June 2023
Six months period ended Year ended
30 June
---------------------------
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
Share Share Cash Attributable
For the period capital Share Capital Share Group based flow to the Non-
ended 30 June - capital - redemption premium restructuring Restricted payment Capital hedge Translation Retained owners of controlling Total
2023 Ordinary Deferred Reserve account reserve reserve reserve contribution reserve reserve earnings the Company interests equity
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
Year ended
Six-month period ended 31 December
30 June
--------------------------
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 (7,156) 1,786 4,004
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 31 December 6 months ended 31 December
30 June 30 June
-------------------- ------------ -------------------- ------------
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 share being
profit
for the period attributable to Owners of the
Company (US$'000) 8,336 13,097 25,326
Earnings for the purpose of calculating the
adjusted basic and diluted profit per share
(US$'000)
(Note 4) 8,336 13,097 17,538
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 31 December
2022 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
Vessel spares, fitting and
Vessels other equipment Others Capital work-in-progress Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance as at 1 January 2023 898,200 60,234 2,250 6,766 967,450
Additions - - - 2,117 2,117
Balance as at 30 June 2023 898,200 60,234 2,250 8,883 969,567
-------- ----------------------------- -------- ------------------------- --------
Accumulated Depreciation and
impairment
Balance at 1 January 2023 348,515 21,219 1,916 2,845 374,495
Depreciation expense 10,450 1,579 73 - 12,102
Balance as at 30 June 2023 358,965 22,798 1,989 2,845 386,597
-------- ----------------------------- -------- ------------------------- --------
Net Book Value as at 30 June
2023 539,235 37,436 261 6,038 582,970
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
9 Property and equipment (continued)
Vessel spares, fitting and
Vessels other equipment Others Capital work-in-progress Total
US$'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 GBP0.02 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 GBP19.98 million) was raised of
which $18.51 million (GBP GBP13.32 million) was recognised in the
share capital account and $9.25 million (GBP GBP6.66 million) was
recognised in share premium account. Issue costs amounting to US$
3.2 million had been deducted from the share premium account.
Deferred shares at GBP0.08 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 GBP1.00 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
GBP1.00, 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 GBP1.00.
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 GBP7.9 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 Year ended
30 June 31 December
-------------------------
2023 2022 2022
US$'000 US$'000 US$'000
Profit for the period 8,711 13,110 25,402
Adjustments for:
Depreciation of property and equipment
(Note 9) 12,102 11,843 23,695
Amortisation of dry-docking expenditure
(Note 10) 2,138 2,768 5,613
Amortisation of right-of-use asset 1,340 1,152 2,635
Impairment loss - - 13,192
Reversal of impairment (Note 9) - - (20,980)
Income tax expense (Note 5) 1,256 1,471 1,724
End of service benefits charge 336 48 270
Movement in ECL provision during
the period/year 531 (63) 1,921
Recovery of ECL provision 17 - (96)
Share based payment credit/(charge) 14 43 45
Finance income (74) (8) (11)
Finance expenses (Note 8) 18,187 7,290 20,137
Other income (12) (66) (68)
Cash flow from operating activities
before
movement in working capital 44,546 37,588 73,479
Changes in trade receivables (4,926) 6,571 5,610
Changes in prepayments, advances
and other receivables (2,120) (1,538) -
Changes in trade and other payables 5,693 142 5,005
Cash generated from operations 43,193 42,763 84,094
Taxation paid (952) (439) (1,077)
End of service benefits paid (172) (119) (452)
Net cash generated from operating
activities 42,069 42,205 82,565
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Financial Statements
for the period ended 30 June 2023 (continued)
18 Contingent liabilities
At 30 June 2023, the banks acting for Gulf Marine Services FZE,
one of the subsidiaries of the Group, had issued performance bonds
amounting to US$ 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 GBP0.06 GBP0.09 GBP0.08
Exercise price GBP0.00 GBP0.00 GBP0.00
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
US$'000 2022
US$'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 we calculate the average day rates by dividing total
rates 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 LIBOR plus margin.
rate
Calendar takes base days at 365 and only excludes periods
days 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 percentage of staff who continued to be employed
retention 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 represents the ratio of Adjusted EBITDA to debt service.
Cover
GCC Gulf Cooperation Council
GMS core consists of 13 SESVs, with an average age of ten
fleet years.
Interest represents the ratio of Adjusted EBITDA to Net finance
Cover charges.
IOC Independent Oil Company.
KPIs Key performance indicators.
Lost Time any workplace injuries sustained by an employee while
Injuries on the job that prevents them from being able to
perform their job for a period of one or more days.
Lost Time the lost time injury rate per 200,000 man hours which
Injury Rate is a measure of the frequency of injuries requiring
(LTIR) 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 represents finance charges as defined by the terms
charges of the Group's banking facility for that period less
interest income for that period.
Net leverage represents the ratio of net bank debt to Adjusted
ratio 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 any work-related injury other than a fatality or
work day lost work day case which results in a person being
case (RWDC) unfit for full performance of the regular job on
any day after the occupational injury.
Secured day day rates from signed contracts firm plus options
rates held by clients.
Secured utilisation contracted days of firm plus option periods of charter
hire from existing signed contracts.
Security the ratio (expressed as a percentage) of Total Net
Cover (loan Bank Debt at that time to the Market Value of the
to value) 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 calculated on the injury rate per 200,000 man hours
Injury Rate and includes all our onshore and offshore personnel
(TRIR) and subcontracted personnel. Offshore personnel are
monitored over a 24-hour period.
Underlying underlying general and administrative (G&A) expenses
G&A 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 Cost of sales before depreciation, amortisation and
expense 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
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END
IR BRGDIGGXDGXG
(END) Dow Jones Newswires
August 31, 2023 02:00 ET (06:00 GMT)
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