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FOR
IMMEDIATE RELEASE
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18 April
2024
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Gulf Marine Services
PLC
('Gulf Marine Services',
'GMS', 'the Company' or 'the Group')
2023 ANNUAL REPORT AND NOTICE
OF 2024 ANNUAL GENERAL MEETING
The Company advises that the 2023
Annual Report, the Notice of the 2024 Annual General Meeting and
Form of Proxy are being made available to shareholders
electronically today, 18 April 2024. The 2023 Annual Report
(in pdf and ESEF compliant format), the Notice of 2024 Annual General Meeting and Form of Proxy
are available on the Company's website at
www.gmsplc.com.
In accordance with LR 9.6.1, copies
of the above documents have also been submitted to the FCA's
National Storage Mechanism and will shortly be available for
inspection on the National Storage Mechanism's website,
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Hard copies of the 2023 Annual
Report, Notice of
the 2024 Annual General Meeting and Form of Proxy are today being
posted to those shareholders having elected
to receive paper copies.
In accordance with Disclosure
Guidance and Transparency Rule 6.3.5, additional information is set
out in the appendices to this announcement. This information is
extracted from the 2023 Annual Report. The appendices should be read in
conjunction with the Company's Full Year
2023 Results Announcement, issued at 07:00
on 4 April 2024, RNS Number 2402J.
This material is not a substitute for reading the
full 2023 Annual Report.
The Company will hold its Annual
General Meeting (the 'AGM') at 2:30 p.m. (UAE time) on Wednesday, 5
June 2024 at Gulf Marine Services WLL, Office 403, International
Tower, 24th (Karama) Street, Abu Dhabi, United Arab
Emirates.
The Board recognises that the AGM is
an important event for shareholders in the corporate calendar and
is committed to ensuring that shareholders can exercise their right
to vote and ask questions in connection with this meeting.
Accordingly, for those shareholders that do not wish to attend, or
those that wish to attend and are unable to do so, questions in
connection with the business of the AGM can be submitted on
reasonable notice by email to cosec@gmsplc.com in advance of the
AGM and, in so far as relevant to the business of the meeting,
questions will be responded to by email and taken into account as
appropriate at the meeting itself. We are not planning to
have a Directors' presentation at the AGM and it will be held
strictly to conduct the business of the AGM.
Voting at the AGM will be by way of
a poll so that all the votes cast in advance by shareholders
appointing the Chairman of the Meeting as their proxy to vote on
their behalf can be taken into account. Shareholders have one vote
for each ordinary share held when voting on a poll and this
procedure ensures that every vote can be cast.
The results of the AGM will be
announced as soon as practical after it has taken place.
Shareholders wishing to vote on any
of the matters of business at the AGM are encouraged to submit
their votes (as soon as possible) in advance of the meeting and in
any case, by 11.30am (UK time) on 3 June 2024 through the proxy and
electronic voting facilities and to appoint the Chairman of the
meeting as their proxy for this purpose. Further details are
included in the Notice of the AGM.
Appendix A
Statement of Directors'
Responsibilities
The following responsibility
statement is repeated here solely for the purpose of complying with
DTR 6.3.5. This statement relates to, and is extracted from, page
76 of the 2023 Annual Report.
These responsibilities are for the
full 2023 Annual Report and not the extracted information presented
in this announcement or otherwise.
We confirm
that to the best of our knowledge:
·
the financial statements, prepared in accordance
with the relevant financial reporting framework, give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole;
·
the strategic report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
·
the Annual Report and financial statements, taken
as a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
The
Directors of the Company and their responsibilities as at 3 April
2024 are set out below:
Mansour Al
Alami, Executive Chairman
Hassan
Heikal, Deputy Chairman, Non-Executive Director
Lord Anthony St John of
Blestso, Senior Independent
Non-Executive Director
Charbel El
Khoury, Non-Executive Director
Jyrki
Koskelo, Independent Non-Executive Director
Haifa Al
Mubarak, Independent Non-Executive
Director
Appendix B
Principal risks and
uncertainties
The following has been extracted
from pages 14 to 18 of the 2023 Annual Report:
The rating of the principal risks
facing the Group in the next five years are set out below, together
with the mitigation measures. These risks are not intended to be an
exhaustive analysis of all risks.
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Risk
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Mitigating factors and actions
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1
Utilisation
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Utilisation
levels may be reduced by the
following
underlying causes:
•
Customer concentration leading to potential changes in our contract profile and pipeline. Risks of potential
loss of some
clients
to competitors.
•
ADNOC continues to expand its fleet thus controlling the UAE market.
•
Fleet capabilities may no longer match with
changing client requirements. Clients may increase the standard
specification required for a Self-Elevating Support Vessel (SESV),
which might require the Group to upgrade some of its fleet to be
compliant.
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Strengthening Client
Engagement and Foster Loyalty
The Group
maintains strong client relationships through consistent
communication and a demonstrated history of delivering secure and
reliable services. GMS has formulated strategies for fleet upgrades
aligned with anticipated client needs in the future. These
initiatives aim to craft commercial proposals that foster loyalty,
encouraging customers to commit to longer-term contracts involving
a greater utilisation of vessels
through
incentivisation.
Diversification Strategies
Across Business Segments and Geographies
The Group
actively seeks opportunities to optimise vessel utilisation and
consistently evaluates avenues for diversifying its market presence
by expanding its client portfolio.
Customisation Capabilities
for Client Needs
The Group
is capable of modifying assets in order to satisfy client
requirements. Further, GMS' vessels are adaptable to compete for a
wider market share, enabling the Group to maximise the utilisation
level and charter day rates.
To comply
with LIMS (Lifting Integrity Management System) the Group has
involved engineering companies to perform technical studies on
existing equipment to extend the life of equipment (time
limited).
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2 Inability to secure an
appropriate capital structure
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Poor
financial performance, such as declining
revenues or
profitability, can make it more difficult for the Group to attract
financing or negotiate favourable terms.
A low share
price may prevent GMS from raising sufficient levels of equity to
recapitalise the business.
As warrants
were issued in January 2023, this may impact the Group's ability to
attract new investors as there would be a potential dilution if
these warrants are exercised.
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Focus on
Deleveraging
Conscious
focus on deleveraging has resulted in reduction in leverage levels
to 3.05 times compared to 4.4 times in 2022. Group anticipates net
leverage ratio to be below 2.5 times before the end of
2024.
Investors Relationship
Management
Maintain
strong investor relations and ensure timely dissemination of
Regulatory News Service (RNS) updates.
Increased share
price
The share
price has increased from 4.65 pence as of 31 December 2022 to 14.5
pence as of 31 December 2023, reflecting investors' confidence in
the Group's business strategy.
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3 Arabian Peninsula Local
Content Requirements
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Arabian
Peninsula region National Oil Companies (NOCs) have local content
requirements as part of their tender processes, which varies for
each country, designed to give preference to suppliers that commit
to improving their local content and levels of spend and investment
in-country. This may prevent GMS from winning new contracts or lead
to financial loss and/or a reduction in profit margins on existing
contracts, which will ultimately impact operating cash flows and
net profitability.
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Local Content
Requirements
GMS fully
embraces local content regulations, reflecting its extensive
experience
in serving
NOCs in the Arabian Peninsula region. The Group maintains offices
in Arabian Peninsula region countries where it operates, actively
overseeing its supply chain to prioritise the enhancement of local
content. When required, GMS collaborates with local partners in
targeted markets to strategically position itself for project
acquisition. Notably, during the tendering phase, companies with
superior audited local content scores are typically offered first
refusal to match any lower bids.
Market Knowledge and
Operational Expertise
The Group
has well-established long-term relationships in the Arabian
Peninsula region which provides an understanding of clients'
requirements and operating standards.
Local
Content
The Group
continues to explore ways to improve its local content scores in
all the regions in which it operates. We are tracking the scores in
two jurisdictions.
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4 Inability to deliver safe
and reliable operations
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Geo-political events or pandemic may
impact ability to safely operate assets due to restricted crew
travel in certain countries.
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.
Incomprehensive insurance coverage
may lead to financial loss.
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Safety Commitment and
Operational Reliability
Our highest
priority is providing safe and reliable operations. This is
achieved through a resilient Health, Safety, Environment and
Quality (HSEQ) management system and a strong safety-focused
culture. Management has appropriate safety practices and procedures
including disaster recovery plans and comprehensive insurance cover
across our fleet.
Training and
Compliance
Our
employees undergo continuous and rigorous training on operational
best practices.
Scheduled
Maintenance
The Group
adheres to regular maintenance schedules on its vessels to ensure
compliance with the highest safety standards.
Business Continuity
Plan
The Group
has implemented a business continuity management plan, which it
regularly updates to ensure the reliability of its operations,
including the capability to transfer crew and source spares from
different regions to maintain safe operations.
Management
continues to review and improve the current management systems and
monitors the performance of HSEQ.
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5 Liquidity and covenant
compliance
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The
business is exposed to short-term liquidity
management
risks due to high interest rates and inflation, which could impact
the debt service obligations and the Group's bank facilities
covenants.
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.
Breach of
covenant - All covenants are closely monitored 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.
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Liquidity
Management
The Group
continues to manage liquidity carefully through focusing on cash
collection from its customers.
Optimising Capital
Expenditure
The Group
continues to restrict capital expenditure to essential spending as
well as specific client requirements, but without jeopardising the
safe and reliable operations of its vessels.
Covenant
Compliance
The
management team and Board regularly examine future covenant
compliance based on the latest forecasts and take necessary
measures to avoid any potential where a future breach of covenant
is at risk. The Group monitors its various covenants throughout the
remaining period of the loan.
Focus on
Deleveraging
Management
continues to focus on making early repayments of the bank loans to
reduce the interest costs, improve our leverage position and meet
our covenant requirements.
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6 People
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Attracting,
retaining, recruiting
and
developing a skilled workforce.
Losing
skills or failing to attract new talent to the business has the
potential to undermine performance.
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Effective Communication,
Training and Engagement Initiatives
Communication has remained a key practice of management. GMS
held a full two-day strategy meeting at the Group's headquarters in
Abu Dhabi. This brought together the Board and Senior Management in
a productive forum discussing longer-term plans for the business.
It included presentations and discussion on each key aspect of the
Group's operations, recent and future industry developments and
ongoing and future strategic plans.
Further,
events like our recent Abu Dhabi headquarters celebration,
recognising employee milestones from 10-25 years of tenure,
reinforce our united culture. As the Group matures and longtime
experts pass their torches, we are committed to developing the next
generation of leaders equipped to guide our mission.
Remuneration
Policy
The
Short-Term Incentive Plan (STIP) is based on a single Business
Corporate Scorecard to ensure all staff are aligned and
incentivised around delivering a single set of common
goals.
Equal
Opportunities
GMS is
engaged in fair and transparent recruitment practices. It has a
zero-tolerance policy towards discrimination and provides equal
opportunities for all employees.
Further,
GMS adds value through development programs, promotion from within
the organisation and focus on growing talent.
Resource
Planning
The Group
has identified all critical roles held by individuals and have
adopted processes
to ensure
the smooth transition in the event of changes in those personnel.
Also, in the short term, the Group utilised recruitment specialists
and head-hunters to fulfil key positions as the need had
arisen.
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7 Legal, economic, and
political conditions
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Political
instability in the regions in which
GMS
operates (and recruit from) may adversely affect its
operations.
As the
majority of crew for certain key positions come from Eastern Europe
and Southeast Asia, political instability may hamper the
recruitment, retention and deployment of personnel.
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Emergency Response Planning
and Insurance
For all our
major assets and areas of operation, the Group maintains emergency
preparedness plans. Insurance cover over the Group's assets is
reviewed regularly to ensure sufficient cover is in
place.
Workforce Planning and
Monitoring
Workforce
planning and demographic analysis is undertaken in order to
increase diversity within the Group. Multiple new recruitment
agencies registered to source and diversify crew composition across
different geographies.
Monitoring Inflation and
Interest Rates
Management
is continually monitoring the liquidity position from changes in
inflation and a focus on cost reduction. During the year, GMS has
recruited a Cost Controller to monitor and manage financial
expenditures to ensure adherence to budgetary constraints and
optimise cost efficiency. The key aim of the Group is to deleverage
through early repayments, which will reduce the impact of
interest.
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8 Compliance and
regulation
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Non-compliance with anti-bribery and corruption regulations
could be detrimental to stakeholder relations and lead to
reputational and financial loss.
GMS'
operations are subject to international conventions on - and a
variety of complex federal and local laws, regulations and
guidelines relating to - health, safety and the protection of the
environment. Compliance with these has become increasingly costly,
complex and stringent. Failure to appropriately identify and comply
with laws and regulations, could lead to regulatory
investigations.
Compliance
with recently introduced UAE Corporate Tax Regulations, including
adherence to transfer pricing requirements, poses potential
administrative and financial obligations for the Group.
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Code of
Conduct
The Group
has a Code of Conduct which includes anti-bribery and corruption
policies, and all employees are required to comply with this Code
when conducting business on behalf of the Group. It is
mandatory for employees to undergo in-house training on
anti-corruption. All suppliers are pre-notified of anti-bribery and
corruption policies and required to confirm their compliance with
these policies.
Regulations
A central
database is maintained which documents all of GMS' policies and
procedures which comply with laws and regulations within the
countries in which GMS operates.
A dedicated
Company Secretary is in place to help monitor compliance, in
particular for UK legal and corporate governance
obligations.
External
Review
The
internal auditors help ensure compliance with GMS policies,
procedures, internal controls and business processes.
Engagement of Tax
Consultant
A reputed
tax consultant has been engaged to assist with a Group tax health
check, a review of Group's transfer pricing policy and
implementation of corporate tax in the UAE.
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9 COVID-19 pandemic - Removed
during 2023
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10 Cyber-crime - security and
integrity
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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.
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Cybersecurity Monitoring and
Defence
GMS
operates multi-layer cyber-security defences which are monitored
for effectiveness to ensure they remain up to date.
GMS engages
with third-party specialists to provide security
services.
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11 Climate
change
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Climate
change poses both transition and physical risks to the
Group.
The
transition risks come from the decarbonisation of the global
economy.
This 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.
The
physical risks also interact with principal risk 4 - Our inability
to deliver safe and reliable operations.
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Legal and Policy
Monitoring
The Group
carefully monitors legislative developments to ensure compliance
with all relevant laws both in the UK and the Arabian Peninsula
region. The TCFD disclosure in this report explains our assessment
and response to climate-related risks to be transparent with our
stakeholders.
Physical
Infrastructure
The Group
monitors weather patterns to ensure conditions are suitable for our
offshore employees and vessels. Onshore buildings and offshore
vessels are designed to withstand the heat in the Arabian Peninsula
region.
Environmental
Impact
GMS aims to
minimise its environmental impact by installing energy and water
efficiency measures. We also ensure our machinery and engines are
regularly maintained so they operate efficiently.
Long-term
Planning
GMS has a
proven track record in the renewables sector which provides
versatility in our business model. Our vessels are built to be as
flexible as possible to maximise utilisation.
We are
aware that we may need to consider changing sea levels and
environmental legislation when replacing vessels that are being
retired in the long term.
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- Ends
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Enquiries: GMS
Mansour Al Alami, Executive
Chairman
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+44 (0) 207 603 1515
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Celicourt
Communications
Mark
Antelme
Philip Dennis
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+44 (0)20 8434 2643
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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 Middle East, South East 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 eight 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.