TIDMGMS
RNS Number : 3407O
Gulf Marine Services PLC
29 May 2020
FOR IMMEDIATE RELEASE 29 May 2020
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the
Group')
2019 ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
The Company advises that the 2019 Annual Report, the Notice of
the 2020 Annual General Meeting and Proxy Form are being made
available to shareholders electronically today, 29 May 2020. The
2019 Annual Report and the Notice of 2020 Annual General Meeting
will be available shortly on the Company's website at
www.gmsuae.com .
In accordance with Listing Rule 9.6.1R, copies of these
documents are being submitted to the UK Listing Authority via a
National Storage Mechanism and will shortly be available to the
public for inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
.
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 2019 Annual
Report. The appendices should be read in conjunction with the
Company's Full Year 2019 Results Announcement , issued at 07:00 on
1 May 2020, RNS Number 5839L . This material is not a substitute
for reading the full 2019 Annual Report.
Mailing of the 2019 Annual Report, Notice of the 2020 Annual
General Meeting and Proxy Form to shareholders will commence
shortly.
The Company will hold its Annual General Meeting (the 'AGM') at
12:00 noon on Tuesday, 30 June 2020. Further details are included
in the Notice of the Notice AGM. In light of prevailing public
health advice and following the compulsory measures imposed by the
UK Government in response to the COVID-19 pandemic, among other
things, prohibiting non-essential travel and public gatherings of
more than two people (the 'COVID-19 Measures'), shareholders should
not attempt to attend this year's AGM in person. The Board will be
implementing the following changes to the usual AGM
arrangements:
-- The Company expects only one Director and another GMS
designated shareholder representative to be in attendance at the
venue for quorum purposes to conduct the business of the
meeting.
-- No other Directors will be present in person.
-- Shareholders will not be permitted to attend the Company's
AGM in person and, if they attempt to do so, will be refused entry
to the meeting in line with the COVID-19 Measures and under the
Company's Articles.
-- There will be no update on trading or other management
statements given at the AGM, although a trading and operations
update will be published on the Company's website in advance of the
AGM.
-- Shareholders are encouraged to submit questions about the
business of the AGM in advance of the meeting by email 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.
-- In the event that our meeting arrangements change subsequent
to publication of this notice of AGM, the Company will publish
details on its website at http://www.gmsuae.com and, if
practicable, issue a further communication via a regulatory news
service.
-- Voting at the AGM will be by way of a poll so that all the
votes cast in advance by shareholders appointing the Chairman of
the Meeting as their proxy to vote on their behalf, can be taken
into account. Shareholders have one vote for each ordinary share
held when voting on a poll and this procedure ensures that every
vote can be cast.
-- The results of the AGM will be announced as soon as practical after it has taken place.
Shareholders wishing to vote on any of the matters of business
at the AGM are therefore strongly encouraged to:
1. Submit their votes (as soon as possible) in advance of the
meeting through the proxy and electronic voting facilities and to
appoint the Chairman of the meeting as their proxy for this
purpose.
2. Submit any questions in connection with the business of the
meeting in advance to the Company Secretary at cosec@gmsuae.com
.
3. Look out for any updates in connection with the arrangements
for the AGM via RNS and on the Company's website.
Appendix A
Statement of Directors' Responsibilities
The following responsibility statement is repeated here solely
for the purpose of complying with DTR 6.3.5. This statement relates
to and is extracted from page 79 of the 2019 Annual Report.
These responsibilities are for the full 2019 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;
-- 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 performance,
business model and strategy; and
-- all relevant information for report preparation was provided to the external auditor.
The Directors of the Company and their responsibilities as at 30
April 2020 are set out below:
Tim Summers, Executive Chairman
Steve Kersley, Chief Financial Officer
Mike Turner, Senior Independent Non-Executive Director
Dr Shona Grant, Independent non-executive Director
David Blewden, Independent Non-Executive Director
Mo Bississo, Non-Executive Director
Appendix B
Principal risks and uncertainties
The following has been extracted from pages 21 to 24 of the 2019
Annual Report:
The rating of the principal risks facing the Group in the short
to medium term are set out below, together with the mitigation
measures. These risks are not intended to be an exhaustive analysis
of all risks.
Risk Mitigating factors and actions
1 Liquidity and debt servicing
Due to the Group's current level of Renegotiation of bank facilities
debt, relative to cash flow and EBITDA, The Group has agreed a non-binding
it faces the risk that: term sheet to amend and extend bank
1. It might be unable to service capital facilities with its Lending Group.
and interest obligations as they fall If the documentation is completed
due. by 30 June 2020 as expected, this
2. It might fail to meet its covenant will reduce the severity of existing
obligations at the relevant testing covenant tests, while extending the
dates. tenor for the repayment of principal.
It will also deliver access to adequate
This would precipitate an event of working capital facilities and bonding.
Default under the Loan Agreements,
which would, in turn, give lenders Liquidity management
the right to accelerate repayment The Group has significantly reduced
of the outstanding loans, and then overdue receivables and continues
exercise security over the Group's to manage
assets, should immediate payment not liquidity carefully through focusing
be made. on receivables collections and managing
This would trigger an insolvency. the timing
of supplier payments. Short term cash
In that context, the business is highly flow, through to the finalisation
exposed to short-term liquidity management of the loan deal,
risks arising is tight.
from potential:
1. Increases in interest rates, which The need to complete binding loan
further increase debt service obligations. documentation in respect of the Group's
2. Unexpected increases in working restructured banking facilities and
capital (particularly through inability the Group's tight short-term liquidity
to collect receivables). position indicate a material uncertainty
3. Supplier disruption due to high that may cast significant doubt as
level of supplier overdues. to the Group's ability to continue
as a going concern. Notwithstanding
If access to bonding facilities is this material uncertainty, the Directors
restricted, precipitated by the current believe that based on the progress
funding difficulties, then our cash made to date in this regard, there
flows will be impacted, either through is good reason to believe that final
the requirement to cash collateralise loan documentation will be completed
bonds or turn away business. in a timely fashion; and that the
Group's working capital and liquidity
position can be managed effectively.
Refer to Note 3 of the consolidated
financial statements.
Cost management
The Group has implemented a comprehensive
cost reduction programme, removing
over US$ 13 million of annualised
costs in order to generate higher
EBITDA and increased cash to service
debt. Continual review of costs and
search for further efficiencies is
ongoing.
Hedging strategies
The Group has taken out hedges to
help mitigate the risk of volatility
of interest rates. See Note 10 of
the consolidated financial statements
for further details.
-------------------------------------------------------
2 Inability to secure an appropriate capital structure - equity
A continuing low share price driven Renegotiation of the debt facilities
by not having a suitable long-term (discussed above) will provide a platform
debt profile may prevent GMS from for rebuilding confidence in equity
raising sufficient levels of equity holders by giving the business time
to get an acceptable capital structure to deliver its turnaround plan, without
solution. the risk of lenders precipitating
an insolvency.
Beyond that, the delivery of lower
operating costs and higher utilisation,
through improved efficiencies, safe
and reliable operations and building
strong customer/stakeholder relationships,
will be key to driving improved profitability
and cash flow, which is expected to
deliver shareholder confidence and
a higher share price.
-------------------------------------------------------
3 Oil and Gas Market
Despite the current drop in global Business segment and geographical
oil demand arising from COVID-19, diversity
the Middle East Oil and Gas market The Group has established businesses
is active, with new vessels entering outside its core Middle Eastern markets
the market from Far Eastern shipyards (particularly in the North Sea), and
offering attractive financing structures outside of oil and gas (renewables).
in order to reduce high levels of
inventory of completed vessels. An Targeting
increase in supply could lead to lost We target contracts that align with
opportunities to charter our vessels. availability of vessel spec and that
This in turn could reduce our ability comply with client requirements.
to secure contracts.
Market knowledge and operational expertise
MENA NOCs have introduced local content The Group has a track record of established
requirements as part of their tender long-term relationships in the MENA
processes designed to giving preference region and North West Europe, which
to suppliers that commit to improving provides an understanding of our clients'
their local content and levels of requirements and operating standards.
spend and investment in-country. This
may prevent GMS from winning contracts Modification flexibility for clients
or lead to financial loss and/or reduction Our vessels are built to be as flexible
in margins on existing contracts which as possible allowing us to compete
will ultimately impact cash flows for a wide share of the market, helping
and profitability. us to maximise utilisation levels
and charter day rates. The Group is
The change in ownership/structures capable of modifying assets to satisfy
for North Sea oil and gas businesses client requirements and can do so
could lead to changes in client requirements in its own yard where appropriate.
or demand for our services, which
we may not be able to meet and therefore We embrace local content requirements
our customer base may reduce, and with a long history of operating for
contracts may be lost. NOCs in the
Middle East.
-------------------------------------------------------
4 Operations: inability to deliver safe and reliable operations
The Group may suffer commercial and Safety awareness
reputational damage from an environmental Safety and reliability are top priorities
or safety incident involving our employees, and are underpinned by our HSEQ management
visitors or contractors. system and strong safety-focused culture.
Management ensures appropriate safety
Inadequate preparation for emergency practices and procedures; disaster
situations such as pandemics, natural recovery plans and the insurance coverage
disasters, geopolitical instability, of all commercial contracts are in
could have a negative impact on our place.
business.
Training and compliance
Insufficient insurance coverage may Our employees undergo continuous training
lead to financial loss. This is generally on operational best practices.
relevant but also specifically in
relation to the relocation of our Scheduled maintenance
vessels. The Group follows regular maintenance
schedules on its vessels and the condition
of the vessels is consistently monitored.
Business continuity plan
The Group has in place a business
continuity management plan which it
regularly maintains.
Insurance
The Group regularly liaise with insurance
brokers to ensure sufficient coverage.
-------------------------------------------------------
5 Customer concentration
The Group is reliant on a limited Continuous communication with clients
number of NOCs, IOCs and international The Group maintains strong relationship
EPC clients. If one of our clients with its clients though continuous
were to move away from us to a competitor, communication and a history of providing
this would lead to changes in our safe and reliable services.
contract profile and pipeline and
expose us to losses. Business Segment and Geographical
Diversity
The Group has established businesses
outside its core Middle Eastern markets
(particularly in the North Sea), and
outside of oil and gas (renewables).
It is actively looking to diversify
its market footprint.
-------------------------------------------------------
6 Legal, economic, and political conditions
Political instability in the regions Emergency response planning and insurance
in which we operate (and recruit from) For all our major assets and areas
may adversely affect our operations. of operation, the Group maintains
emergency preparedness plans. We regularly
Continuing uncertainty surrounding review the insurance coverage over
trade arrangements following the UK's the Group's assets to ensure adequate
exit from the European Union ('Brexit') cover is in place.
and potential legislative changes
results in increased uncertainty over Workforce planning and monitoring
future policy, and regulation in the Workforce planning and demographic
United Kingdom, which could impact analysis is completed in order to
Group operations increase diversity.
Brexit
We support the free movement of goods,
services and people. Management continue
to monitor the status of the UK Government's
negotiations, changes in legislation
and future policies.
-------------------------------------------------------
7 People
Attracting, retaining, recruiting Communication
and developing a skilled workforce Communication aligns towards our common
is key. goals. Feedback from employees is
actively sought, using employee surveys.
Losing skills or failing to attract A Board member is explicitly tasked
new talent to our business has the with monitoring the level of engagement
potential to undermine performance. and alignment across the organisation.
Inadequate succession planning and Remuneration Policy
lack of identification of critical The Short Term Incentive Plan (STIP)
roles may result in disruption if has been restructured around a single
the related personnel leave the Group. Business Scorecard to ensure all staff
are incentivised around a single set
of common goals. In December 2019
we completed the first formal Employee
Survey and results are being evaluated
and appropriate actions are being
implemented.
Equal opportunities
GMS are engaged in fair and transparent
recruitment practices. We have a zero-tolerance
policy towards discrimination and
we provide equal opportunities for
all employees.
Resource planning
The Group is in the process of identifying
critical roles and preparing plans
to ensure smooth transition in case
of changes in personnel.
-------------------------------------------------------
8 Cyber crime - security and integrity
Phishing attempts result in inappropriate Cybersecurity monitoring and defence
transactions, data leakage and financial GMS operates multi-layer cybersecurity
loss. The Group is at risk of loss defences which are monitored for effectiveness
through financial cybercrime. to ensure they remain up to date.
We engage with 3rd party specialists
to provide security services.
-------------------------------------------------------
9 Compliance and regulation
Non-compliance with anti-bribery and Code of conduct
corruption regulations could damage The Group has a Code of Conduct which
stakeholder relations and lead to includes anti-bribery and corruption
reputational and financial loss. policies and all employees are required
to comply with this Code when conducting
Failure to appropriately identify business on behalf of the Group. Employees
and comply with laws and regulations are required to undergo in-house training
and other regulatory statutes in new on anti corruption. All suppliers
and existing markets could lead to are pre-notified of anti-bribery and
regulatory investigations. corruption policies and required to
confirm compliance with these policies.
Regulations
A central database is maintained which
documents all our policies and procedures
which comply with laws and regulations
within the countries in which we operate.
On specialist topics, we make use
of external advisors, where appropriate.
In 2019 we appointed a dedicated Company
Secretary to help monitor compliance,
in particular, with regard to UK legal
and corporate governance obligations.
External Review
Our Internal Audit function helps
ensure compliance with GMS policies,
procedures, internal controls and
business processes. The Group's vessels
are also audited by external bodies
such as the American Bureau of Shipping
(ABS).
-------------------------------------------------------
10 Failure to meet customers' requirements
There is a risk that the Group's fleet Flexibility and innovation
capabilities no longer match with We respond directly to client feedback,
changing client requirements. which allows us to bid on a wide range
Failure to deliver the specifications of contracts.
and expected performance could lead
to reputational damage and impact Vessel monitoring
our ability to win work. The Group has procedures in place
such as the Planned Maintenance System
to ensure that the vessels undergo
regular preventative maintenance.
The Group's robust operating standards
result in minimal downtime.
-------------------------------------------------------
11 COVID-19 pandemic
There is a health and safety risk Hygiene measures
to staff, both onshore and offshore, We have implemented extensive hygiene
who come in contact with confirmed control and prevention measures across
cases. the fleet and for our onshore staff.
Our clients have adopted similar measures,
There is the risk that offshore staff in many cases in compliance with strict
will be unable to board or leave Group Government directives in force across
vessels, given restrictions on movement the countries in which we operate.
placed by the countries in which we
operate. Offshore rotations
Crew change restrictions are in place
There is the risk that onshore staff to protect offshore staff from exposure
will be unable to work as normal due to infection.
to mandatory health and safety restrictions,
placed by Government, including quarantine Remote working
and travel restrictions. Onshore staff are working virtually
from their homes, with only a skeleton
Disruption might be caused to the workforce in our main office.
supply chain, caused by the impact
of COVID-19 on our suppliers' operations. Supply chain
We have reviewed our supply chain
The impact of COVID-19 and the resultant to ensure we can make alternative
adverse impact on oil prices, on our arrangements, in the event of supply
client's financial position might disruption. In most critical cases
lead to loss of new business development we have UAE based alternatives.
opportunities, the re-negotiation
of existing contracts, or failure Customer base
of clients to pay. 76% utilisation has already been secured
on committed contracts in 2020. Demand
in the Middle East remains robust
with core customers continuing with
extensive tender programmes. 12 of
our 13 vessels are now based in the
Middle East. Most of our major customers
are well capitalised National or International
Oil Companies.
-------------------------------------------------------
- Ends -
Enquiries: GMS
Tim Summers, Executive Chairman
Tony Hunter, Company Secretary +44 (0) 207 603 1515
Brunswick (PR Adviser to GMS)
Patrick Handley - UK
Will Medvei - UK +44 (0) 20 7404 5959
Jade Mamarbachi - UAE +971 (0) 50 600 3829
Gulf Marine Services PLC's Legal Entity Identifier is
213800IGS2QE89SAJF77
www.gmsuae.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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACSGUGDUBUDDGGC
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