REG - Gulf Marine Services - Half-year Report
04/09/2024 07:00
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RNS Number : 7897C Gulf Marine Services PLC 04 September 2024
04 September 2024
Gulf Marine Services PLC
('Gulf Marine Services', 'GMS', 'the Company' or 'the Group')
Announcement of Interim results for the six months period ended 30 June 2024
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 period ended 30 June 2024 (H1
2024).
Overview
H1 2022 H1 2023 H1 2024 H1 2024 versus
US$ m US$ m US$ m H1 2023 change
Revenue 66.4 74.3 80.7 9%
Gross profit 27.4 34.8 38.8 11%
Adjusted EBITDA(1) 37.3 44.3 47.7 8%
Net profit 13.1 8.7 7.4 -15%
Net Leverage Ratio(1) 4.56:1 3.75:1 2.62:1 -30%
H1 Financial and Operational Highlights:
· Net leverage ratio(1) on 30 June 2024 improved to 2.62:1 (31 December 2023:
3.05:1). Net bank debt(1) lowered by US$ 28.8 million to US$ 238.5 million (31
December 2023: US$ 267.3 million) as the Group continues its focus on
deleveraging. In addition to its contractual obligations, the Group made an
additional payment of US$ 5.0 million in debt reduction. Further measures were
taken to minimise interest charges.
· The Group achieved revenue of US$ 80.7 million for the first half of 2024,
reflecting an increase of 9% compared to US$ 74.3 million in H1 2023. The
increase in revenue was attributed to improvements in fleet average day rates
to $32.4k (H1 2023: US$ 30.4k) This was largely driven by higher demand for
our S-Class vessels. The increase was partially offset by a decrease in fleet
average utilization from 93% in H1 2023 to 91% in H1 2024. This decrease was
largely attributed to necessary planned downtime for the maintenance and
drydocking of various S-Class and K-Class vessels.
· Gross profit margin improved to 48% (H1 2023: 47%).
· Adjusted EBITDA increased by 8% reaching US$ 47.7 million (H1 2023: US$ 44.3
million) driven by the increase in revenue. Adjusted EBITDA margin remained at
59%.
· Group's net profit for the first half of 2024 decreased by 15% to US$ 7.4
million (H1 2023: US$ 8.7 million). Despite the growth in revenue and
reduction in finance costs, net profit reduced as a consequence of the impact
of fair value of warrants with the increased share price, increase in tax
expense and general administrative expenses.
· Finance expenses decreased to US$ 12.3 million (H1 2023: US$ 17.5 million),
driven by the cessation of 250 basis points (bps) Profit-In-Kind (PIK)
interest, reduction of margin rate by 90 bps, and a further reduction in
margin by 10 bps. The first two reductions were due to achieving a net
leverage ratio below 4:1 as of 31 March 2023, and the third reduction was
achieved upon reaching a net leverage ratio below 3:1 as of 31 March 2024.
· Fair value of the warrants at 30 June 2024 amounted to US$ 11.3 million (31
December 2023: US$ 14.3 million) representing 53.4 million warrants (31
December 2023: 87.6 million warrants). The reduction in the number of
outstanding warrants is due to their partial exercise/settlement during H1
2024 resulting in issue of 53.5 million ordinary shares. The fair value of the
warrants exercised amounting to US$ 10.4 million was reclassified from
liability to equity. Further, the impact of changes in the fair value of the
warrants increased to US$ 7.5 million during H1 2024 (H1 2023: US$ 0.7
million), primarily due to increase in the Group's share price and partially
offset by a decrease in number of outstanding warrants.
· The basic earnings per share for the period decreased to US$ 0.68, as compared
to US$ 0.82 in the first half of 2023. Further, the diluted earnings per share
for the period decreased to US$ 0.63 compared to US$ 0.82 in the first half of
2023. Had the warrants not been exercised (resulting in issue of additional
shares during the period), basic loss per share and diluted loss per share
would have been US$ 0.02 and US$ 0.02 respectively.
(1) This represents an Adjusted Performance Measure (APM) as defined in the
Glossary which is included in Note 24 to the interim consolidated Financial
Statements.
Outlook:
· Adjusted EBITDA guidance for 2024 remains in the range of US$ 92 - 100
million.
· Demand in the market remains strong due to a combination of high market
activity and limited vessel availability. An estimated 18-21 new vessels are
expected to be operational in the next 2 to 3 years. We expect market growth
and retirement of aged assets from 2025-2027 to absorb the supply increase.
· Secured backlog was US$ 426.8 million on 30 June 2024 (30 June 2023: US$ 301.4
million), which reflects the additional contract awards announced over the
last 12 months, offset by the revenue recognised.
· Contract awards announced in H1 2024 have a combined total charter period of
14.3 years (H1 2023: 2.4 years) which underscores the ongoing strength in
demand for our vessels across the various markets in which we operate. The
Group is currently working on potential new contracts to further improve the
inventory and address the backlog.
Mansour Al Alami, Executive Chairman, GMS said:
"We remain committed to our strategy of deleveraging, prioritizing the shift
of value from lenders to shareholders, and are on course to meet our 2024
adjusted EBITDA guidance. This progress has been bolstered by higher day rates
and disciplined performance in the first half of the year. Despite ongoing
challenges such as operational disruptions, inflation, and elevated borrowing
costs, we are actively managing these risks and are confident in our ability
to further navigate the Company towards continued success."
Enquiries:
Gulf Marine Services PLC
Mansour Al Alami Tel: +44 (0)20 7603 1515
Executive Chairman
Celicourt Communications Tel: +44 (0) 20 7770 6424
Mark Antelme
Philip Dennis
Ali AlQahtani
Chairman's Review
Group performance
During the first half of 2024, the Group showed an improvement in its
financial performance, driven by a 7% increase in average day rates. Although
fleet average utilization was 91%, reflecting a 2% decline from H1 2023, this
decrease was attributable to planned maintenance and drydocking. It's crucial
to highlight that the increase in day rates represent fleet-wide averages.
With some contracts carried over from previous years at lower rates, the
actual increase for new contracts surpassed the reported average, showcasing a
positive trend in securing new contracts at higher rates. The revenue growth
contributed to improved adjusted EBITDA of US$ 47.7 million, compared to US$
44.3 million reported in H1 2023.
Capital structure and liquidity
The Group remains committed to deleveraging. The net leverage ratio was
reduced to 2.62 times as of 30 June 2024, down from 3.05 times on 31 December
2023. This improvement was driven by a reduction in net bank debt to US$ 238.5
million (31 December 2023: US$ 267.3 million) and improved adjusted EBITDA.
The Group prepaid US$ 21.0 million of its obligation for the year, during H1
2024, towards its debt and made an additional payment of US$ 5.0 million.
Achieving a net leverage ratio below 3:1 at the end of the first quarter
enabled us to reduce the margin rate by 10 bps, which is in addition to the
250 bps reduction in margin rate achieved in H1 2023, when the net leverage
was reduced below 4:1. Subsequent to the period end, the Group made further
prepayments towards the bank borrowings of US$ 11.0 million.
We recently announced a US$ 300 million debt facility, marking another
milestone in the Group's progress. This potential transaction is commercially
approved by all parties and the contractual arrangements, currently in
progress, are expected to be finalised within the next couple of months.
Management is confident that the deal will be signed consistent with the
agreed term sheet. This development indicates a new beginning for us and paves
the way to meet our long-term goals of growth and rewarding shareholders,
while maintaining our dedication to agility.
This facility enables us to increase shareholder value through strategic
investments in growth, as well as by reducing restrictions on dividend
payments and share buybacks. GMS will seek opportunities to add assets that
can promptly enhance our backlog and profitability, ensuring favourable terms
for these acquisitions.
GMS is closely observing the encouraging developments in its shareholder
registry. We are delighted to welcome our new investors.
Board Update
By way of a separate announcement issued today, the Company is announcing that
Hassan Heikal, Deputy Chairman of the Company, is stepping down from the Board
with immediate effect. The Board is grateful to Mr Heikal for the support
and guidance that he has provided to the Board and the Company over the past
four years and extends to him every good wish for the future.
Outlook
Given the Group's improved performance in H1 2024, we reaffirm our adjusted
EBITDA guidance for 2024, projecting a range between US$ 92 million and US$
100 million. This guidance is aligned with our current market conditions and
expectations. We are also working on revisiting our EBITDA guidance for 2025
towards year end. Further, our secured backlog improved to US$ 426.8 million
on 30 June 2024 (30 June 2023: US$ 301.4 million).
Mansour Al Alami
Executive Chairman
03 September 2024
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 can serve
clients' requirements across the globe, including those in Arabian Peninsula
region and Europe.
The GMS fleet of 13 SESVs is amongst the youngest in the industry. 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.
Financial Review
H1 2022 H1 2023 H1 2024 H1 2024 versus
US$ m US$ m US$ m H1 2023 change
Revenue 66.4 74.3 80.7 9%
Gross profit 27.4 34.8 38.8 11%
Adjusted EBITDA 37.3 44.3 47.7 8%
Net profit for the period 13.1 8.7 7.4 -15%
Net Leverage Ratio 4.56:1 3.75:1 2.62:1 -30%
Revenue and segmental profit
The Group reported 9% increase in revenue, reaching US$ 80.7 million compared
to the previous period's US$ 74.3 million, driven by an increase in average
day rates for the period by 7%. The increase is partially offset by a decrease
in fleet average utilisation from 93% in H1 2023 to 91% in H1 2024.
Average day rates across the fleet increased by 7% to US$ 32.4k compared to
the previous period's US$ 30.4k with improvements in S-Class and K-Class
vessels. S-Class average day rates rose by 21% to US$ 40.1k (H1 2023: US$
33.1k), while K-Class average day rates improved by 7% to US$ 22.6k (H1 2023:
US$ 21.2k). E-Class normalised average day rate also improved by 2% to US$
41.3k (H1 2023: US$ 40.6k).
Utilisation continues to be at a high level; however, it decreased by two
percentage points to 91% compared to H1 2023's 93%. S-Class and K-Class
vessels achieved relatively lower utilisation at 86% (H1 2023: 96%) and 91%
(H1 2023: 95%), respectively, due to planned downtime for maintenance and
drydocking. E-Class vessels utilisation improved by 6% to 94% (H1 2023: 88%)
reflecting improved backlog.
The table below shows the contribution to revenue and segment gross profit
made by each vessel class during the period:
Revenue Gross profit before adjustment for depreciation, amortization and impairment
charges
(US$'000)
Vessel Class
H1 2024 H1 2023 H1 2024 H1 2023
K-Class vessels 28,178 27,781 17,383 17,244
S-Class vessels 18,947 17,691 12,951 12,407
E-Class vessels 33,593 28,813 24,231 19,850
Total 80,718 74,285 54,565 49,501
Cost of sales and general & administrative expenses
Cost of sales as a percentage of revenue remained flat at 52%. Depreciation
and amortisation charged to cost of sales increased to US$ 15.5 million (H1
2023: US$ 14.8 million) due to reversal of previously recognised impairments,
as at 31 December 2023 and additional capital expenditure incurred during the
current and prior period.
Underlying general and administrative expenses(1) (which excludes depreciation
and amortisation) increased as a percentage of revenue to 8% from 6% in H1
2023 driven by increased staff costs and professional fees.
(1)Represents general and administrative costs excluding depreciation,
amortisation and other exceptional costs. A reconciliation of this measure is
provided in Note 5 to the interim consolidated financial statements
Finance expenses
Finance expenses decreased to US$ 12.3 million (H1 2023: US$ 17.5 million),
driven by the cessation of a 250 basis points (bps) Profit-In-Kind (PIK), a
reduction of the margin rate by 90 bps, and a further reduction in the margin
by 10 bps. The first two reductions were due to achieving a net leverage ratio
below 4.0:1, as of 31 March 2023, and the third reduction was due to achieving
a net leverage ratio below 3.0:1 as of 31 March 2024.
A net foreign exchange loss of US$ 0.3 million in H1 2024 (H1 2023: loss of
US$ 0.6 million) arose from unfavourable movements in exchange rates of the
Pound Sterling against the US Dollar.
Fair value of the warrants
Fair value of the warrants, at 30 June 2024 amounted to US$ 11.3 million (31
December 2023: US$ 14.3 million) representing 53.4 million warrants (31
December 2023: 87.6 million warrants). The reduction in the number of
outstanding warrants is due to their partial exercise/settlement during H1
2024 resulting in issue of 53.5 million ordinary shares. The fair value of the
warrants exercised amounting to US$ 10.4 million was reclassified from
liability to equity. Further, the impact of changes in the fair value of the
warrants increased by US$ 7.5 million during H1 2024 (H1 2023: US$ 0.6
million), primarily due to increase in the Group's share price and partially
offset by a decrease in number of outstanding warrants.
Tax expenses
Tax expense increased to US$ 2.5 million (H1 2023: US$ 1.3 million) as the
introduction of UAE corporate tax and other tax expenses negatively impacted
our H1 figures.
Earnings
Net profit for the period decreased by 15% to US$ 7.4 million compared to US$
8.7 million reported in H1 2023. Despite the growth in revenue and reduction
in finance costs, net profit reduced due to an increase in the fair value of
warrant liabilities and an increase in general & administrative expenses
(as explained above).
Cash flow and liquidity
During the period, the Group delivered higher operating cash flows of US$ 45.6
million (H1 2023: US$ 42.1 million). This increase is primarily from higher
revenues generated during the period. The net cash outflow from investing
activities increased to US$ 6.3 million (H1 2023: US$ 2.6 million).
The Group's net cash outflow from financing activities was US$ 40.6 million
(H1 2023: US$ 46.7 million) mainly comprising of repayments to the banks of
US$ 30.0 million (H1 2023: US$ 28.6 million) and interest paid of US$ 12.0
million (H1 2023: US$ 16.3 million). The Group continues to focus on
deleveraging by prepaying US$ 21.0 million of its obligation for the period,
during H1 2024. Further, an additional payment of US$ 5.0 million was made
towards its debt during the period. The above cash outflows were partially
offset by the funds received on issuance of share capital because of warrants
being exercised. Subsequent to the period end, the Group made a prepayment of
US$ 11.0 million to the banks.
The Group has US$7.4 million of available resources comprising cash and cash
equivalents at the reporting date. Further, it has a working capital facility
of US$ 15.0 million (31 December 2023: US$ 15.0 million) which can be utilised
to draw down cash, of which US$ 2.0 million (31 December 2023: US$ 2.0
million) was utilised, leaving US$ 13.0 million (31 December 2023: US$ 13.0
million) available for drawdown. The facility expires alongside the main debt
facility in June 2025. Please refer to the Net Bank Debt and Borrowings
section for the update on refinancing.
Balance sheet
Total non-current assets at 30 June 2024 decreased to US$ 614.7 million (31
December 2023: US$ 621.0 million), reflecting depreciation charge of US$ 17.9
million (H1 2023: US$ 15.6 million) on the non-current assets. The decrease is
partially offset by capital expenditures of US$ 11.6 million (H1 2023: US$ 6.4
million) representing cost of planned equipment upgrades and dry-docking of
vessels.
Total current assets at 30 June 2024 increased to US$ 49.8 million (31
December 2023: US$ 47.4 million). Trade receivables stood almost flat at US$
30.4 million (31 December 2023: US$ 30.6 million). The Group reassessed the
position of the client which entered administration during 2023 and decided to
recognise an additional provision of US$ 0.25 million. Further, accrued
revenue increased to US$ 7.6 million (31 December 2023: US$ 2.7 million).
The total current liabilities increased to US$ 306.3 million (31 December
2023: US$ 99.5 million), primarily due to the reclassification of bank
borrowings from non-current to current liabilities considering its maturity in
June 2025. This increase also reflects higher trade and other payables and
lease liability amounting to US$ 38.4 million (31 December 2023: US$ 35.1
million) and US$ 2.7 million (31 December 2023: US$ 1.6 million),
respectively. The increase in current liabilities is partially offset by
payments made during H1 2024 towards the Group's debt facilities and reduction
in the fair value of warrants due to a lower number of warrants after their
partial exercise during H1 2024.
While current assets are significantly lower than current liabilities, mainly
due to the reclassification of bank borrowings, the Group expects to honour
all its liabilities as they fall due. The Group reaches this conclusion by
excluding the impact of the current term loan expiring in the next 12 months,
as we have successfully reached an agreement to refinance the term facility
following the period end (refer below section), as well as the impact of the
derivative financial instrument liability classified as current (as it will
not generate a cash outflow of funds).
Total non-current liabilities reduced to US$ 6.3 million (31 December 2023:
US$ 238.6 million) primarily due to the reclassification of bank borrowings
from non-current to current liabilities, as explained above.
Net Bank Debt and Borrowings
Net bank debt reduced to US$ 238.5 million (31 December 2023: US$ 267.3
million). This was a result of management's commitment to accelerate
deleveraging. The Group prepaid US$ 21.0 million of its obligation for the
year, during H1 2024. Further, an additional payment of US$ 5.0 million was
made towards the Group's debt during the period.
The Group's existing debt facility is set to mature in June 2025. On 1 August
2024 the Group reached an agreement to refinance its current bank debt. Three
banks, two of which are current lenders, will have an equal participation in
the refinancing facilities. This potential transaction is commercially
approved by all parties and the contractual arrangements, currently in
progress, are expected to be finalised within the next couple of months.
Management is confident that the deal will be signed consistent with the
agreed term sheet.
The new facility will consist of a term loan of an amount equivalent to USD
250 million in United Arab Emirates Dirhams (AED) as a well as a working
capital facility of an amount equivalent to USD 50 million, also in AED. The
loan will have a tenor of five years from the facility agreement date. 80% of
the term loan will be amortized quarterly over 5 years with a 20% balloon.
Exposure to the AED will be hedged in full.
This landmark transaction will have significant advantages to all
stakeholders. The financing costs, currently standing at 300 bps (+ SOFR) will
gradually go down to 225 bps (+ EIBOR) when net leverage gets below 2.0 times.
At the transaction date, expected net leverage levels, the financing costs
will be at 250 bps plus EIBOR. This will provide additional cash liquidity to
GMS. The surplus liquidity the deal provides will accelerate the achievement
of GMS goals.
Going concern
The Group's forecast indicates that its refinanced debt facility, as announced
on 1 August 2024, will provide sufficient liquidity for its requirements for
at least the next twelve months and accordingly the condensed consolidated
financial statements for the Group for the current period have been prepared
on the Going Concern basis. For further details please refer the going concern
disclosure in Note 2 to the condensed consolidated financial statements.
Related party transactions
During the period, there were related party transactions for catering services
of US$ 82k (H1 2023: US$ 402k), overhauling services of US$ 597k (H1 2023: US$
156k) and laboratory services of US$ 3k (H1 2023: nil) with affiliates of
Mazrui International LLC, the Group's second largest shareholder (25.6%).
All related party transactions disclosed herein have been conducted at arm's
length and entered into after a competitive bidding process. This process
ensures that the terms and conditions of such transactions are fair,
reasonable, and comparable to those that would be available in similar
transactions with unrelated third parties.
Risks and uncertainties
Several risks and uncertainties could significantly influence the Group's
performance for the rest of 2024. The Directors believe that the principal
risks and uncertainties have remained consistent since the release of the
Annual Report for the year ended 31 December 2023. For a comprehensive
analysis of these risks and the Group's mitigation strategies, please refer to
pages 12 to 18 of the 2023 Annual Report, available at www.gmsplc.com
(http://www.gmsplc.com) .
-
· Utilization levels might decline due to several key factors: a high
concentration of customers leading to possible contract shifts and increased
competition risk; ADNOC's fleet expansion dominating the UAE market; and
potential misalignment of fleet capabilities with evolving client demands,
which could necessitate costly upgrades to meet new SESV standards.
· National Oil Companies (NOCs) in the Arabian Peninsula have local content
requirements in their tender processes, favouring suppliers that enhance local
investment and spending. This could prevent GMS from securing new contracts or
result in financial losses and reduced profit margins on existing contracts,
ultimately impacting operating cash flows and net profitability.
· Geo-political events or pandemics may disrupt safe asset operations due to
restricted crew travel. The Group could face commercial and reputational
damage from environmental or safety incidents involving employees or
contractors. Insufficient preparation for equipment failures, failure to meet
client demands, or unpredictable weather may negatively impact the business,
and inadequate insurance coverage could lead to financial losses.
· The business faces short-term liquidity risks from high interest rates and
inflation, which could affect debt service and bank covenants. Reduced
liquidity may impact future operations and trigger a default, giving lenders
the right to accelerate loan repayments and claim assets.
· Attracting, retaining, recruiting, and developing a skilled workforce is
crucial. Losing talent or failing to attract new skilled employees could
undermine the business's performance.
· Political instability in the regions where GMS recruits, could adversely
affect its operations. With many key crew members coming from Eastern Europe
and Southeast Asia, such instability may disrupt recruitment, retention, and
deployment of personnel.
· Non-compliance with anti-bribery and corruption regulations could harm
stakeholder relations and result in reputational and financial losses. GMS is
required to comply with complex international and local laws on health,
safety, and environmental protection, with increasing costs and stringent
requirements. Failure to comply could lead to regulatory investigations.
Additionally, adhering to new UAE Corporate Tax Regulations and transfer
pricing requirements may impose administrative and financial burdens on the
Group.
· 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 presents both transition and physical risks to the Group.
Transition risks include the global shift toward decarbonization, which may
alter investor sentiment, reduce client demand, and introduce new legislation
requiring increased reporting and greener alternatives. Physical risks involve
rising temperatures affecting working hours and rising sea levels impacting
operations.
RESPONSIBILITY STATEMENT
Financial information for the period ended 30 June 2024.
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
03 September 2024
03 September 2024
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 2024 which comprises the condensed consolidated
statement of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of changes in equity,
the condensed consolidated statement of cash flows, a summary of material
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 2024 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.
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 2023 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
Sep 3 2024
Chartered Accountants
1 Harbourmaster place,
IFSC,
Dublin 1,
Ireland.
GULF MARINE SERVICES PLC
Condensed Consolidated Statement of Comprehensive Income
for the period ended 30 June 2024
Six months period ended 30 June
2024 2023
US$'000 US$'000
Notes (Unaudited) (Unaudited)
Revenue 4,8 80,718 74,285
Cost of sales (41,667) (38,954)
Expected credit losses - net of recoveries 4 (211) (548)
Gross profit 38,840 34,783
General and administrative expenses (9,043) (6,098)
Operating profit 29,797 28,685
Finance income 83 74
Finance expenses 9 (12,300) (17,535)
Impact of change in fair value of derivative 17 (7,460) (652)
Foreign exchange loss, net (263) (617)
Other income 10 12
Profit for the period before taxation 9,867 9,967
Taxation charge for the period 6 (2,499) (1,256)
Profit for the period 7,368 8,711
Other comprehensive income - items that may be reclassified to profit or loss:
Net hedging gain reclassified to the profit or loss - 279
Exchange differences on translating foreign operations (44) 305
Total comprehensive income for the period 7,324 9,295
Profit attributable to:
Owners of the Company 7,023 8,336
Non-controlling interest 345 375
7,368 8,711
Total comprehensive income attributable to:
Owners of the Company 6,979 8,920
Non-controlling interest 345 375
7,324 9,295
Earnings per share
Basic (cents per share) 7 0.68 0.82
Diluted (cents per share) 7 0.63 0.82
All results are derived from continuing operations in each period. There are
no discontinued operations in either period.
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
GULF MARINE SERVICES PLC
Condensed Consolidated Statement of Financial Position
as at 30 June 2024
30 June 31 December
2024 2023
US$'000 US$'000
Notes (Unaudited) (Audited)
ASSETS
Non-current assets
Property and equipment 10 594,630 606,412
Dry docking expenditure 11 13,751 11,204
Right-of-use assets 6,334 3,347
Total non-current assets 614,715 620,963
Current assets
Trade receivables 12 30,442 30,646
Prepayments, advances and other receivables 13 11,949 8,057
Cash and cash equivalents 7,440 8,666
Total current assets 49,831 47,369
Total assets 664,546 668,332
EQUITY AND LIABILITIES
Capital and reserves
Share capital - Ordinary 14 31,472 30,117
Capital redemption reserve 15 46,445 46,445
Share premium account 13 111,995 99,105
Group restructuring reserve (49,710) (49,710)
Restricted reserve 272 272
Capital contribution 9,177 9,177
Translation reserve (2,586) (2,542)
Retained earnings 201,726 194,703
Attributable to the Owners of the Company 348,791 327,567
Non-controlling interest 3,059 2,714
Total equity 351,850 330,281
Current liabilities
Trade and other payables 38,352 35,054
Current tax liability 8,173 7,032
Bank borrowings - scheduled repayments within one year 16 245,939 41,500
Lease liabilities 2,670 1,623
Derivative financial instruments 17 11,304 14,275
Total current liabilities 306,438 99,484
Non-current liabilities
Provision for employees' end of service benefits 2,407 2,395
Bank borrowings - scheduled repayments more than one year 16 - 234,439
Lease liabilities 3,851 1,733
Total non-current liabilities 6,258 238,567
Total liabilities 312,696 338,051
Total equity and liabilities 664,546 668,332
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
GULF MARINE SERVICES PLC
Condensed Consolidated Statement of Changes in Equity
for the period ended 30 June 2024
Share capital - Ordinary Share premium account Group restructuring reserve Share based payment reserve Capital contribution Cash flow hedge reserve Translation Attributable to the owners of the Company Total
Capital redemption Reserve Non- controlling interest equity
Reserve Restricted Retained
reserve earnings
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$'000
As at 1 January 2024 30,117 46,445 99,105 (49,710) 272 - 9,177 - (2,542) 194,703 327,567 2,714 330,281
Profit for the period - - - - - - - - - 7,023 7,023 345 7,368
Other comprehensive income for the period
Exchange differences on foreign operations - - - - - - - - (44) - (44) - (44)
Total comprehensive income for the period - - - - - - - - (44) 7,023 6,979 345 7,324
Transactions with owners of the Company
Issue of share capital
1,355 - 12,973* - - - - - - - 14,328 - 14,328
Share issuance cost - - (83) - - - - - - - (83) - (83)
Total transactions with owners of the Company 1,355 - 12,890 - - - - - - - 14,245 - 14,245
As at 30 June 2024 31,472 46,445 111,995 (49,710) 272 - 9,177 - (2,586) 201,726 348,791 3,059 351,850
As at 1 January 2023 30,117 46,445 99,105 (49,710) 272 3,632 9,177 (279) (2,885) 149,712 285,586 1,988 287,574
Profit for the period - - - - - - - - - 8,336 8,336 375 8,711
Other comprehensive income for the period
Net hedging gain on interest hedges reclassified to the profit or loss
- - - - - - - 279 - - 279 - 279
Exchange differences on foreign operations
- - - - - - - - 305 - 305 - 305
Total comprehensive income for the period
- - - - - - - 279 305 8,336 8,920 375 9,295
Transactions with owners of the Company
Share based payment charge - - - - - 14 - - - 14 - 14
Transfer of share option reserve - - - - - (3,646) - - - 3,646 - - -
Total transactions with owners of the Company - - - - - (3,632) - - - 3,646 14 - 14
As at 30 June 2023 30,117 46,445 99,105 (49,710) 272 - 9,177 - (2,580) 161,694 294,520 2,363 296,883
*Addition to share premium amount reflects cash proceeds US$ 2.5m and release
of warrants liability of US$ 10.4m upon exercise of warrants.
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
GULF MARINE SERVICES PLC
Condensed Consolidated Statement of Cash Flows
for the period ended 30 June 2024
Six-month period ended 30 June
2024 2023
US$'000 US$'000
(Unaudited) (Unaudited)
Profit for the period 7,368 8,711
Adjustments for:
Depreciation of property and equipment (Note 10) 13,018 12,102
Amortisation of dry-docking expenditure (Note 11) 2,568 2,138
Amortisation of right-of-use asset 2,268 1,340
Income tax expense (Note 6) 2,499 1,256
End of service benefits charge 228 336
Movement in ECL provision during the period 211 548
Share based payment credit/(charge) - 14
Finance income (83) (74)
Finance expenses (Note 9) 12,300 17,535
Impact of change in fair value of warrant (Note 17) 7,460 652
Other income (10) (12)
Cash flow from operating activities before movement in working capital 47,827 44,546
Changes in trade receivables (7) (4,926)
Changes in prepayments, advances and other receivables (3,926) (2,120)
Changes in trade and other payables 3,298 5,693
Cash generated from operations 47,192 43,193
Taxation paid (1,358) (952)
End of service benefits paid (216) (172)
Net cash generated from operating activities 45,618 42,069
Investing activities
Payments for additions of property and equipment (1,236) (2,127)
Dry docking expenditure paid (5,115) (521)
Interest received 83 74
Net cash used in investing activities (6,268) (2,574)
Financing activities
Repayment of bank borrowings (30,000) (28,601)
Principal elements of lease payments (2,090) (1,828)
Proceeds from issue of share capital on exercise of warrants 3,897 -
Share issuance cost (83) -
Payment of costs associated with borrowings - (148)
Settlement of derivatives (Note 17) - 327
Interest paid on bank borrowings (12,048) (16,264)
Interest paid on leases (252) (137)
Net cash used in financing activities (40,576) (46,651)
Net decrease in cash and cash equivalents (1,226) (7,156)
Cash and cash equivalents at the beginning of the period 8,666 12,275
Cash and cash equivalents at the end of the period 7,440 5,119
The accompanying notes form an integral part of these condensed consolidated
interim financial statements.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024
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 interim financial statements of the Group for the
six-month period ended 30 June 2024 were authorised for issue on 03 September
2024. The condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of Section 434 of the Companies Act
2006. The condensed consolidated interim financial statements have been
reviewed, not audited.
The Group issued statutory consolidated financial statements for the year
ended 31 December 2023, 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 03 April 2024. 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 2023 has been
delivered to the Registrar of Companies.
During the period, the Group has issued ordinary shares on 10 May 2024 (refer
to Note 17 for further details).
2 Material accounting policies
The accounting policies and methods of computation adopted in the preparation
of these condensed consolidated interim financial statements are consistent
with those followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2023 as disclosed in the Annual
Report, except for the adoption of new standards and interpretations effective
as of 01 January 2024, which are described in more details below.
The condensed consolidated interim financial statements have been prepared on
the historical cost basis, except for derivative financial instruments that
are measured at fair values at the end of each reporting period. Historical
cost is generally based on the fair value of the consideration given in
exchange for assets.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
2 Material 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 interim 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 2023. In addition, results for the
six-month period ended 30 June 2024 are not necessarily indicative of the
results that may be expected for the financial year ending 31 December 2024.
The condensed consolidated statement of comprehensive income for the six-month
period ended 30 June 2024 is not affected significantly by seasonality of
results.
Going concern
The Group was in a net current liability position as at 30 June 2024 amounting
to US$ 256.6 million (31 December 2023: US$ 52.1 million). The current assets
are significantly lower than current liabilities primarily due to the
reclassification of bank borrowings from non-current to current liabilities
considering its maturity in June 2025.
On 1 August 2024 the Group reached an agreement to refinance its current bank
debt. Three banks, two of which are current lenders, will have an equal
participation in the refinancing facilities. This potential transaction is
commercially approved by all parties and the contractual arrangements,
currently in progress, are expected to be finalised within the next couple of
months. Management is confident that the deal will be signed consistent with
the agreed term sheet.
The agreed facilities comprise a term loan of an amount equivalent to USD 250
million in United Arab Emirates Dirhams ('AED') as a well as a working capital
facility of an amount equivalent to USD 50 million, also in AED. The loan will
have a tenor of five years from the facility agreement date, with 80%
repayable quarterly over five years and 20% due as a balloon payment at the
end of the tenor. Whilst the AED has been pegged to the USD for a number of
years, the Group is planning to hedge any potential exposure to this in
full. The new facilities will also be subject to the periodic compliance
with agreed covenants.
The financing costs, currently at 300 bps (+ SOFR) will gradually decrease to
225 bps (+EIBOR) when the Group's net leverage ratio falls below 2.0 times. At
transaction date expected net leverage levels, the financing costs will be at
250 bps plus EIBOR. This will provide additional cash liquidity to GMS. The
surplus liquidity the deal provides is expected to accelerate the achievement
of GMS's goals.
-------
The Group closely monitors its liquidity and is expected to meet its
short-term obligations over the next twelve months. During the period, the
Group made a loan prepayment of US$ 21.0 million and an additional payment of
US$ 5.0 million towards its bank borrowings. The loan prepayment and
additional payment were made after taking into account the forecast cash flows
in the second half of 2024.
The Group has US$ 7.4 million of cash and cash equivalents and an undrawn
working capital facility of US$ 13 million (31 December 2023: US$ 13 million)
at the reporting date. The working capital facility expires alongside the main
debt facility in June 2025.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
2 Material accounting policies (continued)
Going concern (continued)
The Group's forecasts indicate that its anticipated refinanced debt facility
will provide sufficient liquidity for its requirements for at least the next
12 months and accordingly, the condensed consolidated interim financial
statements for the Group for the period ended 30 June 2024 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 interim financial statements.
New accounting standards or amendments Effective date
- Amendments to IAS 1 Classification of Liabilities as Current or Non-current
and Non-current liabilities with covenants
1 January 2024
- Amendments to IFRS 16 Lease Liability in a Sale and Leaseback 1 January 2024
- Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements 1 January 2024
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 2024 will be provided in the Group's annual consolidated
financial statements for the year ending 31 December 2024.
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:
New accounting standards or amendments Effective date
- Amendments to IAS 21 Lack of Exchangeability 1 January 2025
- Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Available for optional adoption / effective date deferred indefinitely
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 financial information.
3 Key sources of Estimation Uncertainty and Critical
Accounting Judgements
In preparing these condensed consolidated interim financial statements,
management has made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the last annual consolidated financial statements.
These include the impairment and reversal of previous impairment of property
and equipment, impairment of financial assets, the fair valuation of warrants
and the critical accounting judgment relating to a subsidiary of the Group
that received a tax assessment from the Saudi tax authorities (ZATCA)
regarding the transfer pricing of our inter-group bareboat agreement.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
4 Segment reporting
The segment information provided to the chief operating decision makers for
the operating and reportable segments for the period include the following:
Gross profit before adjustments for depreciation, amortisation and impairment
charges
Revenue
6 months ended 30 June 6 months ended 30 June
2024 2023 2024 2023
US$'000 US$'000 US$'000 US$'000
K-Class vessels 28,178 27,781 17,383 17,244
S-Class vessels 18,947 17,691 12,951 12,407
E-Class vessels 33,593 28,813 24,231 19,850
_______ _______ _______ _______
Total revenue 80,718 74,285 54,565 49,501
_______ _______ _______ _______
Less:
Depreciation charged to cost of sales (12,946) (12,032)
Amortisation charged to cost of sales (2,568) (2,138)
Expected credit losses - net of recoveries (211) (548)
_______ _______
Adjusted gross profit 38,840 34,783
_______ _______
Gross profit 38,840 34,783
_______ _______
General and administrative expenses (9,043) (6,098)
Finance income 83 74
Finance expense (refer Note 9) (12,300) (17,535)
Impact of change in fair value of derivatives
(7,460) (652)
Foreign exchange loss, net (263) (617)
Other income 10 12
_______ _______
Profit before taxation 9,867 9,967
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 Interim Financial Statements
for the period ended 30 June 2024 (continued)
5 Presentation of non-GAAP results
The following table provides a reconciliation between the statutory and
non-statutory financial results:
Six months ended 30 June
2024 2023
US$'000 US$'000
Revenue 80,718 74,285
Cost of sales
-Cost of sales before depreciation, amortisation and impairment (26,153) (24,784)
Gross profit before depreciation, amortization & impairment 54,565 49,501
-Depreciation and amortisation (15,514) (14,170)
-Expected credit losses (211) (548)
Gross profit 38,840 34,783
General and administrative
-Depreciation and amortisation (2,340) (1,410)
-Other administrative costs (6,703) (4,688)
Operating profit 29,797 28,685
Finance income 83 74
Finance expense (12,300) (17,535)
Impact of change in fair value of derivatives (7,460) (652)
Other income 10 12
Foreign exchange loss, net (263) (617)
Profit before taxation 9,867 9,967
Taxation charge (2,499) (1,256)
Net profit after tax 7,368 8,711
Profit attributable to
Owners of the Company* 7,023 8,336
Non-controlling interest 345 375
Earnings per share (Basic) 0.68 0.82
Earnings per share (Diluted) 0.63 0.82
Supplementary non-statutory information
Operating profit 29,797 28,685
Add: Depreciation and amortisation charges 17,854 15,580
EBITDA(1) 47,651 44,265
(1)Please see Glossary for definition.
*There are no exceptional adjustments for the current and comparative periods,
so the adjusted non-GAAP results align with the statutory results.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
6 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
period in each taxable jurisdiction (being principally Qatar, the United
Kingdom, Saudi Arabia and United Arab Emirates). The Group effective tax rate
was 25.3% for the period ended June 2024 (Six months ended June 2023: 12.6%).
The current tax charge of US$ 2.5 million (six-month period ended June 2023:
US$ 1.3 million) included withholding tax amounting to US$ 1.0 million
(six-month period ended June 2023: US$ 1 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 inter-group bareboat agreement, for the period from 2017 to 2019.
The Group has currently filed an appeal with the Tax Violations and Disputes
Appellate Committee (TVDAC) 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 the Group 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. Nevertheless, during 2023, to reach an amicable solution, the
Group had also filed a settlement application with the Alternate Dispute
Resolution Committee (ADRC), which subsequently requested a settlement offer.
The Directors have submitted a settlement proposal and are currently awaiting
a response from the ADRC. Appropriate provisions for this case have been
recorded in the financial statements reflecting the directors current best
estimate of the outflows in line with IFRIC 23. The directors will continue to
keep this matter under review.
On 9 December 2022, the UAE Ministry of Finance released Federal Decree-Law
No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax
Law or the Law) to enact a Federal Corporate Tax regime in the UAE. This Law
has become effective for accounting periods beginning on or after 1 June 2023.
The Group's UAE operations is subject to a 9% corporation tax rate with effect
from 01 January 2024. A rate of 0% apply to taxable income not exceeding AED
375,000.
GMS has considered deferred tax implications in the preparation of these
condensed consolidated interim financial statements in respect of property 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 and equipment, that would result
in such a timing difference. Hence, management has concluded that no
adjustments to these condensed consolidated interim financial statements are
necessary.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
7 Earnings per share
6 months ended 30 June 6 months ended 30 June
2024 2023
Earnings for the purpose of calculating the basic and diluted earnings per 7,023 8,336
share being profit for the period attributable to Owners of the Company
(US$'000)
Earnings for the purpose of calculating the adjusted basic and diluted profit 7,023 8,336
per share (US$'000) (Note 5)
Weighted average number of shares ('000) 1,031,709 1,016,415
Weighted average diluted number of shares ('000) 1,116,317 1,016,415
Basic earnings per share (cents) 0.68 0.82
Diluted earnings per share (cents) 0.63 0.82
Adjusted earnings per share(1) (cents) 0.68 0.82
Adjusted diluted earnings per share(1) (cents) 0.63 0.82
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.
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 5). 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 warrants during the period.
Adjusted diluted earnings per share is calculated on the same basis but uses
adjusted profit (refer Note 5) attributable to the equity shareholders of the
Company.
The following table shows a reconciliation between basic and diluted average
number of shares:
30 June 2024 30 June 2023
000's 000's
Weighted average basic number of shares in issue 1,031,709 1,016,415
Weighted average effect of warrants 84,608 -
Weighted average diluted number of shares in issue 1,116,317 1,016,415
Refer Note 17 for details on exercise of warrants.
(1) This represents an Adjusted Performance Measure (APM) as defined in the
Glossary which is included in Note 24 to the condensed consolidated interim
financial statements.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
8 Revenue
30 June 2024 30 June 2023
US$'000 US$'000
Charter hire 40,496 36,759
Lease income 28,666 28,305
Messing and accommodation 6,106 4,640
Maintenance service 3,293 2,709
Mobilisation and demobilization 1,783 820
Sundry income 374 1,052
80,718 74,285
Revenue recognized - over time 80,344 73,124
Revenue recognized - point in time 374 1,161
80,718 74,285
Revenue by geographical segment is based on the geographical location of the
customer as shown below:
30 June 2024 30 June 2023
US$'000 US$'000
United Arab Emirates 23,561 29,101
Saudi Arabia 19,931 19,061
Qatar 28,073 20,978
Total - Arabian Peninsula region 71,565 69,140
Total - Europe 9,153 5,145
Total - Worldwide 80,718 74,285
The Group operates in both the oil and gas and renewables sector. Oil and gas
revenues are driven from both client operating cost expenditure and capex
expenditure. Renewables are primarily driven by windfarm developments from
client expenditure. Details are shown below:
Oil and gas 71,565 69,140
Renewables 9,153 5,145
80,718 74,285
9 Finance expenses
30 June 2024 30 June 2023
US$'000 US$'000
Interest on bank borrowings 11,628 16,493
Interest on finance leases 252 137
Other finance expenses 420 567
Loss on derivatives reclassified through profit and loss - 279
Net loss on changes in fair value of interest rate swap (note 17) - 59
12,300 17,535
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
10 Property and equipment
Vessels Vessel spares, fitting and other equipment Others Capital work-in-progress Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance as at 1 January 2024 898,200 60,757 2,250 10,569 971,776
Additions - - - 1,236 1,236
Transfers - 2,963 - (2,963) -
Balance as at 30 June 2024 898,200 63,720 2,250 8,842 973,012
Accumulated Depreciation and impairment
Balance at 1 January 2024 335,987 24,471 2,061 2,845 365,364
Depreciation expense 11,189 1,756 73 - 13,018
Balance as at 30 June 2024 347,176 26,227 2,134 2,845 378,382
Net Book Value as at 30 June 2024 551,024 37,493 116 5,997 594,630
Vessels Vessel spares, fitting and other equipment Others Capital work-in-progress Total
US$'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 - - - 4,326 4,326
Transfers - 523 - (523) -
Balance as at 31 December 2023 898,200 60,757 2,250 10,569 971,776
Accumulated Depreciation and impairment
Balance at 1 January 2023 348,515 21,219 1,916 2,845 374,495
Depreciation expense 20,900 3,252 145 - 24,297
Impairment charge 3,565 - - - 3,565
Reversal of impairment (36,993) - - - (36,993)
Balance as at 31 December 2023 335,987 24,471 2,061 2,845 365,364
Net Book Value as at 31 December 2023 562,213 36,286 189 7,724 606,412
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
11 Dry docking expenditure
30 June 31 December
2024
2023
US$'000 US$'000
At 1 January 11,204 8,931
Expenditure incurred during the period/year 5,115 6,960
Amortised during the period/year (2,568) (4,687)
13,751 11,204
12 Trade receivables
30 June 31 December
2024
2023
US$'000 US$'000
Trade receivables 32,879 32,872
Less: Allowance for expected credit losses (2,437) (2,226)
Net trade receivables 30,442 30,646
13 Prepayments, advances and other receivables
30 June 31 December
2024
2023
US$'000 US$'000
Prepayments 2,819 3,557
Advances to suppliers 1,486 1,758
Accrued revenue 7,564 2,656
Deposits 80 86
11,949 8,057
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
14 Share capital
Ordinary shares at £0.02 per share
Number of ordinary shares
('000) US$'000
At 1 January 2024 1,016,415 30,117
Issue of share capital (Note 17) 53,531 1,355
As at 30 June 2024 1,069,946 31,472
Number of ordinary shares
('000) US$'000
At 1 January 2023 1,016,415 30,117
As at 31 December 2023 1,016,415 30,117
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, if any.
The Group had the right but not the obligation to buyback all of the deferred
shares for an amount not exceeding £1.00 in aggregate, which with the
shareholders approval, was completed on 30 June 2022. Accordingly, 350,487,787
deferred shares were cancelled. Following the cancellation of the Deferred
shares on 30 June 2022, a transfer of $46.4 million was made from Share
capital - Deferred to a Capital redemption reserve. There was no dilution to
the shares ownership as a result of the share reorganisation.
Under the Companies Act, a share buy‑back by a public company can only be
financed through distributable reserves or the proceeds of a fresh issue of
shares made for the purpose of financing a share buyback. The Company had
sufficient reserves to purchase the Deferred shares for £1.00.
The Group has issued ordinary share capital on the exercise of previously
issued warrants to its lenders which has resulted in issuance of ordinary
shares of 53,531,734 on 31 May 2024 (refer Note 17).
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
15 Capital redemption reserve
The capital redemption reserve with a value of US$ 46.4 million was created on
30 June 2022 when the Company purchased and then cancelled 350,487,787
deferred ordinary shares (refer Note 14). The capital redemption reserve is
not distributable.
16 Bank borrowings
Secured borrowings at amortised cost are as follows:
30 June 31 December
2024
2023
US$'000 US$'000
Term loans 243,939 273,939
Working capital facility* 2,000 2,000
245,939 275,939
*The revolving working capital facility amounts to US$ 40 million (31 December
2023: US$ 40 million). US$ 25 million (31 December 2023: US$ 25 million) of
the working capital facility is allocated to performance bonds and guarantees
and US$ 15 million (31 December 2023: US$ 15 million) is allocated to funded
portion, of which US$ 2.0 million was utilised as of 31 December 2023, leaving
US$ 13.0 million (31 December 2023: US$ 13 million) available for drawdown.
The working capital facility expires alongside the main debt facility in June
2025.
Bank borrowings are presented in the condensed consolidated financial position
as follows:
30 June 31 December
2024
2023
US$'000 US$'000
Non-current
Bank borrowings - 234,439
Current
Bank borrowings - scheduled repayments within one year* 243,939 39,500
Working capital facility 2,000 2,000
245,939 275,939
*Refer Note 2 for details on planned refinancing of bank borrowings.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
-----
16 Bank Borrowings (continued)
Net debt as at the end of the period/year was as follows:
30 June 31 December
2024
2023
US$'000 US$'000
Bank borrowings net of issue costs 245,939 275,939
Less: Cash and cash equivalents (7,440) (8,666)
Total 238,499 267,273
The principal terms of the outstanding facility as at 30 June 2024 are as
follows:
· The facility's main currency is US$ and is repayable with a Secured Overnight
Financing Rate (SOFR) plus a margin based on a ratchet depending on leverage
levels.
· Following the cessation of the LIBOR on 30 June 2023, the reference rate in
the Common Terms Agreement has been changed to the SOFR as the new benchmark
rate.
· 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. As a result,
the margin rate on the loan has been decreased from 4% to 3.1%. By the second
quarter of 2024, the Group further reduced its net leverage ratio to below
3.0, resulting in an additional decrease in the margin rate from 3.1% to 3.0%.
· The facility remains secured by mortgages over its whole fleet with a net book
value at 30 June 2024 of US$ 551 million (31 December 2023: US$ 562.2 million)
(Note 10). Additionally, gross trade receivables, amounting to US$ 32.9
million (31 December 2023: US$ 32.9 million) have been assigned as security
against the loans extended by the Group's banking syndicate (Note 12).
· The Group has also provided security against gross cash balances, being cash
balances amounting to US$ 7.4 million (31 December 2023: US$ 8.7 million)
before the restricted amounts related to visa deposits held with the Ministry
of Labour in the UAE which are included in deposits. These have been assigned
as security against the loans extended by the Group's banking syndicate.
· As an equity raise of US $50.0 million did not take place by 31 December 2022,
87.6 million warrants were issued on 2 January 2023, giving debt holders the
right to 137,075,773 million shares at a strike price of 5.75 pence per share.
Warrant holders will have the right to exercise their warrants up to the end
of the term of the loan facility, being 30 June 2025. During the period,
34,218,700 warrants were exercised by the holders resulting in issuance of
53,531,734 new ordinary shares (refer to Note 17).
---
The facility is subject to certain financial covenants including: Debt Service
Cover, Interest Cover, and Net Leverage Ratio, which are tested bi-annually in
June and December. There are also additional covenants relating to general
and administrative costs, capital expenditure and Security Cover (loan to
value) which are tested annually in December. Further, there are other
restrictions, including the payment of dividends, until the net leverage ratio
falls below 4.0 times, a level reached in second quarter of 2023. All
applicable financial covenants assigned to the Group's debt facility were met
as of 30 June 2024.
The Group is exposed to interest rate risk on its bank borrowings which are
subject to floating interest rates. The sensitivity analyses below have been
determined based on the exposure to interest rates for non-derivative
instrument at the end of the reporting period. For floating rate liabilities,
the analysis is prepared assuming the amount of liability outstanding at the
end of the reporting period was outstanding for the whole period.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
16 Bank Borrowings (continued)
If interest rates had been 100 basis points higher/lower and all other
variables were held constant, the profit for the period ended 30 June 2024
would decrease/increase by US$ 1.2 million. This is mainly attributable to the
Group's exposure to interest rates on its variable rate borrowings.
17 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 £7.9 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.
During the period, 34,218,700 warrants were exercised by the holders resulting
in issuance of 53,531,734 new ordinary shares with a nominal value of 2p per
share and share premium of 3.75p per share. The fair value of the warrants
that were exercised was recalculated at the time of exercise. The fair value
of 34,218,700 warrant exercised was calculated at US$ 10.4 million. This fair
value is added to the actual cash raised of US$ 3.9 million, in line with
Companies Act 2006 to give a total increase in share capital and share premium
of US$ 14.3 million. Issue costs of US$83k have been reduced from the share
premium account. Shares issued as a result of the exercise of warrants were
ordinary shares with identical rights and privileges as the existing shares of
the Group.
Management commissioned an independent valuation expert to measure the fair
value of the outstanding warrants as of 30 June 2024, which was determined
using Monte Carlo option-pricing model, which takes into consideration the
market values of comparable public companies, considering among other factors,
the use of multiples of earnings, and adjusted to reflect the restrictions on
the ability of our shares to trade in an active market. The simulation
considers sensitivity by building models of possible results by substituting a
range of values. Warrants valuation represents a Level 3 fair value
measurement under IFRS 13 hierarchy. The fair value of the 53,403,247
outstanding warrants as at 30 June 2024 was US$ 11.3 million (31 December
2023: US$ 14.3 million for 87,621,947 warrants). On a per warrant basis, 30
June 2024 valuation stands at US$ 0.212 per warrant representing a 29.9%
increase from the 31 December 2023 valuation of US$ 0.163 per warrant, which
is primarily attributable to increase in share price of the Company. The share
price increased from 14.5 pence as at 31 December 2023 to 17.0 pence as at 30
June 2024. A 10% change in share price will increase or decrease the valuation
by US$ 1.6 million.
Interest Rate Swap
The Group had an Interest Rate Swap (IRS) arrangement, originally in place,
with a notional amount of US$ 50.0 million. The remaining notional amount
hedged under the IRS as at 30 June 2024 was US$ nil (31 December 2023: US$
nil). The IRS hedged the risk of variability in interest payments by
converting a floating rate liability to a fixed rate liability. The IRS
arrangement matured during 2023, therefore, the fair value of the IRS as at 30
June 2024 was US$ nil (31 December 2023: US$ nil). In 2020 cash flows of the
hedging relationship for the IRS were not highly probable and, therefore,
hedge accounting was discontinued from that point.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
17 Derivative financial instruments (continued)
Interest Rate Swap (continued)
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
represent Level 2 fair value measurements under the IFRS 13 hierarchy.
IFRS 13 fair value hierarchy
Apart from warrants, the Group has no other financial instruments that are
classified as Level 3 in the fair value hierarchy in the current period 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$'000
At 1 January 2024 - (14,275) (14,275)
Impact of change in fair value of warrants - (7,460) (7,460)
Derecognition of warrants exercised - 10,431 10,431
At 30 June 2024 - (11,304) (11,304)
At 1 January 2023 386 (3,198) (2,812)
Net loss on changes in fair value of interest rate swap (59) - (59)
Settlement of derivatives (327) - (327)
Impact of change in fair value of warrants - (11,077) (11,077)
At 31 December 2023 - (14,275) (14,275)
18 Contingent liabilities
As at 30 June 2024, the banks acting for Gulf Marine Services FZE, one of the
subsidiaries of the Group, had issued bid bonds and performance bonds
amounting to US$ 19 million (31 December 2023: US$ 19.6 million), all of which
were counter-indemnified by other subsidiaries of the Group.
19 Capital commitments
30 June 31 December
2024
2023
US$'000 US$'000
Contractual capital commitments 6,896 7,825
Capital commitments comprise mainly capital expenditure, which has been
contractually agreed with suppliers for future periods for equipment or the
refurbishment of existing vessels.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
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 year ended 31 December 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 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.
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.
To the extent that share-based payments are granted to employees of the
Group's subsidiaries without charge, the share-based payment is capitalised as
part of the cost of investment in subsidiaries.
The number of share awards granted by the Group during the period/year is
given in the table below:
30 June 31 December
2024
2023
At the beginning of the period - 1,176,014
Granted in the period - -
Cash settled in the period - -
Forfeited in the period (1,176,014)
At the end of the period - -
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
20 Long term incentive plans (continued)
The weighted average remaining contractual life for the vesting period
outstanding as at 30 June 2024 was nil years (31 December 2023: nil years).
The weighted average fair value of shares granted during the period to 30 June
2024 was US$ nil (31 December 2023: US$ nil).
LTIP LTIP LTIP
Grant date 14 Jun 2022 29 May 2020 15 Nov 2019
Share price £0.06 £0.09 £0.08
Exercise price £0.00 £0.00 £0.00
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
The expected share price volatility of Gulf Marine Services PLC shares was
determined by considering the historical share price movements for a
three-year period up to the grant date (and of each of the companies in the
peer 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 2024 30 June 2023
US$'000 US$'000
Catering services for vessel Pepper from
National Catering Company Limited WLL
82 402
Vessel maintenance and overhaul services from Sigma Enterprise Company LLC
597 156
Laboratory services from Aman Integrated Solutions LLC 3 -
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
21 Related party transactions (Continued)
Related party balances included in trade and other payables are as follows:
31 December 2023
30 June 2024 US$'000
US$'000
National Catering Company Limited WLL 229 500
Sigma Enterprise Company LLC 993 500
Aman Integrated Solutions LLC 6 3
22 Events after the reporting period
Subsequent to the period end, the Group made prepayments towards the bank
borrowings of US$ 11.0 million.
On 1 August 2024, the Group reached an agreement with commercial banks to
refinance its current bank debt (refer to Note 2 for further details).
23 Reclassification
Certain figures have been reclassified since the comparative consolidated
financial statements as presented below. We believe the revised presentation
gives users better information to understand these condensed consolidated
interim financial statements given the materiality of the warrants in the
current period.
H1 2023 Before reclassification H1 2023 After reclassification
Reclassifications
US$'000 US$'000 US$'000
Condensed consolidated statement of profit or loss and other comprehensive
income
Finance expense (Note 35) (18,187) 652 (17,535)
Impact of change in fair value of warrants - (652) (652)
24 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.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
24 Glossary (continued)
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 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. The adjusted earnings
attributable to equity shareholders of the Company is used for the purpose of
basic gain per share adjusted for any exceptional items.
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 5 and 7.
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 period to period. A
reconciliation of this measure is provided in note 5 of these results.
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 period to period
.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
24 Glossary (continued)
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 5.
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
2024
2023
US$'000 US$'000
Statutory cost of sales 41,667 38,954
Less: depreciation and amortisation (Note 5) (15,514) (14,170)
26,153 24,784
EBITDA - represents earnings before interest, tax, depreciation and
amortisation, which represents operating profit after adding back depreciation
and amortisation. This measure provides additional information of the
underlying operating performance of the Group. A reconciliation of this
measure is provided in Note 5.
In the current and comparative six months period there were no non-operational
items or impairment charges or reversal of impairment charges and therefore
EBITDA is equivalent to adjusted EBITDA.
Margin - revenue less cost of sales before depreciation, amortization and
impairment as identified in Note 5 of the condensed consolidated interim
financial statements.
Net bank debt - represents the total bank borrowings less cash and cash
equivalents. This measure provides additional information of the Group's
financial position. A reconciliation is shown below:
30 June 31 December
2024
2023
US$'000 US$'000
Bank borrowings 245,939 275,939
Less: cash and cash equivalents (7,440) (8,666)
238,499 267,273
Net cash flow before debt service - the sum of cash generated from operations
and investing activities.
GULF MARINE SERVICES PLC
Notes to the Condensed Consolidated Interim Financial Statements
for the period ended 30 June 2024 (continued)
24 Glossary (continued)
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 4.
Underlying performance - day to day trading performance that management are
directly able to influence in the short term.
Other Definitions
Average day rates we calculate the average day rates by dividing total charter hire revenue per
month by total hire days per month throughout the period 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 rate SOFR plus margin.
Calendar days takes base days at 365 and only excludes periods 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.
EIBOR The Emirates Interbank Offered Rate
Employee retention percentage of staff who continued to be employed during the period (excluding
retirements and redundancies) taken as number of resignations during the
period divided by the total number of employees at the period 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 Cover represents the ratio of Adjusted EBITDA to debt service.
GCC Gulf Cooperation Council
GMS core fleet consists of 13 SESVs
Interest Cover represents the ratio of Adjusted EBITDA to Net finance charges.
IOC Independent Oil Company.
KPIs Key performance indicators.
Lost Time Injuries any workplace injuries sustained by an employee while on the job that prevents
them from being able to perform their job for a period of one or more days.
Lost Time Injury Rate (LTIR) the lost time injury rate per 200,000 man hours which is a measure of the
frequency of injuries requiring employee absence from work for a period of one
or more days.
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 charges represents finance charges as defined by the terms of the Group's banking
facility for that period less interest income for that period.
Net leverage ratio represents the ratio of net bank debt to Adjusted 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 work day case (RWDC) any work-related injury other than a fatality or lost work day case which
results in a person being unfit for full performance of the regular job on any
day after the occupational injury.
Secured day rates day rates from signed contracts firm plus options held by clients.
Secured utilisation contracted days of firm plus option periods of charter hire from existing
signed contracts.
Security Cover (loan to value) the ratio (expressed as a percentage) of Total Net Bank Debt at that time to
the Market Value of the 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.
SOFR Secured Overnight Financing Rate
Total Recordable Injury Rate (TRIR) calculated on the injury rate per 200,000 man hours and includes all our
onshore and offshore personnel and subcontracted personnel. Offshore personnel
are monitored over a 24-hour period.
Underlying G&A underlying general and administrative (G&A) expenses 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 expense Cost of sales before depreciation, amortisation and impairment, refer to Note
5.
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.
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