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Gulf Marine Services PLC
Annual Report 2021
HIGHLIGHTS
In this report
Strategic Report
Highlights
2021 Financial Highlights
2021 Operational Highlights
2022 Highlights and Outlook
Non-Financial Information Statement
Chairman’s Review
People and Values
Business Model & Strategic Objectives
Section 172 Statement
Market Analysis
Risk Management
Key Performance Indicators
Financial Review
Long-term Viability Statement
Governance
Chairman’s Introduction
Board of Directors
Report of the Board
Audit and Risk Committee Report
Nomination Committee Report
Remuneration Committee Report
IFC
IFC
1
1
1
2
4
18
22
26
28
34
36
38
40
42
44
49
53
56
Directors’ Remuneration Policy Report 58
Annual Report on Remuneration
Directors’ Report
Statement of Directors’ Responsibilities
Financial Statements
Independent Auditor’s Report
Group Consolidated
Financial Statements
Company Financial Statements
Glossary
Other Definitions
Corporate Information
66
74
79
80
90
139
151
153
155
Also online at
https://www.gmsplc.com/Results-and-
Presentations.aspx
Our vision
To be the best SESV operator
in the world
2021 Overview
Revenue
US$ 115.1m
(2020: US$ 102.5m)
Adjusted EBITDA
US$ 64.1m
(2020: US$ 50.4m)
Net profit for the year
US$ 31.2m
(2020: net loss of US$ 124.3m)
Utilisation
84%
(2020: 81%)
General and
administrative expenses
US$ 12.3m
(2020: US$ 18.2m)
2021 Financial Highlights
— Revenue increased by 12.3% to US$ 115.1 million (2020: US$ 102.5 million)
driven by increased utilisation in higher earning E- and S-Class vessels
as detailed below.
— Increased adjusted EBITDA1 to US$ 64.1 million (2020: US$ 50.4 million)
and an improvement to adjusted EBITDA margin to 56% (2020: 49%).
— Cost of sales excluding depreciation, amortisation and the reversal of
impairment/impairment charge was US$ 41.2 million (2020: US$ 42.3
million) reflecting higher vessel utilisation.
— General and administrative expenses decreased to US$ 12.3 million
(2020: US$ 18.2 million) as a result of US$ 5.6 million of non-recurring
costs incurred in prior year (2021: nil).
— US$ 15.0 million reversal of prior year’s impairment compared to an
impairment charge of US$ 87.2 million in 2020, reflecting Group’s
improved long-term outlook.
— First reported net profit since 2016 at US$ 31.2 million (2020: net loss of
US$ 124.3 million). Adjusted net profit2 of US$ 18.0 million (2020: adjusted
net loss of US$ 15.3 million).
— Interest on bank borrowings reduced by 37% to US$ 17.5 million (2020:
US$ 27.6 million) following refinancing of the Group’s debt facility and
reduction in LIBOR with both margin and average LIBOR decreasing to
3.0% and 0.2% (2020: 5.0% and 1.0%).
— Net bank debt3 reduced to US$ 371.3 million (2020: US$ 406.2 million).
Net leverage ratio4 reduced to 5.8 times (2020: 8.0 times).
— Successful issuance of equity by 30 June 2021 removed potential event of
default, which in turn removed material uncertainty as to the Group’s ability
to continue as a Going Concern reported in 2020.
2021 Operational Highlights
— Average fleet utilisation increased by 3 percentage points to 84% (2020: 81%) with notable improvements in both S- and
E-Class vessels at 98% (2020: 92%) and 72% (2020: 65%) respectively. Average utilisation for K-Class vessels remained flat
at 86% (2020: 86%).
— Average day rates marginally increased to US$ 25.7k (2020: US$ 25.3k) with recent awards in the second half of the year
showing significant improvement.
— New charters and extensions secured in year totalled 9.6 years (2020: 6.6 years).
— Operational downtime remains low at 1.5% (2020: 1.6%).
— Border restrictions and quarantine requirements in relation to COVID-19 have shown signs of easing in latter part of 2021.
— Strengthening of Board with the appointment of two independent non-executive Directors in February 2021 and May 2021
and one non-executive Director in August 2021.
2022 Highlights and Outlook
— Secured utilisation for 2022 currently stands at 88%
against actual utilisation of 84% in 2021.
— Anticipate continued improvement on day rates as
Middle East vessel demand outstrips supply on the
back of a strong pipeline of opportunities.
— Average secured day rates over 12% higher than 2021
actual levels.
— Reversal of impairment recognised with a value of
US$ 15.0 million indicative of improving long-term
market conditions.
— Group anticipates net leverage ratio to be below
4.0 times by the end of 2022 without relying on a
second equity raise.
NON-FINANCIAL INFORMATION STATEMENT
See Glossary.
1 Represents operating profit/(loss) after adding back depreciation, amortisation
and the reversal of impairment in 2021 and depreciation, amortisation, an
impairment charge and adjusting items in 2020. This measure provides
additional information in assessing the Group’s underlying performance that
management can more directly influence in the short term and is comparable
from year to year. A reconciliation of this measure is provided in Note 30.
2 Represents net profit/(loss) after adding back depreciation, amortisation the
reversal of impairment and adjusting items in 2021 and depreciation,
amortisation, an impairment charge and adjusting items in 2020. This measure
provides additional information in assessing the Group’s total performance that
management can more directly influence and is comparable from year to year.
A reconciliation of this measure is provided in Note 30.
3 Represents total bank borrowings less cash.
4 Represents the ratio of net bank debt to adjusted EBITDA.
The Group has complied with the requirements of s414CB of the Companies Act 2006 by including certain non-financial information within
the strategic report.
The table below sets out where relevant information can be found within this report*:
Reporting requirement and policies and standards which govern our approach:
Information necessary to understand our business and its impact,
policy due diligence and outcomes:
Environmental matters
• Greenhouse Gas (GHG) Emissions Policy
• Climate change strategy
• Carbon emission reporting
• Taskforce on Climate-related Financial Disclosures (TCFD)
• GHG emissions, page 12
• People and values section, page 4
• Carbon emission reporting, page 12
• TCFD, page 4
Employees
• Anti-Corruption and Bribery Policy
• Social Responsibility Policy
• Whistleblowing Policy
• Health and safety standards
• Diversity and equal opportunities
• Employee engagement and welfare
Human rights
• Disability Policy
• Anti-Slavery Policy
• Code of Conduct Policy
• Ethical practises, page 15
• Ethical practises, page 15
• Ethical practises, page 15, and Audit and
Risk Committee report page 52
• Health and safety, page 17
• Diversity, page 14, Directors’ Report, page 74
• Employee engagement and welfare, page 15
• Employees and policies, Directors’ Report, page 76
• Ethical practises, page 15
• Ethical practises, page 15, Risk management page 32
Principal risks and impact on business activity
• Risk management, pages 28 to 33
Remuneration Policy
Description of the business model
Key Performance Indicators (KPIs)
• Remuneration Policy, page 58
• Our business model, page 18
• KPIs, page 34
* Further details on policies and procedures are available on our corporate website: www.gmsplc.com
Annual Report 2021
1
Strategic Report CHAIRMAN’S REVIEW
Turning the Corner
2021 saw a number of positive steps being made by the Group as the business continues to turn
around. A new bank deal and subsequent equity raise helped stabilise the balance sheet, removing
a potential event of default with our banks. Improving demand for our vessels led to utilisation
being the highest in the last six years, driving an increase in day rates for contracts awarded in the
second half of the year, which we will see the benefit of in 2022. The Group reported improved
margins driven by increased revenues leading to its first reported net profit since 2016.
Capital structure and liquidity
Net bank debt reduced to US$ 371.3 million
(2020: US$ 406.2 million). A combination
of reduced debt and improved adjusted
EBITDA led to a 28% reduction in the net
leverage ratio reducing from 8.0 times
in 2020 to 5.8 times at the end of 2021.
The Group will continue its focus on
organically reducing leverage going forward.
Commercial and operations
The Group secured nine new contracts in
the year, worth US$ 66.0 million (2020: seven
contracts worth US$ 18.0 million). Tender
and bid activity increased, with 2.6 vessel
years of projects that are due to commence
in 2022 currently in the pipeline. Evolution
commenced its first long-term contract
utilising its cantilever system.
The Group successfully concluded a US$
27.8 million equity raise in June 2021 which
prevented an event of default on its loan
facilities. Under these facilities, the Group
is required to raise a further US$ 50 million
of equity by the end of 2022 or issue
87.6 million warrants entitling the Group’s
banks to acquire 132 million shares, or
11.5% of the share capital of the Company,
for a total consideration of GBP £7.9 million,
or 6.0p per share.
The Group is exploring the various
contractual options available per the current
bank terms to take place by the end of 2022.
As disclosed, the two options available are
the raise of US$ 50 million equity or the
issuance of 87.6 million warrants giving
potential rights to 132 million shares if
exercised. As at 31 December 2021, neither
of the two contractual scenarios had been
ruled out. The Board however consider the
more likely outcome will be the issuance of
warrants rather than the equity raise.
Interest on bank borrowings reduced by
36.5% to US$ 17.5 million (2020: US$ 27.6
million) following the renegotiation of the
Group’s bank facility in March 2021, the
reduction in net bank debt, following the
successful equity raise and a reduction
in average LIBOR to 0.2% (2020: 1.0%),
(refer to Note 36 in the consolidated
financial statements).
Despite challenges brought by COVID the
Group has achieved its best year for financial
performance for many years. Average
utilisation, particularly for K-Class vessels,
has remained at its highest since 2016.
New charters and extensions secured in year
totalled 9.6 years. Operational downtime
continued the trend of recent years of being
low at 1.5% (2020: 1.6%).
Governance
Three new non-executive Directors joined
the Board during 2021, with the appointment
of Jyrki Koskelo, Anthony St John and
Charbel El Khoury in February, May, and
August 2021 respectively.
I currently hold the position of Chairman
and Chief Executive, leading the business
and the Board. Whilst holding the positions
of both Chairman and Chief Executive is not
recommended by the 2018 UK Corporate
Governance Code (the Code), the Board has
concluded that, at this stage in the Group’s
turnaround process, this continues to be
appropriate. This recognises both the level
and pace of change necessary for the Group
and its relatively small scale. This will be
regularly assessed by the Board as the
Group progresses through its
turnaround process.
Group performance
Revenue increased by 12.3% to US$ 115.1
million (2020: US$ 102.5 million) with an
increase in utilisation of 3 percentage points
to 84% (2020: 81%) and with notable
improvements in both S- and E-Class vessels
at 98% (2020: 92%) and 72% (2020: 65%)
respectively. K- Class vessels remained flat at
86% (2020: 86%). Average day rates across
the fleet marginally increased to US$ 25.7k
(2020: US$ 25.3k). Certain contracts awarded
in the latter half of the year, which are due to
commence in 2022, saw significant day rate
improvements on legacy contracts.
Vessel operating expenses decreased by
2.6% to US$ 41.2 million (2020: $42.3 million),
despite the increase in utilisation. General
and administrative expenses reduced by
US$ 5.9 million to US$ 12.3 million, of which
US$ 5.6 million related to non-recurring
adjusting items in 2020 and the balance
reflecting savings from the final phase of
the Group’s cost-cutting exercise.
Adjusted EBITDA was US$ 64.1 million,
up 27.2% from the previous year (2020:
US$ 50.4 million) mainly driven by improved
utilisation, particularly in the Group’s higher
earning E- and S-Class vessels.
During the year there was a reversal of
previous impairment charges of US$ 15.0
million, indicative of improvements to
long-term market conditions and non-
operational finance expenses totalling
US$ 1.7 million following the extinguishment
of the old debt facility and recognition the
new debt facility that completed in the year,
(refer to Note 30 in the consolidated
financial statements).
The Group returned to profitability for the
first time since 2016 with a net profit for the
year of US$ 31.2 million (2020: net loss of
US$ 124.3 million) and an adjusted net profit
of US$ 18.0 million (2020: adjusted net loss
of US$ 15.3 million).
2
Gulf Marine Services PLC
Revenue
Gross profit/(loss)
Adjusted EBITDA1
Impairment reversal/(impairment)
Net profit/(loss) for the year
Adjusted net profit/(loss)2
2021
US$m
115.1
60.6
64.1
15.0
31.2
18.0
2020
US$m
102.5
(55.5)
50.4
(87.2)
(124.3)
(15.3)
2019
US$m
108.7
(25.0)
51.4
(59.1)
(85.5)
(20.0)
1 Represents operating profit/(loss) after adding back depreciation, amortisation and the reversal of impairment in 2021 and depreciation, amortisation, an impairment
charge and adjusting items in 2020. This measure provides additional information in assessing the Group’s underlying performance that management can more directly
influence in the short term and is comparable from year to year. A reconciliation of this measure is provided in Note 30.
2 Represents net profit/(loss) after adding back depreciation, amortisation the reversal of impairment and adjusting items in 2021 and depreciation, amortisation, an
impairment charge and adjusting items in 2020. This measure provides additional information in assessing the Group’s total performance that management can more
directly influence and is comparable from year to year. A reconciliation of this measure is provided in Note 30.
The Group has complied with the
requirements of LR 9.8.6(8)R, by reporting
on a ‘comply or explain’ basis against the
11 recommended TCFD disclosures. As of
31 December 2021, the Group was unable
to make disclosures that were consistent
with those of the TCFD for ten out of the
eleven disclosures. The Group aims to be
fully compliant by 31 December 2022. Refer
to page 4 for further details.
Outlook
Due to the strong pipeline of opportunities
expected to come to the market, the Group
anticipates seeing continued improvements
in day rate and utilisation levels in 2022.
Secured utilisation for 2022 currently stands
at 88% (equivalent in 2021: 73%).
Secured backlog stands at US$ 179.2 million
as at 1 April 2022 (US$ 207.3 million as at
1 April 2021) and average secured day rates
at US$ 28.9k, 12.6% higher than 2021 actual
average day rates. Given the current high
levels of utilisation secured, combined with
higher day rates, the Group expects the
financial performance to continue to improve
and reiterates its EBITDA guidance of
between US$ 70-US$ 80 million for 2022.
Mansour Al Alami
Executive Chairman
12 May 2022
Removal of material uncertainty
The Group is currently operating as a Going
Concern without any material uncertainties.
This is the first time the Group has been
operating as Going Concern without any
material uncertainties since 2017.
Safety
There were two recordable injuries in the
early part of 2021. One Lost Time Injury and
one Restricted Work Day Case. This led to
an increase in our Total Recordable Injury
Rate from 0.0 (2020) to 0.2 (2021), and an
increase in our Lost Time Injury rate from
0.0 (2020) to 0.1 (2021). These levels remain
significantly below industry average and in
both cases have since returned to zero in
early 2022. Two vessels celebrated safety
milestones in the year, with both Evolution
and Endeavour reaching five years
without incident.
We continue to develop our systems and
processes to ensure that our offshore
operations are as safe as possible in line
with the expectations of our customers
and stakeholders.
Taskforce on Climate-related
Financial Disclosures
This year the Annual Report includes our
first Task Force on Climate-related Financial
Disclosures (TCFD). This is a new
requirement for premium listed companies
on the London Stock Exchange. We
welcome the introduction of this regulation,
having previously committed to adopting
the TCFD recommendations by 2022.
GMS acknowledged climate change as an
emerging risk in 2019, and in December
2021, recognised it as a principal risk.
Annual Report 2021
3
Strategic Report PEOPLE AND VALUES
Delivering on
Our Responsibility for
A Sustainable Future
Environmental, Social
and Governance Factors
Recognising the Group’s principal activities
continues to be the provision of vessels to the
offshore oil, gas and renewable energy sectors,
We are constantly looking for ways to reduce
our impact on the environment. Below are
some of the most recent initiatives that we have
implemented to reduce emissions across the
business, refer to page 14 for further details.
In 2022, GMS will be measuring itself against
the “The global standards for sustainability
reporting” or “GRI Standards” to enable it to
report consistently and transparently on
progress. As a premium listed FTSE firm, the
Group is required under the UK Listing Rules
to adopt the Task Force on Climate-related
Financial Disclosures (TCFD) and included
below is the first assessment and plan going
forward. The mandatory report of Greenhouse
Gas Emissions is also provided below.
Environment
Task Force on Climate-Related
Financial Disclosures (TCFD)
Report 2021
The Group has complied with the
requirements of LR 9.8.6(8)R, by reporting
on a ‘comply or explain’ basis against the
11 recommended TCFD disclosures as
outlined further below.
As of 31 December 2021, the Group was
unable to make disclosures that were
consistent with those of the TCFD for ten out
of the eleven disclosures due to the fact that
TCFD compliance activities were not initiated
until Q4 2021. Where we have not complied,
we have provided our anticipated date for
compliance and the next steps.
The Board took the decision in December
2021 to include climate change as a principal
risk, albeit it is one which the Board
considers to have a low overall likelihood/
impact on the Group’s operations as at
31 December 2021 (refer to the Governance
section below and Note 5 of the consolidated
financial statements for further details).
Following this decision, further work has been
undertaken during 2022 by management in
conjunction with a third party ESG advisor;
and the Group aims to be fully compliant with
all eleven disclosures by 31 December 2022.
We have assessed where we can improve
in the future to provide the fullest disclosure
on each recommendation. As a result, in
2022 we will be undertaking a full Scope 3
analysis, developing a net-zero strategy, and
financially modelling our climate-related risks
and opportunities.
The table below outlines each disclosure
with its compliance status as of
31 December 2021 and our aim is to
become fully compliant in 2022.
Compliance with and departures from the TCFD recommendations
Theme
Disclosure
Position as of
31 December 2021
Planned compliance date and plans
to achieve compliance
Governance
a) Describe the board’s oversight
of climate-related risks and
opportunities.
Compliant as at
31 December 2021
Strategy
b) Describe management’s role
in assessing and managing
climate-related risks and
opportunities.
a) Describe the climate-related
risks and opportunities the
organisation has identified
over the short, medium,
and long term.
Non-compliant
31 December 2022
In 2022, management will monitor all potential risks
and opportunities to the business and to include
climate change as a key risk for discussion during
risk management workshops.
Non-compliant
31 December 2022
In 2022, we will financially assess the climate-
related risks to determine those which could
have material financial impact on the organisation.
This process will be described in our 2022 report.
4
Gulf Marine Services PLC
Theme
Disclosure
Position as of
31 December 2021
Planned compliance date and plans
to achieve compliance
Strategy
continued
Risk
management
Metrics & targets
b) Describe the impact of
Non-compliant
31 December 2022
climate-related risks and
opportunities on the
organisation’s businesses,
strategy, and financial
planning.
In 2022, after our financial impact assessment,
we will be able to describe potential impacts of
climate-related issues on our financial performance
and where it has been used in our financial planning
process.
We will also be developing a net-zero strategy in
line with the emission reduction commitments of
jurisdictions where we operate.
c) Describe the resilience of the
organisation’s strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower
scenario.
Non-compliant
31 December 2022
In 2022, we will expand on the potential impact
of climate-related issues on financial performance
based on our financial assessment.
a) Describe the organisation’s
Non-compliant
31 December 2022
processes for identifying and
assessing climate-related
risks.
b) Describe the organisation’s
processes for managing
climate-related risks.
c) Describe how processes for
identifying, assessing, and
managing climate-related
risks are integrated into the
organisation’s overall risk
management.
a) Disclose the metrics used by
the organisation to assess
climate-related risks and
opportunities in line with its
strategy and risk management
process.
b) Disclose Scope 1, Scope 2,
and, if appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the related
risks.
c) Describe the targets used by
the organisation to manage
climate-related risks and
opportunities and
performance against targets.
In 2022, we will continue to establish/enhance
the Group’s processes for the identification and
assessing of climate related risks.
Non-compliant
31 December 2022
In 2022, we will ensure that climate change is
included as a key risk for consideration in our overall
risk management workshop and feedback the
outcomes to the Audit and Risk Committee.
Non-compliant
31 December 2022
In 2022, we will undertake a climate change specific
risk management workshop with a third party
specialist to determine risks, opportunities and
mitigating actions required by the Group. These
risks and measures will be included in the overall
risk register.
Non-compliant
31 December 2022
In 2022, we will calculate GMS’s Scope 3 emissions
and formulate its net-zero strategy. Without
understanding GMS’s global carbon footprint,
it is impossible to develop climate-related metrics
in line with the corporate strategy and risk
management process.
Non-compliant for Scope 3
31 December 2022
In 2022 we will calculate GMS’s
Scope 3 emissions and highlight material emission
categories.
Non-compliant
31 December 2022
In 2022 we will calculate GMS’s full emissions
footprint, and from this baseline, we will formulate
emission reduction targets and pathways.
In future years, we will report annual progress
against these targets.
Annual Report 2021
5
Strategic Report PEOPLE AND VALUES
continued
Overview – Where do we stand
with TCFD?
The Group recognises that as part of our
long-term business strategy, we need to
operate responsibly, and as part of this,
as we achieve compliance with the TCFD
disclosure requirements, we want to be
transparent about the climate-related risks
and opportunities facing our business. This
is an area where our industry as a whole
needs to improve, and as such, we welcome
the introduction of mandatory TCFD
reporting. We recognise that climate change
is a growing area of concern for all
businesses, and the adoption of the TCFD
disclosure requirements in 2022 will allow us
to carefully analyse the associated risks and
opportunities to our operations. The TCFD
categorises the risks as transition and
physical. Transition risks are the risks
associated with the decarbonisation of the
global economy; physical risks are
associated with acute and chronic impacts
of the changing climate.
Governance – Ensuring
accountability and responsibility
for climate-related risks.
Climate change has become an area of
increased interest for the Board, senior
management, and GMS’ stakeholders in
recent years. In 2019 climate change was
recognised as an emerging risk, and in
December 2021, it was added as a principal
risk. As explained in Note 5 of the
consolidated financial statements, the Board
does not believe the Group will face any
significant negative impacts of climate
change on demand levels for its vessels
in the near term (due to a combination of:
the expected continued demand for oil and
gas to be produced in the Group’s core
market of the Middle East; and the alternative
opportunities that exist for the Group to
deploy more of its fleet in offshore
renewables in the long-term without major
additional capital expenditure being required
on its vessels in order to do so). On this
basis, the Board has determined the overall
risk of climate change to remain as low
likelihood, low impact as at 31 December
2021. Notwithstanding this assessment,
elevating the risk of climate change to a
principal risk will mean that it will be
discussed going forward at each Board
meeting as part of the principal risk review
item and be part of the Group’s enterprise
risk assessment procedures which are
described below under Risk Management
and in the broader Risk Management section
of this Annual Report.
The TCFD recommendations have provided
guidance for improving GMS’s climate-
change governance mechanisms, such as
the introduction of climate scenario analysis
in January 2022, and the financial modelling
which is planned for Q2 2022. This analysis/
modelling was not performed in 2021 as
TCFD compliance activities were not initiated
until Q4 2021/Q1 2022. We will however
continue to monitor developments in the
TCFD framework and ensure that we develop
our processes accordingly to ensure that we
are able to increase our disclosure
compliance levels in the future.
The Board’s Oversight
The Board has overall responsibility for
ensuring that risks are effectively managed.
As part of its regular risk assessment
procedures going forward, the Board will
take account of the significance of ESG
matters, including climate change, to GMS’
business. It reviews and discusses risk
management at each principal Board
meeting, focussing on principal risks. The
Board reviews the risk profile formally on an
annual basis. In the February 2021 Board
meeting, risks were discussed and climate
change remained an emerging risk. In
December 2021, it moved climate change
onto the principal risk heat map when it was
discussed as part of the ESG review.
The Audit and Risk Committee has been
delegated the responsibility for reviewing
the effectiveness of the Group’s system of
internal control and procedures as a practical
matter, including climate change as a
principal risk as of December 2021. It will
receive reports from external advisers as
required, to enable it to discharge its duties
and to be given a deeper level of insight on
certain business matters. It was not feasible
to assess the potential financial impacts of
the risks and opportunities of climate change
on the business in 2021. The quantification
of the potential risks and opportunities will be
introduced into the climate risk assessment
process in Q2 of 2022 and be subject to the
Audit and Risk Committee’s internal controls.
Senior Management’s role
The Senior Management team (the Group
Financial Controller, the Group Financial
Accounting Team Leader, and the HSEQ
Manager) is responsible for assessing,
managing, and reporting the potential risks
and opportunities to the Board and the Risk
and Audit Committee. From 2022 onwards,
this will include risks associated with climate
change. The Senior Management team will
meet with the Executive Chairman at least
twice a year to conduct risk management
workshops. Senior management has
provisionally evaluated the potential long
term impacts of climate change through
climate scenario analysis. In 2022, it will
conduct further financial impact modelling
and submit the results to the Audit and Risk
Committee for its internal control processes.
Figure 1 below provides an overview of the
delegation of responsibilities between the
Board, the Audit and Risk Committee and
the Senior Management team.
Figure 1: Delegation of responsibilities for risk management, including climate-related risks, in GMS
The Board
The Board has overall responsibility for the Group’s strategy and ensuring effective risk management.
The Audit and Risk Committee
The Committee’s responsibilities include reviewing the Group’s internal control and risk management systems as well as monitoring
the effectiveness of the Group’s internal audit function.
Senior Management
The Senior Management team implements the risk management process from risk identification to management and mitigation.
6
Gulf Marine Services PLC
To determine the inherent risk of each
potential risk, the impact and likelihood
are combined to give the inherent risk rating.
A Green, Amber or Red classification is
assigned based on the inherent risk rating
and the control effectiveness. A Red rating
represents an elevated inherent risk rating
with limited current controls. The Amber risk
classification indicates an elevated inherent
risk rating with some risk exposure remaining
after introduced controls. The Green risk
rating means the risk exposure is low. Eight
of the sixteen provisional risks identified have
an Amber rating in at least one scenario and
timeline and two of the sixteen are have been
linked to two scenarios. Table 1 below shows
the scenarios and timeline when each risk is
initially classified as Amber. The other six
risks considered have a Green rating across
all scenarios and timelines. None of the risks
identified have a red risk rating as at
31 December which is consistent with
the Board’s view that shows no immediate
significant financial impact of climate change
on the carrying value of the Group’s assets
as at 31 December 2021. The Group’s risk
management system is explained on
page 28.
Strategy – Building climate
resilience into our business
strategy.
Climate change was recognised as an
emerging risk in 2019, and since the addition
of climate change as a principal risk in
December 2021 in response to the TCFD
recommendations, the Board has initiated
work to understand the impact of climate
change on the Group’s operations, strategy,
and financial planning. As a result of this,
an initial climate change risk management
workshop was arranged and facilitated by
an external ESG advisor in January 2022
where the results of a detailed climate-
related scenario analysis were discussed.
The analysis was carried out across GMS’s
three office locations (Abu Dhabi, Doha,
and Dammam) and two vessel locations
(the Gulf and the North Sea). The preliminary
results of this workshop are presented below.
The preliminary climate-related scenario
analysis conducted in Q1 2022, together
with subsequent analyses planned to take
place during the coming months, will enable
Senior Management to assess the Group’s
operational resilience to potential climate-
related risks and opportunities. Each
potential climate-related risk and opportunity
will be provisionally assessed and classified
through the use of the Group’s existing risk
classification process over the short
(2020-2025), medium (2025-2035) and long
(2035-2050) term to determine the inherent
impact on the business strategy.
This was the first year that GMS has been
required to fully integrate the TCFD
recommendations into the risk management
framework and, as noted above, it has not
achieved compliance with ten of the eleven
TCFD requirements as of 31 December 2021.
One area of non-compliance noted was that
the Group has not reported the potential
financial impacts of climate change on its
operations. As disclosed in Note 5 to the
consolidated financial statements, the
current analysis shows no immediate
significant financial impact of climate change
on the carrying value of the Group’s assets
as at 31 December 2021. The intention is
to achieve full compliance with the TCFD
disclosures as at 31 December 2022; and
therefore during 2022, Senior Management
will conduct the necessary financial
modelling of the potential risks and
opportunities and the aim is to report
on the financial impacts in next year’s
TCFD Disclosure.
Climate scenarios are possible future global
warming pathways that can be used to
interrogate GMS’s potential climate-related
risks and opportunities over the short,
medium and long term. This will enable
Senior Management to evaluate its
operational resilience to climate change and
introduce mitigation measures. Table 1 lists
the eight climate-related risks provisionally
identified as having an Amber rating in at
least one scenario and timeline.
The scenarios were modelled using data
from several established models, including
CORDEX (Coordinated Regional Climate
Downscaling Experiment), CLIMADA (Climate
Adaptation) and IAM (Integrated Assessment
Models) data. Climate Warming Pathways:
• <2°C by 2100: approximately aligned
with the Paris Agreement target of max.
1.5°C of warming above pre-Industrial
levels. This scenario requires coordinated
efforts by governments and businesses to
rapidly reduce carbon emissions through
policy and operational changes, leading
to high levels of transition risks but limited
physical risks.
• 2-3°C by 2100: based on the pledges
agreed at the end of COP26, it is
estimated that this is the level of warming
currently expected. This scenario is
envisaged as the outcome of reactive
action from governments, with policy
being introduced ad-hoc, whilst only the
most committed businesses take serious
action; it is associated with the highest
level of transition risks with some
physical risks.
• >3°C by 2100: little to no action is taken
over the next few decades in this scenario
leading to limited transition risks but the
highest level of physical risks.
The three warming pathways present a range
of potential climate-related risks to GMS’s
operations over the short, medium and long
term. Eight climate indicators, including
precipitation, aridity and temperature, were
provisionally modelled for each site and
scenario. The most severe physical risks
from climate change are present in the >3ºC
scenario, and the transition risks are highest
in the <2ºC and 2-3ºC scenarios. As most
of the Group’s operations are already in
extreme climate conditions, the infrastructure
we own has been built accordingly. The
office buildings in the Middle East region are
exposed to above 40ºC days for consecutive
months. Therefore, the region’s infrastructure
design and our working schedules already
consider these extreme weather conditions.
Future scenario analyses will enable senior
management to stress test GMS’s
operational and strategic resilience to climate
change each year.
Annual Report 2021
7
Strategic Report PEOPLE AND VALUES
continued
Table 1: Provisional Transition risks with an Amber rating, with the scenario and timeline in which an
Amber rating is first assigned.
Risk Type Climate-related
Risk
Scenario Timeline
Potential
Likelihood
Potential
Impact
Context
<2ºC
Short
Almost certain Moderate GMS is listed on the London Stock
Transition
risk
Increased policy and
reporting requirements
in the UK
Exchange and is subject to UK climate
change and environmental reporting
regulations. Such changes to policy and
reporting requirements are considered to
be almost certain to occur in the short term.
However, the concentration of the Group’s
vessels in the Middle East region (with only
one of the Group’s vessels currently located
in the UK) would likely mean that the
potential operational/financial impact of
such changes would be limited to
Moderate.
The Group aims to mitigate this risk by
carefully monitoring legislative developments
to minimise instances of non-compliance
with all relevant laws both in the UK and
the Middle East.
Fewer climate-related policy obligations
are anticipated for operational Gulf sites (as
compared to the UK reporting regulations
noted above) in the short term, hence the
potential likelihood of this risk deemed to be
lower (“Possible” as compared to “Almost
certain”) than that noted above for the UK.
However, if such policies and increased
regulations were to be introduced over a
longer time period, then the concentration
of GMS’ fleet in the Middle East would
result in a relatively higher (“Significant”)
potential impact.
The Group carefully monitors legislative
developments to aim to ensure compliance
with all relevant laws both in the UK and the
Middle East.
There is increasing concern over fossil fuel
use in the UK/EU, although demand for oil
and gas is predicted to grow. Although as
a result new investors may become more
challenging to find, current shareholders
(>50% of which are Middle East based) are
heavily invested in the Company’s existing
strategy and business model and therefore
the likelihood of a Significant impact is only
considered Possible in the short term.
This TCFD disclosure will inform investors
about our response to climate-related risks
and opportunities.
Increased policy and
reporting requirements
in the UAE
<2°C
2-3°C
Medium
Medium
Possible
Possible
Significant
Significant
Changing investor
sentiment
<2°C
Short
Possible
Significant
8
Gulf Marine Services PLC
Risk Type Climate-related
Risk
Scenario Timeline
Potential
Likelihood
Potential
Impact
Context
<2°C
2-3°C
Short
Short
Possible
Possible
Significant
Significant
Transition
risk
continued
Wider stakeholder
concern; reduced
revenue from negative
impacts on workforce
management and
planning (e.g.,
employee attraction
and retention)
Costs to transition to
lower emissions
technology
<2°C
2-3°C
Medium
Medium
Possible
Unlikely
Major
Major
It is possible in the short term that
increased stakeholder concern may be
seen, including from employees who may
start to take company environmental action
and preparedness into account. This could
impact the Group’s revenue and employee
retention. In a <2°C, where action is
required, this concern could be greater.
It would be lower in a 2-3°C where action
is being taken sporadically. However, given
the Group’s workforce requirement is
concentrated in its core market of the
Middle East, where the expectation is that
the economy will continue to be reliant
upon and supportive of oil and gas
production for many years, it is not
anticipated that the Group will not be able
to attract suitably experienced/qualified
employees so as to avoid any operational
disruption.
We will aim to provide disclosures to inform
our stakeholders of our plans to respond to
climate related risks.
A requirement to transitioning to lower
emissions technology is possible in the
medium term under a <2ºC scenario and
this could be associated with additional
costs for GMS. The impact could be the
same in a 2-3ºC but this is considered
unlikely. This is still an amber risk despite
the reduced likelihood given potential
quantum.
We are aware that we may need to
consider environmental legislation when
replacing vessels that are being retired
in the long term. In this event, significant
R&D would be needed for electric vessels.
GMS will consider buying these when they
are available.
However, as per Note 5 of the consolidated
financial statements, as an operator of
state-of-the-art vessels in both the oil and
gas and renewables (offshore wind) sectors
with experience in multiple geographical
areas, the Group’s fleet offers significant
operational flexibility. For the reasons noted
above, the risk of changes in operational
policies and regulations in the Group’s core
market of the Middle East is only
considered as Possible in the Medium
term. Further, the Group anticipates there
will be sufficient future demand to deploy
its fleet in both the offshore oil and gas
markets in the Middle East and the UK and/
or to the renewables market without the
need to incur major additional capital
expenditure on the vessels.
Annual Report 2021
9
Strategic Report PEOPLE AND VALUES
continued
Risk Type Climate-related
Risk
Scenario Timeline
Potential
Likelihood
Potential
Impact
Context
Transition
risk
continued
Introduction of Carbon
pricing and taxes
<2°C
2-3°C
Medium
Medium
Likely
Possible
Significant
Major
It is likely that in a <2°C scenario, carbon
pricing and taxes could be introduced in
the medium term and the potential cost
impacts of this could be significant. For a
2-3°C scenario, the likelihood is considered
possible and the impact could be major,
as pricing would/may be introduced more
gradually. Changes in tax legislation will
be closely monitored and internal models
can be used to factor this into the
business strategy.
2-3°C
Long
Likely
Significant Given the Group’s core market is in the
Increased costs and/or
reduced demand for
products and services
resulting from fines
and judgments
MENA region, management do not expect
this to have a major impact in the short or
medium term.
However, if legislative developments are
not carefully monitored to ensure full
compliance, it is possible that there may be
increased costs due to fines and potentially
reduced demand for products. This is
considered likely in the long term of the
2-3°C scenario and, if it happened, the
impact could be significant.
The Group mitigates this risk by closely
monitoring compliance with current and
future legislation so as to reduce the
likelihood of receiving fines for non-
compliance.
In a <2°C scenario where urgent action
is being taken, it is possible that there
could be changing customer preferences
resulting in reduced demand for goods
and services. This could have a significant
impact in the medium term. The Group will
continue to monitor any shift in consumer
demand across the regions it operates in.
However as noted above and in Note 5 to
the consolidated financial statements, a
Westwood Global Energy Group report
predicts an increase in demand for oil and
gas over the next 40 years, including in the
Group’s core markets. GMS also has a
proven track record in the renewables sector
which provides versatility in our business
model such that the Board is confident
that the Group will not face any significant
impact on the demand for its vessels due
to climate change implications beyond the
extent reflected in management’s
assumptions and sensitivities.
<2°C
Medium
Possible
Significant
Changing consumer
preference, reduced
demand for goods and
services due to a shift
in consumer
preferences
10
Gulf Marine Services PLC
Transition risks
GMS has provisionally identified three short
term risks: increasing UK policy requirements,
changing investor sentiment, and wider
stakeholder concern. As a premium listed
company on the London Stock Exchange
with operations primarily in the Gulf region,
GMS is subject to UK climate change and
environmental reporting regulations. We
foresee the short-term reporting obligations
increasing in the UK under <2ºC and 2-3ºC
scenarios, while we anticipate fewer
climate-related policy obligations in our
operational Gulf sites. The Group will
continue to monitor upcoming legislation for
both regions to aim to ensure compliance.
There is increasing investor and wider
stakeholder interest in how we engage with
climate change as a business. If we do not
respond appropriately to changing investor
sentiment, there is a risk to our ability to raise
capital, especially from investors operating
outside of the Middle East region. It is
essential to highlight however that our client
base is predominately in the Middle East, a
region home to five of the top ten oil-
producing countries and is responsible for
producing approximately 27% of the world’s
oil production. In addition, our two largest
investors (>50%) and our banking is based in
the Middle East. Although the transition to
cleaner energy continues to gather pace,
demand for oil and gas will continue to
account for over half of the energy mix by
2040 (Westwood Global Energy Group
report), even in the most ambitious energy
transition scenario. Based on the predicted
continued growth of the oil and gas industry
in the Middle East, the Board consider the
risk of investor sentiment changing within
this region is relatively low (“Possible” per
the table above) in the immediate near term.
Nevertheless, we recognise that the
likelihood of this risk will increase in the
medium to long-term in the <2ºC and 2-3ºC
scenarios. By providing relevant disclosures
in future periods, we will inform our investors
and wider stakeholders, including our
employees, about any changes to our
current business model and strategy
concerning climate change.
We identified a long term risk as the
transition to greener vessels and those able
to operate in deeper seas. The costs of
transitioning to lower emission technology
have also been considered. We anticipate
the risk likelihood of changing vessels will
increase over time, alongside improvements
in industry research and the development
of greener vessels. Although we have not
financially modelled each risk as at
31 December 2021, the Board do not
consider that vessel replacement costs
would significantly impact our business at
this point in time. The Board expect that
existing vessels will likely need to be retired/
fully depreciated across their remaining
useful lives before we are required to replace
them with greener options.
One climate-related opportunity previously
identified was GMS’s vessel support to the
renewable sector. This opportunity introduces
versatility to GMS’s strategy as the Board
reviews the potential impacts of the transition
to a low carbon global economy.
Physical risks
Our offices and most of our vessels are
located in the Gulf region, which experiences
an extreme climate with high temperatures,
low precipitation, and high water stress. The
region is well prepared to withstand extreme
heat with regulations to restrict people from
working outside during the hottest part of
the day and buildings designed to withstand
high temperatures. The provisional climate
analysis suggests that sandstorms will
become more frequent as temperatures
rise and precipitation decreases. Each
of the Group’s vessels is equipped with a
specialised filtration device to reduce the
risk of sandstorms damaging the vessels’
engines. Climate change will likely
exacerbate water stress in the region;
each of the Group’s vessels is equipped with
desalination equipment to mitigate water
stress. All the above risks have therefore
provisionally been assigned a Green rating.
The provisional climate analysis suggests that
sea-level rise in the long-term may affect the
depth at which our vessels can operate. The
types of vessels we invest in moving forward
after retiring existing assets will therefore
need to be able to operate at greater depths.
Risk management – Embedding
climate into our enterprise risk
assessment process.
Climate change is a wide-ranging and
complex topic increasingly important to the
general public, clients, investors and
employees. In December 2021, climate
change was added to our principal risks,
which means it will now be fully embedded in
the Group’s enterprise risk assessment
process going forward. The Group’s
enterprise risk assessment process begins
with identifying and assessing risks. Mitigating
controls are then identified. Identified risks
are consolidated by the Senior Management
into an overall heatmap for principal risks.
The Audit and Risk Committee will review the
risk profile at least quarterly. The Board will
discuss the Group’s risk register at each of
its principal meetings and review the risk
profile formally on an annual basis.
The introduction of TCFD has helped start
the development of GMS’s climate risk
assessment with the introduction annual
of climate scenario analysis in 2022 to
understand the impacts of climate change
on our operations. This will further evolve in
2022 with financial impact assessment.
Climate scenario analysis and subsequent
risks assessment were not conducted during
2021 and first provisional assessment has
been conducted in January 2022. Three
interrelated steps were undertaken as part
of this:
Step 1 – Identifying the risks:
Senior management, with the support of
specialists, used climate-scenario analysis
to provisionally identify sixteen potential
transition and physical risks to the business
over three climate warming pathways and
three timelines.
Step 2 – Assessing the risks:
These provisional risks were presented to
relevant internal stakeholders, including the
Chief Financial Officer. The provisional risks
were presented at Group and site levels.
Following our existing enterprise risk
assessment process and drawing on the
relevant expertise of Senior Management,
each provisional climate-related risk and
opportunity was given a likelihood and
impact rating, which were combined to
provide the inherent risk rating for each
scenario and timeline.
Step 3 – Addressing the risks:
Control actions can be implemented to
prevent, reduce or mitigate risk. Each
provisional risk was appraised to determine
the most appropriate approach and control
actions defined. A provisional control
effectiveness rating was assigned, which,
combined with the inherent risk rating,
allowed each provisional risk to be given
an overall rating of Red, Amber or Green for
each scenario and timeline. Overall, ten risks
were provisionally assigned an Amber rating
in at least one scenario and timeline.
From 2022 onwards, this process be will
repeated at least annually with the climate
scenario models rerun, the provisional risks
being reassessed, and the controls checked
to ensure they are still appropriate. There will
also be risk management workshops at least
bi-annually between the Executive Chairman
and the Senior Management team where
principal risks, including climate change,
will be assessed for impact and likelihood.
Annual Report 2021
11
Strategic Report PEOPLE AND VALUES
continued
Metrics & targets – Identifying,
measuring and monitoring our
environmental impact.
Our Scope 1 and 2 emissions have been
calculated and reported on since 2019. Our
Scope 1 emissions are related to the direct
consumption of gas and fuels utilised for the
Group’s vessel operations. Our Scope 2
emissions are related to our indirect
emissions due to our consumption of
purchased electricity in day to day business
operations. The Group uses no natural gas.
We adhere to Streamlined Energy & Carbon
Reporting (SECR) regulations. We have set
2019 as the baseline year for measuring and
monitoring our Scope 1 and 2 emissions.
Currently, most of the Group’s emissions
footprint is related to our fleet’s combustion
of transportation fuels, but this is subject to
change when we aim to calculate our Scope
3 emissions in 2022. Our vessels are leased
to client’s long term, but we account for their
GHG emissions within our footprint. Our
emission reduction efforts thus far have been
focused on reducing our Scope 1 and 2
emissions. We are pleased to report a
decrease in our Scope 1 and 2 emissions.
However, we expect the significant drop in
2021 levels to be counteracted as we come
out of the coronavirus pandemic. We report
on our emissions annually to track
improvements and intend to set reduction
targets once Scope 3 calculations and our
net-zero strategy are complete in 2022.
We have established workstreams to
measure and track our progress against key
goals set by the Group. Our work contributes
towards helping the business grow whilst
aiming to reduce our environmental impact
to build climate resilience. The Group aims to
identify and implement achievable emissions
reporting targets by working closely with an
expert third party and formalising a climate
policy to meet these targets as a priority.
See energy efficiency actions below.
Carbon Emission Reporting
Scope 1 direct emissions (fugitive emissions
and transportation fuels) for this year of
reporting are 50,170 tCO2e, resulting from
the direct combustion of 184,706,865 kWh
of fuel. This represents a carbon increase
of 10% from last year.
Scope 2 indirect emissions (purchased
electricity) for this year of reporting are 31
tCO2e, resulting from the consumption of
71,784 kWh of electricity purchased and
consumed in day-to-day business
operations. This represents a carbon
reduction of 94% from last year.
In 2022, GMS’s full Scope 3 emissions will
be calculated, and its net-zero strategy
formulated. Consistent with the Greenhouse
Gas (GHG) Protocol Corporate Value Chain
Accounting & Reporting Standard (version
1.0), GMS will aim to report on all the
applicable Scope 3 categories. Once
available, a complete GHG inventory will
allow Senior Management to examine GMS’s
GHG emissions, set reduction targets,
formulate a realistic net-zero strategy, and
appropriately assess the Group’s operational
risk from climate change in line with
climate-related scenarios.
Our operations have an intensity metric of
417.02 tCO2e per US$m total revenue for this
reporting year. This represents a reduction
in operational carbon intensity of 7%, from
the previous reporting year.
Scope 1 and 2 consumption and CO2e
emission data has been calculated in line
with the 2019 UK Government environmental
reporting guidance. The following Emission
Factor Databases consistent with the 2019
UK Government environmental reporting
guidance have been used, utilising the
current published kWh gross calorific value
(CV) and kgCO2e relevant for reporting year
01/01/2021 – 31/12/2021: Database 2020,
Version 1.0. The reporting boundary used for
collation of the carbon emissions reporting
data is the same as that used to prepare the
consolidated financial statements.
Figure 1: The trend in electricity, air travel, refrigerant and vessel fuel emissions from 2019-2021.
Scope 1 – Company Car Emissions
Scope 1 – Vessel Fuel Emissions
Scope 1 – Air Travel Emissions*
56
39,192
871
66
42
56
42,951
42,851
39,192
2,662
902
871
Scope 1 – Refrigerant Emissions
Scope 2 – Global Onshore Electricity
Emissions (excluding UK consumption)
1,912
2017
3,554
2018
2019
2,520
31
1,912
580
479
31
2017
2018
2019
2017
2018
2019
2019 (tCO2e)
2020 (tCO2e)
2021 (tCO2e)
* Air Travel Emissions for 2019 and 2020 calculated solely in-house.
2017
2018
2019
2017
2018
2019
12
Gulf Marine Services PLC
The following figures show the detailed consumption and associated emissions for this reporting year for operations, with figures from the
previous reporting period included for comparison.
The total consumption (kWh) figures for reportable energy supplies are as follows:
Utility and Scope
Grid-Supplied Electricity
(Scope 2)
Gaseous and other fuels
(Scope 1)
Transportation
(Scope 1)
Total
The total emission (tCO2e) figures for reportable energy supplies are as follows:
Utility and Scope
Grid-Supplied Electricity
(Scope 2)
Gaseous and other fuels
(Scope 1)
Transportation
(Scope 1)
Refrigerants
(Scope 1)
Total
2021 UK
Consumption
(kWh)
2021 Global
(excluding UK)
Consumption
(kWh)
2020 UK
Consumption
(kWh)
2020 Global
(excluding UK)
Consumption
(kWh)
0
0
71,784
0
0
0
815,940
0
15,330,963
169,375,902
18,089,737
147,946,495
15,330,963
169,447,686
18,089,737
148,762,435
2021 UK
Consumption
(tCO2e)
2021 Global
(excluding UK)
Consumption
(tCO2e)
2020 UK
Consumption
(tCO2e)
2020 Global
(excluding UK)
Consumption
(tCO2e)
0
0
31
0
0
0
479
0
4,022
44,206
4,674
38,219
0
4,022
1,912
46,148
0
4,674
2,520
41,217
An intensity metric of tCO2e per $m total revenue has been applied for our annual total emissions. The methodology of the intensity metric
calculations are detailed in the appendix, and results of this analysis is as follows:
Intensity Metric
tCO2e / Total Revenue $m
2021 UK
Intensity Metric
2021 Global
(excluding UK)
Intensity Metric
2020 UK
Intensity Metric
2020 Global
(excluding UK)
Intensity Metric
34.76
398.78
45.6
402.15
Annual Report 2021
13
Strategic Report PEOPLE AND VALUES
continued
Energy efficiency actions
Closures of Offices and Facilities
The relocation of our offices and downsizing
of onshore facilities has led to a 95%
reduction in CO2 emissions produced by
electricity consumption from 2020 to 2021.
Decrease in business travel
(COVID-19)
Levels of business travel remain suppressed
and due to changes in crew rotations, we
have seen a slight decrease (4%) in air travel
CO2 emissions.
Moving forward, the Group aims to identify
and implement achievable emissions
reporting targets and formalise a climate
policy to meet these targets as a priority.
Change in refrigerant
We changed the refrigerant used on our
vessels for the cooling process, resulting in
a 30% decrease in refrigerant emissions in
2020. In 2021 we decreased our refrigerant
emissions by a further 25% through better
maintenance and equipment. In addition,
we are now evaluating using R32 on all our
vessels which would significantly reduce
the Global Warming Potential of our fleet.
Table 2: Overarching goals and key workstreams to achieve them.
Goal
Key workstreams
Reduce GHG emissions
Restrict non-essential business travel
Trialling of a lube oil filtration system on our vessels
Expand our reporting to Scope 3 emissions next year
Reduce refrigerant emissions
Change Refrigerants
Implement waste reduction plans We are developing a process to record waste data to set waste-related targets
Engage our supply chain
on its climate impact
Reducing our use of plastic bottles offshore
Conduct supplier environmental assessments
Run climate scenario analysis on our key supplier routes
Social
Values
Core values of Responsibility, Excellence
and Relationships are incorporated into all
aspects of the business. GMS is committed
to ensuring the Health and safety of its
employees, subcontractors, clients and
partners and to upholding high
ethical standards.
Responsibility
GMS is committed to the Health and Safety
of its employees, subcontractors, clients and
partners and to behaving with environmental
responsibility. The Group’s focus is on
ensuring the safety of everything it designs,
constructs, operates and maintains.
The Group believes it has responsibility
across all business relationships. As part of
that, it is continually seeking opportunities
to grow the business and to create value for
shareholders. This includes being cost-
conscious and managing its risks effectively.
Excellence
The Company is always looking for ways to
better meet client needs through continuous
improvement. It aims to build on past
experiences and to embrace innovation.
14
Gulf Marine Services PLC
GMS sets itself challenging targets to
deliver superior performance and exceed
stakeholder expectations, including clients.
The reputation and integrity of the business
are important. Therefore, GMS works with
rigour and transparency to ensure it is the
preferred contractor of choice.
Relationships
The Company aims to attract and retain
premium staff and ensure they are
empowered to carry out their duties safely
and effectively.
GMS values employee diversity, the provision
of an environment where employees can
perform to their full potential and be
rewarded for delivering excellence.
Core values of Responsibility, Excellence
and Relationships are incorporated into all
aspects of the business. GMS is committed
to ensuring the Health and Safety of its
employees, subcontractors, clients and
partners and to upholding high
ethical standards.
Turnover
Voluntary employee turnover increased
to 14% in 2021 versus 8% in 2020. The
increase in the turnover trend was seen after
the COVID restrictions were relaxed in some
countries and are in line with pre-COVID
levels of staff turnover.
Diversity
The Group’s workforce consists of 545
personnel recruited from 34 countries. The
significant experience and skills individuals
bring to GMS help it conduct its business
globally. GMS recognises its talented and
diverse workforce as a competitive
advantage and ensures that diversity is
maintained across all areas by implementing
an Equal Opportunities Policy.
The information on page 16 provides details
of the gender diversity and country of origin
of our personnel as of 31 December 2021.
GMS has a zero-tolerance toward
discrimination either directly or indirectly
on the grounds of gender, race, colour,
nationality, ethnic or racial origins, marital
status, religion or disability. GMS is an equal
opportunities employer committed to seeking
out and retaining the calibre of human talent
that is strategically aligned with our business
GMS’ Code of Conduct sets out the basic
rules of the Group. The Code’s purpose is to
ensure work is undertaken safely, ethically,
efficiently, and within the laws of the countries
in which GMS operates. All staff receive Code
of Conduct training as part of their induction,
and the Group’s reputation and success are
dependent on staff putting the Code into
practice in all dealings with stakeholders.
GMS maintains an awareness of human
rights issues, which is reflected in its suite of
Group policies, including the Anti-Corruption
and Bribery Policy, Anti-Slavery Policy,
Social Responsibility Policy and
Whistleblowing Policy.
Whistleblowing reporting service
An independent reporting service for
whistleblowing is in place. It operates
confidentially, is available 24 hours a day
and is staffed by highly skilled professional
call handlers. This service:
• gives a voice to employees, contractors,
suppliers and supply chain and
other stakeholders;
• helps maintain a culture of openness;
• demonstrates that GMS takes
malpractice seriously;
• provides Senior Management with an
overall temperature of the business; and
• supports employees who speak up.
The Whistleblowing policy has a strict
non-retaliation commitment to support
any employees who speak up.
growth and performance. Our business
success is a reflection of the quality and
skill of our people. Details of our Equal
Opportunities Policy can be found in the
Governance section of our website.
Share ownership
The Group has operated a long-term
incentive plan since 2014. Please see pages
67 to 68 in the Remuneration Report for
further details.
Performance
The Short-Term Incentive Plan (STIP)
structure was redesigned during 2019 so
that all participants, including Executive
Directors, are working towards the same
transparent targets. There is no guaranteed
variable pay awards at GMS, with all pay
being performance-based. The 2022 STIP
measures for employees are set out at the
bottom of the page.
This aligns with shareholder interests and
encourages a performance-based culture
to achieve Group objectives.
Succession planning
GMS seeks to promote from within, where
possible and to manage this, the Company
has a succession planning process in place
for employees based on years of experience
and qualifications, however, due to the size
of the business, external hires will be made
where a post cannot be filled internally. The
Group is engaged in fair and transparent
recruitment practices. In 2021, GMS
promoted 22 employees.
Learning and development
GMS aims to ensure that all employees
maintain the relevant technical and regulatory
training required to fulfil their roles. As
seafarers, all crew maintain their relevant
STCW (Standards of Training, Certification
and Watchkeeping – a worldwide convention
that ensures a lateral standard of training is
achieved across all countries in the world)
qualifications that license them to operate
the Group’s vessels, in accordance with
International Maritime Organisation
requirements. For vessels operating within
the offshore Oil & Gas Sector, all crew also
complete additional training in areas such as,
but not limited to, offshore safety and
awareness and emergency response.
Ethical practice
The Group operates responsibly, in
accordance with the formal legal and
regulatory disclosure requirements expected
of a UK listed company.
For cultural and legal reasons, the extent
to which the number of offshore female
personnel can be increased is limited. Local
labour laws, for example, in the countries in
which GMS currently operates in the Middle
East, stipulate those women cannot work in
an inappropriate environment and hazardous
jobs/industries, meaning the Company is
unable to employ them offshore. As the
provisions of the UK Government’s Equality
Act 2010, relating to gender pay gap
disclosure, are not applicable to GMS,
this information has not been provided.
Employee Engagement
and Welfare
The employee engagement survey was
rolled out at the end of 2021, with an 82%
completion rate. This is consistent with the
last survey that was conducted in 2019 for
the entire GMS workforce. The areas
employees scored as needing attention are
the frequency of communication, as a Group
and between departments, and creating
opportunities to provide constructive ideas
on how to improve processes. In 2020,
GMS launched it’s internal ‘Bright Ideas’
campaign to encourage employees to share
their ideas to drive efficiencies in their areas
of work.
In 2021, the focus continued on employee’s
Health and safety, due to the potential risks
arising from COVID-19. There was regular
COVID-19 onsite testing. All employees were
actively encouraged to get vaccinated and
the year-end vaccination rate is 98%. Onshore,
GMS introduced Flexible Working Hours to
improve work-life balance and drive efficiencies
within the organisation with Work from Home
option under certain circumstances. Crew
rotations, for offshore employees, were
changed to cater to COVID-19 travel and
quarantine restrictions to adhere to client
and government requirements.
Rashed Al Jarwan was appointed as the new
dedicated Workforce Engagement Director
in 2021. A hybrid Town Hall style meeting
was conducted with him for all onshore and
offshore staff in the last quarter of 2021. On
an ongoing basis, onshore employees are
able to discuss items they feel relevant with
management at Head Office and offshore
employees have regular meetings with
Operations to discuss any issues that
affect them.
Annual Report 2021
15
Strategic Report PEOPLE AND VALUES
continued
People
Total number of employees
Offshore
545
(2020: 532)
490
(2020: 479)
Onshore
55
(2020: 53)
Voluntary turnover
14%
(2020: 8%)
Nationalities
34
(2020: 35)
Total number of Direct Reports
to Senior Managers
Total number
of Senior Managers
13
11
3
2
3
Male
Female
GMS Employees – By Region 2021
Offshore
Onshore
2017
2018
18
7
2019
113
2018
2019
2017
2
3
7
11
352
32
Africa
Asia
Europe
MENA
Other (Canada, Venezuela, New Zealand)
16
Gulf Marine Services PLC
Health and safety
The Group operates its vessels to the highest
international health and safety standards.
Management Systems, that govern all
Company activities and operations are
voluntarily accredited to ISO 9001, ISO 14001
and ISO 45001. All vessels operate in
compliance with the International Safety
Management (ISM) Code, meaning the
International Management Code for the
Safe Operation of Ships and for Pollution
Prevention, which is a legal requirement.
Risks arising from operations and activities
are routinely assessed to ensure that
mitigation measures are implemented
and communicated to all employees.
All employees are made aware of the risks
associated with operations through extensive
training and employee engagement. Training
programs are developed annually and
reviewed periodically.
The Group implemented and remote
healthcare system for all of its offshore
workforce in 2021, providing access to
onshore Doctors and mental health
support 24/7.
The Group has recently implemented a
Company-wide Marine Enterprise Resources
Planning System to modernise and digitalise
its vessel operations. The system integrates
all aspects of vessel management through
one web-based platform hosted on the
cloud and accessed onshore and offshore.
Management now has access to a
centralised database used to enhance
efficiency and improve decision-making.
The information below is intended to provide
an overview of the Health and Safety
performance over the reporting period.
Number of
work-related fatalities
Number of recordable
work-related injuries
Number of high-consequence
work-related injuries
0
(2020: 0)
1
(2020: 0)
Number of hours worked
1,962,081
(2020: 2,030,955)
1
(2020: 0)
Governance
For Governance related considerations, please refer to the Governance section of this Annual Report.
Weighting
Performance range (from zero to full pay-out)
40% (48% stretched)
Less than US$ 30.0m – Greater than US$ 35.0m
40% (48% stretched)
Less than US$ 50.0m – Greater than US$ 70.0m
10% (12% stretched)
Less than 44.0% – Greater than 52.5%
10% (12% stretched)
Less than 60% – Greater than 90%
100%
US$ 30m
40%
US$ 30.1m-US$ 35m
40-48%* max
120 days
US’000
Number of days past due
Trade receivables
Less: Allowance for trade receivables
Net trade receivables 2021
Trade receivables
Less: Allowance for trade receivables
Net trade receivables 2020
32,215
(169)
32,046
19,336
(80)
19,256
3,183
(8)
3,175
1,829
(4)
1,825
2,323
(6)
2,317
728
(2)
726
1,175
(3)
1,172
–
–
–
672
(2)
670
3
–
3
Total
US’000
42,143
(195)
2,575
(7)
2,568
41,948
2,311
(47)
24,207
(133)
2,264
24,074
Eight customers (2020: six) account for 97% (2020: 99%) of the total trade receivables balance (see revenue by segment information in
Note 29); however, credit risk is considered to be limited due to historical performance and ongoing assessments of customer credit and
liquidity positions.
Annual Report 2021
117
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
10 Derivative financial instruments
Embedded derivatives – contract to issue warrants
In June 2020, the Group restructured the terms of its borrowings with its lenders. These terms included warrants to be issued to its lenders
if GMS had not raised US$ 75.0 million of equity by no later than 31 December 2020. As this term was not expected to be met, an embedded
derivative liability was recognised for the obligation to issue the warrants. At 31 December 2020, this had a value of US$ 1.4 million, which
had increased to US$ 1.8 million by March 2021.
In March 2021, the Group amended the terms of its loan facility, as mentioned in Note 21, and additional time was granted to raise equity
before warrants were required to be issued to its lenders. The previous obligation to issue warrants to the bank was waived, and a contingent
requirement to issue warrants to banks was introduced. The amended terms required US$ 25.0 million of equity to be raised by 31 December
2021 otherwise the Group would be in default, and a further US$ 50.0 million to be raised by 31 December 2022. GMS was subsequently
successful with the requirement to raise the first tranche of equity (Refer to Note 12).
As the new terms of the loan facility contained separate distinguishable terms with a contingent requirement to issue warrants to banks,
management determined the debt facility to contain an embedded derivative. The Group was required to recognise the embedded derivative
at fair value. Management commissioned an independent valuation expert to measure the fair value of the warrants, which was determined
using Monte Carlo simulations. The simulation considers sensitivity by building models of possible results by substituting a range of values.
This represents a Level 3 fair value measurement under the IFRS 13 hierarchy. The fair value of the liability as at 31 December 2021 was
US$ 0.7 million (31 December 2020 US$ 1.4 million). As the derivative was due to be settled after 12 months, the balance is recognised
as a non-current liability.
The Group successfully concluded a US$ 27.8 million equity raise in June 2021 which prevented an event of default on its loan facilities.
Under these facilities, the Group is required to raise a further US$ 50 million of equity by the end of 2022 or issue 87.6 million warrants entitling
the Group’s banks to acquire 132 million shares, or 11.5% of the share capital of the Company, for a total consideration of GBP £7.9 million,
or 6.0p per share. Warrant holders will have the right to exercise there warrants up to the end of the term of the loan facility being
30 June 2025.
The loan facility was a tri-partite agreement between the Company, a subsidiary of the Group and the Groups banking syndicate. As the
embedded derivative was over the Company’s equity, the balance has been recorded on the Company’s balance sheet.
Interest Rate Swap
The Group entered into an Interest Rate Swap (IRS) on 30 June 2018 to hedge a notional amount of US$ 50.0 million. The remaining notional
amount hedged under the IRS as at 31 December 2021 was US$ 30.8 million (31 December 2020: US$ 38.4 million). The IRS hedges the risk
of variability in interest payments by converting a floating rate liability to a fixed rate liability. The fair value of the IRS as at 31 December 2021
was a liability value of US$ 1.1 million (31 December 2020: US$ 2.4 million). As cashflows of the hedging relationship were not highly probable
in 2020 hedge accounting was discontinued. The net revaluation gain in the period to 31 December 2021 of US$ 0.1 million was accordingly
recognised in the income statement, together with a US$ 0.1 million loss in respect of amounts recycled from the cash flow hedge reserve
(Note 36).
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 the contract to issue warrants, the Group has no other financial instruments that are classified as Level 3 in the fair value hierarchy
in the current year that are determined by reference to significant unobservable inputs. In the previous year, the contract to issue warrants
was recognised at level 2 of the fair value hierarchy. 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:
At 1 January 2021
Loss on settlement of derivatives
Net gain on changes in fair value of interest rate swap
Derecognition of embedded derivative warrants
Initial recognition of embedded derivative
Net loss on changes in fair value of embedded derivative
As at 31 December 2021
Interest rate
swap
US$’000
Cross currency
interest rate
swap
US$’000
Embedded
derivative
US$’000
(2,387)
1,033
278
–
–
–
(1,076)
–
–
–
–
–
–
–
(1,449)
–
–
1,890
(926)
(232)
(717)
Total
US$’000
(3,836)
1,033
278
1,890
(926)
(232)
(1,793)
118
Gulf Marine Services PLC
At 1 January 2020
Gain on fair value changes of hedging instruments
Gain/(loss) on settlement of derivatives
Net loss on changes in fair value of interest rate swap
Initial recognition of embedded derivative
Net loss on changes in fair value of embedded derivative
As at 31 December 2020
Interest rate
swap
US$’000
Cross currency
interest rate
swap
US$’000
Embedded
derivative
US$’000
(1,737)
–
901
(1,551)
–
–
(2,387)
(3)
21
(18)
–
–
–
–
–
–
–
–
(1,386)
(63)
(1,449)
Total
US$’000
(1,740)
21
883
(1,551)
(1,386)
(63)
(3,836)
These statements include the cost of hedging reserve and cash flow hedge reserve which are detailed further in the consolidated statement
of changes in equity. These reserves are non- distributable.
11 Cash and cash equivalents
Interest bearing
Held in UAE banks
Non-interest bearing
Held in UAE banks
Held in banks outside UAE
Total cash at bank and in hand
12 Share capital
Ordinary shares at £0.02 per share
At 1 January 2020 and 1 January 2021
Placing of new shares
Capital reorganisation
As at 31 December 2021
Deferred shares at £0.08 per share
At 1 January 2020 and 1 January 2021
Capital reorganisation
As at 31 December 2021
2021
US$’000
2020
US$’000
639
55
778
6,854
8,271
1,026
2,717
3,798
Number of
ordinary shares
(Thousands)
350,488
665,927
–
1,016,415
Number of
ordinary shares
(Thousands)
–
350,488
350,488
Ordinary
shares
US$’000
58,057
18,505
(46,445)
30,117
Ordinary
shares
US$’000
–
46,445
46,445
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 10p per share were subdivided and re-designated into 1 ordinary share with a nominal value of 2p and 1 deferred share with a nominal
value of 8p 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 have 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 have extremely limited rights. The Group has the right but not the obligation to buy back all of the Deferred Shares
for an amount not exceeding £1.00 in aggregate without obtaining the sanction of the holder or holders of the Deferred Shares. As there is no
contractual obligation, management do not consider there to be a liability.
As part of the equity raise on 28 June 2021, the Company issued 665,926,795 new ordinary shares with a nominal value of 2p per share at 3p
per share with the additional pence per share being recognised in the share premium account. Issue costs amounting to US$ 3.2 million
(31 December 2020: US$ nil) have been deducted from the share premium account.
Annual Report 2021
119
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
13 Restricted reserve
The restricted reserve of US$ 0.3 million (2020: US$ 0.3 million) represents the statutory reserve of certain subsidiaries. As required by the
UAE Commercial Companies Law, 10% of profit for the year is transferred to the statutory reserve until the reserve equals 50% of the share
capital. This reserve is not available for distribution. No amounts were transferred to this reserve during either of the years shown.
14 Group restructuring reserve
The Group restructuring reserve arose on consolidation under the pooling of interests (merger accounting) method used for the Group
restructuring. Under this method, the Group was treated as a continuation of GMS Global Commercial Investments LLC (the predecessor parent
Company) and its subsidiaries. At the date the Company became the new parent Company of the Group via a share-for-share exchange,
the difference between the share capital of GMS Global Commercial Investments LLC and the Company, amounting to US$ 49.7 million,
was recorded in the books of Gulf Marine Services PLC as a Group restructuring reserve. This reserve is non-distributable.
15 Share based payment reserve
Share based payment reserve of US$ 3.6 million (2020: US$ 3.7 million) relates to awards granted to employees under the long-term incentive
plans (Note 27).
16 Capital contribution
The capital contribution reserve is as follows:
At 31 December
2021
US$’000
9,177
2020
US$’000
9,177
During 2013, US$ 7.8 million was transferred from share appreciation rights payable to capital contribution as, effective 1 January 2013,
the shareholders have assumed the obligation to settle the share appreciation rights. An additional charge in respect of this scheme of
US$ 1.4 million was made in 2014. The total balance of US$ 9.2 million is not available for distribution.
17 Translation reserve and Retained earnings
Foreign currency translation reserve represents differences on foreign currency net investments arising from the re-translation of the net
investments in overseas subsidiaries.
Retained earnings include the accumulated realised and certain unrealised gains and losses made by the Group.
18 Non-controlling interests
The movement in non-controlling interests is summarised as follows:
At 1 January
Share of profit for the year
At 31 December
2021
US$’000
1,694
218
1,912
2020
US$’000
1,659
35
1,694
19 Provision for employees’ end of service benefits
In accordance with UAE and Saudi Arabia Labour Laws, the Group is required to provide for end of service benefits for certain employees.
The movement in the provision for employees’ end of service benefits during the year was as follows:
At 1 January
Provided during the year
Paid during the year
At 31 December
20 Trade and other payables
Trade payables
Due to a related party (Note 23)
Accrued expenses
Deferred revenue
VAT payable
Other payables
2021
US$’000
2,190
678
(546)
2,322
2021
US$’000
8,767
197
9,023
593
875
–
19,455
2020
US$’000
2,280
527
(617)
2,190
2020
US$’000
12,251
188
8,449
357
943
1,207
23,395
The average credit period on purchases is 194 days (2020: 152 days). No interest is payable on the outstanding balances. Trade and other
payables are all current liabilities.
120 Gulf Marine Services PLC
21 Bank borrowings
Secured borrowings at amortised cost are as follows:
Term loans
Working capital facility
Bank borrowings are split between hedged and unhedged amounts as follows;
Hedged bank borrowing via Interest Rate Swap*
Unhedged bank borrowings
2021
US$’000
358,026
21,500
379,526
2021
US$’000
30,769
348,757
379,526
2020
US$’000
388,533
21,500
410,033
2020
US$’000
38,462
371,571
410,033
*
This is an economic hedge and not accounted for in accordance with IFRS 9, Financial Instruments. The Group uses an IRS to hedge a portion of the Group’s floating
rate liability by converting LIBOR to a fixed rate. Refer to Note 26 for further details.
Bank borrowings are presented in the consolidated statement of financial position as follows:
Non-current portion
Bank borrowings
Current portion
Bank borrowings – scheduled repayments within one year
2021
US$’000
2020
US$’000
353,429
379,009
26,097
379,526
31,024
410,033
As noted in the 2020 annual report, on 31 December 2020, the Group’s banking syndicate agreed to extend certain obligations on the Group,
which it was otherwise required to have met, including the requirement to issue warrants to banks and accrue Payment in Kind (PIK) interest.
This meant the Group was not in an event of default as at 31 December 2020. This was further extended on 27 January 2021 and 25 February
2021. As the waivers received led to revisions to the timing of payments, management assessed the fair value of the remaining cashflows.
On 31 March 2021, the Group amended the terms of its loan facility with its banking syndicate. The amended terms (see below) were
significantly different compared to the original loan. Management determined that the Group’s loan facility was substantially modified and
accordingly the old loan facility was extinguished, and the new facility recognised.
A net gain of US$ 6.3 million (2020: US$ 1.1 million) was recognised in the profit and loss (Note 36) reflecting the waiver of PIK interest
otherwise payable during the first quarter of 2021, the remeasurement of the debt to fair value as at the date of the substantial modification,
and the impact of a change in the forecast voluntary repayment of the debt. US$ 3.2 million of costs incurred in renegotiating the new facility
were expensed (2020: US$ 15.8 million).
The remeasurement of the bank borrowings was determined in accordance with generally accepted principles based on a discounted cash
flow analysis, using appropriate effective interest rates.
The principal terms of the outstanding facility as at 31 December 2021 are as follows:
• The facility’s main currency is US$ and is repayable with a margin at 3% up to 31 December 2022 at which point margin is based on a
ratchet depending on leverage levels (2020: margin ratchet based on leverage levels) and final maturity in June 2025 (31 December 2020:
June 2025).
• The revolving working capital facility amounts to US$ 50.0 million. US$ 25.0 million of the working capital facility is allocated to
performance bonds and guarantees and US$ 25.0 million is allocated to cash of which US$ 21.5 million was drawn as at 31 December
2021 (31 December 2020: US$ 21.5 million), leaving US$ 3.5 million available for drawdown (31 December 2020: US$ 3.5 million). There
was a reduction to the cash element of the working capital facility by US$ 5 million to US$ 20 million on 31st March 2022. A payment of
US$ 5 million was made by the Group on the same day reducing the amount utilised to US$ 16.5 million, leaving US$ 3.5 million available
for drawdown as at 31 March 2022. The working capital facility expires alongside the main debt facility in June 2025.
• The facility remains secured by mortgages over its whole fleet, with a net book value at 31 December 2021 of US$ 560.9 million
(31 December 2020: US$ 558.6 million) (Note 5). Additionally, gross trade receivables, amounting to US$ 43.0 million (31 December 2020:
US$ 24.2 million) have been assigned as security against the loans extended by the Group’s banking syndicate (Note 9).
• The Group has also provided security against gross cash balances, being cash balances amounting to US$ 8.3 million (31 December
2020: US$ 3.8 million) (Note 11) before the restricted amounts related to visa deposits held with the Ministry of Labour in the UAE of
US$ 39k (2020: US$ 95k) included in trade and other receivables (see deposits in Note 9), which have been assigned as security
against the loans extended by the Group’s banking syndicate.
Annual Report 2021
121
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
21 Bank borrowings continued
• The amended terms contain contingent conditions such that if an equity raise of US$ 75.0 million in aggregate does not take place
by 31 December 2022, PIK interest would potentially accrue, only if leverage is above 4.0x and warrants would be due to the banking
syndicate, refer to Note 10 for details of the valuation of the contract to issue warrants.
The facility is subject to certain financial covenants including; Debt Service Cover; Interest Cover; and Net Leverage Ratio; which are tested
bi-annually in June and December. As at 31 December 2021 the Group were required to achieve a net leverage ratio lower than 6.1x, interest
cover with a minimum ratio of 1.2x and service cover with a minimum ratio of 2.5x. 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. In addition, there are
restrictions to payment of dividends until the net leverage ratio falls below 4.0 times. All financial covenants assigned to the Group’s debt
facility, described above were met as of 31 December 2021.
Management considers the carrying amount of the Group’s bank borrowings approximates it’s fair value as at 31 December 2021.
31 December 2021:
Term loan – scheduled repayments within one year
Term loan – scheduled repayments within more than one year
Working capital facility – scheduled repayment more than
Outstanding amount
Current
US$’000
Non-current
US$’000
Total
US$’000
Security
Maturity
26,097
–
–
331,929
26,097
331,929
Secured
Secured
June 2025
June 2025
one year
–
21,500
21,500
Secured
June 2025
26,097
353,429
379,526
31 December 2020:
Term loan – scheduled repayments within one year
Term loan – scheduled repayments within more than one year
Working capital facility – scheduled repayment within
one year
9,524
–
21,500
31,024
–
379,009
–
379,009
9,524
379,009
21,500
410,033
Secured
Secured
June 2025
June 2025
Secured
June 2025
2021
US$’000
3,311
1,955
147
(2,342)
(147)
2,924
1,817
736
206
165
2,924
1,817
1,107
2,924
2020
US$’000
1,954
3,239
182
(1,871)
(193)
3,311
1,739
826
746
–
3,311
1,739
1,572
3,311
22 Lease liabilities
As at 1 January
Recognition of new lease liability additions
Interest on finance leases (Note 36)
Principal elements of lease payments
Interest paid
As at 31 December
Maturity analysis:
Year 1
Year 2
Year 3 – 5
Onwards
Split between:
Current
Non-current
122 Gulf Marine Services PLC
23 Related party transactions
Related parties comprise the Group’s major shareholders, Directors and entities related to them, companies under common ownership and/
or common management and control, their partners and key management personnel. Pricing policies and terms of related party transactions
are approved by the Group’s Board.
Balances and transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note.
Key management personnel:
As at 31 December 2021, there were 2.2 million shares held by Directors (31 December 2020: nil). Refer to the Governance Report on page 71.
Related parties
The Group’s principal subsidiaries are outlined in Note 3. The related parties comprising of the Group’s major shareholders are outlined in the
Directors Report on page 76. The other related party during the year was:
Partner in relation to Saudi Operations
Relationship
Abdulla Fouad Energy Services Company
Minority shareholder in GMS Saudi Arabia Ltd.
Partner in relation to UAE Operations
National Catering Company Limited WLL
Affiliate of a significant shareholder of the Company
The amounts outstanding to Abdulla Fouad Energy Services Company as at 31 December 2021 was US$ 0.1 million (2020: US$ 0.2 million),
refer to Note 20.
The amounts outstanding to National Catering Company Limited WLL as at 31 December 2021 was US$ 0.1 million (2020: US$ nil) included
in trade and other payables (Note 20).
Significant transactions with the related party during the year:
Rentals property from Abdulla Fouad
Rentals of breathing equipment from Abdulla Fouad
Catering services for Vessel Pepper from National Catering Company Limited WLL
Compensation of key management personnel
The remuneration of Directors and other members of key management personnel during the year were as follows:
Short-term benefits
End of service benefits
Share based payment charge (LTIPs)
Termination payments
2021
US$’000
2020
US$’000
54
452
289
54
524
–
2021
US$’000
2020
US$’000
915
7
–
–
922
1,165
94
141
1,161
2,561
Compensation of key management personnel represents the charge to the profit or loss in respect of the remuneration of the executive and
non-executive Directors. At 31 December 2021, there were five members of key management personnel (2020: four members). During 2020,
the Board was replaced; the previous Board’s remuneration is included in the disclosure above for 2020. Further details of Board
remuneration and the termination of key management personnel are contained in the Directors’ Remuneration Report on page 69.
24 Contingent liabilities
At 31 December 2021, the banks acting for Gulf Marine Services FZE, one of the subsidiaries of the Group, had issued bid bonds,
performance bonds and labour guarantees amounting to US$ 11.6 million (2020: US$ 15.9 million) all of which were counter-indemnified
by other subsidiaries of the Group.
Annual Report 2021
123
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
25 Commitments
Capital commitments
2021
US$’000
6,832
2020
US$’000
7,470
Capital commitments comprise mainly capital expenditure, which has been contractually agreed with suppliers for future periods for
equipment or the upgrade of existing vessels.
26 Financial instruments
Categories of financial instruments
Financial assets:
Current assets at amortised cost:
Cash and cash equivalents (Note 11)
Trade receivables and other receivables (Note 9)*
Total financial assets
*
Trade and other receivables excludes prepayments and advances to suppliers.
Financial liabilities:
Derivatives recorded at FVTPL:
Interest rate swap (Note 10)
Embedded derivative (Note 10)
Financial liabilities recorded at amortised cost:
Trade and other payables (Note 20*)
Lease liabilities (Note 22)
Current bank borrowings – scheduled repayments within one year (Note 21)
Non-current bank borrowings – scheduled repayments more than one year (Note 21)
Total financial liabilities
*
Trade and other payables excludes amounts of deferred revenue and VAT payable.
2021
US$’000
2020
US$’000
8,271
44,446
52,717
3,798
26,682
30,480
2021
US$’000
2020
US$’000
1,076
717
2,387
1,449
17,987
2,924
26,097
353,429
402,230
22,095
3,311
31,024
379,009
439,275
The following table combines information about the following;
• Fair values of financial instruments (except financial instruments when carrying amount approximates their fair value); and
• Fair value hierarchy levels of financial liabilities for which fair value was disclosed.
Financial liabilities:
Recognised at level 2 of the fair value hierarchy:
Interest rate swap (Note 10)
Embedded derivative (Note 10)
Recognised at level 3 of the fair value hierarchy:
Embedded derivative (Note 10)
2021
US$’000
2020
US$’000
1,076
–
2,387
1,449
717
–
The following table provides information about the sensitivity of the fair value measurement to changes in the most significant inputs:
Description
Valuation
technique
Significant
unobservable input
Sensitivity of the fair value measurement to input
Embedded derivative Monte-Carlo
Equity raise or warrant issue
simulation
technique
The valuation methodology assumes warrants are issued and vest
whenever sufficient equity is not raised, and sufficient equity is
assumed to be raised whenever market capitalisation exceeds
US$ 75 million in a Monte Carlo simulation with 5,000 iterations for
Group’s future market capitalisation. As a result of this assumption,
there are 2,797 iterations out of 5,000 where warrants are issued
and vest, and 2,203 iterations where sufficient equity is raised.
The fair value of financial instruments classified as level 3 are, in certain circumstances, measured using valuation techniques that incorporate
assumptions that are not evidenced by the prices from observable current market transactions in the same instrument and are not based on
observable market data.
124 Gulf Marine Services PLC
The fair value of the Group’s embedded derivative at 31 December 2021 has been arrived at on the basis of a valuation carried out at that date
by a third- party expert, an independent valuer not connected with the Group. The valuation conforms to International Valuation Standards.
The fair value was determined using a Monte-Carlo simulation with 5,000 iterations of which 54% of iterations had warrants being issued
and 46% had an equity raise taking place by 31 December 2022.
Favourable and unfavourable changes in the value of financial instruments are determined on the basis of changes in the value of the instruments
as a result of varying the levels of the unobservable parameters, quantification of which is judgmental. There have been no transfers between
Level 2 and Level 3 during the years ended 31 December 2021 and 31 December 2020.
The Group uses interest rate swap derivatives to hedge volatility in interest rates. These were previously formally designated into hedge
accounting relationships. As disclosed in the 2019 annual report, the Group’s banks agreed to waive the testing requirement of all covenants
for the December 2019 testing date. As the cashflows of the hedging relationship subsequent to 31 December 2020 were not highly
probable, the hedge discontinued in 2020 and the interest rate swap was reclassified to fair value through profit and loss. As a result, a gain
of US$ 0.3 million (2020: loss of US$ 1.6 million) was recognised in relation to the change in fair value of the interest rate swap in the current
year (Note 36).
Capital risk management
The Group manages its capital to support its ability to continue as a going concern while maximising the return on equity. The Group does not
have a formalised optimal target capital structure or target ratios in connection with its capital risk management objectives, however under the
revised banking terms signed in March 2021, a minimum of US$ 75 million has to be raised prior to 31 December 2022 in order to accelerate
payments towards term debt. The capital structure of the Group consists of net bank debt and total equity. The Group will look to delever the
Company as well as maximise cash wherever possible over the coming years.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the
basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are
disclosed in Note 3 to the financial statements.
Financial risk management objectives
The Group is exposed to the following risks related to financial instruments – credit risk, liquidity risk, interest rate risk and foreign currency
risk. Management actively monitors and manages these financial risks relating to the Group. In December 2020 an agreement was reached
between the United Kingdom (“UK”) and the European Union (“EU”) for the UK to exit the EU (“Brexit”). The Group has considered the risks
arising from Brexit and on amounts presented in these consolidated financial statements. As the majority of the Group’s operations and our
lending syndicate are in the Middle East, our UK office was closed at the end of 2019 and there is currently one vessel working in North West
Europe, the exposure is not considered to be significant beyond the foreign currency risk described later.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group, and arises
principally from the Group’s trade and other receivables and cash and cash equivalents.
The Group has adopted a policy of only dealing with creditworthy counterparties which have been determined based on information available
and other financial analysis, such that significant revenue is generated by dealing with high profile well known customers, for whom the credit
risk is assessed to be suitably low. The Group attempts to control credit risk by monitoring credit exposures, limiting transactions with specific
non-related counterparties, and continually assessing the creditworthiness of such non-related counterparties.
Cash balances held with banks are assessed to have low credit risk of default since these banks are highly regulated by the central banks of
the respective countries. At the year-end, cash at bank and in hand totalled US$ 8.3 million (2020: US$ 3.8 million), deposited with banks with
Fitch short-term ratings of F2 to F1+ (Refer to Note 11).
Concentration of credit risk arises when a number of counterparties are engaged in similar business activities, or activities in the same
geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected
by changes in economic, political or other conditions. Concentration of credit risk indicates the relative sensitivity of the Group’s performance
to developments affecting a particular industry or geographic location. During the year, vessels were chartered to ten Middle East and two
international companies, including international oil companies and engineering, procurement and construction (“EPC”) contractors.
At 31 December 2021, 8 companies accounted for 96% (2020: 10 companies accounted for 99%) of the outstanding trade receivables.
The credit risk on liquid funds is limited because the funds are held by banks with high credit ratings assigned by international agencies.
The amount that best represents maximum credit risk exposure on financial assets at the end of the reporting period, in the event
counterparties failing to perform their obligations generally approximates their carrying value.
The Group considers cash and cash equivalents and trade and other receivables which are neither past due nor impaired to have a low credit
risk and an internal rating of ‘performing’. Performing is defined as a counterparty that has a strong financial position and which there are no
past due amounts.
Annual Report 2021
125
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
26 Financial instruments continued
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by seeking to maintain
sufficient facilities to ensure availability of funds for forecast and actual cash flow requirements.
The table below summarises the maturity profile of the Group’s financial liabilities. The contractual maturities of the Group’s financial liabilities
have been determined on the basis of the remaining period at the end of the reporting period to the contractual maturity date. The maturity
profile is monitored by management to assist in ensuring adequate liquidity is maintained. Refer to Going Concern in Note 3.
The maturity profile of the assets and liabilities at the end of the reporting period based on contractual repayment arrangements was as follows:
Interest rate
Total
US$’000
1 to 3
months
US$’000
4 to 12
months
US$’000
2 to 5
years
US$’000
31 December 2021
Non-interest bearing financial assets
Cash and cash equivalents- non-interest bearing
Trade receivables and other receivables*
Interest bearing financial assets
Cash and cash equivalents- interest bearing
Non-interest bearing financial liabilities
Trade and other payables**
Interest bearing financial liabilities
Bank borrowings- principal
Interest on bank borrowings
Lease liabilities
Interest on lease liabilities
Interest rate swap
7,632
44,446
639
52,717
7,632
41,208
639
49,479
–
670
–
670
–
2,568
–
2,568
3.0%–3.3%
17,987
17,987
–
–
379,526
34,907
2,205
104
1,076
435,805
Total
US$’000
3,743
26,682
55
30,480
6,524
2,898
440
20
–
27,869
1 to 3
months
US$’000
3,743
24,415
55
28,213
19,573
8,378
925
42
–
28,918
4 to 12
months
US$’000
–
3
–
–
3
–
7,500
15,499
1,340
89
–
24,428
353,429
23,631
840
42
1,076
379,018
2 to 5
years
US$’000
–
2,264
–
–
2,264
–
432,295
57,155
1,669
97
2,387
493,603
Interest rate
31 December 2020
Non-interest bearing financial assets
Cash and cash equivalents- non-interest bearing
Trade and other receivables*
Interest bearing financial assets
Cash and cash equivalents- interest bearing
Non-interest bearing financial liabilities
Trade and other payables**
Interest bearing financial liabilities
Bank borrowings- principal
Interest on bank borrowings
Lease liabilities
Interest on lease liabilities
Interest rate swap
5.2%–7.0%
22,095
22,095
463,795
77,705
3,536
226
2,387
569,744
24,000
5,051
527
40
–
51,713
* Trade and other receivables excludes prepayments and advances to suppliers.
** Trade and other payables excludes amounts of deferred revenue and VAT payable.
126 Gulf Marine Services PLC
Interest rate risk management
The Group is exposed to cash flow interest rate risk on its bank borrowings which are subject to floating interest rates.
The Group uses an IRS to hedge a notional amount of US$ 50 million (2020: US$ 50.0 million). The remaining amount of notional hedged from
the IRS as at 31 December 2021 was US$ 30.8 million (2020: US$ 38.5 million). The IRS hedges the risk of variability in interest payments by
converting a floating rate liability to a fixed rate liability. The fair value of the IRS as at 31 December 2021 was a liability value of US$ 1.1 million
(2020: US$ 2.4 million), (see Note 10 for more details). As noted above the hedge discontinued on 1 January 2020 and the interest rate swap
was reclassified to fair value through profit and loss.
Interest Rate Benchmark Reform
The key risks for the Group arising from the transition are:
Interest rate basis risk: There are two elements to this risk as outlined below:
•
If the bilateral negotiations with the Group’s counterparties are not successfully concluded before the cessation of IBORs, there are
significant uncertainties with regard to the interest rate that would apply. This gives rise to additional interest rate risk that was not
anticipated when the contracts were entered into and is not captured by our interest rate risk management strategy. For example, in some
cases the fallback clauses in IBOR loan contracts may result in the interest rate becoming fixed for the remaining term at the last IBOR
quote. The Group is working closely with all counterparties to avoid this from occurring, however if this does arise, the Group’s interest
rate risk management policy will apply as normal and may result in closing out or entering into new interest rate swaps to maintain the mix
of floating rate and fixed rate debt.
Interest rate risk basis may arise if a non-derivative instrument and the derivative instrument held to manage the interest risk on the
non-derivative instrument transition to alternative benchmark rates at different times. This risk may also arise where back-to-back
derivatives transition at different times. The Group will monitor this risk against its risk management policy which has been updated to
allow for temporary mismatches of up to 12 months and transact additional basis interest rate swaps if required.
•
Liquidity risk: There are fundamental differences between IBORs and the various alternative benchmark rates which the Group will be
adopting. IBORs are forward looking term rates published for a period (e.g. 3 months) at the beginning of that period and include an inter-
bank credit spread, whereas alternative benchmark rates are typically risk free overnight rates published at the end of the overnight period
with no embedded credit spread. These differences will result in additional uncertainty regarding floating rate interest payments which will
require additional liquidity management. The Group’s liquidity risk management policy has been updated to ensure sufficient liquid resources
to accommodate unexpected increases in overnight rates.
Accounting: If transition to alternative benchmark rates for certain contracts is finalised in a manner that does not permit the application of
the reliefs introduced in the Phase 2 amendments, this could lead to increased volatility in profit or loss if re-designated hedges are not fully
effective and volatility in the profit or loss if non-derivative financial instruments are modified or derecognised. The Group is aiming to agree
changes to contracts that would allow IFRS 9 reliefs to apply. In particular, the Group is not seeking to novate derivatives or close out
derivatives and enter into new on-market derivatives where derivatives have been designated in hedging relationships.
Litigation risk: If no agreement is reached to implement the interest rate benchmark reform on existing contracts, (e.g. arising from differing
interpretation of existing fallback terms), there is a risk of prolonged disputes with counterparties which could give rise to additional legal and
other costs. The Group is working closely with all counterparties to avoid this from occurring.
Operational risk: Our current treasury management processes are being updated to fully manage the transition to alternative benchmark
rates and there is a risk that such upgrades are not fully functional in time, resulting in additional manual procedures which give rise to
operational risks. The Group has developed workstreams to ensure the relevant updates are made in good time and the Group has plans
in place for alternative manual procedures with relevant controls to address any potential delay.
Progress towards implementation of alternative benchmark interest rates
The Group has been in ongoing discussions with its lenders in relation to transition to alternative benchmark rates. This is the case for both
its bank borrowings and interest rate swap.
Foreign currency risk management
The majority of the Group’s transactions are denominated in UAE Dirhams, Euros, US Dollars and Pound Sterling. As the UAE Dirham and
Saudi Riyal are pegged to the US Dollar, balances in UAE Dirham and Saudi Riyals are not considered to represent significant currency risk.
Transactions in other foreign currencies entered into by the Group are short-term in nature and therefore management considers that the
currency risk associated with these transactions is limited.
Brexit has not had any material impact on Group operations or gave exposure to transactions in Pound Sterling. Management continue
to monitor changes in legislation and future policies and will develop suitable mitigants if required.
Annual Report 2021
127
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
26 Financial instruments continued
Foreign currency risk management continued
The carrying amounts of the Group’s significant foreign currency denominated monetary assets include cash and cash equivalents and trade
receivables and liabilities include trade payables. The amounts at the reporting date are as follows:
US Dollars
UAE Dirhams
Saudi Riyals
Pound Sterling
Euros
Qatari Riyals
Norwegian Krone
Others
Assets
31 December
Liabilities
31 December
2021
US$’000
35,097
87
7,688
4,189
89
3,264
–
–
50,414
2020
US$’000
19,193
103
6,719
315
23
1,652
–
–
28,005
2021
US$’000
4,889
2,092
553
948
196
86
2
1
8,767
2020
US$’000
6,239
3,347
738
1,054
535
210
126
2
12,251
At 31 December 2021, if the exchange rate of the currencies other than the UAE Dirham and Saudi Riyal had increased/decreased by
10% against the US Dollar, with all other variables held constant, the Group’s profit/(loss) for the year would have been higher/lower by
US$ 0.6 million (2020: higher/lower by US$ nil) mainly as a result of foreign exchange loss or gain on translation of Euro and Pound Sterling
denominated balances.
27 Long term incentive plans
The Group has Long Term Incentive Plans (“LTIPs”) which were granted to senior management, managers and senior offshore officers.
From 2019 onwards the employment condition is that each eligible employee of the Company must remain in employment during the
three-year vesting period. LTIPs have been aligned to the Company’s share performance therefore only financial metrics will be applied.
EPS (“Earnings Per Share”) has been dropped as the financial metric.
In the prior years until 2018, the release of these shares was conditional upon continued employment, certain market vesting conditions and
in the case of senior management LTIP awards, performance against three-year target EPS compound annual growth rates. 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 simulations, 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 market performance condition, 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, which for the Company mainly related to the continual employment of the employee during the vesting period,
and in the case of the senior management, until 2018 as noted above, achievement of EPS growth targets, were taken into account by adjusting
the number of equity instruments expected to vest at each balance sheet date. 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 year is given in the table below:
At the beginning of the year
Granted in the year
Cash settled in the year
Forfeited in the year
At the end of the year
2021
000’s
6,573,229
–
(1,854,298)
(2,219,217)
2020
000’s
8,768,294
2,661,388
–
(4,856,453)
2,499,714
6,573,229
The weighted average remaining contractual life for the vesting period outstanding as at 31 December 2021 was 0.5 years (31 December
2020: 1.0 years). The weighted average fair value of shares granted during the year ended 31 December 2021 was US$ nil (31 December
2020: US$ 0.10).
128 Gulf Marine Services PLC
128 Gulf Marine Services PLC
Grant date
Share price
Expected volatility
Risk-free rate
Expected dividend yield
Vesting period
Award life
LTIP
LTIP
29 May 2020 15 November 2019
£0.08
102.79%
0.48%
0.00%
3 years
3 years
£0.09
120%
0.01%
0.00%
3 years
3 years
The expected share price volatility of Gulf Marine Services PLC shares was determined taking into account the historical share price
movements for a three-year period up to the grant date (and of each of the companies in the comparator group). The risk-free return was
determined from similarly dated zero coupon UK government bonds at the time the share awards were granted, using historical information
taken from the Bank of England’s records.
On 15 March 2021, the Remuneration Committee determined that awards granted on 28 March 2018 which were due to vest on 28 March
2021 would be settled in cash, not by the issue of shares as was contractually stipulated, subject to the achievement of the original
performance conditions. For the purposes of IFRS 2, this represented a reclassification of these awards from equity-settled to cash-settled.
In accordance with IFRS 2, at the date of reclassification a balance of US$ 0.1 million equal to the fair value of the awards at the modification
date was deducted from equity. As the fair value at the modification date was lower than the cumulative equity-settled share-based payment
charge at that date, no adjustment was made to profit or loss as a result of the modifications.
On 9 June 2021, the Company’s Ordinary Shares of 10p each were split into Ordinary Shares of 2p each and deferred shares of 8p each.
A consequence of this change will be that the share options issued in prior years will be modified to such that the recipients are granted
Ordinary Shares of 2p each, not Ordinary Shares of 10p each.
This change represented a modification of the share-based payments for the purposes of IFRS 2. However, as the modification did not result
in a favourable change for the employees, no adjustments to the share-based payment charge was required as a result of the change to the
Company’s share capital.
28 Dividends
There was no dividend declared or paid in 2021 (2020: nil). No final dividend in respect of the year ended 31 December 2021 is to be
proposed at the 2022 AGM.
During the year ended 31 December 2017 and 31 December 2018, the Group’s subsidiaries declared a dividend of US$ 0.3 and
US$ 0.3 million, respectively, to non-controlling interests. Both these dividends were paid during 2020.
29 Segment reporting
Management have identified that the Directors and senior management team are the chief operating decision makers in accordance with the
requirements of IFRS 8 ‘Operating Segments’. Segment performance is assessed based upon adjusted gross profit/(loss), which represents
gross profit/(loss) before depreciation and amortisation and loss on impairment of assets. The reportable segments have been identified by
Directors and senior management based on the size and type of asset in operation.
The operating and reportable segments of the Group are (i) K-Class vessels, which include the Kamikaze, Kikuyu, Kawawa, Kudeta, Keloa
and Pepper vessels (ii) S-Class vessels, which include the Shamal, Scirocco and Sharqi vessels, (iii) E-Class vessels, which include the
Endeavour, Endurance, Enterprise and Evolution vessels, and (iv) Other vessels, considered non-core assets, which does not form part of
the K-, S- or E-Class vessels segments. The composition of the Other vessels segment, which are non-core assets, was amended in 2018.
All of these operating segments earn revenue related to the hiring of vessels and related services including charter hire income, messing
and accommodation services, personnel hire and hire of equipment. The accounting policies of the operating segments are the same as
the Group’s accounting policies described in Note 3.
Annual Report 2021
129
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
29 Segment reporting continued
K-Class vessels
E-Class vessels
S-Class vessels
Other vessels
Less:
Depreciation charged to cost of sales
Amortisation charged to cost of sales
Reversal of impairment/(impairment loss)
Gross profit/(loss)
Other general and administrative expenses
Finance expense
Foreign exchange loss, net
Other income
Finance income
Restructuring costs
Exceptional legal costs
Loss on disposal of property and equipment
Gain on disposal of assets held for sale
Profit/(loss) for the year before taxation
Revenue
Segment adjusted
gross profit/(loss)
2021
US$’000
43,027
38,680
33,420
–
115,127
2020
US$’000
40,947
29,407
32,136
2
102,492
2021
US$’000
26,214
25,104
22,590
–
73,908
(22,738)
(5,503)
14,959
60,626
(12,272)
(14,463)
(1,002)
28
9
–
–
–
–
2020
US$’000
25,349
12,676
22,210
(10)
60,225
(25,524)
(3,073)
(87,156)
(55,528)
(12,632)
(46,740)
(993)
257
15
(2,492)
(3,092)
(2,073)
259
32,926
(123,019)
The total revenue from reportable segments which comprises the K-, S- and E-Class vessels was US$ 115.1 million (2020: US$ 102.5 million).
The Other vessels segment does not constitute a reportable segment per IFRS 8 Operating Segments.
Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the years.
Segment assets and liabilities, including depreciation, amortisation and additions to non-current assets, are not reported to the chief
operating decision makers on a segmental basis and are therefore not disclosed.
Information about major customers
During the year, four customers (2020: two) individually accounted for more than 10% of the Group’s revenues. The related revenue figures for
these major customers, the identity of which may vary by year was US$ 13.4 million, US$ 16.6 million, US$ 42.0 million and US$ 18.6 million
(2020: US$ 39.3 million and US$ 17.7 million). The revenue from these customers is attributable to the E-Class vessels, S-Class vessels and
K-Class vessels reportable segments.
Geographical segments
Revenue by geographical segment is based on the geographical location of the customer as shown below.
2021
US$’000
58,019
21,376
22,591
101,986
10,392
2,749
13,141
115,127
2020
US$’000
53,363
17,745
19,047
90,155
5,353
6,984
12,337
102,492
United Arab Emirates
Saudi Arabia
Qatar
Total – Middle East and North Africa
United Kingdom
Rest of Europe
Total – Europe
Worldwide Total
130 Gulf Marine Services PLC
Type of work
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
Renewables
Total
2021
US$’000
101,986
13,141
115,127
2020
US$’000
90,196
12,296
102,492
A reversal of impairment of US$ 15.0 million (2020: impairment of US$ 87.2 million) was recognised in respect of property and equipment
(Note 5). These (reversal of impairments)/impairment charge were attributable to the following reportable segments:
K-Class vessels
S-Class vessels
E-Class vessels
Other vessels
2021
Depreciation charged to cost of sales
Amortisation charged to cost of sales
Reversal of impairment charge
2020
Depreciation charged to cost of sales
Amortisation charged to cost of sales
Impairment charge
2021
US$’000
(4,852)
–
(10,107)
–
(14,959)
K-Class vessels
US$’000
S-Class vessels
US$’000
E-Class vessels
US$’000
Other vessels
US$’000
4,739
2,759
(4,852)
7,432
1,863
61,130
5,842
848
–
5,807
605
–
12,037
1,896
(10,107)
12,092
605
26,026
120
–
–
193
–
–
2020
US$’000
61,130
–
26,026
–
87,156
Total
US$’000
22,738
5,503
(14,959)
25,524
3,073
87,156
Annual Report 2021
131
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
30 Presentation of adjusted non-GAAP results
The following table provides a reconciliation between the Group’s adjusted non-GAAP and statutory financial results:
Revenue
Cost of sales
– Cost of sales before depreciation,
amortisation and impairment
– Depreciation and amortisation
Reversal of impairment/(impairment loss)*
Gross profit/(loss)
General and administrative
– Amortisation of IFRS 16, Leases
– Depreciation
– Other administrative costs
Restructuring costs**
Exceptional legal costs***
Year ended 31 December 2021
Year ended 31 December 2020
Adjusted
non-GAAP
results
US$’000
115,127
Adjusting
items
US$’000
Statutory
total
US$’000
Adjusted
non-GAAP
results
US$’000
–
115,127
102,492
(41,219)
(28,241)
–
45,667
(2,410)
(78)
(9,784)
–
–
–
–
14,959
14,959
–
–
–
–
–
(41,219)
(28,241)
14,959
60,626
(2,410)
(78)
(9,784)
–
–
(42,267)
(28,597)
–
31,628
(2,543)
(313)
(9,776)
–
–
Adjusting
items
US$’000
–
–
–
(87,156)
(87,156)
–
–
–
(2,492)
(3,092)
Statutory
total
US$’000
102,492
(42,267)
(28,597)
(87,156)
(55,528)
(2,543)
(313)
(9,776)
(2,492)
(3,092)
Operating profit/(loss)
33,395
14,959
48,354
18,996
(92,740)
(73,744)
Finance income
Finance expense
Cost to acquire new bank facility****
Fair value adjustment on recognition of new
debt facility*****
Other income
Loss on disposal of property plant and
equipment
Gain on disposal of assets held for sale
Foreign exchange loss, net
Loss before taxation
Taxation charge
Profit/(loss) for the year
Profit/(loss) attributable to:
Owners of the Company
Non-controlling interests
Gain/(loss) per share (basic)
Gain/(loss) per share (diluted)
Supplementary non statutory information
Operating profit/(loss)
Add: Depreciation and amortisation
Adjusted EBITDA
9
(12,737)
–
–
28
–
–
(1,002)
19,693
(1,707)
17,986
17,768
218
2.57
2.55
33,395
30,729
64,124
–
–
(3,165)
1,439
–
–
–
–
13,233
–
13,233
13,233
–
1.91
1.91
14,959
–
14,959
9
(12,737)
(3,165)
1,439
28
–
–
(1,002)
32,926
(1,707)
31,219
31,001
218
4.48
4.46
48,354
30,729
79,083
15
(30,495)
–
–
257
(2,073)
259
(993)
(14,034)
(1,285)
(15,319)
(15,354)
35
(4.38)
(4.38)
18,996
31,453
50,449
–
–
(15,797)
(448)
–
–
–
–
(108,985)
–
(108,985)
(108,985)
–
(31.10)
(31.10)
(92,740)
–
(92,740)
15
(30,495)
(15,797)
(448)
257
(2,073)
259
(993)
(123,019)
(1,285)
(124,304)
(124,339)
35
(35.48)
(35.48)
(73,744)
31,453
(42,291)
*
**
The reversal of impairment credit/impairment charge on certain vessels and related assets have been added back to gross profit/(loss) to arrive at adjusted gross profit for
the year ended 31 December 2021 and 2020 (refer to Note 5 for further details). Management have adjusted this due to the nature of the transaction which management
believe is not directly related to operations management are able to influence. This measure provides additional information on the core profitability of the Group.
Restructuring costs incurred are not considered part of the regular underlying performance of the business and so have been added back to arrive at adjusted loss
for the year ended 31 December 2020 (refer to Note 33 for further details). Management have adjusted this due to them being one off in nature. This measure provides
additional information in assessing the Group’s total performance that management is more directly able to influence and on a basis comparable from year to year.
See KPI section on page 34 for further details.
*** Exceptional legal costs incurred are not considered part of the regular underlying performance of the business and so have been added back to arrive at adjusted loss
for the year ended 31 December 2020 (refer to Note 34 for further details). Management have adjusted this due to them being one off in nature. This measure provides
additional information in assessing the Group’s total performance that management is more directly able to influence and on a basis comparable from year to year.
See KPI section on page 34 for further details.
**** Costs incurred to arrange a new bank facility have been added back to loss before taxation to arrive at adjusted profit/(loss) for the year ended 31 December 2021 and
31 December 2020. Management have adjusted this due to both the nature of the transaction and the incidence of these transactions occurring. Costs incurred to
arrange a new bank facility are not related to the profitability of the Group which management are able to influence and are typically only incurred when a refinance
takes place. This measure provides additional information in assessing the Group’s total performance that management is more directly able to influence and on a
basis comparable from year to year. See KPI section on page 34 for further details.
***** The fair value adjustment on recognition of the new loan has been added back to profit/(loss) before taxation to arrive at adjusted loss for the year ended 31 December
2021 and 2020. Management have adjusted this due to them being one off in nature. This measure provides additional information in assessing the Group’s total
performance that management is more directly able to influence and on a basis comparable from year to year.
132 Gulf Marine Services PLC
Cashflow reconciliation:
Profit/(loss) for the year
Adjustments for:
(Reversal of impairment)/impairment loss
(Note 5)*
Cost to acquire new bank facility**
Fair value adjustment on recognition of
new debt facility***
Finance expenses
Other adjustments (Note 38)
Cash flow from operating activities before
movement in working capital
Change in trade and other receivables
Change in trade and other payables
Cash generated from operations (Note 38)
Income tax paid
Net cash flows generated from
operating activities
Net cash flows used in
investing activities
Payment of issue costs on bank borrowings
Other cash flows used in financing activities
Net cash flows used in
financing activities
Net change in cash and
cash equivalents
Year ended 31 December 2021
Year ended 31 December 2020
Adjusted
non-GAAP
results
US$’000
Adjusting
items
US$’000
Statutory
total
US$’000
Adjusted
non-GAAP
results
US$’000
Adjusting
items
US$’000
Statutory
total
US$’000
17,986
13,233
31,219
(15,319)
(108,985)
(124,304)
–
–
–
12,737
32,576
63,299
(17,090)
(4,849)
41,360
(849)
40,511
(11,498)
(450)
(20,925)
(14,959)
3,165
(1,439)
–
–
–
–
–
–
–
–
–
(3,165)
–
(14,959)
3,165
(1,439)
12,737
32,576
63,299
(17,090)
(4,849)
41,360
(849)
–
–
87,156
15,797
–
30,495
34,343
49,519
4,866
(1,973)
52,412
(763)
448
–
–
(5,584)
–
(1,797)
(7,381)
–
87,156
15,797
448
30,495
34,343
43,935
4,866
(3,770)
45,031
(763)
40,511
51,649
(7,381)
44,268
(11,498)
(3,615)
(20,925)
(12,350)
(115)
(22,075)
–
(14,334)
–
(12,350)
(14,449)
(22,075)
(21,375)
(3,165)
(24,540)
(22,190)
(14,334)
(36,524)
7,638
(3,165)
4,473
17,109
(21,715)
(4,606)
*
The reversal of impairment credit/impairment charge on certain vessels and related assets have been added back to Cash flow from operating activities before
movement in working capital for the year ended 31 December 2021 and 2020 (refer to Note 5 for further details).
** Costs incurred to arrange a new bank facility have been added back to Cash flow from operating activities before movement in working capital for the year ended
31 December 2021 and 31 December 2020.
*** The fair value adjustment on recognition of the new loan has been added back to Cash flow from operating activities before movement in working capital for the year
ended 31 December 2021 and 2020.
31 Earnings/(loss) per share
Profit/(loss) for the purpose of basic and diluted earnings/(loss) per share being profit/(loss) for the year
attributable to Owners of the Company (US$’000)
Profit/(loss) for the purpose of adjusted basic and diluted earnings/(loss) per share (US$’000) (Note 30)
Weighted average number of shares (‘000)
Weighted average diluted number of shares in issue (‘000)
Basic earnings/(loss) per share (cents)
Diluted earnings/(loss) per share (cents)
Adjusted earnings/(loss) per share (cents)
Adjusted diluted earnings/(loss) per share (cents)
2021
2020
31,001
17,768
691,661
695,753
4.48
4.46
2.57
2.55
(124,339)
(15,354)
350,488
350,488
(35.48)
(35.48)
(4.38)
(4.38)
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company (as disclosed in the
statement of comprehensive income) by the weighted average number of ordinary shares in issue during the year.
Adjusted earnings/(loss) per share is calculated on the same basis but uses the profit/(loss) for the purpose of basic earnings/(loss) per share
(shown above) adjusted by adding back the non-operational items, which were recognised in the consolidated statement of profit or loss and
other comprehensive income in the prior year. The adjusted earnings/(loss) per share is presented as the Directors consider it provides an
additional indication of the underlying performance of the Group.
Annual Report 2021
133
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
31 Earnings/(loss) per share continued
Diluted earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year, adjusted for the weighted average effect of share-based payment charge
outstanding during the year. As the Group incurred a loss in 2020, diluted earnings/(loss) per share is the same as loss per share, as the
effect of share-based payment charge was anti-dilutive.
Adjusted diluted earnings/(loss) per share is calculated on the same basis but uses adjusted profit/(loss) (Note 30) attributable to equity
holders of the Company.
The following table shows a reconciliation between the basic and diluted weighted average number of shares:
Weighted average basic number of shares in issue
Weighted average effect of LTIP’s
Weighted average diluted number of shares in issue
32 Revenue
Charter hire
Lease income
Messing and accommodation
Maintenance service
Mobilisation and demobilisation
Sundry income
Revenue recognised – over time
Revenue recognised – point in time
2021
’000s
691,661
4,092
695,753
2021
US$’000
63,525
38,824
7,971
2,865
1,077
865
115,127
113,931
1,196
115,127
2020
’000s
350,488
–
350,488
2020
US$’000
60,797
33,252
5,506
1,267
1,030
640
102,492
101,683
809
102,492
Included in mobilisation and demobilisation income is an amount of US$ 0.1 million (2020 US$ 0.3 million) that was included as deferred
revenue at the beginning of the financial year.
Lease income:
Maturity analysis:
Year 1
Year 2
Year 3 – 5
Onwards
Split between:
Current
Non-current
Further descriptions on the above types of revenue have been provided in Note 3.
2021
2020
47,994
21,306
4,305
–
73,605
47,994
25,611
73,605
40,529
22,856
21,175
–
84,559
40,529
44,030
84,559
134 Gulf Marine Services PLC
33 Restructuring costs
During 2019 and 2020, the organisational structure was simplified with a number of management posts removed and not replaced.
In addition, the operational footprint was reviewed and certain operations in the UK and MENA were closed. Consultancy costs incurred
mainly related to legal advice on restructuring and Board changes. There were no such costs in the current year.
Total restructuring costs was US$ 8.8 million, of which US$ 6.3 million was incurred in 2019 and US$ 2.5 million in 2020. At 31 December
2021, the remaining provision was US$ 0.2 million (31 December 2020: US$ 0.3 million), which is expected to be fully utilised over the next
12 months.
Staff costs
Consultancy fees
Business travel
Office/port closures
2021
US$’000
2020
US$’000
–
–
–
–
–
1,862
403
82
145
2,492
34 Exceptional legal costs
During the year ended 31 December 2020, as a result of the non-binding proposed offer to buy the share capital of the Company from our
largest shareholder, several requests for General Meetings, and legal advice for Director disputes, additional were incurred in 2020 totalling
to US$ 3.1 million, which did not repeat in the current year.
35 Finance income
Bank and other income
36 Finance expense
Interest on bank borrowings (Note 21)
Cost to acquire new bank facility*(Note 21)
Recognition of embedded derivative for contract to issue warrants (Note 10)
Loss on IRS reclassified to profit or loss
Net loss on changes in fair value of embedded derivative for contract to issue warrants
Interest on finance leases (Note 7)
Net gain on revision of debt facility (Note 21)
Derecognition of embedded derivative for contract to issue warrants (Note 10)
Net (gain)/loss on changes in fair value of interest rate swap (Note 10)
Other finance expenses
* Costs incurred to acquire new loan facility including arrangement, advisory and legal fees.
2021
US$’000
9
2020
US$’000
15
2021
US$’000
2020
US$’000
17,545
3,165
926
278
232
147
(6,332)
(1,890)
(278)
670
14,463
27,626
15,797
1,449
901
–
182
(1,070)
–
1,551
301
46,740
Annual Report 2021
135
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
37 Profit/(loss) for the year
The profit/(loss) for the year is stated after charging/(crediting):
Total staff costs (see below)
Depreciation of property and equipment (Note 5)
Amortisation of dry docking expenditure (Note 6)
Depreciation of right-of-use assets (Note 7)
Foreign exchange loss, net
Auditor’s remuneration (see below)
Expense relating to short term leases or leases of low value assets (Note 7)
Movement in ECL provision during the year (Note 9)
(Reversal of impairment)/impairment loss (Note 5)
Recovery of ECL provision (Note 9)
Loss on disposal of property plant and equipment
Gain on disposal of assets held for sale
The average number of full time equivalent employees (excluding non-executive Directors) by geographic area was:
Middle East and Northern Africa
Rest of the world
2021
US$’000
31,761
22,816
5,503
2,411
1,002
1,141
525
62
(14,959)
–
–
–
2020
US$’000
28,264
25,837
3,074
2,543
993
1,025
247
69
87,156
(64)
2,073
(259)
2021
Number
2020
Number
499
35
534
467
29
496
The total number of full time equivalent employees (including executive Directors) as at 31 December 2021 was 545
(31 December 2020: 533).
Their aggregate remuneration comprised:
Wages and salaries
End of service benefit (Note 19)
Share based payment charge
Employment taxes
The analysis of the auditor’s remuneration is as follows:
Group audit fees
Subsidiary audit fees
Total audit fees
Audit-related assurance services – interim review
Audit-related assurance services – equity raise review
Total fees
2021
US$’000
31,039
678
26
18
31,761
2020
US$’000
27,692
527
7
38
28,264
2021
US$’000
2020
US$’000
631
62
693
240
170
784
95
879
146
–
1,103
1,025
For further information on the Group’s policy in respect of Auditor’s remuneration see page 51 of the Report of the Audit and Risk Committee.
136 Gulf Marine Services PLC
38 Notes to the consolidated statement of cash flows
Operating activities
Profit/(loss) for the year
Adjustments for:
Depreciation of property and equipment (Note 5)
Finance expenses (Note 36)
Amortisation of dry docking expenditure (Note 6)
Depreciation of right-of-use assets (Note 7)
Income tax expense (Note 8)
Movement in ECL provision during the year (Note 9)
End of service benefits charge (Note 19)
(Reversal of impairment)/impairment loss (Note 5)
End of service benefits paid (Note 19)
Share-based payment charge (Note 15)
Interest income (Note 35)
Recovery of ECL provision (Note 9)
Loss on disposal of property and equipment (Note 37)
Gain on disposal of assets held for sale (Note 37)
Hedging revenue adjustment (Note 10)
Other income
Cash flow from operating activities before movement in working capital
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables
Cash generated from operations
Taxation paid
Net cash generated from operating activities
2021
US$’000
2020
US$’000
31,219
(124,304)
22,816
14,463
5,503
2,411
1,707
62
678
(14,959)
(546)
(18)
(9)
–
–
–
–
(28)
63,299
(17,090)
(4,849)
41,360
(849)
40,511
25,837
46,740
3,074
2,543
1,285
69
527
87,156
(617)
168
(15)
(64)
2,073
(259)
(21)
(257)
43,935
4,866
(3,770)
45,031
(763)
44,268
Annual Report 2021
137
Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
38 Notes to the consolidated statement of cash flows continued
Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.
Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s
consolidated statement of cash flows as cash flows from financing activities.
At 1 January 2020
Financing cash flows
Bank borrowings received
Repayment of bank borrowings
Principal elements of lease payments
Settlement of derivatives
Interest paid
Total financing cashflows
Non-cash changes:
Recognition of new lease liability additions
Interest on leases (Note 36)
Interest on bank borrowings (Note 36)
Gain on fair value changes of hedging instruments (Note 10)
Net loss on change in fair value of IRS (Note 10)
Loss on fair value changes on the embedded derivative (Note 10)
Gain on revision of debt facility (Note 36)
Total non cash changes
At 31 December 2020
Financing cash flows
Bank borrowings received
Repayment of bank borrowings
Principal elements of lease payments
Settlement of derivatives
Interest paid
Total financing cashflows
Non-cash changes:
Recognition of new lease liability additions
Interest on leases (Note 36)
Interest on bank borrowings (Note 36)
Bank commitment fees (Note 36)
Gain on revision of debt facility (Note 36)
Net gain on change in fair value of IRS (Note 10)
Loss on fair value changes on the embedded derivative (Note 10)
The expensing of unamortised issue costs in relation to previous loan (Note 36)
Revaluation gain on revision of debt cash flows at the date of modification (Note 36)
Total non cash changes
At 31 December 2021
Derivatives
(Note 10)
US$’000
Lease
liabilities
(Note 22)
US$’000
Bank
borrowings
(Note 21)
US$’000
1,740
1,954
401,955
–
–
–
(883)
–
(883)
–
–
–
(21)
1,551
1,449
–
2,979
3,836
–
–
–
(1,033)
–
(1,033)
–
–
–
–
–
(278)
(732)
–
–
(1,010)
1,793
–
–
(1,871)
–
(193)
(2,064)
3,239
182
–
–
–
–
–
3,421
3,311
–
–
(2,342)
–
(147)
(2,489)
1,955
147
–
–
–
–
–
–
–
2,102
2,924
21,500
(12,075)
–
–
(27,903)
(18,478)
–
–
27,626
–
–
–
(1,070)
26,556
410,033
2,000
(30,983)
–
–
(12,737)
(41,720)
–
–
17,545
–
(6,332)
–
–
–
–
11,213
379,526
39 Events after the reporting period
Russia-Ukraine conflict
On 24th February 2022, Russia launched ground and air attacks on Ukraine which led to the closure of airports and land borders. This
developing situation has the potential to impact Group’s operations and presents a risk to the health, safety and welfare of certain GMS’
employees living in Ukraine. The Group has implemented procedures to provide required support should employees be affected as well as
ensure continuity across the business. In response to military action launched by Russia, western countries and other global allies imposed
an unprecedented package of coordinated sanctions against Russia. The Group has minimal activity with suppliers in Russia and continues
to manage its supply chain and has robust procedures in place to avoid any disruption to operations. Overall, the Group does not expect the
war in Ukraine and resulting sanctions to have a significant impact on operations.
138 Gulf Marine Services PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
Non-current assets
Investments in subsidiaries
Other receivables
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Creditors: Amounts falling due within one year
Other payables
Net current liabilities
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Derivatives
Net assets
Equity
Share capital – Ordinary
Share capital – Deferred
Share premium account
Share based payment reserve
Retained earnings
Total equity
Notes
5
6
6
8
9
10
10
10
10
2021
US$’000
229,806
43,591
273,397
216
−
216
Restated*
2020
US$’000
247,325
2,798
250,123
48
64
112
36,172
36,172
18,173
18,173
237,441
232,062
717
1,449
236,724
230,613
30,117
46,445
99,105
3,647
57,410
58,057
−
93,080
3,739
75,737
236,724
230,613
The Company reported a loss for the financial year ended 31 December 2021 of US$ 18.3 million (2020: US$ 330.1 million).
The financial statements of Gulf Marine Services PLC (registered number 08860816) were approved by the Board of Directors and authorised
for issue on 12 May 2022. Signed on behalf of the Board of Directors
Mansour Al Alami
Executive Chairman
Lord Anthony St John of Bletso
Independent Non-executive Director
* Details of the prior period reclassification can be found in Note 13
The attached Notes 1 to 14 form an integral part of these financial statements.
Annual Report 2021
139
Financial Statements
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
At 1 January 2020
Loss for the year/
Total comprehensive expense
Share based payment charge (Note 10)
At 31 December 2020
Loss for the year/
Total comprehensive expense
Share based payment credit (Note 10)
Capital reorganisation (Note 10)
Issue of share capital (Note 10)
Share issue costs
Cash settlement of share based payments
(Note 12)
Share
capital
– Ordinary
US$’000
58,057
−
−
58,057
−
−
(46,445)
18,505
−
Share
capital
– Deferred
US$’000
−
−
−
−
−
−
−
46,445
−
Share
premium
account
US$’000
93,080
−
−
93,080
−
−
−
9,253
(3,228)
−
−
−
Share based
payment reserve
US$’000
Retained
earnings
US$’000
Total equity
US$’000
3,569
405,857
560,563
−
170
3,739
(330,120)
−
75,737
(330,120)
170
230,613
−
(18)
−
−
−
(74)
(18,327)
−
−
−
−
−
(18,327)
(18)
(46,445)
74,203
(3,228)
(74)
At 31 December 2021
30,117
46,445
99,105
3,647
57,410
236,724
The attached Notes 1 to 14 form an integral part of these financial statements.
140 Gulf Marine Services PLC
NOTES TO COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1 Corporate information
Gulf Marine Services PLC (“the Company”) was a private company limited by shares, incorporated in the United Kingdom under the
Companies Act 2006 and is registered in England and Wales. On 7 February 2014, the Company re-registered as a public limited company.
The address of the registered office of the Company is 107 Hammersmith Road, London, United Kingdom, W14 0QH. The registered number
of the Company is 08860816. The Company is the Parent Company of the Gulf Marine Services PLC Group comprising of Gulf Marine
Services PLC and its underlying subsidiaries (“the Group”). The consolidated Group accounts are publicly available.
2 Accounting policies
Currency
The functional and presentational currency of the Company is US Dollars (“US$”).
Going concern
The Company’s ability to continue as a going concern is premised on the same assessment as the Group.
The Group’s Directors have assessed the Group’s financial position for a period through to June 2023 and have a reasonable expectation
that the Group will be able to continue in operational existence for the foreseeable future.
The material uncertainty over going concern that existed and was previously disclosed as a significant judgment when the 31 December 2020
financial statements were approved on 21 May 2021 no longer exists due to the successful issuance of equity in June 2021, which removed
the potential event of default on the Group’s revised bank facilities, as renegotiated in March 2021.
The renegotiation of bank facilities also resulted in a 40% reduction in margin payable in 2021 and 2022, with the surplus cash generated
from these savings used to accelerate repayment of the loan principal (refer to Note 21 in the Group consolidated financial statements for
further details on the revised terms of the bank facility).
As a result of the above refinancing in March 2021 and subsequent equity raise in June 2021, the Directors no longer consider going concern
to be a critical accounting judgment as at 31 December 2021.
The Group is exploring various contractual options available per the current bank terms to take place by the end of 2022. As disclosed in the
strategic report, the two options available are the raise of US$ 50 million equity or the issuance of 87.6 million warrants giving potential rights
to 132 million shares if exercised. As at 31 December 2021, the Board consider the more likely outcome will be the issuance of warrants
rather than the equity raise. PIK interest will potentially accrue, only if the net leverage ratio is above 4.0 times. Based on the latest Board
approved projections, the net leverage ratio is expected to be below 4.0x and therefore no PIK interest is expected.
The forecast used for Going Concern reflects management’s key assumptions including those around utilisation and vessel day rates
on a vessel-by-vessel basis. Specifically, these assumptions are:
• Average day rates across the fleet are assumed to be US$ 28.6k for the 18 month period to 30 June 2023;
• 90% forecast utilisation for the 18 month period to 30 June 2023;
• Strong pipeline of tenders and opportunities for new contracts that would commence during the forecast period.
As noted above the impact of COVID-19 has also been considered in short-term forecasts approved by the Board which include additional
hotel and testing costs for offshore crew whilst in quarantine. Terms and conditions of crew rotations have also been amended and costs
updated to reflect this. Rotations have been extended for all crew to limit the number of times in quarantine and the number of changeouts
on the crew which increases the risk of infection each time it occurs. All policies are in line with Government and client guidelines for offshore
activities. Management note that the impact of COVID-19 has shown significant signs of easing in H1 2021, continuing throughout 2022 and
therefore this is not expected to be a long-term risk.
While the current situation regarding the war in Ukraine and Russian sanctions described on page 33 remains uncertain, the Directors believe
the potential impact of the war, border closures and resulting sanctions will not have a significant impact on operations.
Brexit is not expected to have a significant effect on the Group’s operations as 12 of 13 vessels are in the MENA region.
The Group is expected to continue to generate positive operating cash flows for the foreseeable future and has in place a committed working
capital facility of US$ 50.0 million, of which US$ 25.0 million can be utilised to support the issuance of performance bonds and guarantees.
The balance can be utilised to draw down cash. US$ 21.5 million of this facility was utilised as at 31 December 2021, leaving US$ 3.5 million
available for drawdown as at 31 March 2022 (2020: US$ 3.5 million). There was a reduction to the cash element of the working capital facility
by US$ 5 million to US$ 20 million on 31st March 2022. A payment of US$ 5 million was made by the Group on the same day reducing the
amount utilised to US$ 16.5 million, leaving US$ 3.5 million available for drawdown. The working capital facility expires alongside the main
debt facility in June 2025.
The principal borrowing facilities are subject to covenants and are measured bi-annually in June and December. Refer to Note 21 in the Group
consolidated financial statements for further details.
Annual Report 2021
141
Financial Statements NOTES TO COMPANY FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
2 Accounting policies continued
Going concern continued
The Group’s forecasts, having taken into consideration reasonable risks and downsides, indicate that its revised bank facilities along with
sufficient order book of contracted work (currently secured 86% of revenue for FY 2022) and a strong pipeline of near-term opportunities for
additional work (a further 6% is at an advanced stages of negotiation captured in the Group’s backlog) will provide sufficient liquidity for its
requirements for the foreseeable future and accordingly the consolidated financial statements for the Group for the current period have been
prepared on a going concern basis.
A downside case was prepared using the following assumptions:
• no work-to-win in 2022;
• a 22 percent reduction in work to win utilisation in H1 2023; and
• a reduction in day-rates for an E-Class vessel assumed to have the largest day rate, by 10% commencing from November 2022,
i.e. after expiry of the current secured period.
Based on the above scenario, the Group would not be in breach of its term loan facility, however, the net leverage ratio is forecast to exceed
4.0 times as at 31 December 2022 for a period of 6 months and therefore PIK interest of US$ 3.9 million would accrue in the assessment
period and has been included in the above forecast. Such PIK would be settled as part of the bullet payment on expiry of the Group’s term
loan facility in June 2025. The downside case is considered to be severe but plausible and would still leave the Group with $10m of liquidity
and in compliance with the covenants under the Group’s banking facilities throughout the period until the end of May 2023.
In addition to the above reasonably plausible downside sensitivity, the Directors have also considered a reverse stress test, where adjusted
EBITDA has been sufficiently reduced to breach the net leverage ratio as a result of a combination of reduced utilisation and day rates,
as noted below:
• no work-to-win in 2022;
• a 40 percent and 25 percent reduction in options utilisation in 2022 and H1 2023 respectively;
• a 48 percent reduction in work to win utilisation in H1 2023; and
• a reduction in day-rates for an E-Class vessel assumed to have the largest day rate, by 10% commencing from November 2022,
i.e. after expiry of the current secured period.
Based on the above scenario, net leverage ratio is forecast to exceed 4.0 times at 31 December 2022 for a period of 6 months and therefore
PIK interest of US$ 3.9 million would accrue in the assessment period and has been included in the above forecast. Such PIK would be settled
as part of the bullet payment on expiry of the Group’s term loan facility in June 2025. The net leverage ratio is also breached at HY 2023.
Should circumstances arise that differ from the Group’s projections, the Directors believe that a number of mitigating actions can be executed
successfully in the necessary timeframe to meet debt repayment obligations as they become due (refer Note 21 in the Group consolidated
financial statements for maturity profiles) and in order to maintain liquidity. Potential mitigating actions include the following:
• Reduction in client specific capex due to no mobilisation of vessels of approximately US$ 4 million in 2022 and US$ 2.5 million in H1 2023;
• Vessels off hire for prolonged periods could be cold stacked to minimise operating costs on these vessels at the rate of US$ 35,000/
month for K-Class and US$ 50,000/month for S-Class/E-Class;
• Reduction in overhead costs, particularly, bonus payments estimated at US$ 125k per month; and
• 2022 – H2 2024 voluntary payments could be deferred till H1 2025 when the bullet payment will be made as there would be less cash
available to help deleverage on a voluntary basis.
Further information on the use of the going concern basis has been disclosed in the Director’s report (page 76). GMS remains cognisant of
the wider context in which it operates and the impact that climate change could have on the financial statements of the Group. Please refer
to page 4 for more details of climate change and mitigants adopted by the Group.
Basis of accounting
The separate financial statements of the Company are presented as required by the Companies Act 2006. These have been prepared under
the historical cost convention, modified to include certain items at fair value, and in accordance with Financial Reporting Standard 102
(FRS 102) issued by the Financial Reporting Council.
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 (the ‘Act’) to not present the Company
Income Statement nor the Company Statement of Comprehensive Income. The result for the Company for the year was a loss of
US$ 18.3 million (2020: loss of US$ 330.1 million). The principal accounting policies are summarised below. They have all been applied
consistently throughout both years.
The Company meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions
available to it. Exemptions have been taken in relation to the presentation of a statement of profit or loss and other comprehensive income,
cash flow statement, remuneration of key management personnel, and financial instrument disclosures.
Investments
Investments in subsidiaries are recognised at cost less impairment.
142 Gulf Marine Services PLC
Financial instruments
Financial assets and financial liabilities are recognised in the Company’s statement of financial position, when the Company becomes a party
to the contractual provisions of the instrument.
Financial liabilities
Financial liabilities are classified as either financial liabilities at Fair Value Through Profit or Loss (‘‘FVTPL’’) or ‘‘other financial liabilities’’.
Other payables are classified as ‘‘other financial liabilities’’. Other financial liabilities are initially measured at the transaction price, net of
transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate (“EIR”) method, with
interest expense recognised on an effective interest rate, except for short-term payables or when the recognition of interest would be immaterial.
The EIR method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.
The EIR is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire.
Derivative liability
The Company considers whether a contract contains a derivative liability when it becomes a party to the contract. Derivatives are initially
recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting
date. The resulting gain or loss is recognised in profit or loss immediately.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Financial assets
Basic financial assets including other receivables and cash and bank balances are initially measured at transaction price, plus transaction
costs. Such assets are subsequently carried at amortised cost using the effective interest method.
Interest income is recognised by applying the effective interest rate method, except for short-term receivables when the recognition of interest
would be immaterial.
Other financial assets are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair
value and the changes in fair value are recognised in profit or loss.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective
evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows
of the investment have been affected.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Taxation
Current tax, including UK Corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the reporting date where transactions
or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the reporting date.
Deferred tax is measured on a non-discounted basis. Timing differences are differences between the Company’s taxable profits and its
results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessment periods different from those
in which they are recognised in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence, it can be
regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences
can be deducted.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are
expected to apply to the reversal of the timing difference.
Annual Report 2021
143
Financial Statements NOTES TO COMPANY FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
2 Accounting policies continued
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the contracted rate or the rate of exchange ruling at the balance sheet date and the
gains or losses on translation are included in the profit or loss account.
Share-based payments
The fair value of an equity instrument is determined at the grant date based on market prices if available, taking into account the terms and
conditions upon which those equity instruments were granted. If market prices are not available for share awards, the fair value of the equity
instruments is estimated using a valuation technique to derive an estimate of what the price of those equity instruments would have been at
the relevant measurement date in an arm’s length transaction between knowledgeable, willing parties. Equity-settled share-based payments
to employees are measured at the fair value of the instruments, using a binomial model together with Monte Carlo simulations as at the grant
date, and is expensed over the vesting period. The value of the expense is dependent upon certain key assumptions including the expected
future volatility of the Company’s share price at the date of grant.
The fair value measurement reflects all market based vesting conditions. Service and non-market performance conditions are taken into
account in determining the number of rights that are expected to vest. The impact of the revision of the original estimates, if any, is recognised
in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
3 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in Note 2, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ
from these estimates.
Critical judgements in applying the Company’s accounting policies
Critical accounting judgements are those which management make in the process of applying the Company’s accounting policies and that
have the most significant effect on the amounts recognised in the financial statements.
Management has not made any critical judgements in applying the Company’s accounting policies for the year ended 31 December 2021.
Key source of estimation uncertainty
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods.
The key assumptions concerning the future, and other key sources of estimation uncertainty that may have a significant risk of causing a
material adjustment to the carrying value of assets and liabilities within the next financial year, are outlined below.
Recoverability of investments
As noted above, the Company performs impairment reviews in respect of investments whenever events or changes in circumstance indicate
that the carrying amount may not be recoverable. An impairment loss is recognised when the recoverable amount of an asset, which is the
higher of the asset’s net realisable value and its value in use, is less than its carrying amount. The recoverability of investments is primarily
impacted by the cash flows of the vessels owned by the Group’s subsidiary undertakings and cashflows related to the Group’s debt facility.
The projection of cash flows related to vessels and debt facility requires the use of various estimates including future day rates, vessel utilisation
levels, and discount rates, in which the estimate is most sensitive. For further details on analysis of the sensitivities of these estimates, refer to
Note 5. The Company undertook a full impairment review of its investments during the year. The review led to the recognition of an aggregate
impairment of US$ 17.0 million (2020:US$ 327.7 million) on the investment in subsidiaries (see Note 5). As at 31 December 2021, the Company
had investments of US$ 229.8 million (2020: US$ 247.3 million).
4 Dividends
There was no interim dividend declared or paid in 2021 (2020: Nil).
No final dividend in respect of the year ended 31 December 2021 (2020: Nil at the 2021 AGM) is to be proposed at the 2021 AGM.
144 Gulf Marine Services PLC
5 Investment in subsidiaries
Gross investments in subsidiaries as at 01 January
Capital (reduction)/contribution in subsidiary in relation to derivative liability (Note 9)
Gross investments in subsidiaries as at 31 December
Impairments as at 01 January
Impairment of investments in year
Impairments as at 31 December
Carrying amount as at 31 December
2021
US$’000
574,995
(523)
574,472
(327,670)
(16,996)
(344,666)
229,806
2020
US$’000
573,546
1,449
574,995
–
(327,670)
(327,670)
247,325
As at 31 December 2021, the market capitalisation of the GMS Group continued to be lower than the carrying value of investments in the
Company’s investments in its subsidiary undertakings. Management engaged an independent expert to derive a nominal post-tax discount
rate which was estimated at 12.10% (2020: 9.86%). This increase in post-tax discount rate was a further indicator of impairment and
accordingly, the Company undertook a full assessment of recoverable amount of its investments in subsidiaries at the reporting date.
The review was done by identifying the value in use of each vessel in the fleet as the underlying cash generating units of the investments
in subsidiaries. The net bank debt of the GMS Group was then deducted from the value in use of the investments, which was based on the
combined value in use of vessels within the Group. This assessment is based on management’s projections of utilisation and day rates and
associated cash flows and adjusted to include full overheads and future tax charges. Projections used to derive future cashflows reflect the
ongoing COVID-19 pandemic and oil price environment. The risk adjusted cash flows were discounted using the nominal post-tax discount
rate mentioned above of 12.1% (2020: 9.86%), which reflects the current market assessment of the time value of money and is based on the
Group’s weighted average cost of capital. The discount rate has been calculated using industry sector average beta, risk free rates of return
as well as specific adjustments for country risk and tax regimes in the countries in which the Group operates and a size premium. A post tax
discount rate was used as the cashflows to derive the value in use of investments in subsidiaries includes the impacts of tax as
described above.
In concurrence with external advisors, management reviewed and narrowed down the peer companies used to compute the discount rate
and measured the overall impact of existing and additional risks relating to the Company, resulting in an increase of the WACC to 12.1%
as noted above.
The review led to the recognition of an aggregate impairment of US$ 17.0 million (2020: US$ 327.7 million) on the investment in subsidiaries.
Although this is in contrast to the reversal of impairment recognised in the Group financial statements of US$ 15.0 million (2020: impairment
of US$ 87.2 million), management believe this is reasonable based on the value in use of investments and the Group’s current share price.
The assessment described above takes into account complete profitability of underlying investments which also included implications of
tax and debt.
The Company has conducted an analysis of the sensitivity of the impairment test to reasonably possible changes in the key assumptions (day
rates, utilisation and nominal post-tax discount rates) used to determine the recoverable amount of investments. The first sensitivity modelled a
10% increase/reduction to day rates over the remaining useful economic life of vessels included in investments. A second sensitivity modelled a
10% increase/reduction to utilisation rates. A third sensitivity was modelled where a 1% increase/decrease was applied to the post-tax discount
rate mentioned above. As mentioned above management reviewed and narrowed down the peer companies used to compute the discount
rate following consultation with external advisors. The same companies will be used going forward as these are deemed to be more specific
to GMS’s capital structure and therefore management does not anticipate significant changes beyond 1% to the discount rate going forward.
The results of the first sensitivity indicated that a 10% decrease to dayrates would lead to an additional impairment charge of US$ 105.2 million.
In comparison, a 10% increase to dayrates would reduce the impairment charge booked by US$ 17.0 million to US$ nil and lead to a reversal
of impairment of US$ 88.2 million. The total carrying amount of investments would be US$ 124.6 million and US$ 335.0 million, respectively.
The results of the second sensitivity indicated that a 10% decrease to utilisation would lead to an additional impairment charge of
US$ 105.2 million. In comparison, a 10% increase to utilisation would reduce the impairment charge booked by US$ 17.0 million to
US$ nil and lead to a reversal of impairment of US$ 55.4 million. The total carrying amount of investments would be US$ 124.6 million and
US$ 302.2 million, respectively.
The results of the third sensitivity indicated that a 1% decrease to the nominal post-tax discount rate would lead to a reduction of the
impairment charge booked during the period of US$ 17.0 million to US$ nil and a reversal of impairment of US$ 29.9 million whereas
a 1% increase to the nominal post-tax discount rate would lead to an increase to the impairment charge booked during the period of
US$ 41.3 million. The total carrying amount of investments would be US$ 276.7 million and US$ 188.5 million, respectively.
Annual Report 2021
145
Financial Statements NOTES TO COMPANY FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
5 Investment in subsidiaries continued
The Company has investments in the following subsidiaries:
Name
Place of Registration
Registered Address
2021
2020
Type of Activity
Gulf Marine Services W.L.L.
United Arab Emirates Office 403, International Tower, 24th Karama
100%
100% Marine contractors
Proportion of
Ownership Interest
Offshore Holding Invt SA
Panama
Offshore Logistics Invt SA
Panama
Offshore Accommodation
Panama
Invt SA
Offshore Jack-up Invt SA
Panama
Offshore Craft Invt SA
Panama
Offshore Structure Invt SA
Panama
Offshore Maritime Invt SA
Panama
Offshore Tugboat Invt SA
Panama
Offshore Boat Invt SA
Panama
Offshore Kudeta Invt SA
Panama
GMS Endurance Invt SA
Panama
Street, P.O. Box 46046, Abu Dhabi,
United Arab Emirates
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
100%
100% Holding Company
100%
100% Dormant
100%
100% Dormant
100%
100% Owner of barge “Kamikaze”
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
100%
100% Owner of barge “GMS
Endeavour”
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama, Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama, Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama, Republic of Panama
100%
100% Owner of barge “Kikuyu”
100%
100% Owner of “Helios” – Dormant
100%
100% Owner of “Atlas” – Dormant
100%
100% Owner of barge “Kawawa”
100%
100% Owner of barge “Kudeta”
100%
100% Owner of barge “Endurance”
Gulf Marine Services (UK)
United Kingdom
14 Carden Place, Aberdeen, AB10 1UR
100%
100% Operator of offshore barges
Limited
Gulf Marine Saudi Arabia
Saudi Arabia
Co. Limited
King Fahad Road, Al Khobar, Eastern Province,
P.O. Box 31411 Kingdom Saudi Arabia
75%
75% Operator of offshore barges
Gulf Marine Services (Asia)
Singapore
Pte. Ltd.
1 Scotts Road, #21-07, Shaw Centre,
Singapore, 228208
100%
100% Operator of offshore barges
GMS Enterprise Investment SA Panama
GMS Sharqi Investment SA
Panama
GMS Scirocco Investment SA
Panama
GMS Shamal Investment SA
Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
100%
100% Owner of barge “Enterprise”
100%
100% Owner of barge “Sharqi”
100%
100% Owner of barge “Scirocco”
100%
100% Owner of barge “Shamal”
GMS Jersey Holdco. 1
Jersey
12 Castle Street, St. Helier, Jersey, JE2 3RT
100%
100% General investment
Limited*
GMS Jersey Holdco. 2 Limited Jersey
12 Castle Street, St. Helier, Jersey, JE2 3RT
GMS Marine Middle East FZE
United Arab Emirates
ELOB, Office No. E-16F-04, P.O. Box 53944,
Hamriyah Free Zone, Sharjah
100%
100%
100% General investment
100% Operator of offshore barges
GMS Global Commercial Invt
United Arab Emirates Office 403, International Tower, 24th Karama
100%
100% General investment
LLC
GMS Keloa Invt SA
Panama
GMS Pepper Invt SA
Panama
GMS Evolution Invt SA
Panama
Street, P.O. Box 46046, Abu Dhabi,
United Arab Emirates
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama,Republic of Panama
100%
100% Owner of barge “Keloa”
100%
100% Owner of barge “Pepper”
100%
100% Owner of barge “Evolution”
Gulf Marine Services LLC
Qatar
Qatar Financial Centre, Doha
Mena Marine Limited
Singapore
Ugland House, Grand Cayman, KY1-1104,
Cayman Islands, P.O. Box 309
100%
100%
100% Marine contractor
100% General investment
GMS Phoenix Investment SA
Bloc Office Hub, Fifth Floor, Santa Maria
Business District, Panama, Republic of Panama
100%
100% Dormant
* Held directly by Gulf Marine Services PLC.
146 Gulf Marine Services PLC
6 Other receivables
Non-current assets
Amounts receivable from Group undertakings
Current assets
Other receivables
2021
US$’000
43,591
43,591
216
216
Restated
2020
US$’000
2,798
2,798
48
48
43,807
2,846
Amounts receivable from Group undertakings are interest-free, unsecured and have no fixed repayment terms.
7 Deferred tax asset
At the reporting date, the Company has unused tax losses of US$ 12.8 million available for offset against future profits (2020: US$ 12.1 million).
These UK tax losses may be carried forward indefinitely. The Company had insufficient future taxable profits to justify the recognition of a
deferred tax asset and therefore no deferred tax asset has been recognised in the current year (2020: US$ Nil).
8 Other payables
Amounts falling due within one year
Amounts owed to Group undertakings
Other payables
2021
US$’000
35,606
566
36,172
Restated
2020
US$’000
17,446
727
18,173
Amounts owed to Group undertakings are current, interest-free, unsecured and have no fixed repayment terms.
Balances with related parties are repayable on demand. The present value of the liability is deemed to equal the undiscounted cash amount
payable. No interest charge is therefore imputed on these amounts.
9 Derivative financial instruments
Derivative liability – contract to issue warrants
In June 2020, the Group restructured the terms of its borrowings with its lenders. These terms included warrants to be issued to its lenders
if the Group had not raised US$ 75.0 million of equity by no later than 31 December 2020. As this term was not expected to be met, an
embedded derivative liability was recognised for the obligation to issue the warrants. At 31 December 2020 these had a value of
US$ 1.4 million, which had increased to US$ 1.8 million by March 2021.
In March 2021, the Group amended the terms of its loan facility, as described above, and additional time was granted to raise equity before
warrants were required to be issued to its lenders. The previous obligation to issue warrants to the bank was waived, and a contingent
requirement to issue warrants to banks was introduced. The amended terms required US$ 25.0 million of equity to be raised by
31 December 2021 otherwise the Group would be in default, and a further US$ 50.0 million to be raised by 31 December 2022.
The Group was subsequently successful with the requirement to raise the first tranche of equity (Refer to Note 13).
As the new terms of the loan facility contained separate distinguishable terms with a contingent requirement to issue warrants to banks,
management determined the debt facility to contain an embedded derivative liability. The Group was required to recognise the embedded
derivative liability at fair value. Management commissioned an independent valuation expert to measure the fair value of the warrants, which
was determined using Monte Carlo simulations. The simulation considers sensitivity by building models of possible results by substituting a
range of values. The loan facility was a tri-partite agreement between the Company, a subsidiary of the Group and the Group’s banking
syndicate. As the embedded derivative was over the Company’s equity, a derivative liability has been recorded on the Company’s balance
sheet with a corresponding increase in the investment in the subsidiary representing a capital contribution.
The fair value of the liability as at 31 December 2021 was US$ 0.7 million (31 December 2020 US$ 1.4 million). As the derivative is due to be
settled after 12 months, the balance is recognised as a non-current liability.
Annual Report 2021
147
Financial Statements NOTES TO COMPANY FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
9 Derivative financial instruments continued
Derivative liability – contract to issue warrants continued
The movement in the derivative financial statements is as follows:
As at 1 January
Derecognition of derivative liability warrants
Initial recognition of derivative liability
Net loss on changes in fair value of derivative liabilities
As at 31 December
10 Share capital and reserves
The share capital of Gulf Marine Services PLC was as follows:
Ordinary shares at £0.02 per share
At 1 January 2020 and 1 January 2021
Placing of new shares
Capital reorganisation
As at 31 December 2021
Deferred shares at £0.08 per share
At 1 January 2020 and 1 January 2021
Capital reorganisation
As at 31 December 2021
2021
US$’000
(1,449)
1,890
(926)
(232)
(717)
2020
US$’000
–
–
(1,449)
–
(1,449)
Number of
ordinary shares
(Thousands)
350,488
665,927
–
1,016,415
Number of
ordinary shares
(Thousands)
–
350,488
350,488
Ordinary
shares
US$’000
58,057
18,505
(46,445)
30,117
Ordinary
shares
US$’000
–
46,445
46,445
Prior to an equity raise on 28 June 2021 the Company underwent a capital reorganisation where all existing ordinary shares with a nominal
value of 10p per share were subdivided and re-designated into 1 ordinary share with a nominal value of 2p and 1 deferred share with a
nominal value of 8p 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 have no voting rights and no right to the profits generated by the Company. On winding-up or other return of capital,
the holders of deferred shares have extremely limited rights. The Company has the right but not the obligation to buy back all of the Deferred
Shares for an amount not exceeding £1.00 in aggregate without obtaining the sanction of the holder or holders of the Deferred Shares.
As there is no contractual obligation, management do not consider there to be a liability.
As part of the equity raise on 28 June 2021, the Company issued 665,926,795 new ordinary shares with a nominal value of 2p per share at 3p
per share with the additional pence per share being recognised in the share premium account. Issue costs amounting to US$ 3.2 million
(31 December 2020: US$ nil) have been deducted from the share premium account.
The Company has one class of ordinary shares, which carry no right to fixed income.
The share premium account contains the premium arising on issue of equity shares, net of related costs.
The Company’s share-based payment reserve of US$ 3.6 million (2020: US$ 3.7 million) relates to the cumulative charge for awards granted
to employees of a subsidiary undertaking under a long-term incentive plan, details of which are provided in Note 12. The share-based
payment credit during the year was US$ 0.02 million (2020: share-based payment charge of US$ 0.2 million).
The retained earnings represent cumulative profits or losses net of dividends paid and other adjustments.
148 Gulf Marine Services PLC
11 Staff numbers and costs
The average monthly number of employees (including executive directors) was:
Administration
Their aggregate remuneration comprised:
Wages and salaries
Employment taxes
2021
Number
2020
Number
4
4
3
3
2021
US$’000
2020
US$’000
241
–
241
931
11
942
12 Long term incentive plans
The Company has Long Term Incentive Plans (“LTIPs”) which were granted to senior management, managers and senior offshore officers.
From 2019 onwards the employment condition is that each eligible employee of the Company must remain in employment during the
three-year vesting period. LTIPs have been aligned to the Company’s share performance therefore only financial metrics will be applied.
EPS (“Earnings Per Share”) has been removed as the financial metric and TSR (“Total Shareholder Return”) is now the sole financial metric.
In the prior years until 2018, the release of these shares was conditional upon continued employment, certain market vesting conditions and
in the case of senior management LTIP awards, performance against three-year target EPS compound annual growth rates. 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 simulations, 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 market performance condition, 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, which for the Company mainly related to the continual employment of the employee during the vesting
period, and in the case of the senior management, until 2018 as noted above, achievement of EPS growth targets, were taken into account
by adjusting the number of equity instruments expected to vest at each balance sheet date. 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 Company’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 Company during the year is given in the table below:
At the beginning of the year
Granted in the year
Cash settled in the year
Forfeited in the year
At the end of the year
2021
000’s
6,573,229
–
(1,854,298)
(2,219,217)
2020
000’s
8,768,294
2,661,388
–
(4,856,453)
2,499,714
6,573,229
The weighted average remaining contractual life for the vesting period outstanding as at 31 December 2021 was 0.5 years (31 December
2020: 1.0 years). The weighted average fair value of shares granted during the year ended 31 December 2021 was US$ nil (31 December
2020: US$ 0.10).
Annual Report 2021
149
Financial Statements NOTES TO COMPANY FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 31 DECEMBER 2021
12 Long term incentive plans continued
Grant date
Share price
Expected volatility
Risk-free rate
Expected dividend yield
Vesting period
Award life
LTIP
LTIP
29 May 2020 15 November 2019
£0.08
103%
0.48%
0.00%
3 years
3 years
£0.09
120%
0.01%
0.00%
3 years
3 years
The expected share price volatility of the Company’s shares was determined taking into account the historical share price movements for
a three-year period up to the grant date (and of each of the companies in the comparator group). The risk-free return was determined from
similarly dated zero coupon UK government bonds at the time the share awards were granted, using historical information taken from the
Bank of England’s records.
On 15 March 2021, the Remuneration Committee determined that awards granted on 28 March 2018 which were due to vest on
28 March 2021 would be settled in cash, not by the issue of shares as was contractually stipulated, subject to the achievement of the original
performance conditions. For the purposes of FRS 102 section 26, this represented a reclassification of these awards from equity-settled to
cash-settled. In accordance with FRS 102 section 26, at the date of reclassification a balance of US$ 0.1 million equal to the fair value of the
awards at the modification date was deducted from equity. As the fair value at the modification date was lower than the cumulative equity-
settled share-based payment charge at that date, no adjustment was made to profit or loss as a result of the modifications.
On 9 June 2021, the Company’s Ordinary Shares of 10p each were split into Ordinary Shares of 2p each and deferred shares of 8p each.
A consequence of this change will be that the share options issued in prior years will be modified to such that the recipients are granted
Ordinary Shares of 2p each, not Ordinary Shares of 10p each.
This change represented a modification of the share-based payments for the purposes of FRS 102 section 26. However, as the modification
did not result in a favourable change for the employees, no adjustments to the share-based payment charge was required as a result of the
change to the Company’s share capital.
13 Reclassification
In the prior year the Company recognised amounts owed to Group undertakings net of amounts receivable from Group undertakings. The
Company has reclassified amounts receivable from Group undertakings from other payables to other receivables since there is no legal right
of offset. Additionally, these balances were expected to be settled after 12 months from the year ended 31 December 2020 and therefore has
been presented as a non-current asset in the prior year. The details of the reclassification are included in the table below:
Impact on Company statement of financial position
Non-current assets
Other receivables
Amounts receivable from Group undertakings
Amounts falling due within one year
Other payables
Amounts owed to Group undertakings
Other payables
As previously
reported
US$’000
Reclassification
US$’000
As reclassified
US$’000
–
–
14,648
727
15,375
2,798
2,798
2,798
–
2,798
2,798
2,798
17,446
727
18,173
14 Events after the reporting period
Russia-Ukraine conflict
On 24 February 2022, Russia launched ground and air attacks on Ukraine which led to the closure of airports and land borders. The developing
situation has the potential to impact GMS operations and presents a risk to the health, safety and welfare of certain GMS employees living in
Ukraine. GMS has implemented procedures to provide required support should employees be affected, as well as to ensure continuity across
the business. In response to military action launched by Russia, western countries and other global allies imposed an unprecedented package of
coordinated sanctions against Russia. The Group has minimal activity with suppliers in Russia and continues to manage its supply chain and has
robust procedures in place to avoid any disruption to operations. Overall, the Group does not expect the war in Ukraine, and resulting sanctions,
to have a significant impact on operations.
150 Gulf Marine Services PLC
GLOSSARY
Alternative Performance Measure (APMs) – An APM is a financial measure of historical or future financial performance, financial position,
or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.
APMs are non-GAAP measures that are presented to provide readers with additional financial information that is regularly reviewed by
management and the Directors consider that they provide a useful indicator of underlying performance. Adjusted results are also an important
measure providing useful information as they form the basis of calculations required for the Group’s covenants. However, this additional
information presented is not uniformly defined by all companies including those in the Group’s industry. Accordingly, it may not be comparable
with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts
calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. Such measures should not be viewed in isolation
or as an alternative to the equivalent GAAP measure. In response to the Guidelines on APMs issued by the European Securities and Markets
Authority (ESMA), we have provided additional information on the APMs used by the Group.
Adjusted diluted earnings/loss per share – represents the adjusted earnings/loss 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/loss attributable to equity shareholders of the Company is used for
the purpose of basic gain/loss per share adjusted by adding back impairment charges (deduction of reversal of impairment during the year
2021), restructuring charges, exceptional legal costs 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 31.
Adjusted EBITDA – represents operating profit after adding back depreciation (deduction for reversal of impairment during 2021),
amortisation, non-operational items and impairment charges. This measure provides additional information in assessing the Group’s
underlying performance that management is more directly able to influence in the short term and on a basis comparable from year to year.
A reconciliation of this measure is provided in Note 30.
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 30.
Adjusted net profit/(loss) – represents net profit/(loss) after adding back impairment charges and costs of renegotiating bank terms.
This measure provides additional information in assessing the Group’s total performance that management is more directly able to
influence and, on a basis, comparable from year to year. A reconciliation of this measure is provided in Note 30 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.
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:
Statutory cost of sales
Less: depreciation and amortisation
2021
US$’000
69,460
(28,241)
41,291
2020
US$’000
70,864
(28,597)
42,267
Annual Report 2021
151
Financial Statements
GLOSSARY continued
EBITDA – represents earnings before interest, tax, depreciation and amortisation, which represents operating profit after adding back
depreciation and amortisation. This measure provides additional information of the underlying operating performance of the Group.
A reconciliation of this measure is provided in Note 30.
Margin – revenue less cost of sales before depreciation, amortisation and impairment as identified in Note 30 of the consolidated
financial statements.
Net bank debt – represents the total bank borrowings less cash and cash equivalents. This measure provides additional information
of the Group’s financial position. A reconciliation is shown below:
Statutory bank borrowings
Less: cash and cash equivalents
2021
US$’000
379,526
(8,271)
371,255
2020
US$’000
410,033
(3,798)
406,235
Finance leases are excluded from net bank debt to ensure consistency with definition of the Group’s banking covenants.
Net cash flow before debt service – the sum of cash generated from operations and investing activities.
Net leverage ratio – the ratio of net bank debt at year end to adjusted EBITDA which is further adjusted for items including but are
not limited to reversal of impairment credits/(impairment charges), restructuring costs, exceptional legal costs and non-operational
finance related costs in alignment with the terms of our bank facility agreement. This has no impact for the current or prior periods.
The reconciliation is shown below:
A: Net bank debt, as identified above
B: Adjusted EBITDA, as disclosed in Note 30
Net leverage ratio (A/B):
2021
US$’000
371,255
64,124
5.78
Non-operational finance expenses – this pertains to the following items below as disclosed in Note 36, Finance expense.
Cost to acquire new bank facility
Fair value adjustment on recognition of new debt facility
Operational downtime – downtime due to technical failure.
2021
US$’000
(3,165)
1,439
(1,726)
2020
US$’000
406,235
50,449
8.1
2020
US$’000
(15,797)
(448)
(16,245)
Segment adjusted gross profit/loss – represents gross profit/loss after adding back depreciation, amortisation and 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 30.
Underlying performance – day to day trading performance that management are directly able to influence in the short term.
152 Gulf Marine Services PLC
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 year and then calculating a monthly average.
Backlog
represents firm contracts and extension options held by clients. Backlog equals (charter day rate x remaining days
contracted) + ((estimated average Persons On Board x daily messing rate) x remaining days contracted) + contracted
remaining unbilled mobilisation and demobilisation fees. Includes extension options.
Borrowing rate
LIBOR 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.
Debt Service Cover
represents the ratio of Adjusted EBITDA to debt service.
Demobilisation
fee paid for the vessel re-delivery at the end of a contract, in which client is allowed to offload equipment and
personnel.
DEPS/DLPS
diluted earnings/losses per share.
Employee retention
percentage of staff who continued to be employed during the year (excluding retirements and redundancies)
taken as number of resignations during the year divided by the total number of employees as at 31 December.
EPC
ESG
Finance service
engineering, procurement and construction.
environmental, social and governance.
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
GMS core fleet
consists of 13 SESVs, with an average age of ten years.
Interest Cover
represents the ratio of Adjusted EBITDA to Net finance charges.
IOC
KPIs
Independent Oil Company.
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.
LIBOR
London Interbank Offered Rate.
Mobilisation
fee paid for the vessel readiness at the start of a contract, in which client is allowed to load equipment and personnel.
Net finance 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
OSW
National Oil Company.
Offshore Wind.
Annual Report 2021
153
Financial Statements
OTHER DEFINITIONS continued
PIK
Payment In Kind. Under the banking documents dated 17 June 2020 and 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 reduces below 5.0x
b) Nil when Net Leverage reduces below 4.0x
Under the documents dated 31 March 2021, PIK accrues on either 1 July 2021 if the US$ 25 million equity is not
raised by 30 June 2021, or from 1 January 2023 if the US$ 50 million is not raised by 31 December 2022.
PIK stops accruing at the date on which all loans are paid or discharged in full.
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 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.
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.
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
Warrants
Cost of sales before depreciation, amortisation and impairment, refer to Note 30.
Under the banking documents date 31 March 2021, if Warrants are issued on 1 July 2021 because of the failure to
raise US$ 25 million by 30 June 2021, half of the issued warrants vest on that date. The other half will only vest on
2 January 2023 if there is a failure to raise US$ 50 million. If warrants are issued on 2 January 2023 because of the
failure to raise US$ 50 million all of the issued warrants vest on the same date. All warrants to expire on 30 June 2025
(maturity date of the facilities).
154 Gulf Marine Services PLC
Board of Directors
Mansour Al Alami
Executive Chairman
Hassan Heikal
Deputy Chairman, Non-Executive Director
Rashed Al Jarwan
Senior Independent Non-Executive Director
Lord Anthony St John of Bletso
Independent Non-Executive Director
Charbel El Khoury
Non-Executive Director
Jyrki Koskelo
Independent Non-Executive Director
CORPORATE INFORMATION
Corporate Brokers
Panmure Gordon
One New Change,
London EC4M 9AF
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
Legal Advisers
Shearman and Sterling LLP
9 Appold Street
London EC2A 2AP
Auditors
Deloitte LLP
2 New Street Square
London EC4A 3BZ
Public Relations Advisers
Celicourt Communications Limited
Orion House
5 Upper St Martin’s Lane
London WC2H 9EA
Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Registered Office
Gulf Marine Services PLC
Masters House
107 Hammersmith Road
London W14 0QH
Head Office
Gulf Marine Services
P.O. Box 46046
Abu Dhabi, UAE
T: +971 (2) 5028888
F: +971 (2) 5553421
E: IR@gmsplc.com
Gulf Marine Services
P.O. Box 46046
Abu Dhabi, UAE
T: +971 (2) 5028888
F: +971 (2) 5553421
E: IR@gmsplc.com
www.gmsplc.com
Annual Report 2021
155
Financial Statements OUR CLIENTS
156 Gulf Marine Services PLC
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Gulf Marine Services
P.O. Box 46046
Abu Dhabi, UAE
T: +971 (2) 5028888
F: +971 (2) 5553421
E: IR@gmsplc.com
www.gmsplc.com
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