Trading Update

RNS Number : 4961E

Gulf Marine Services PLC

06 November 2020

 

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6 November 2020

Gulf Marine Services PLC

("GMS" or the "Company")

Trading Update

2020 performance remains ahead of plan

Nine-month 2020 performance remains ahead of the Business Plan, with September 2020 actuals now recorded.  Total contracted GMS fleet utilisation stands at 84% for FY 2020.

Recent contract awards from both NOC and EPC clients have further increased the order book and raised contracted fleet utilization.  Renewable energy activity also continues, with steady work for the vessel located in North West Europe through to end 2021. The outlook for European renewable work is promising, with a number of opportunities emerging as clients seek to secure vessels for projects in the longer-term.

Since the last market update, further vessels have been secured under contract, with total fleet contracted utilization already at 69% for 2021. As a comparison, at the same time in 2019, only 56% had been secured for 2020.

A multi-year framework agreement has been secured with a leading international EPC contractor and the first contract has been awarded under this framework.  In all, 3 new contracts and/or extensions representing 18 months of contract coverage have been secured in MENA since the Company's Interim 2020 results were announced in August 2020.

Operations are continuing without material interruption, notwithstanding the impact of COVID-19. Four vessels have had reported COVID-19 cases, and effective measures have been put in place to manage the impact. Crew changes remain affected by restricted travel and quarantine requirements, but progress is being made through constructive dialogue with the relevant authorities, and GMS crew. Despite these challenges, GMS has delivered zero Lost Time Injury performance in 2020, and HSE performance remains stable.

GMS Evolution, a unique E-Class vessel fitted with GMS cantilever technology, has continued to support well intervention work for a major Middle East NOC client. To date, operations have been completed on 13 wells, proving the technology concept and providing the client with enhanced safety and lower-cost operations.

Progress continues on cost reduction, with annualized costs savings now standing at $18.5m with further opportunities for cost reduction identified. Nine-month 2020  G&A costs have been reduced by 30% compared to the same period in 2019, and onshore headcount has been reduced by 48% since early 2019.

The relocation of GMS from its outdated Musaffah base to new facilities within Abu Dhabi has been successfully completed.  This move reduces the combined office & yard costs by around 40% annually from 4Q2020 onwards. Relocation costs have been more than covered by sales of equipment no longer required within the new footprint.

Nine-month 2020 adjusted EBITDA [1] delivery remains above Business Plan targets, an increase of 25% versus the comparative period in 2019. Year-to-dateNine-month 2020 adjusted EBITDA [2] margin (against the same period last year) has improved from 43% in 2019 to 59% - an increase of 36% - delivered despite the current challenging market conditions and restrictions due to COVID-19.  

The Board once again reconfirms the previous 2020 guidance, originally issued in January, of $57-62 million adjusted EBITDA, with the expected outturn at the upper end of the range.

Tim Summers, Executive Chairman of GMS said,

"GMS performance has been transformed in 2020, with period-on-period increases in EBITDA, margin and utilisation, as well as new technology delivery and, at the same time, a material reduction in our costs. These achievements are a credit to the entire GMS team and a demonstration of the improvements we promised.  Today we again reconfirm guidance, issued initially in January 2020.

This performance comes despite the market headwinds brought by the commodity price crash and COVID-19, and the considerable distraction and expense incurred by a rival seeking to take control of the Company.  Throughout, GMS has remained focused on delivering on our guidance, and ensuring safe and reliable operations for our clients."

Enquiries:

GMS Tim Summers, Executive Chairman Stephen Kersley, Chief Financial Officer Tony Hunter, Company Secretary		[phone]
Brunswick (PR Adviser to GMS) Patrick Handley - UK Will Medvei - UK Jade Mamarbachi - UAE		[phone]  [phone]

ABOUT GMS

GMS, a company listed on the London Stock Exchange, was founded in Abu Dhabi in 1977 and has become a world-leading provider of advanced self-propelled self-elevating support vessels (SESVs).  The fleet serves the oil, gas and renewable energy industries from its offices in the United Arab Emirates and Saudi Arabia.  The Group's assets are capable of serving clients' requirements across the globe, including those in the Middle East, South East Asia, West Africa, North America, the Gulf of Mexico and Europe.

The GMS fleet of 13 SESVs is amongst the youngest in the industry, with an average age of eight years. The vessels support GMS's clients in a broad range of offshore oil and gas platform refurbishment and maintenance activities, well intervention work and offshore wind turbine maintenance work (which are opex-led activities), as well as offshore oil and gas platform installation and decommissioning and offshore wind turbine installation (which are capex-led activities).

The SESVs are categorised by size - K-Class (Small), S-Class (Mid) and E-Class (Large) - with these capable of operating in water depths of 45m to 80m depending on leg length.  The vessels are four-legged and are self-propelled, which means they do not require tugs or similar support vessels for moves between locations in the field; this makes them significantly more cost-effective and time-efficient than conventional offshore support vessels without self-propulsion. They have a large deck space, crane capacity and accommodation facilities (for up to 300 people) that can be adapted to the requirements of the Group's clients.

The Company's Legal Entity Identifier is 213800IGS2QE89SAJF77.

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[1] Adjusted EBITDA - represents operating loss after adding back depreciation and amortisation, impairment charges and exceptional items

[2] Adjusted EBITDA margin - represents adjusted EBITDA divided by revenue

 

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