2019 FULL YEAR RESULTS Gulf Marine Services PLC May 2020
Contents 1 COVID-19 Update 2 2019 Review, Current Status & Trading Update 3 2019 Financial Results EBITDA • Cost Savings • Fleet Utilisation and Rates • Revenue and Cashflow • Capital Expenditure • Capital Structure • 4 2020 Forward View 2
COVID-19 UPDATE
COVID-19 Managing Business Impact Group • Routine Board updates • Restricted travel • Critical supplier analysis • Onshore and offshore contingency plans • Daily Management Call Onshore • Organisation size reduced • Staff working from home • Working hours and salaries reduced • Leave and business travel Offshore • Crew rotations frozen • Rotation schedule extended • COVID-19 cases on 2 vessels 4
2019 REVIEW, CURRENT STATUS & TRADING UPDATE
2019 Safe and Reliable Operations Secure performance and delivery during transformational change • Governance Overhaul of Board and Senior Management Team • Remuneration Policy aligned with performance • Reform of management oversight: financial; cost control; risk • Cost Savings US$ 13m annualised savings • 30% reduction in onshore headcount • 2019 Results Revenue: US$ 108.7m (2018: US$123.3m) • Adjusted EBITDA: US$ 51.4m (2018: US$ 58.0m) • Net cash flow before debt service US$ 41.9m (2018: US$ 5.9m) • Utilisation and Backlog 13 years of new contracts delivered plus 2 years of extensions • 6
Current Status Capital Structure Post year-end, term sheet agreed • Documentation to be completed by 30 • June 2020 Market Activity Tender activity continuing in Middle East • Relocation of two E-Class vessels to Middle East • Continued demand within renewables market in NW • Europe Strong Contract Backlog Secured utliisation as at 1 st Year Secured utilisation April 2019 69% 54% 2019 76% 27% 2020 49% 23% 2021 7
Trading Update 1Q 20 results ahead of Business Plan • 83% of 2020 Business Plan revenues secured • (including contracted options) Blue chip clients with strong, long term • relationships Some pressure for short term rate reductions • GMS will update promptly on significant • developments 8
2019 FINANCIAL RESULTS
2019 Income Statement US$ m FY 2019 FY 2018 Revenue 108.7 123.3 * Cost of sales less impairment (74.6) (76.3) Impairment charge (59.1) - General and administrative expenses (17.8) (18.6) * Restructuring Costs (6.3) - EBITDA (14.1) 58.0 Adjusted EBITDA 51.4 58.0 Loss for the period/year (85.5) (5.1) Loss per share: Basic and Diluted (cents per share) (24.48) (1.75) * 2019 figures include depreciation and amortisation of US$31.3m in cost of sales and US$3.7m in G&A 10
August 2019 EBITDA Guidance 60 55 -7 58 58 50 -4 51 51 US$ m -2 45 45-48 45 48 40 35 December 2018 Util ilisatio ion NW Util ilisatio ion Mid iddle le Day Rates August guidance 2019 Actual guidance Europe East 11
August EBITDA Guidance Outperformed 53 51 2 51 49 47 4 US$ m 45 45 - 48 43 41 39 37 35 August guidance Utilisation Cost Savings 2019 Actual 12
Continuous Drive to Reduce Costs US$ 13m Annualised Savings Cost Savings Timeline All amounts in US$ m Dec Mar Sep Nov Dec Actuals 8% 2 35% 4 28% 6 6 8.5 8 10 10 12% 12 17% 12 13 14 People Facilities Vessel Catering Cost savings programme currently delivering more than double amount announced in March 2019 Third Party Suppliers Others 13
Significant Headcount Reduction Onshore Headcount G&A as % of Revenue 113 108 14 % 79 13 % Dec-17 Dec-18 Dec-19 12 % 30% headcount reduction in 2019 2017 2018 2019 14
Driving Operational Efficiencies Vessel Core Opex (VCO) VCO is the underlying cost per day of running a vessel, excluding costs arising from client specific requests. Includes costs for: crew • 13 repair and maintenance • All amounts in US$ 000s’ per day equipment rental • 12 insurance, fees and taxes • vessel communications • 11 10 9 8 7 6 5 S-Class K-Class E-Class K-Class S-Class 15
Fleet Utilisation in 2019 Overall Stable 97 100 90 80 75 Percentage Utilisation 73 69 69 68 70 64 60 51 50 40 30 20 10 0 E-Class S-Class K-Class Fleet Average 2019 2018 16
Day Rates Lower but Stable 50 46 45 41 40 40 US$ 000s’ per day 34 33 35 30 30 23 25 22 20 15 10 5 0 E-Class S-Class K-Class Fleet Average 2019 2018 17
Balanced Revenue Streams Revenue by Customer Revenue by Geographical Location NOC UAE Increase in revenue from NOCs • Strong presence in all three Middle East following strengthened relationships markets EPC Renewables market remained stable NW Europe • despite two contracts concluding UAE: position strengthening reflecting • IOC Qatar improving relationships KSA: Remains around a third of our total • Renewable Energy KSA revenue with continued utilisation for one key client Qatar: an important growth market • 14% 23% 25% 33% 30% 33% 44% 55% 11% 19% 34% 12% 9% 25% 25% 8% 2019 2018 2019 2018 18
Capex Discipline US$ 109m 110 100 New build 90 Client Specific 80 Maintenance 70 US$ m 60 50 40 US$ 32m 30 US$ 23m 20 US$ 10m 10 0 2016 2017 2018 2019 19
Focus on Cash Flow FY 2019 All amounts in US$ m 109 44 14 10 6 10 3 42 Revenue Opex Overheads Restructuring Tax Changes in Capex and other Net cashflow working capital FY 2018 123 48 17 0 3 25 24 6 Revenue Opex Overheads Restructuring Tax Changes in Capex and other Net Cashflow working capital 20
Summary Balance Sheet Our fleet $54m impairment on 2 E-Class vessels, plus $5m relating to Net book value US$ 662.7m • scrapping of obsolete vessel and US$ 59.1m impairment equipment • Working capital Net Debt US$ m Dec 2018 Dec 2019 US$ m Dec 2018 Dec 2019 Trade Receivables 33.0 25.1 Bank debt 411.5 398.5 Trade Payables (9.0) (11.5) Cash (11.0) (8.4) Net Working Capital 24.0 13.6 Net debt 400.5 390.1 21
New Loan Facilities Term sheet agreed • Extended maturity to 30 June 2025 • Enhanced liquidity through new US$ 50m • working capital facility Re-phased amortisation • Increased Financial Covenant headroom • Incentives to de-lever through shareholder • equity injection PIK interest • Contingent equity warrants • Legal documentation finalised by 30 June • 2020 22
Bank Negotiations: Timeline Major reprofiling Rollover working Rollover working Term Sheet of maturity dates capital facility to capital facility to Agreed and financial 31 December 28 February covenants Mar Feb Jan Nov Dec Sep Dec Dec 20 20 20 15 18 19 19 17 Waived covenant Announcement of Rollover working breaches and Common Terms anticipated failure capital facility to rollover working Agreement signed to meet financial 31 March capital facility to covenants 31 January 23
Banking Process Forward Plan Common Terms Agreement to be Formal credit substantially approvals by the completed by end end of June of April Mar Apr May Jun 20 20 20 20 Major commercial Security and terms agreed and Islamic ratified by Credit documentation Committees completed 24
2020 FORWARD VIEW
2020 Operations Update 12 of 13 vessels in fleet currently on hire • 5 vessels on multi-year contracts • Backlog as at 1 April 2020: US$ 239.7m • Robust supply chain • 83% of business plan revenues already • secured (80% excluding options) Pressure on day rates • Clear procedures in place for COVID-19 • 26
Cost Update All amounts in US$ m Cost Savings Timeline 2019 Mar Sep Nov Dec Dec Actual 13 8.5 15 6 10 12 April 2020 Further cost savings have been achieved from: Operational optimisation • Supplier contract • renegotiations Further headcount reductions • 27
G&A Update G&A as % of Revenue Onshore Headcount 22% reduction during 2020 14.0 120 113 108 100 13.0 79 Percentage 80 62 12.0 60 40 11.0 20 10.0 0 Dec-17 Dec-18 Dec-19 Apr-20 2017 2018 2019 2020 28
Summary Continue to deliver excellent safety and operational performance Safe and reliable • Cost savings programme currently delivering ahead of plan • Low-cost operations Actions in place to drive further cost improvements • Backlog strengthening substantially Strengthening position in • core markets 76% of 2020, 49% of 2021, 35% of 2022 utilisation secured • Amortisation and covenant tests restructured Sustainable capital • structure New US$ 50m working capital facility • Clear procedures in place for COVID-19 Managing an uncertain • environment 1Q 20 results ahead of Business Plan • 29
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