Gulf Marine Services Regulatory News (GMS)

FOR IMMEDIATE RELEASE

28 April 2023

Risk

Mitigating factors and actions

1 Utilisation

Utilisation levels may be reduced by the

following underlying causes:

• Customer concentration leading to

potential significant changes in our contract

profile and pipeline. Risks of potential

loss of some clients to competitors.

• ADNOC (our client) has changed its

strategy to bring SESVs in house through

the acquisition of Zakher Marine. There

is a risk of other NOCs to follow suit.

• Fleet capabilities may no longer match

with changing client requirements. Clients

may increase the standard specification

required for an SESV, which might require

the Group to upgrade some of its fleet to

be compliant.

Modification Flexibility for Clients

GMS' vessels are built to be as flexible as possible allowing the Group to compete for a

wide share of the market, which enable the Group maximise utilisation levels and charter

day rates. The Group is capable of modifying assets in order to satisfy client requirements.

To comply with LIMS (Lifting Integrity Management System) the Group have involved

engineering companies to perform technical studies on existing equipment to extend the

life of equipment (time limited).

Continuous Communication with Clients and Encouraging Loyalty

The Group maintains strong relationship with its clients through continuous communication

and a proven track record of providing safe and reliable services.

GMS has developed plans for fleet upgrades based on the expected future requirements

of our clients.

To develop commercial proposals that builds loyalty by incentivising customer for longer

term contracts with a higher number of vessels used.

Business Segment and Geographical Diversity

The Group is continuously looking for opportunities to maximise the utilisation of its

vessels.

It is continually reviewing opportunities looking to diversify its market footprint through

increasing its global client base.

Vessel Monitoring

The Group has procedures in place, such as the Planned Maintenance System, to ensure

that the vessels undergo regular preventative maintenance. The Planned Maintenance

System has been upgraded to a modern ERP enabling overdue maintenance to be tracked

and reported regularly. The Group's robust operating standards result in minimal

operational downtime.

2 Inability to secure an appropriate capital structure

The Group is subject to increasing cost of

debt due to increase in interest rates global

benchmark, increase in the margin ratchet to

4% from 3% and introduction of PIK interest

from 1 January 2023. This will impact the

liquidity in the business and could impact the

share price.

As warrants were issued in January 2023, this

may impact the Group's ability to attract new

investors as there would be a potential dilution

if these warrants are exercised.

Focus on De-leveraging

Leverage levels have significantly reduced to 4.4 times compared to 5.8 times in 2021. With a continued focus on de-leveraging, the Group aims to have leverage levels below

4.0 times before the end of 2023.

3 GCC Local Content Requirements

GCC NOCs have local content requirements

as part of their tender processes, which varies

for each country, designed to give preference

to suppliers that commit to improving their

local content and levels of spend and

investment in-country. This may prevent GMS

from winning new contracts or lead to financial

loss and/or a reduction in profit margins on

existing contracts, which will ultimately impact

operating cash flows and net profitability.

Local Content Requirements

GMS embraces local content requirements, with a long history of operating for NOCs in

the GCC with offices in each of the GCC countries where the Group operates. The Group

actively manages its supply chain to ensure focus is put on maximising local content and,

where necessary, will collaborate with local partners in specific markets to ensure it positions

itself in the best possible position to win work. Often during the tendering process, companies

with a higher audited local content score are given the offer of first refusal to price match any

lower bids.

Market Knowledge and Operational Expertise

The Group has well established long-term relationships in the GCC region which provides

an understanding of clients' requirements and operating standards.

Local Content

The Group continues to explore ways to improve its local content scores in all the regions

in which they operate.

4 Operations: inability to deliver safe and reliable operations

The Group may suffer commercial and

reputational damage from an environmental

or safety incident involving employees, visitors

or contractors.

Inadequate preparation for situations, such

as sudden equipment failure, inability to fulfil

client requirements and unpredictable weather

could have a negative impact on the business.

Incomprehensive insurance coverage may

lead to financial loss.

Safety Awareness

Our highest priority is providing safe and reliable operations. This is achieved through HSEQ

management system and a strong safety-focused culture. Management has appropriate

safety practices and procedures including disaster recovery plans and comprehensive

insurance cover across our fleet.

Training and Compliance

Our employees undergo continuous and rigorous training on operational best practices.

Scheduled Maintenance

The Group adheres to regular maintenance schedules on its vessels to ensure compliance

with the highest safety standard.

Business Continuity Plan

The Group has in place a business continuity management plan which it regularly maintains

to ensure the reliability of its operations.

Management continues to review and improve the current management systems and

monitors the performance of HSEQ.

Insurance

The Group regularly consults with insurance brokers to ensure sufficient coverage is in place.

5 Liquidity and covenant compliance

The business is exposed to short-term liquidity

management risks due to potential increases

in interest rates and inflation, which could

impact the debt service obligations and the

Group's bank facilities covenants.

The increase in interest charges will lead

to reduced liquidity in the business as

more cash will be required to meet our

banking requirements.

Reduced liquidity could impact future

operations and lead to an event of default.

This would give lenders the right to accelerate

repayment of the outstanding loans, and then

exercise security over the Group's assets.

Breach of covenant - All covenants are closely

monitored as the headroom remains narrow,

which is due to the Group's performance

being very sensitive to many internal and

external factors such as utilisation, operational

downtime, interest rates and other variables.

Liquidity Management

The Group continues to manage liquidity carefully through focusing on cash collection from

its customers.

Minimising Capital Expenditure

The Group is focused on restricting capital expenditure to essential spending, but without

jeopardizing the safe and reliable operations of its vessels.

Covenant Compliance

The management team and Board regularly examine future covenant compliance based

on the latest forecasts and take necessary measures to avoid any potential where a future

breach of covenant is at risk. The Group monitors its various covenants throughout the

remaining period of the loan.

Expedite Debt Repayment

Management is focussed on making early repayments of the bank loans to reduce the

interest costs, improve our leverage position and meet our covenant requirements.

6 People

Attracting, retaining, recruiting and developing

a skilled workforce.

Losing skills or failing to attract new talent to

the business has the potential to

undermine performance.

Communication, Training and Engagement

Communication has remained a key practice of management.

Rashed Al Jarwan is the Workforce Engagement Director for the Group, he is explicitly

tasked with monitoring the level of engagement and alignment across the organisation.

During the year, the Group organized an event at Jubail Mangrove Park which is an

educational and leisure destination. At the event, employees were recognised for their

contributions in 2022, while some staff received Long Service Awards for completing

either 10, 15, 20 or 25 years of service.

Remuneration Policy

The Short-Term Incentive Plan (STIP) is based on a single Business Corporate Scorecard to

ensure all staff are aligned and incentivised around delivering a single set of common goals.

Equal Opportunities

GMS is engaged in fair and transparent recruitment practices. It has a zero-tolerance policy

towards discrimination and provides equal opportunities for all employees.

Further, GMS add value through development programs, promotion from within the

organization and focus on growing talent.

Resource Planning

The Group has identified all critical roles held by individuals and have adopted processes to

ensure the smooth transition in the event of changes in those personnel. Also, in the short

term, the Group utilised recruitment specialists and headhunters to fulfil key positions as the

need had arisen.

7 Legal, economic, and political conditions

Political instability in the regions in which

GMS operates (and recruit from) may

adversely affect its operations.

As the majority of crew for certain key

positions come from Eastern Europe (Russia/

Ukraine), Indonesia and Philippines, political

instability may hamper the recruitment,

retention and deployment of personnel.

Economic conditions such as interest rate

and inflation increases will have an impact

on the Groups' liquidity and profitability.

Emergency Response Planning and Insurance

For all our major assets and areas of operation, the Group maintains emergency

preparedness plans. Insurance cover over the Group's assets is reviewed regularly to ensure

sufficient cover is in place.

Workforce Planning and Monitoring

Workforce planning and demographic analysis is undertaken in order to increase diversity

within the Group.

Tax Advisors

The Group engage with reputable tax advisors who regularly monitor the impacts of changes

to tax legislation across the regions that GMS operates in.

Inflation and Interest Rates

Management is continually monitoring the liquidity position from changes in inflation

and a focus on cost reduction. The key aim of the Group is to deleverage through early

repayments, which will reduce the impact of interest.

8 Compliance and regulation

Non-compliance with anti-bribery and

corruption regulations could be detrimental to

stakeholder relations and lead to reputational

and financial loss.

GMS' operations are subject to international

conventions on - and a variety of complex

federal and local laws, regulations and

guidelines relating to - health, safety and the

protection of the environment. Compliance

with these has become increasingly costly,

complex and stringent. Failure to appropriately

identify and comply with laws and regulations,

could lead to regulatory investigations.

Code of Conduct

The Group has a Code of Conduct which includes anti-bribery and corruption policies, and

all employees are required to comply with this Code when conducting business on behalf

of the Group. It is mandatory for employees to undergo in-house training on anti-corruption.

All suppliers are pre-notified of anti-bribery and corruption policies and required to confirm

their compliance with these policies.

Regulations

A central database is maintained which documents all of GMS' policies and procedures

which comply with laws and regulations within the countries in which GMS operate.

A dedicated Company Secretary is in place to help monitor compliance, in particular

for UK legal and corporate governance obligations.

External Review

The Internal Auditors help ensure compliance with GMS policies, procedures, internal

controls and business processes

9 COVID-19 pandemic

Despite easing of COVID-19 restrictions the

pandemic still presents some challenges.

There are still strict quarantine requirements

for crew, which could lead to further increased

cost. These measures can change at short

notice, maintaining the risk that offshore staff

will be unable to crew change.

There remains health risk to staff, both

onshore and offshore, who come into contact

with confirmed cases.

The restrictions around COVID-19 have been lifted during the year. The Group has noted

a decrease in the number of cases through better control measures in place.

The Group remains focussed on the following areas to ensure a safe working environment.

Hygiene Measures

GMS maintains hygiene control and prevention measures across the fleet and onshore

offices. The Group has maintained similar precautionary measures across the countries

in which it operates.

Vessel Maintenance

The Group has in place a stringent change management process, which ensures the risk

management process in place is appropriate.

Recovery of COVID-19 Related Costs

The Group is in the process of reclaiming some quarantine and other COVID-19

related expenses.

10 Cyber-crime - security and integrity

Phishing attempts result in inappropriate

transactions, data leakage and financial loss.

The Group is at risk of loss and reputational

damage through financial cyber-crime.

Cybersecurity Monitoring and Defence

GMS operates multi-layer cyber-security defences which are monitored for effectiveness

to ensure they remain up to date.

GMS engages with third party specialists to provide security services.

11 Climate change

Climate change poses both transition and

physical risks to the Group.

The transition risks come from the

decarbonisation of the global economy. This

could result in changing investor sentiment

making new investors harder to find. It may

bring changing client preferences leading to

reduced demand for our services.

New legislation could require us to increase

reporting and possibly substitute our products

and vessels for greener alternatives. Physical

risks include rising temperatures, which could

further impact working hours, and rising sea

levels, which could affect where our vessels

can operate.

The physical risks also interact with Principal

Risk 4 - Our ability to deliver safe and

reliable operations.

Legal & Policy Monitoring

The Group carefully monitors legislative developments to ensure compliance with all

relevant laws both in the UK and the Middle East. The TCFD disclosure in this report

explains our assessment and response to climate-related risks to be transparent with

our stakeholders.

Physical Infrastructure

The Group monitors weather patterns to ensure conditions are suitable for our offshore

employees and vessels. Onshore buildings and offshore vessels are designed to withstand

the heat in the GCC region.

Environmental Impact

GMS aims to minimise its environmental impact by installing energy and water efficiency

measures. We also ensure our machinery and engines are regularly maintained so they

operate efficiently.

In 2022, we have calculated all our scopes emissions and setting targets for the long-term

reduction of our carbon emissions.

Long-term Planning

GMS has a proven track record in the renewables sector which provides versatility in our

business model. Our vessels are built to be as flexible as possible to maximise utilisation.

We are aware that we may need to consider changing sea levels and environmental

legislation when replacing vessels that are being retired in the long term.

Enquiries: GMS

Mansour Al Alami, Executive Chairman

+44 (0) 207 603 1515

Celicourt Communications

Mark Antelme

Philip Dennis

+44 (0)20 8434 2643