Interim Results for the Six Months Ended 30 June 2020

Source: 8/4/2020, Location: Middle East

Financial Highlights

· Adjusted EBITDA increased by 34% to US$ 31.4 million (H1 2019: US$ 23.4 million) with an adjusted EBITDA margin of 63% (H1 2019: 43%). This reflects the benefit of cost savings and improved utilisation, despite the impact of COVID-19 on the market environment and operations. Full year adjusted 2020 EBITDA guidance of US$ 57.0 - 62.0 million is reconfirmed and is now expected to be at the upper end of the range.

· Progress continues on the programme to reduce costs. The 2019/20 cost saving programme has secured US$ 16.5 million in savings, on an annualised basis, significantly exceeding the original target of US$ 6.0 million set in March 2019. As a result of the Framework Agreement with Zakher Marine International announced on 29 May 2020, further savings are expected to be delivered going forward. A new cost savings target of US$ 18.5 million has been set.

· Revenue reduced by 9% to US$ 49.8 million (H1 2019: US$ 55.0 million), mainly reflecting lower day rates for all vessel classes, partially offset by an improvement in utilisation.

· Average fleet utilisation for H1 2020 has increased to 78%, a 9 percentage point increase, despite the impact of COVID-19 on tender activity and operations, together with the relocation of two E-Class vessels from the North Sea to the Middle East, which had those vessels off hire for a total of six months (with a 4% impact on total fleet utilisation).

· Charter day rates have remained low (reduced by on average 16% compared to H1 2019), reflecting the impact of COVID-19 on the rate environment and the expiry of prior contracts secured in 2017 before the oil price downturn.

· General and administrative expenses fell by 43% (US$ 3.7 million) reflecting the full impact of cost savings implemented in 2019 and early 2020.

· The reduced loss for the period of US$ 6.7 million (H1 2019: US$ 16.7 million) reflects increased EBITDA, reduced depreciation and lower finance costs, as well as the impairment of US$ 4.6 million in H1 2019.

· The restructuring of term debt facilities was executed with Lenders on 10 June 2020. This has re-established access to working capital facilities[3], and reprofiled debt repayments (including an extension of final maturity) and amended covenant tests to more sustainable levels.

· Net cash flow before debt service has increased reflecting the impact of cost savings which have more than offset a decline in revenue.

Operational Highlights

· Continued strong safety performance with zero lost time injuries incurred (H1 2019: zero).

· H1 2020 utilisation increased to 78% (H1 2019: 69%; FY 2019: 69%). This was mainly driven by a significant improvement in utilisation of K Class vessels to 86% (H1 2019: 65%). E Class vessel utilisation rose to 58% (H1 2019 54%), notwithstanding the fact that two of the four vessels were off hire for a total of 6 months, while being relocated from the North Sea to the Middle East. S-Class utilisation at 92% was stable (H1 2019: 96%)

· Secured FY utilisation (including options) currently stands at 83% for 2020 and 54% for 2021.

· COVID-19 cases were reported on two vessels which have since returned to work. The financial impact has been small (US$ 1.4 million in lost revenue). Careful management of crew has proven invaluable in minimising operational risks. Onshore staff have returned to substantially normal working practices.

· Secured backlog is US$ 225.1 million as at 1 August 2020, up 7% (US$ 14.6 million) compared to September 2019 (US$ 210.5 million).

· Four new contract awards announced in 2020 with a combined charter period of 8.5 years including contract extensions.

· GMS Evolution, which is fitted with the unique GMS cantilever has secured its first contract using this technology, working for a Middle Eastern based NOC.

Tim Summers, Executive Chairman, GMS said:

"GMS has delivered a significant improvement in performance despite the difficulties brought by COVID-19, and the resultant oil price collapse. Vessel utilisation has been restored to 2016 levels, while adjusted EBITDA is up 34% on H1 2019. We have continued to secure new contracts throughout the pandemic, increasing the order book and profitability is up substantially compared to the previous year.

Operational risks brought about by COVID-19 were managed carefully, with minimal operational and financial disruption. Most importantly, we have protected the health and wellbeing of our employees.

The delivery of a restructured loan deal with our Lenders is an important milestone. It will provide us with the stability going forward to continue to build on the progress that we have already made in turning around this business.

In fewer than twelve months, a new management team has fundamentally repositioned GMS for success. With 83% fleet utilisation already secured for 2020, and a lean cost base, we are already demonstrating the business's ability to drive profitable growth. In stabilising markets, the Board is determined to capture this considerable opportunity for the reward of all of our shareholders."

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