DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2021
The Directors submit their report and consolidated financial statements of Gulf Navigation Holding PJSC (“the Company”) and its subsidiaries (collectively referred to as “the Group”) for the year ended 31 December 2021. These will be laid before the shareholders at the Annual General Meeting of the Company, which is scheduled to be held sometime within the first half of 2022.
The Group is primarily engaged in marine transportation of commodities, chartering vessels, shipping services, marine transport under special passenger and merchant contracts, clearing and forwarding services and container loading, unloading, discharging and packaging services.
Results and appropriation of profit
The results of the Group for the year ended 31 December 2021 are set out on page 10 of these consolidated financial statements.
As of 31 December 2021, the Group’s current liabilities exceeded its current assets by AED 127,874 thousand (2020: AED 338,749 thousand) and the Group has accumulated losses amounting to AED 668,909 thousand (2020: AED 729,659 thousand). The Group has made profit of AED 59,522 thousand (2020: loss AED 284,607 thousand) for the year then ended.
As at 31 December 2021, the Group’s accumulated losses continue to exceed 50% of its issued share capital. In accordance with Article 302 of the UAE Federal Law No (2) of 2015 (as amended), the Company had called a General Assembly on 29 April 2021 to vote on either dissolving the Company or to continue its activity with an appropriate restructuring plan. A special resolution has been passed by the General Assembly to approve the continuity of operations for the Company in accordance with Article 302 of the UAE Federal Law No (2) of 2015 (as amended).
During the year, the lender of term loan V amended the repayment and other terms and conditions of the term loan, which led to the Group being compliant with the revised covenants of the term loan V. Also, the Group was able to finalise negotiations with lenders for term loan II and III. Based on the settlement agreement, the lender has agreed to waive AED 20,385 thousand out of the total outstanding amount of AED 96,385 thousand [see Note 13(e)] subject to timely repayment of future instalments. The first instalment of the revised repayment schedule of AED 50,000 thousand has been paid by the lender of term loan V on the Group’s behalf [see Note 13(e)].
The management of the Group has prepared a cash flow forecast for a period of not less than twelve months from the date of these consolidated financial statements and have a reasonable expectation that the Group will have adequate resources to continue its operational existence for the foreseeable future.
The cash flow forecast is based on following key assumptions:
- One vessel of the Group will be sold, in accordance with the cash flow forecast; and
- One of the shareholders will provide up to AED 8,500 thousand to fund the working capital of the Group in June 2022.
Whilst the shareholders have resolved to continue the operations of the Group in the General Meeting held on 29 April 2021 as required by Article 302 of the Federal Law No (2) of 2015 (as amended), the timing and realisation of the above matters are not within management’s control.
Following the Board of Directors Decision No. (32/R. T) of 2019 to restructure and convert the major debts of the Group into equity by way of issuing a mandatorily convertible Sukuk, the Group has obtained the necessary approval from the Securities & Commodities Authority (“SCA”), its regulatory body, to proceed with the plan. Further, the Group has also obtained the approval to the appointment of the evaluator and the evaluation has been already completed and the report presented to the Board of Directors. Consequently, a General Assembly Meeting was held on 31 January 2022, and it was resolved to approve the issuance of Mandatory Convertible Bonds for a value up to AED 150,000,000 (One hundred and fifty million UAE Dirhams) (“New Bonds”) by way of a private placement. It was also resolved to approve the increase of the share capital of the Company by AED 450,000,000 distributed among 450,000,000 shares for the purposes of converting the New Bonds into shares in the Company.
The Directors of the Company during the year were as follows:
- Sheikh Theyab Bin Tahnoon Bin Mohammad Al Nahyan (Chairman)
- Mr. Abdulla Subhi Ahmed Atatreh (Vice-Chairman)
- Mr. Mohamed Ahmad Abdulla Rasheed Alhammadi (Director)
- Mr. Abdulaziz Fahad H. Alongary (Director)
- Mr. Waleed Mohammad Mohammad
(Director) – ResignationDate 10/06/2021
- Mr. Ahmad Mohamed Fathi Kilani (Director)
- Mr. Abdul Rahman Mahmoud Abdul Rahman Mohamad Al Afifi (Director)
The consolidated financial statements of the Group have been audited by Ernst & Young.
Dr. Abdul Rahman Al Afeefi
Ahmad “M.F.” A. Al Kilani
CHIEF FINANCIAL OFFICER