Gulf Marine Services PLC (AIM:GMS) shares fell 6.4% after it revealed that its tax assessment settlement proposal had been rejected by the Saudi Arabia dispute resolution committee (ADRC), with the total amount not yet made clear.
"The directors believe that the impact of the judgment may result in a modest delay in achieving the group's target leverage of 1.5x, dependent on the overall performance of the group's business."
Results for 2024 showed that a subsidiary of the group received a US$9.2 million tax assessment for 2021 from the Saudi Zakat, Tax and Customs Authority, including delay fines, related to the transfer pricing of an inter-group bareboat agreement for the 2017-2019 financial years.
Supported by its external tax advisers, GMS filed an appeal and applied for a settlement with the ADRC.
This week it was notified that its latest settlement proposal had been rejected and a court hearing had been brought forward to 12 May, at which the court delivered its judgment.
"The company understands that its appeal has been denied and that no further appeal from the judgment is possible," with the amount awarded under the judgment yet to be communicated to the group.
"Management will work on obtaining a waiver of the penalties," GMS added, noting that provisions had been recorded in the latest results.
Adjusted EBITDA guidance for 2025 remains in the range of US$100-108 million, with an increase for 2026 still targeted.