TIDMGYG
RNS Number : 0674V
GYG PLC
04 April 2019
04 April 2019
GYG plc
("GYG", the "Company" or the "Group")
2018 FINAL RESULTS
A challenging year with a visible recovery in Q4 2018
GYG plc (AIM: GYG), the market leading superyacht painting,
supply and maintenance company, today announces its audited results
for the year ended 31 December 2018.
Financial Highlights
-- Group revenue of EUR45.0m (FY17: EUR62.6m)
o Coating (Refit and New Build) revenue of EUR35.5m (FY17:
EUR53.7m)
o Supply revenue up 7% to EUR9.5m (FY17: EUR8.9m)
-- Adjusted EBITDA(1) loss of EUR0.9m (FY17: EUR7.2m)
-- Operating loss of EUR4.3m (FY17: operating profit of
EUR1.4m)
-- Net debt position(2) of EUR6.6m at 31 December 2018 (FY17:
EUR6.7m)
-- Cash of EUR5.1m as at 31 December 2018 (EUR6.2m at 31
December 2017)
Operational Highlights
-- Despite a challenging 2018 due to a very soft Refit market
and lower project wins in New Build, GYG had a Record Order Book(3)
as at 31 March 2019 of EUR38.8m, EUR28.5m ahead of the same point
in the prior year (EUR10.3m as of 31 March 2018)
-- Higher visibility of income at an earlier stage with
increasing New Build income throughout the year. The announcement
of three substantial New Builds over 70m+ in length in Northern
Europe since the 2018 year end softened the Refit seasonality
-- MB92 Barcelona, one of the leading superyacht Refit centers
in the world, recently invested in the South of France, acquiring
an established shipyard and one of the largest dry docks in Europe,
dedicated to superyachts. GYG has signed a new commercial agreement
with MB92 Group to extend the current relationship in Spain to
their new French operation
-- Significant progress has been made in systems, processes and
controls across the Group. The Board has also restructured the
organisation's senior and middle management, with more focus on
production and gross margins, pipeline, sales and key industry
partnerships, combined with improved technology
Outlook
-- Current trading in 2019 is in line with expectations after an
encouraging start to the year
-- The Group has agreed terms on three New Build contracts since
the 2018 year end in Northern Europe and the Board expects to see
an upturn in Refit business
-- Two major yacht facilities in the US are nearing completion
of significant site upgrades which are expected to come online in
H1 2019. GYG is well placed in both facilities and the Group's US
team is gearing up for additional expansion, with a strengthening
of its workforce and management team
1) Adjusted EBITDA is defined as operating profit before
depreciation, amortisation, impairment, share based payments and
exceptional items. This is an alternative performance measure, that
provides an analysis of the operating results excluding non-cash
variables and non-recurring items which can vary substantially from
company to company. This indicator is widely used by investors when
evaluating businesses, rating agencies and creditors to evaluate
the level of debt, comparing EBITDA with net debt
2) Net debt position is defined as the net cash and cash
equivalent balances, less short and long-term borrowings and
obligations under finance leases. This is an alternative
performance measure used by investors, financial analysts, rating
agencies, creditors and other parties to ascertain a company's debt
position.
3) Order Book is defined as contracted but unbilled New Build
and Refit projects across the Group.
Remy Millott, CEO of GYG commented:
"Despite 2018 being a very difficult year for the Group and the
wider market, we have made significant progress internally through
Q4 2018 following our focus on improving the business and the way
in which we operate. The changes we have put in place have provided
greater visibility on future revenues, gross margins, sales and
pipeline. The systems also ensure management can address any
important issues earlier than we have been able to in the past,
enabling the team to spend more time with key clients while
focusing on winning business from both new and existing
customers.
"The strong Order Book position at this stage in the year and
the exciting opportunites that we are being presented with, gives
the Board confidence for the future where we are focused on
delivering long term shareholder value."
Analyst meeting
There will be a presentation for sell-side analysts at 9:30am
this morning, 04 April 2019, the details of which can be obtained
from FTI Consulting.
Enquiries:
The Group updated its website and changed its domain from
www.globalyachtinggroup.com to www.gygplc.com on 4 April 2019. An
auto-redirect is in place to ensure any enquiries made to the
previous domain will be redirected to www.gygplc.com.
GYG plc via FTI Consulting
Remy Millott, Chief Executive Tel: +44 (0) 20 3727 1000
Officer
Gloria Fernandez, Chief Financial
Officer
Kevin McNair, Interim Chief Financial
Officer
Zeus Capital Limited (NOMAD & Tel: +44 (0) 20 3829 5000
Broker)
John Goold, Dominic King (broking)
Dan Bate, Nick Cowles, Jordan
Warburton (Corporate Finance)
FTI Consulting (Financial PR) Tel: +44 (0) 20 3727 1000
Alex Beagley
Fiona Walker
Laura Saraby
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Notes to Editors:
GYG is the market leading superyacht painting, supply and
maintenance company, offering services globally through operations
in the Mediterranean, Northern Europe and the United States. The
Company's brands include Pinmar, Rolling Stock, Pinmar Supply,
Pinmar USA, Techno Craft and ACA Marine. GYG's operations can be
divided into three key sales channels:
-- Refit: repainting and finishing of superyachts, normally as
part of a refit programme. Revenues also include scaffolding and
containment work;
-- New Build: fairing and painting of new vessels as part of the build process; and
-- Supply: selling and delivery of maintenance materials,
consumables, spare parts and equipment primarily to trade
customers.
This announcement contains forward-looking statements that are
based on current expectations or beliefs, as well as assumptions
about future events. These forward-looking statements can be
identified by the fact that they do not relate only to historical
or current facts. Forward-looking statements often use words such
as anticipate, target, expect, estimate, intend, plan, goal,
believe, will, may, should, would, could, is confident, or other
words of similar meaning. Undue reliance should not be placed on
any such statements because they speak only as at the date of this
document and, by their very nature, they are subject to known and
unknown risks and uncertainties and can be affected by other
factors that could cause actual results, plans and objectives, to
differ materially from those expressed or implied in the
forward-looking statements. There are a number of factors which
could cause actual results to differ materially from those
expressed or implied in forward-looking statements. The Company
undertakes no obligation to revise or update any forward-looking
statement contained within this announcement, regardless of whether
those statements are affected as a result of new information,
future events or otherwise, save as required by law and
regulations.
CHAIRMAN'S STATEMENT
Our FY18 results are disappointing relative to the solid growth
we reported in 2017. We started the year with a strong sales
pipeline and strategic initiatives to grow our market share in both
New Build and Refit. However, the Refit market was unexpectedly
soft following the disruption to cruising patterns as a result of
the hurricanes at the end of 2017 and a significant downturn at two
of our significant Refit yards (Barcelona and La Ciotat). It also
took us longer than expected to close major New Build projects,
which would have underpinned the Order Book and mitigate the
seasonality and temporary weakness across the Refit market
sector.
Despite this, we started to see good recovery in Q4 2018 with a
number of contracts signed, and now expect Refit trading patterns
to return to normal during 2019. I am pleased to report that during
Q1 2019, as a result of the strategic endeavours with the New Build
shipyards throughout 2018, we have announced three major New Build
projects in Holland, contributing to a record forward Order Book
for 2019, and future visibility with the orders extending through
2020.
Management have taken several actions to improve the Group's
performance including the strengthening of the leadership team with
the appointment of a new Chief Operations Officer, Raúl Galán.
There is a clear plan and targets in place to deliver operational
efficiencies, improve cost controls and provide more focus on sales
and business development.
FINANCIAL RESULTS
As a result of this challenging year, revenue in the year ended
31 December 2018 decreased 28% to EUR45.0m (FY17: EUR62.6m), with a
34% decrease in the Coating Division, reflecting the continued
turbulence in the Refit market and the lower than expected New
Build revenue, partially compensated by the continued good
performance of the Supply Division with a 7% growth in 2018.
The significantly reduced level of activity led to lower gross
margin of 17.9% this year (FY17: 27.1%). Despite a EUR9.5m decrease
in operating costs excluding exceptional items, impairment and
performance share plan costs, operating costs could not be entirely
adjusted in line with the decrease in turnover and the Group
recorded an operating loss of EUR4.3m in the year (FY17: profit of
EUR1.4m) and an adjusted negative EBITDA margin of (2.0%) in the
year (FY17:11.5%) resulting in a net loss, excluding exceptional
items, impairment and performance share plan costs, for the year of
EUR1.7m (FY17: net profit EUR3.6m).
EARNINGS PER SHARE AND DIVIDS
The net loss for the year was EUR3.2m (FY17: loss EUR0.4m)
creating a loss per share of EUR0.06 (FY17: loss of EUR0.01 per
share) and an adjusted basic loss per share of EUR0.03 (FY17:
EUR0.14 earnings per share).
The Board believed it was in the best interests of the Group not
to pay a dividend in relation to FY18, however it is the Board's
intention to reinstate its progressive dividend policy at the
earliest appropriate opportunity.
FINANCIAL POSITION
Cash and cash equivalents totalled EUR5.1m as at 31 December
2018, compared to EUR6.2m as at 31 December 2017. The decrease year
on year, partially compensated by the management of working
capital, corresponds mainly to the lower EBITDA and the repayment
of banking debt, finance leases and June 2018 dividends which
related to FY17. This, as a result, gives an external net debt of
EUR6.6m as at 31 December 2018, compared to EUR6.7m at 31 December
2017.
Total net assets on the balance sheet were EUR12.5m as at 31
December 2018, compared to EUR17.4m as at 31 December 2017
reflecting the lower activity in the year.
CURRENT TRADING AND OUTLOOK
We have had an encouraging start to 2019 with both New Build and
Refit activity levels up, continuing through from Q4 2018. Having
adopted a more conservative approach to forecasting, we remain
cautious until there is firm evidence of an increase in volume of
Refit orders to continue into the second and third quarters. We
have a 143meters New Build project scheduled to start in Germany in
June 2019, followed by another of the recently confirmed New Build
orders in Holland commencing in October 2019. This further
underpins our strategy of gaining market share in the New Build
sector.
Our Supply business is trading in line with expectations and is
progressing well in its strategy of expanding its footprint through
retail partnerships and trade accounts, whilst growing share in the
superyacht supply business with increased direct marketing. We
continue to evaluate potential acquisition targets consistent with
our strategy of developing the Group's position within the
superyacht Service and Supply sector, however in the short-term we
remain focused on growing market share in our core sectors.
As a result of the forthcoming maternity leave of the Group's
Chief Financial Officer, Gloria Fernandez, I am pleased to confirm
that Kevin McNair has taken on the role of Interim Chief Financial
Officer. Kevin joined the business on 11 March 2019 to ensure that
there is a smooth handover of responsibilities ahead of Gloria's
planned leave. Kevin has more than 25 years' experience in
financial management and capital markets. He has spent the past 15
years as finance director/chief financial officer of various
publicly quoted and privately-owned businesses, most recently as
interim CFO at Ebiquity plc.
Following an unusually difficult year, I am confident that the
Group can now deliver long-term growth for our shareholders.
Stephen Murphy
Non-Executive Chairman
4 April 2019
CHIEF EXECUTIVE'S REPORT
2018 proved to be a very difficult year for GYG which is
reflected in our year-end results. There are several major factors
that explain the lower than expected revenue and profits, the most
significant being an unexpectedly soft Refit market and the longer
than initially expected time taken to sign contracts and grow
market share in the New Build sector.
Despite such results, we have made significant progress in many
areas of the Group. We restructured the management team to create a
more concentrated focus on production and gross margins, the sales
pipeline and the visibility of the forward Order Book, as well as
strengthening key industry partnerships. Our continued investment
in improved technology is enhancing our sales prospecting and
allowing us to engage with clients much earlier than we have done
in the past.
I am pleased to report that during Q4 2018 and the early part of
2019 we have seen a return to more normal market conditions and a
strengthening of demand. This, coupled with the internal
improvements we have made, has resulted in significant improvements
to our Order Book of EUR38.8m (as at 31 March 2019), EUR28.5m ahead
of the same point in the prior year (EUR10.3m as at 31 March
2018).
OVERVIEW
The Group achieved revenues of EUR45.0m in the year ended 31
December 2018 (FY17: EUR62.6m), a reduction of 28%, with an
operating loss of EUR4.3m (FY17: profit EUR1.4m), an adjusted
EBITDA loss of EUR0.9m (FY17: EUR7.2m) and a net loss of EUR3.2m
(FY17: EUR0.4m). Our gross margins suffered as a result of the
reduced production volume with our average gross margin for 2018 at
17.9%, down from 27.1% in FY17. We ended the year with cash of
EUR5.1m (FY17: EUR6.2m) and a net debt position of EUR6.6m on par
with the previous year (FY17: EUR6.7m).
The deterioration of our Refit revenues reflect the wider
softness of the Refit market during 2018, with market
intelligence(1) suggesting a c.30% reduction in the Refit paint
activity based on paintable surface areas between 2016 and 2018,
with 2018 down 7.5% in comparison with 2017. This temporary market
downturn can be attributed to several factors:
-- Disruption to the cruising patterns and consequent
maintenance planning cycle caused by the major hurricanes during
the Autumn of 2017 which had a significant impact on the winter
2017/18 Refit season. This major market turbulence affected our H1
2018 performance with the postponement of several major Refit
projects. I am pleased to report that after the 2018 summer
cruising season we started to see a return to more typical market
activity which has resulted in a market stabilisation for the
winter 2018/19 Refit period.
-- A significant downturn in the major Refit yards in the South
of France during H1 2018 caused by uncertainty regarding tax
regulations for yacht owners and crew. Fortunately, the French tax
authorities revised their fiscal strategy in September 2018
exempting yachts and their crew from the potentially onerous social
security tax obligations that had previously threatened all
superyachts whilst in French Refit yards. Accordingly, we saw a
resurgence of activity in Q3 2018 leading to a return to normal
levels of activity in Q4 2018.
-- MB92 in Barcelona, one of the leading superyacht Refit
centres in the world and one of GYG's main Refit locations,
underperformed significantly during 2018. In addition to the
geo-political unrest in Catalunya, the main reason for this
underperformance was due to the disruption in the shipyard while it
was undergoing a major upgrade to its facilities. The construction
work continued throughout 2018, restricting operational capacity
and disrupting services. Despite this, such a major investment by
the yard will increase its lifting capacity by approximately 40%,
strengthening MB92's market share and facilitating long-term
growth. Going forward we expect GYG to benefit from these
improvements and deliver organic growth in this region.
-- Construction delays to the ship-lift infrastructure that is
being installed were experienced at the major new Refit facility in
Savannah, Georgia. GYG is the Refit paint partner for the Savannah
Yacht Center and this was an area from which we envisioned
significant growth in 2018. Due to the delays in commissioning the
new infrastructure, we were restricted in the projects we could
undertake in Savannah yet once this facility becomes fully
operational in H2 2019, we anticipate further organic growth in our
USA paint business.
In summary, the unexpected softness of the 2018 Refit market
caused by these and other mainly non-recurring factors undoubtedly
contributed to our disappointing results. Since Q4 2018 demand in
the Refit sector has strengthened and we have seen a return to
normal levels of activity.
We entered 2019 with a record Order Book of EUR38.8m (as at 31
March 2019), EUR28.5m ahead of the same point in the prior year
(EUR10.3m as at 31 March 2018). This robust Order Book position is
underpinned with solid New Build revenues spread throughout the
year which will help to mitigate the normal cyclicality of the
Refit market. Furthermore, we are now gaining significant traction
with our strategic initiative to grow our share in the Northern
European New Build sector with several major contract negotiations
closed in Q1 2019 which further strengthen and extend the
visibility of our Order Book for 2020 and beyond.
STRATEGY
Growing market share in New Build was one of the major strategic
marketing programmes implemented during 2018. Having completed a
detailed analysis of the principal territorial markets to assess
the value, growth potential and competitive forces of each, we have
now narrowed our primary focus to Holland and Germany. The
shipbuilders in these two countries represent the premium segment
of the large superyacht New Build market and we believe they are
the best fit for GYG's capacity, high quality and technically
advanced fairing and painting services. In Holland and Germany, we
are targeting specific yards which have regard for quality brands,
strong consistent order books, and are interested in entering
strategic sub-contractor arrangements. Our aim is to become a
preferred long-term service partner of a limited number of premium
shipbuilders wherein we can add value by improving speed, quality
and efficiency. Having long-term agreements, and a visible forward
Order Book, will enable the Group to improve utilisation and gross
margins, grow revenues and market share, whilst reducing the
effects of the cyclicality of the Refit market. We will continue to
seek and intercept opportunities in our secondary New Build markets
in Italy, Spain, Turkey and the USA as well as continuing to
exploit our direct relationships with superyacht owners.
Our plans for driving organic growth in the Refit market are
focused on three channels: fleet management companies, partnerships
with major Refit yards and our intelligence-driven direct marketing
to yacht captains and managers. In order to streamline our sales
and marketing activities, we are in the process of simplifying our
brand strategy to focus resources on the market leading Pinmar
brand by scaling back investment in the Rolling Stock and ACA
Marine brands. This will reduce any dilution of our global
marketing activities and ensure a consistent sales proposition to
our customers and industry partners.
In 2018, we signed a new and expanded commercial agreement with
MB92 Group, following their acquisition of the Compositeworks Refit
Company together with the leasehold on a large dry-dock facility,
both located in La Ciotat, France, where GYG have opened a third
major operational hub in this key Mediterranean Refit location.
This, along with new commercial agreements with the expanded
Rybovich and Savannah Refit facilities in the USA, will facilitate
growth in Refit. With our re-structured sales and commercial teams,
we have implemented new account management and quoting procedures
to better support the fleet management companies. With the
continued development of our CRM system we have significantly
enhanced the sales process and direct marketing. All of these
activities are contributing to a fully revised sales pipeline.
DIVISIONAL REVIEW
GYG's activities are segmented between its Coating division and
its Supply division. For the year ended 31 December 2018, the
Coating division achieved revenues of EUR35.5m (FY17: EUR53.7m) and
an adjusted EBITDA loss of EUR1.5m (FY17: EUR6.2m). The Supply
division delivered revenues of EUR9.5m (FY17: EUR8.9m) and an
adjusted EBITDA of EUR545k (FY17: EUR972k).
Coating Division
The Coating division comprises the fairing and painting services
offered to the superyacht New Build and Refit sectors as well as
the specialist engineering services involved with the scaffolding,
containment and removal and repair of yacht hardware and fittings
during a Refit project. Pinmar is the global market leading brand
in the superyacht paint sector: Rolling Stock is a European brand
that is focused on the sailing yacht niche, and ACA Marine is a
regional brand based in France. Technocraft is the scaffolding,
containment and fittings brand that operates throughout Europe.
New Build
During 2018, the Group completed the work on a 93m New Build
project in Holland, a 116m explorer vessel in Germany, the
top-coating of a 74m yacht in Turkey and was approaching completion
on a complicated conversion project of a 110m explorer vessel in
Florida. The Dutch superyacht was the latest in a series of yachts
that Pinmar has completed for a leading shipbuilder with whom the
brand has a preferred supplier relationship. The German project was
a second vessel completed for a repeat customer. The USA project
commenced in 2016 and has been the subject of a number of delays
due to changes in scope.
During the year, the Group announced two substantial New Build
contracts in Germany and Holland, alongside the previously
announced REV 182 project. The three confirmed orders are:
-- a c.140m superyacht for an existing client owner which is to
be built in Germany and with painting to be commenced in Q2
2019
-- a c.94m superyacht to be built in Holland by an existing shipyard partner starting Q4 2018
-- REV 182, the world's largest research and expedition vessel,
which will be constructed in Norway and finished in a German yard
in 2020/21. This project was sourced through an existing industry
relationship
Unfortunately, due to unexpected delays in receiving
confirmation on additional New Build contracts in our sales
pipeline, no new projects were started during 2018 which would
normally have offset the cyclical downturn of the Refit market
during the summer cruising period. Whereas we would normally expect
our New Build activities to contribute an important portion of the
Coating's division revenues and gross margin, this segment
under-performed during 2018. However, as highlighted earlier, our
new strategic approach towards selected New Build yards in both
Holland and Germany has been well received, and I am confident that
we will be announcing further long-term supplier agreements and
multiple major contracts during the course of 2019 which will
provide both strong growth and long-term visibility of our New
Build Order Book through 2020-2022. Furthermore, we have several
opportunities for other New Build projects across Europe which will
further strengthen our market share and drive revenue growth.
Refit
In Refit, the Group has seen part of the work previously
scheduled in the second half of 2017, which was impacted by the
extraordinary sequence of hurricanes, flow through into H1 2018,
with the remainder falling into the second half and in some cases,
into 2019. However, the expected benefit of the 2017 contracts
deferrals has been offset by delays in major projects that were
originally scheduled for H1 2018. The net effect of this general
market softness, particularly in H1 2018, resulted in the
significant revenue shortfall. With a reduction in volume
especially over the summer period the Group took steps to reduce
its operating costs, thereby mitigating any large impact on
EBITDA.
Whilst the Group undertook more individual projects than in
previous years they were, on average, significantly smaller in
terms of scope, with owners choosing not to undertake major Refit
projects during 2018 in order to prevent further disruption to
their cruising periods. We have not, however, detected any
noticeable change in the profile of the yachts, or our customer
retention rate, and we believe that we have held our market share
in a period of weak demand for the whole industry. I am pleased to
report that we started to see a significant upturn in demand in Q4
2018 and have entered 2019 with a strong Q1 Order Book.
Furthermore, our market intelligence has identified that
significantly more superyachts are scheduled for mandatory 5-year
Refit surveys in 2019 than 2018. Whilst painting is not included
directly in the scope of the 5-year survey, owners typically like
to take the opportunity to repaint whilst the vessel is out of
service, and our analysis shows a 78% correlation between 5-year
surveys and painting.
We have recently refreshed the branding of Technocraft, our
specialist yacht scaffold, containment and fittings business. Our
objectives are to reinforce its market leading profile in Spain,
facilitate its regional expansion in La Ciotat, France and Northern
Europe and to increase the profile of the yacht hardware solutions
division. The specialist services that Technocraft provides to
superyachts and Refit yards are integral to the Refit process and
are often sold in conjunction with a Pinmar paint service. GYG's
ability to offer a turnkey Refit package provides a unique sales
point which, along with our global scale and financial security,
constitute a significant competitive advantage in the market.
Supply Division
Our Supply division operates through three distinct sales
channels: retail, trade and superyacht direct supply.
The first half of the year proved to be a challenging period
with trading patterns being slightly lower than normal across the
entire sector. As a supply company selling to both trade and
superyachts directly, a lack of vessels in the territory influences
the Supply division. Turnover for Supply was flat at the end of H1
2018, impacted mainly by five key trade accounts (with MB92 being
the most significant) whose business has not been lost to
competitors, but has suffered the same softening of demand as the
market in general. The business was able to recover revenues during
H2 2018 to end the year with a 7% increase over 2017.
Despite the market challenges and the closure of one of our
retail outlets in Mallorca due to the demolition and redevelopment
of the property, our Supply business reported progress both in
retail and direct sales channels:
-- The retail partner programme now has six new outlets,
expanding the geographic network and increasing sales.
-- Significant progress has been made in expanding the customer
base for direct sales with an 8% increase over FY17 in the number
of superyacht accounts. This is viewed as a major growth
opportunity for the Supply division, leveraging the synergies with
the Coating division who are in communication with the same
yachts.
OPERATIONAL REVIEW
I am pleased to report that we have strengthened our senior
management team with the appointment of Raúl Galán as Chief
Operating Officer. Raúl is focused on delivering improvements to
gross margin, production efficiency and cost savings across the
Group. In addition to our existing initiatives to drive performance
and efficiency improvements in production, we have launched
projects to streamline our procurement process, re-engineer our IT
systems to support our planned growth and recruitment and training
initiatives to develop our workforce.
MARKET DEVELOPMENTS
The overall superyacht fleet continues to exhibit steady growth
with an average compound growth rate of 3.3% over the last ten
years with the result of around 155 new yachts being delivered each
year. The growth in GYG's 40m+ target segment is increasing
steadily at 5.4% CAGR since 2014, reflecting the trend for larger
vessels. At the end of 2018 the 40m+ fleet comprised 1,986 yachts
and is forecast to grow at 4.2%(1) for the period 2019-2023.
The global New Build Order Book remains strong with 423 yachts
on order, of which 228 are in our target segment (40m+). The
addressable paint market value of the 40m+ New Build segment over
the next 5 years (2019-2023) is estimated to be in the region of
c.EUR1.2Bn(1) . Italy is the largest producer of superyachts,
however the Dutch and German yards dominate the larger (70m+)
segment where GYG is at its most competitive.
The overall trends remain positive in both New Build and Refit
despite the short-term fluctuation in the 2018 Refit activity.
Industry forecasts(1) predict strong growth in the Refit market
particularly in 2020 and 2021 driven by the 5-year Refit cycles and
the growing fleet.
There is considerable investment being made in expanding and
upgrading Refit shipyard facilities both in Europe and the USA to
accommodate the increasing fleet and size of superyachts. GYG is
well positioned, with long-term supplier agreements in place with
the major yards.
OUTLOOK
After a difficult year, I believe the business is well placed to
deliver an improved financial performance in 2019. The Group is
making significant progress on its strategy to grow market share in
the Northern European New Build sector and, with this strategic
focus, the Directors believe that 2019 will be a breakthrough year
resulting in the establishment of several new long-term supplier
relationships with leading yards, providing visible and consistent
revenue growth. I am excited by the opportunities presented by the
Group's expansion in La Ciotat, spearheaded by the Pinmar brand and
supported by Technocraft and Pinmar Supply. This, together with the
renewed partnership with the MB92 Group, should facilitate growth
in European Refit. As the new facilities come on stream in
Savannah, and with our new expanded hub at Rybovich in West Palm
Beach, I expect to see further penetration in the USA Refit
market.
I am pleased with the start we have made so far in 2019, with a
record number of Refit projects in production, and a significantly
stronger forward Order Book including several New Build contracts
that extend through to 2021. I am confident that our re-structured
management team are fully focused on the key challenges and are
highly motivated to achieve the Group's performance objectives and
to deliver value to our shareholders.
Remy Millott
Chief Executive Officer
4 April 2019
(1 Source: Superyacht Intelligence March 2019)
FINANCIAL REVIEW FOR THE YEARED 31 DECEMBER 2018
Financial performance
Year ended
31 December 2018 Coating Supply Total reportable segments
EUR000 EUR000 EUR000
Revenue 35,458 9,506 44,964
======== ======= ==========================
Adjusted EBITDA (1,460) 545 (915)
-------------------- -------- ------- --------------------------
Year ended
31 December 2017 Coating Supply Total reportable segments
EUR000 EUR000 EUR000
Revenue 53,713 8,925 62,638
======== ======= ==========================
Adjusted EBITDA 6,219 972 7,191
-------------------- -------- ------- --------------------------
Revenue in the year ended 31 December 2018 decreased 28% to
EUR45.0m (FY17: EUR62.6m), with 34% turnover decrease in the
Coating Division, reflecting the continued turbulence in the Refit
market and the lower New Build revenue than expected, partially
compensated by the continued good performance of the Supply
Division with a 7% growth in FY18.
Owners of superyachts typically undertake an annual haul out and
general maintenance in the off season to keep the vessels in
optimum condition and to ensure availability during the peak
sailing months. This has historically introduced a level of
seasonality to the Company's revenue driven by an H2 weighting to
the key Refit revenues. During FY18, considering the lower than
expected New Build activity in summer, this seasonality was even
further accentuated.
Despite the EUR9.5m decrease in operating costs (not including
exceptional items, impairment, performance share plan costs,
depreciation and amortisation), operating costs could not be
entirely adjusted in line with the decrease in turnover,
predominantly explained by the seasonality experienced during
summer and the lower level of activity, resulting in:
a) an operating loss of EUR4.3m in the year (FY17: profit of EUR1.4m);
b) an adjusted negative EBITDA margin of (2.0%) in the year (FY17: 11.5%) and
c) a net loss, excluding exceptional items, impairment and
performance share plan costs, for the year ended of EUR1.7m (FY17:
net profit of EUR3.6m).
The exceptional items of EUR0.9m in the year mainly related to
restructuring costs needed as a consequence of the decreased level
of activity and as part of a cost saving plan which included
redundancies and other costs associated for reorganization and
restructuring of some departments. Transaction expenses for the
year ended 31 December 2017 included professional fees and other
related fees arising in connection with the IPO and the acquisition
of ACA Marine, the coating business located in the South of
France.
Financial expenses of EUR0.7m in the year (FY17: EUR0.9m) mainly
related to interest on the syndicated loan signed in March 2016,
finance lease and foreign exchange rate.
Earnings per share and dividends
Net loss for the year was EUR3.2m (2017: loss of EUR0.4m). Loss
per share was EUR0.06 (FY17: loss of EUR0.01 per share) and
adjusted basic loss per share was EUR0.03 (FY17: earning per share
EUR0.14).
Basic earnings/(losses) per share are calculated by dividing net
profit/(loss) for the year attributable to the Group (i.e. after
tax and non-controlling interests) by the weighted average number
of shares outstanding during that year.
Diluted earnings/(losses) per share have been calculated on a
similar basis taking into account dilutive potential shares.
Adjusted basic earnings per share are presented to eliminate the
effect of the exceptional items, amortisation and impairment of
intangible assets and performance share plan costs (considering the
tax effect of these adjustments).
Year ended Year ended
31 December 31 December
2018 2017
-------------- --------------
(Losses) for the period
attributable to shareholders
(EUR000) (3,016) (349)
Weighted average number
of shares 46,640,000 30,091,248
Basic (losses) per share
(EUR) (0.06) (0.01)
============== ==============
Adjusted basic (losses)/earnings
per share (EUR) (0.03) 0.14
============== ==============
Dilutive weighted average
number of shares 47,364,350 30,460,009
-------------- --------------
Diluted (losses) per
share (EUR) (0.06) (0.01)
============== ==============
Adjusted diluted (losses)/earnings
per share (EUR) (0.03) 0.13
============== ==============
The Board believed it was in the best interest of the Company
not to pay a dividend in relation to FY18, however it is the
Board's intention to return to the dividend list at the earliest
appropriate opportunity.
Financial position
Cash and cash equivalents totalled EUR5.1m at 31 December 2018
compared to EUR6.2m as at 31 December 2017. The decrease year on
year, partially compensated by the management of working capital,
corresponds mainly to the lower EBITDA and the repayment of banking
debt, finance leases and June dividends related to FY17. Giving as
a result, net debt of EUR6.6m as at 31 December 2018, compared to
EUR6.7m as at 31 December 2017.
Total net assets on the balance sheet were EUR12.5m as at 31
December 2018, compared to EUR17.4m as at 31 December 2017
reflecting the lower activity in the year.
Cash flow
Net cash from operating activities was EUR2.8m for the year
(FY17: generated EUR0.4m). Net cash used in investing activities
was EUR0.8m as at 31 December 2018 (FY17: EUR2.2m used mainly
corresponding to the ACA Marine acquisition in March 2017 and
scaffolding equipment) and net cash used by financing activities
was EUR3.1m mainly corresponding to the dividends paid in June and
repayment of the existing borrowings and finance leases (FY17:
EUR1.7m generated).
Overall net cash outflow for the year was EUR1.2m (FY17: net
cash inflow was EUR0.0m).
Consolidated statement of comprehensive income
For the year ended 31 December 2018
Year ended Year ended
31 December 2018 31 December 2017
Note EUR 000 EUR 000
----------- ------------------ ------------------
Continuing operations
Revenue 3 44,964 62,638
Operating costs (49,233) (61,235)
Adjusted EBITDA (915) 7,191
Depreciation and amortisation (1,886) (1,822)
Impairment 7 (480) -
Performance share plan (108) (67)
Exceptional items 4 (880) (3,899)
--------------------------------------- ----------- ------------------ ------------------
Operating (loss) / profit (4,269) 1,403
Gain on financial instruments 11 417 -
Finance costs - net (737) (879)
(Loss) / profit before tax (4,589) 524
----------- ------------------ ------------------
Tax 5 1,392 (908)
(Loss) for the period (3,197) (384)
----------- ------------------ ------------------
Items that may be reclassified
subsequently
to profit or loss:
Exchange differences
on translation of foreign
operations 31 (96)
Total comprehensive loss for the
period (3,166) (480)
======================================= ====================== ======================
Loss for the period attributable
to:
Owners of the Company (3,016) (349)
Non-controlling interest (181) (35)
Total comprehensive loss for the period
attributable to:
Owners of the Company (2,985) (445)
Non-controlling interest (181) (35)
Loss per share (EUR) 6
From continuing operations
Basic (0.06) (0.01)
Diluted (0.06) (0.01)
----------- ------------------ ------------------
Consolidated statement of financial position
As at 31 December 2018
2018 2017
ASSETS Note EUR 000 EUR 000
--------------------------------- ----- --------- ---------
Non-current assets
Goodwill 7 9,333 9,292
Other intangible assets 11,313 12,720
Property, plant and equipment 8,178 8,352
Other financial assets 1,605 1,621
Deferred tax assets 261 601
Total non-current assets 30,690 32,586
---------------------------------- ----- --------- ---------
Current assets
Inventories 2,546 3,067
Trade and other receivables 6,908 10,848
Cash and cash equivalents 5,069 6,236
Total current assets 14,523 20,151
---------------------------------- ----- --------- ---------
Total assets 45,213 52,737
================================== ===== ========= =========
2018 2017
LIABILITIES Note EUR '000 EUR '000
--------------------------------------------- ------- ---------- ----------
Current liabilities
Trade, deferred income and other payables (16,763) (16,393)
Obligations under finance leases 8 (816) (890)
Borrowings 8 (3,185) (2,388)
Provisions (349) (304)
Derivative financial instruments (37) (16)
Total current liabilities (21,150) (19,991)
---------------------------------------------- ------- ---------- ----------
Net current (liabilities) / assets (6,627) 160
---------------------------------------------- ------- ---------- ----------
Non-current liabilities
Obligations under finance leases 8 (1,139) (1,745)
Borrowings 8 (6,488) (7,893)
Deferred tax liabilities (2,218) (3,952)
Long-term provisions (819) (819)
Other financial liabilities (547) (964)
Other liabilities (343) -
Total non-current liabilities (11,554) (15,373)
---------------------------------------------- ------- ---------- ----------
Total liabilities (32,704) (35,364)
============================================== ======= ========== ==========
Net assets 12,509 17,373
============================================== ======= ========== ==========
EQUITY
--------------------------------------------- ------- ---------- ----------
Share capital 106 106
Share premium 7,035 7,035
Retained earnings 5,894 10,716
Translation reserve (37) (68)
Capital redemption reserve 114 114
Share based payment reserve 267 159
---------------------------------------------- ------- ---------- ----------
Equity attributable to owners of the
Company 13,379 18,062
---------------------------------------------- ------- ---------- ----------
Non-controlling interest 93 274
Put option reserve (963) (963)
Total equity 9 12,509 17,373
============================================== ======= ========== ==========
Consolidated statement of changes in equity
For the year ended 31 December 2018
Capital Share Non-controlling Put
Share Share Retained Translation redemption based interests EUR option TOTAL
capital premium earnings reserves reserve payment Total 000 reserve EQUITY
EUR 000 EUR 000 EUR 000 EUR 000 EUR 000 reserve EUR EUR 000 EUR
EUR 000 000 000
Balance at 1
January 2017 122 12,046 (926) 28 - - 11,270 - - 11,270
========= ========= ========== ============= =========== ======== ======== ================ ======== ========
Issue of share
capital 98 7,901 (79) - - - 7,920 - - 7,920
Costs related
to issue of
share capital - (842) - - - - (842) - - (842)
Reduction of
share premium - (12,070) 12,070 - - - - - - -
Acquisition of
subsidiary - - - - - - - 309 (963) (654)
Share buy back (114) - - - 114 - - - - -
Credit to
equity for
share based
payments - - - - - 159 159 - - 159
Total
comprehensive
loss for the
period - - (349) (96) - - (445) (35) - (480)
--------- --------- ---------- ------------- ----------- -------- -------- ---------------- -------- --------
Balance at 31
December 2017 106 7,035 10,716 (68) 114 159 18,062 274 (963) 17,373
========= ========= ========== ============= =========== ======== ======== ================ ======== ========
Effect of
change in
accounting
policy - - (98) - - - (98) - - (98)
Adjusted
opening
balance 106 7,035 10,618 (68) 114 159 17,964 274 (963) 17,275
--------- --------- ---------- ------------- ----------- -------- -------- ---------------- -------- --------
Dividend
distribution - - (1,708) - - - (1,708) - - (1,708)
Credit to
equity for
share based
payments - - - - - 108 108 - - 108
Total
comprehensive
loss for the
period - - (3,016) 31 - - (2,985) (181) - (3,166)
--------- --------- ---------- ------------- ----------- -------- -------- ---------------- -------- --------
Balance at 31
December 2018 106 7,035 5,894 (37) 114 267 13,379 93 (963) 12,509
========= ========= ========== ============= =========== ======== ======== ================ ======== ========
Consolidated cash flow statement
For the year ended 31 December 2018
2018 2017
Note EUR 000 EUR 000
----- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES (I) 10 2,798 428
==================================================================== ========= =========
- Purchase of intangible assets (47) (48)
- Purchase of property, plant and equipment (769) (1,144)
- Proceeds from disposal of property, plant and equipment 7 5
- Acquisition of subsidiary - (1,053)
CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES (II) (809) (2,240)
==================================================================== ========= =========
- Proceeds from obligations under finance leases 191 -
- Proceeds from bank borrowings 1,118 500
- Payment of costs incurred to issue shares - (842)
- Proceeds on issue of shares - 7,920
- Repayment of obligations under finance leases (871) -
- Repayment of borrowings (1,836) (5,889)
- Dividends paid to shareholders (1,708) -
CASH FLOWS USED IN/(FROM) FINANCING ACTIVITIES (III) (3,106) 1,689
==================================================================== ========= =========
Effect of foreign exchange rate changes (IV) (50) 152
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (I+II+III+IV) (1,167) 29
==================================================================== ========= =========
Cash and cash equivalents at the beginning of the period 6,236 6,207
Cash and cash equivalents at the end of the period 5,069 6,236
SELECTED NOTES TO THE FINANCIAL INFORMATION
1. General information
GYG plc was incorporated on 11 February 2016, as a private
company limited by shares, as Dunwilco 2016 Limited under the
United Kingdom Companies Act 2006. Subsequently, on 21 May 2016,
the Company's corporate name was changed to Global Yachting Group
Limited, and on 25 May 2017 it was changed to GYG Limited. On 22
June 2017 the Company re-registered as a public limited company and
on 5 July 2017 the Company completed an Initial Public Offering
("IPO") and its share capital was admitted to the AIM Market of
London Stock Exchange plc (see note 9). The address of the
registered office is Cannon Place, 78 Cannon Street, London EC4N
6AF, United Kingdom.
The principal activity of the Group is superyacht painting,
supply and maintenance, offering services globally through
operations in the Mediterranean, Northern Europe and the United
States.
These consolidated financial statements are presented in Euro
which is the currency of the primary economic environment in which
the Group operates.
2. Significant accounting policies
2.1. Basis of preparation
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2018,
but is derived from those accounts. Statutory accounts for the year
ended 31 December 2017 have been delivered to the Registrar of
Companies and those for the year ended 31 December 2018 will be
delivered following the Company's 2019 annual general meeting. The
auditors have reported on those accounts: their reports were
unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498(2) or (3) of the
Companies Act 2006.
While the financial information included in this results
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. The Company expects to
publish full financial statements that comply with IFRSs in May
2019.
2.2. Going concern
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future, taking also into account the following relevant
information, which mitigate the net current liability at year
end:
- Group forecasts and projections, considering the Order Book as
at 31 March 2019 of EUR38.8m for 2019.
- Bank facilities totalling EUR15.3m, of which EUR5.7 were drawn
and EUR9.6m were undrawn (see note 8).
- Net current liabilities include deferred income of EUR5.1m,
corresponding to advance from customers related to on-going and
future projects.
The current syndicated loan agreement was initially signed in
March 2016, prior to the Company re-registering from a private to a
public limited company in June 2017. Management has, therefore,
also initiated discussions regarding a refinancing process to adapt
the current financial structure to a listed Group. At 31 December
2017, the Group achieved the financial covenants required by the
syndicated loan. For the year ended 31 December 2018, and
considering the underperformance in FY18, a waiver was signed with
the financial institutions for the leverage covenant and the debt
service coverage ratio for December 2018 and the leverage covenant
for June 2019.
Further, the Directors have reviewed the Group's cash flow and
income forecasts, including a sensitivity analysis and undertaken a
review of forecast compliance with loan covenants. The Directors
will continue to update their forecasts and take appropriate steps
to manage covenant compliance going forward. The Directors are
satisfied that these terms will be met for a period of no less than
12 months from the approval date of these financial statements.
In assessing the Group's ability to continue as a going concern,
the Board has also considered the impact of all potential risks,
including the analysis of the Brexit and, accordingly they have
adopted the going concern basis in preparing these financial
statements.
3. Business segments
The Groups reportable segments are determined by the internal
reporting regularly provided to the Group's Chief Operating
Decision Maker. The Chief Operating Decision Maker, who is
responsible for allocating resources and assessing performance of
the operating segments, has been identified as the Board of
Directors.
The Board of Directors has determined that, based on the Group's
management and internal reporting structure, the Group has two
reportable segments, Coatings - the provision of painting and other
finishing services to yachts and superyachts and Supply - the
distribution of yachting supplies to trade and other customers.
3.1. Segment revenues and results
Segment information about the above businesses is presented
below for the period ended 31 December 2018 and 31 December
2017:
Year ended 31 December 2018
Total reportable
Coating Supply segments
-------- ------- -----------------
EUR000 EUR000 EUR000
Revenue 35,458 9,506 44,964
======== ======= =================
Gross profit 5,990 2,050 8,040
======== ======= =================
Adjusted EBITDA (1,460) 545 (915)
Depreciation and amortisation (1,886)
Impairment (480)
Performance share plan (108)
Exceptional ítems (880)
Operating Loss (4,269)
Gain on financial instruments 417
Finance costs (737)
Loss before tax (4,589)
=================
Year ended 31 December 2017
Total reportable
Coating Supply segments
-------- ------- -----------------
EUR000 EUR000 EUR000
Revenue 53,713 8,925 62,638
======== ======= =================
Gross profit 15,022 1,970 16,992
======== ======= =================
Adjusted EBITDA 6,219 972 7,191
Depreciation and amortisation (1,822)
Performance share plan (67)
Exceptional items (3,899)
Operating Profit 1,403
Finance costs (879)
Profit before tax 524
=================
Segment results include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis.
Revenues from external customers attributed to the Group's
country of domicile and attributed to foreign countries from which
the Group derives revenue is presented below.
Year ended Year ended
31 December 31 December
2018 2017
------------- -------------
EUR000 EUR000
------------- -------------
Spain 27,187 34,025
United Kingdom 1,422 350
Rest of Europe 8,225 21,376
Rest of the World 8,130 6,887
44,964 62,638
============= =============
At 31 December 2018 the Group has non-current assets allocated
to Europe and "Rest of the World" for an amount of EUR28,647
thousand and EUR2,043 thousand, respectively (EUR30,609 thousand
and EUR1,977 thousand, respectively, at 31 December 2017).
4. Exceptional Items
The following table provides a breakdown of exceptional
items:
Year ended Year ended
31 December 31 December
2018 2017
------------- -------------
EUR000 EUR000
------------- -------------
Transaction fees (127) (3,899)
Restructuring costs (753) -
(880) (3,899)
============= =============
Restructuring costs for the year ended 31 December 2018 were
part of a group-wide cost saving plan which includes redundancies
and other costs associated for reorganisation and restructuring of
some departments.
Transaction fees for the year ended 31 December 2018 are mainly
related to professional fees and for the year ended 31 December
2017 were in connection with the IPO and acquisition of ACA, SAS
(note 11).
The tax effect of the above exceptional costs amounts to EUR183k
for the year ended 31 December 2018 (EUR202k for the year ended 31
December 2017).
5. Tax recognised in profit or loss
Year ended Year ended
31 December 31 December
2018 2017
------------- -------------
EUR000 EUR000
------------- -------------
Corporation Tax
Current year (74) (1,120)
Prior years 75 (31)
------------- -------------
1 (1,151)
------------- -------------
Deferred tax
Timing differences 428 265
Tax losses 963 (22)
------------- -------------
1,391 243
------------- -------------
1,392 (908)
============= =============
Spanish Corporation tax is calculated at 25% of the estimated
taxable profit for the year.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
The income tax expense for the year can be reconciled to the
accounting (loss)/ profit as follows :
Year ended Year ended
31 December 31 December
2018 2017
------------- -------------
EUR000 EUR000
------------- -------------
(Loss)/profit before
tax from continuing
operations (4,590) 524
------------- -------------
Tax at the Spanish corporation
tax rate (25%) 1,147 (131)
Overseas tax differences 52 12
Tax effect of incomes
/ (expenses) that are
not considered in determining
tax profit 39 (693)
Other differences 122 (118)
Utilisation of previously
unrec
ognised losses 32 22
1,392 (908)
------------- -------------
6. Earnings/(loss) per share - basic and diluted
From continuing operations
Basic losses per share are calculated by dividing net loss for
the year attributable to the Group (i.e. after tax and
non-controlling interests) by the weighted average number of shares
outstanding during that year.
Diluted losses per share have been calculated on a similar basis
taking into account dilutive potential shares under the agreements
disclosed in note 24 of the consolidated financial statements.
Adjusted basic earnings per share are presented to eliminate the
effect of the exceptional items, amortisation and impairment of
intangible assets, gains on financial instruments and performance
share plan costs (considering the tax effect of these
adjustments).
Year ended Year ended
31 December 31 December
2018 2017
-------------- --------------
Losses for the period
attributable to shareholders
(EUR000) (3,016) (349)
Weighted average number
of shares 46,640,000 30,091,248
Basic losses per share
(EUR) (0.06) (0.01)
============== ==============
Adjusted basic losses
/ earnings per share
(EUR) (0.03) 0.14
============== ==============
Dilutive weighted average
number of shares 47,364,350 30,460,009
-------------- --------------
Diluted losses per share
(EUR) (0.06) (0.01)
============== ==============
Adjusted diluted (losses)/earnings
per share (EUR) (0.03) 0.13
============== ==============
7. Goodwill
Goodwill
---------
EUR000
---------
Cost
At 1 January 2017 8,704
Acquired on business
combination (note 11) 710
Exchange differences (122)
---------
At 31 December 2017 9,292
Exchange differences 41
---------
At 31 December 2018 9,333
=========
Carrying amount
At 31 December 2018 9,333
=========
At 31 December 2017 9,292
=========
At 1 January 2017 8,704
=========
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units (CGUs) or group of units
that are expected to benefit from that business combination. The
carrying amount of goodwill has been allocated as follows:
31 December 31 December
2018 2017
------------ ------------
EUR000 EUR000
------------ ------------
Coating 8,485 8,444
Supply 848 848
9,333 9,292
============ ============
The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be
impaired. Determining the recoverable amount of goodwill requires
the use of estimates by management.
The recoverable amount is the higher of the fair value minus the
costs of selling and its value in use. The Group uses cash-flow
discounting methods to determine such amounts.
The discounted cash-flows are calculated based on 3-year
projections of the budgets approved by the management. These
cash-flows consider past experience and represent the best estimate
of management on future market developments and Group
performance.
The key assumptions for determining the value in use include the
weighted average cost of capital (pre-tax), which has been
estimated at 16.25% for the goodwill registered for each of the
Coating and Supply segments (and at 17,25% for ACA Marine, SAS) and
a long-term growth rate of 3.0% per cent. These estimates,
including the methodology used, may have a significant impact on
the registered values and impairment losses. Management has
concluded that the estimated growth rate used does not exceed the
average long-term growth rate for the relevant markets where the
group operates (Europe and USA).
The Group has conducted an analysis of the sensitivity of the
impairment test to changes in the key assumptions used to determine
the recoverable amount for each of the group of CGUs to which
goodwill is allocated.
The Directors believe that any reasonably possible change in the
key assumptions would not cause the aggregate carrying amount to
exceed the aggregate recoverable amount of the related CGUs.
However, if there were zero revenue growth from the year ended 31
December 2018 over the forecasting period, then there would be no
headroom over the carrying amount of those CGUs. The Directors' do
not believe that this is a reasonably possible outcome based on the
size of the order book.
According to the impairment test carried out at year-end, there
are no impairment losses on the registered goodwill.
8. Borrowings
31 December 31 December
2018 2017
------------ ------------
EUR000 EUR000
------------ ------------
Syndicated loan 8,626 10,478
Capitalised costs -
net (571) (697)
Revolving credit facility 1,027 500
Finance lease liabilities 1,955 2,635
Other financial liabilities 591 -
Total borrowings 11,628 12,916
============ ============
Amount due for settlement
within 12 months 4,001 3,278
============ ============
Amount due for settlement
after 12 months 7,627 9,638
============ ============
8.1 Summary of the borrowing arrangements
Syndicated loan -
On 3 March 2016, the Group subsidiary, Hemisphere Coating
Services, S.L., signed a syndicated loan agreement with three
financial institutions, expiring in March 2021.
This syndicated loan is guaranteed by certain of the Group
subsidiaries and consists of two different facilities:
-- Facility A: loan for a total amount of EUR9,180 thousand with
biannual maturities of EUR918 thousand until expiration in March
2021 since the beginning of the contract.
-- Facility B: loan for a total amount of EUR4,000 thousand
maturing at the end of the contract on March 2021.
Both facilities bear interest at EURIBOR +2.5%.
The loan requires compliance with certain financial covenants.
At 31 December 2017 the Group achieved the financial covenants
required by the syndicated loan. For the year ended at 31 December
2018 and considering the underperformance a waiver was signed with
the financial institutions.
Additional permitted bank facilities have been signed in June
2018 to reinforce the working capital of the Group, the main
increased facilities being:
-- Increase of revolving credit facilities from EUR500 thousand to EUR2,000 thousand.
-- Increase of factoring and discounting facilities from
EUR1,000 thousand to EUR3,000 thousand.
Additionally, the Group also has at its disposal:
-- Factoring facilities with non-recourse up to EUR5.9 million.
-- Bank guarantees up to EUR9 million, of which EUR2.3 million
were drawn as of 31 December, 2018.
As a result of the above agreements, at year end the Group has
bank facilities totalling EUR15.3 million of which EUR5.7 were
drawn and EUR9.6m were undrawn.
8.2. Obligations under finance leases
As of 31 December 2018, the Group has the following minimum
lease payments due to lessors (including, where applicable, the
purchase options) in accordance with current contracts in place,
without taking into account the impact of common expenses, future
CPI increases, nor future contractual rents updates:
Present value of minimum lease Present value of minimum lease
payments payments
------------------------------------- -------------------------------------
As at As at
31 December 2018 31 December 2017
------------------------------------- -------------------------------------
EUR000 EUR000
Amounts payable under
finance leases:
Within one year 816 890
In the second to fifth
years inclusive 1,139 1,745
1,955 2,635
===================================== =====================================
The financial lease contracts are formalised in euros and have
fixed interest rates in accordance with the financial market.
9. Equity
At 1 January 2017 the Company's share capital amounted to EUR122
thousand, represented by 12,167,499 shares with a par value of one
cent of euro each all issued and fully paid. At 1 January 2017,
1,000 shares were not allotted.
On 12 May 2017 the Shareholders approved a special resolution to
cancel the share premium account which was subsequently confirmed
by the High Court of Justice on 15 May 2017. As a result, EUR12,070
thousand was transferred from the share premium account to retained
earnings.
On 21 June 2017 in order to list the Company's share capital on
AIM the Shareholders approved the following resolutions:
- The permission to the capitalisation of reserves and the
allotment of bonus shares amounted to EUR20 thousand. The bonus
issue was funded by using distributable reserves.
- The issue of 2,231 bonus shares for each ordinary share in
proportion to their existing ownership using distributable reserves
amounted to EUR62 thousand.
- The conversion of the 5 different classes of shares to a
combination of ordinary shares and deferred shares, as part of this
conversion no consideration was paid.
- The buy-back of deferred shares using capital contribution reserves amounted to
EUR114 thousand.
On 5 July 2017 the Company's share capital was admitted to
trading on the AIM Market of London Stock Exchange plc. The Company
received EUR7,891,695 from the primary offering shares and
6,944,692 ordinary shares (with a par value GBP0.002) and a share
premium GBP6,944,692 (equivalent euro value of EUR7,901 thousand)
were created in GYG plc.
At 31 December 2017 and 2018 the Company's share capital
amounted to EUR106 thousand represented by 46,640,000 ordinary
shares with a par value of GBP0.002, issued and fully paid up.
A dividend of GBP1,492,480 (equivalent euro value of EUR1,708
thousand), corresponding to 3.2 pence per ordinary share, was paid
on June 2018. This dividend was based on an annualised dividend
yield of 6.4 per cent (calculated on the placing price at the time
of the admnission of the Company's share capital to trading on AIM)
pro rated for the period for which the Company's share capital had
been admitted to trading on AIM for the year ending 31 December
2017 (approximately 6 months).
At 31 December 2018 the Group registered a share based payment
reserve amounting to EUR267 thousand based on the agreements
disclosed in note 24 of the consolidated financial statements.
10. Notes to the cash flow statement
Year ended Year ended
31 December 2018 31 December 2017
EUR 000 EUR 000
=================== ===================
(Loss)/profit for the period before tax (4,589) 524
------------------- -------------------
- Depreciation and amortisation 1,886 1,822
- Impairment 480 -
- Performance share plan 108 67
- Gain on financial instruments (417) -
- Warrant - 92
- Finance income (42) (39)
- Finance costs 786 906
- Exchange differences 11 5
Adjustments to (loss)/profit 2,812 2,853
------------------- -------------------
- Decrease/(increase) in inventories 521 (989)
- Decrease)/(increase) in trade and other receivables 4,614 (3,585)
- Increase in trade and other payables 324 3,818
- (Increase) in other assets and liabilities - (792)
Changes in working capital 5,459 (1,548)
------------------- -------------------
- Interest paid (616) (1,073)
- Income tax paid (268) (328)
Other cash flows used in operating activities (884) (1,401)
------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES 2,798 428
=================== ===================
11. Acquisition of subsidiary/Business combination
31 December 2017
On 11 March 2017, the Group obtained control of ACA, SAS, GYG's
main competitor in France, by acquiring 70 per cent of its issued
share capital. ACA, SAS is a superyacht painting and finishing
company operating out of the South of France and was acquired with
the objective driving growth in this region.
On the purchase date the parties also signed a Put and Call
Option Agreement in which the Group granted to Atko, SARL the right
to require the Group to acquire and receive the amount of shares
that Atko, SARL holds in ACA, SAS. This option is exercisable
during a period of one month commencing on the third anniversary of
the date of the put and call option agreement (being 11 March
2020). As at 31 December 2018, this option was deemed to have a
negligible fair value, however a financial liability of EUR546
thousand (EUR963 thousand at 31 December, 2017) has been recognised
based on the expected purchase price for the equity if the seller
exercises their option.
12. Post Balance sheets events
No events have occurred after 31 December 2018 that might
significantly influence the information reflected in these
financial statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR IJMBTMBMMTRL
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