TIDMGYG
RNS Number : 7083N
GYG PLC
26 September 2019
26 September 2019
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
GYG plc
("GYG", the "Company" and together with its subsidiaries, the
"Group")
2019 Interim Results
A strong first half driven by project win momentum
GYG (AIM: GYG), the market leading superyacht painting,
maintenance and supply company, today announces its unaudited
interim results for the six months ended 30 June 2019.
Financial Highlights
-- Group revenue increased 31.2% to EUR33.1m (HY18:
EUR25.2m)
o Coatings (Refit and New Build) revenue increased 37.1% to
EUR27.3m (HY18: EUR19.9m)
o Supply revenue increased 8.8% to EUR5.7m (HY18: EUR5.3m)
-- Adjusted EBITDA(1) increased to EUR1.5m (HY18: loss of
EUR0.1m)
-- Operating profit increased to EUR0.1m (HY18: loss of
EUR1.4m)
-- Profit before tax increased to EUR0.1m (HY18: loss of
EUR1.7m)
-- Net debt (2) of EUR5.9m as at 30 June 2019 (HY18: EUR10.5m;
FY18: EUR6.6m)
-- Cash of EUR5.8m as at 30 June 2019 (HY18: EUR2.3m; FY18:
EUR5.1m)
(1) Adjusted EBITDA is defined as operating profit before
depreciation, amortisation, impairment, performance
(2) share plan costs and exceptional items. This is an
alternative performance measure used by Directors to
assess the operating performance of the Group.
Net debt position is defined as the net cash and cash
equivalent balances, less short and long-term borrowings
and obligations under 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 unrecognised
revenue from New Build and Refit projects. It does
not include revenue already recognised during the year
and it does not include any future value for revenue
in the Supply division.
Operational Highlights
-- Strong first half driven by positive momentum in both New
Build and Refit
-- Six New Build contract wins significantly improved Group's
Total Order Book(3) to EUR38.6m whilst mitigating the impact of
seasonality in Refit sector
-- Normalisation of Refit market and Group's disciplined focus
on pipeline management had positive impact on Group's contract win
rate
-- Steady growth continued in Supply division with an increased
sales focus on securing new yacht and trade accounts
-- Continued innovation and investment in new application
technology, leveraging a strong relationship with all the main
superyacht paint manufacturers
Order Book and Pipeline
The Order Book at 30 June 2019 was in its strongest ever
position and provides more forward visibility than ever before:
Order Book Total Order Current Current Year Current Year
at: Book Year +1 +2
30 June 2019 EUR38.6m EUR15.3m EUR18.2m EUR5.1m
------------ --------- ------------- -------------
30 June 2018 EUR29.9m EUR11.2m EUR13.1m EUR5.6m
------------ --------- ------------- -------------
30 June 2017 EUR15.2m EUR12.7m EUR2.5m EUR0.0m
------------ --------- ------------- -------------
Post period end
-- Signed contracts for two New Build projects with an existing
shipyard partner in Northern Europe (60+m and 70+m vessels) with
work due to commence in H1 2020
Outlook
-- The Group has made significant progress in developing new
relationships with shipyards and establishing GYG as an alternative
preferred supplier in the New Build sector
-- The team is encouraged by the increasing number of enquiries for 2019-20
-- While recognising the return to profitability during H1, the
Board believes that operating margins can be further improved going
forward
-- The Board also believes that GYG is well positioned to
benefit from the growth opportunities in New Build and greater
shipyard capacity in Refit. It maintains a positive outlook for the
future
Remy Millott, Chief Executive of GYG plc, commented:
"GYG has had a strong first half of 2019 and I am pleased that
this momentum has continued into H2. Our focus on gaining market
share in the New Build sector is delivering solid results as
evidenced by our New Build contract wins and the significant
increase in the average value of contracts we are tendering for.
This, and the normalisation of conditions in the Refit market, has
resulted in the Group's strongest ever forward Order Book at the
half year and we look forward to the second half with
confidence".
For further information, please contact:
GYG plc via FTI Consulting
Remy Millott, Chief Executive Officer Tel: +44 (0) 20
Kevin McNair, Chief Financial Officer 3727 1000
Zeus Capital Limited (NOMAD & Broker) Tel: +44 (0) 20
Dan Bate, Jordan Warburton, Ben Burnett 3829 5000
(Corporate Finance)
John Goold, Mike Seabrook (Corporate
Broking & Sales)
FTI Consulting (Financial PR)
Alex Beagley
Fiona Walker Tel: +44 (0) 20
Sam Macpherson 3727 1000
Forward looking statements
All statements other than statements of historical fact included
in this announcement, including, without limitation, those
regarding the Group's financial position, business strategy, plans
and objectives of management for future operations or statements
relating to expectations in relation to shareholder returns,
dividends or any statements preceded by, followed by or that
include the words "targets", "estimates", "envisages", "believes",
"expects", "aims", "intends", "plans", "will", "may",
"anticipates", "would", "could" or similar expressions or the
negative thereof, are forward looking statements.
Such forward looking statements involve known and unknown risks,
uncertainties and other important factors beyond the Group's
control that could cause the actual results and performance to be
materially different from future results and performance expressed
or implied by such forward looking statements. Such forward looking
statements are based on numerous assumptions regarding the Group's
present and future business strategies and the environment in which
the Group will operate in the future.
These forward-looking statements speak only as of the date of
this announcement. The Company expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change
in the Company's expectations with regard thereto, any new
information or any change in events, conditions or circumstances on
which any such statements are based, unless required to do so by
law or any appropriate regulatory authority.
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, ACA Marine and Techno Craft.
GYG's operations can be divided into two segments:
-- Coating:
- Refit: repainting and finishing of superyachts, normally as
part of a refit programme. Revenues also include scaffolding,
containment work and the removal, repair and reinstallation of the
yachts' hardware and fittings during a paint refit;
- New Build: fairing and painting of new vessels as part of the build process
-- Supply: selling and delivery of maintenance materials,
consumables, spare parts and equipment primarily to trade
customers.
Superyachts require a major survey service every five years to
comply with certain class, maritime laws and insurance
requirements. Owners typically undertake an annual haul out and
general maintenance to remain ahead of the service intervals and to
keep the vessels in optimum condition. Owners often use the major
servicing period as an opportunity for repainting the vessel,
providing GYG with a source of repeat business.
Chief Executive's Statement
Overview
As announced on 31 July 2019, trading in the first half of 2019
was stronger than originally anticipated due to continued
improvements and a disciplined focus across the Group. This,
alongside a solid recovery in the Refit market, where GYG has a
strong market position, and the significant contract wins in the
New Build market, has contributed to a strong trading performance
in H1. Trading in the Supply division has continued to deliver
steady growth in line with expectations.
The Group continues its operational focus to deliver improved
gross margins, a reduction in fixed costs and business process
improvements.
Coating Division
New Build
Over the past 12 months, the Group has won a number of
significant New Build projects resulting in a record FY19-21 Order
Book. These contract wins further highlight the Group's progress
against its stated strategy of expanding its market share in the
New Build sector.
The six confirmed New Build contract wins signed in the period
were:
-- a 94 metre superyacht that started construction in Q4 2018;
-- a 140 metre superyacht started in Q2 2019. There are only 11
superyachts in the world which are of this size or larger;
-- a 70 metre superyacht due to start in Q4 2019;
-- a 110 metre superyacht due to start in Q1 2020;
-- the previously announced Letter of Intent with the owner of
'REV 182', the world's largest research and expedition vessel
currently under construction is scheduled to start fairing and
painting in Q2 2020; and
-- a 100 metre superyacht due to start in Q3 2020.
(Yacht lengths are approximate)
Post period end, as announced on 26 September 2019, the Group
signed contracts for two New Build projects in Northern Europe.
These new orders come from an existing shipyard partner. The two
yachts, of 60+m and 70+m respectively, are under construction and
the Group is due to start work on both in H1 2020.
Previously, the Group has relied primarily on its relationships
with existing owners commissioning new yachts to win contracts in
the New Build sector, however over the past year management has
invested significant time developing relationships directly with
the leading New Build shipyards to secure a continuity of work as
an alternative preferred sub-contracted paint partner. This has
resulted in the Group being asked to tender for an increased number
of contracts over the 12 months ended 30 June 2019 with a
significant uplift in the win rate and negotiations on further New
Build projects.
Refit
The Refit market has seen a marked recovery and return to
normalised trading patterns during H1, having been the division
most heavily impacted by the disruptions in late 2017 and into
2018. Management believe this positive momentum will continue
through the second half of 2019 and beyond.
The strong recovery in the Refit sector is evidenced by the
number of contracts signed earlier in the year than previously
experienced. The Group is well placed to continue to grow market
share and take advantage of the many opportunities including the
increased capacity that has come online with the successful
commissioning of the new ship-lifts in MB92 Barcelona, further
expansion in Rybovich, West Palm Beach and the new facility in
Savannah Yacht Center, Georgia, USA.
Supply Division
H1 has been encouraging for the Supply division as the Group
increased its list of yacht clients as well as trade clients.
The Supply division's turnover increased 8.8% to EUR5.7m. This
performance is encouraging and demonstrates the continued progress
within this side of the business. The key improvements and
developments during H1 and for the remainder of the year
include:
-- The focus on providing services to yachts outside the retail
environment. This activity yields higher margins than trade sales
and presents further opportunities to the Group
-- To drive growth in the yacht supply business, we have
expanded our services to our yacht clients outside of Spain. This
activity keeps us in contact with the yachts while they are
cruising
-- Our retail partner programme is expanding into La Ciotat, France
-- Increased growth and sales focus on new retain partnerships in Spain and trade business; and
-- Consolidated warehousing capacity to improve efficiency,
reduce costs and provide better service when shipping goods.
Brand recognition across the market is growing and will be
further enhanced when the Group refreshes the Pinmar Supply brand
in H1 2020 and launches a new channel-specific marketing
campaign.
Operational Review
During H1 2019, the Group has implemented a number of efficiency
and productivity initiatives aimed at improving gross margins and
reducing fixed costs. The production management team are
continuously monitoring utilisation rates to improve performance
with further developments to be delivered in H2 2019. The Board
expects to see the benefits of these programmes over the remainder
of 2019 and into 2020.
The Group continues to innovate and invest in new application
technology, leveraging its strong relationship with all the main
superyacht paint manufacturers. Its complete adoption of
electrostatic top-coat application which is unique in the industry
is delivering significant time, quality and environmental benefits.
The Group is at the forefront of testing new topcoat technology and
enhanced filler application methods, further asserting the Group's
position in leading the industry.
GYG continues to develop its Human Resources function with a
structured in-house programme of skills development aimed at
expanding the Coating division's production capacity. We have
strengthened our management team through strategic recruitment,
bringing a mix of industry experience and related business
expertise.
We have an ongoing programme to improve our business processes,
systems and infrastructure to support growth and increase the
efficiency of the Group. In 2018, we implemented a new CRM system
which provides data on the worldwide fleet of 5,700 superyachts and
facilitates the management of the marketing and sales process. This
is further enhancing our ability to forecast upcoming yacht refits
and will provide our team with a more efficient approach to
marketing at the appropriate time before a refit. The solid
increase in our conversion rate is evidence that this is producing
positive results for the Group. The CRM system is now being
deployed in the Supply Division, encouraging synergies across the
yacht sales channels.
Market Developments
The global superyacht fleet continues to grow with 153* new
deliveries in 2018, adding 2.9% to the operational fleet and a
further 472 superyachts currently either under construction or on
order for delivery between 2019 and 2023. The fastest growing
segment is the 70+ metre range reflecting the trend for larger
superyachts with European yards continuing to dominate production
capacity. GYG is gaining market share in this segment through its
strengthening relationship with the Dutch and German shipyards.
*Source: Superyacht Intelligence September 2019
People
On 31 July, the Group announced that Gloria Fernandez had
decided not to return after her maternity leave. The Group's
Interim CFO, Kevin McNair, who had been in place since March 2019,
has since been appointed as permanent CFO. Kevin has already
developed a very strong and deep understanding of GYG and has been
an integral part of the team over the past six months. 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.
In June 2019, Derik Wagner joined the Group as an Executive
Director in the USA operation. Derik has been involved in the
superyacht industry for more than 15 years, most recently as
Managing Director of MTN's Yacht Service business. He brings with
him a comprehensive understanding of the industry as well as a wide
network of contacts at all levels. The intention is that the
current USA Managing Director, Peter Brown, will hand over his
responsibilities and role to Derik in H2 2019. We expect Derik to
play a key role in driving this part of the Group forward in the
coming years and maximising the many opportunities we see in the
USA.
As a result of this change, Peter, who has spent most of his
Group career as a senior Director in Europe, can offer additional
support to the COO and the growing European business.
As the Group plans for further growth, the Board is continuing
to review and strengthen the management structure where
required.
Dividend Policy
The Board is encouraged by the positive momentum this year and
has a firm intention to reinstate the progressive dividend policy
at the earliest appropriate opportunity.
Outlook
GYG has had a strong H1 2019 and this momentum has continued
into H2. The Group has made significant progress in building new
relationships with shipyards and establishing GYG as an alternative
preferred supplier. This has resulted in the Group winning
contracts in the New Build sector coupled with large Refit
contracts in the pipeline. The team is encouraged by the increasing
number of enquiries for 2019-20 and beyond.
While recognising the return to profitability during H1, the
Board believes that operating margins can be further improved going
forward. The Board also believes that GYG is well positioned to
benefit from the growth opportunities in New Build and greater
shipyard capacity in Refit. It maintains a positive outlook for the
future.
Financial performance
As a result of the improved performance across the Group,
revenue for the six-month period to 30 June 2019 increased 31.2% to
EUR33.1m (HY18: EUR25.2m) with an adjusted EBITDA of EUR1.5m in the
period (HY18: loss of EUR0.1m).
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
cruising months. This has historically introduced a level of
seasonality to the Company's revenue with an H2 weighting to the
key Refit revenues. Whilst the signing of New Build contracts will
help to mitigate the historical seasonality of Refit, management
expect the usual H2 weighting of the Refit sector to continue to
benefit the Group in the second half.
The EUR6.4m increase in operating costs (not including
exceptional items, performance share plan costs, depreciation and
amortisation) represents an increase of 24% on H1 2018. The
relatively lower increase in operating costs when compared to the
growth in revenue demonstrates the improved operating efficiency of
the Group and enhanced forward visibility. The increased revenues
during the period, combined with the relatively lower operating
costs, have generated an "Adjusted EBITDA" that was EUR1.6m higher
than H1 2018.
The operating profit for H1 of EUR0.1m was as a consequence of
the higher income level during the period (HY18 loss of
EUR1.4m).
Financial expenses, mainly interest and foreign exchange costs,
remained constant at EUR0.4m during the period (HY18: EUR0.4m). The
Group did recognise a gain on financial instruments of EUR0.4m in
H1 2019 in relation to the acquisition of outstanding shares in ACA
Marine s.a.r.l.
The profit before tax of EUR0.1m (HY18: loss of EUR1.7m) has
also increased as a result of the factors set out above.
Net profit, excluding exceptional items and performance share
plan costs, was EUR0.3m (HY18: net loss EUR0.8m).
IFRS 16
We have applied the new IFRS 16 Leases accounting standard for
the first time in 2019. This standard has a material impact on the
financial statements as it leads to most leases being recognised on
the Statement of Financial Position as a right-of-use asset and a
lease liability. The impact of reporting under IFRS 16 is set out
in note 2 to the Interim Consolidated Financial Statements.
The impact of IFRS 16 in H1 2019 is to increase depreciation by
EUR0.3m and interest expense by EUR0.02m while reducing other
administrative expenses by EUR0.3m.
In relation to net debt, IFRS 16 increases new lease liabilities
by EUR1.8m as at 30 June 2019.
Auditors
In July 2019, the Group appointed PWC LLP as auditors.
Independent review report to GYG plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed GYG plc's condensed consolidated interim
financial statements (the "interim financial statements") in the
half-yearly report of GYG plc for the 6 month period ended 30 June
2019. Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the AIM Rules for
Companies.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated balance sheet as at 30 June 2019;
-- the condensed consolidated statement of comprehensive income for the period then ended;
-- the condensed consolidated cash flow statement for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half-yearly
report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the AIM Rules for Companies.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half-yearly report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the
half-yearly report in accordance with the AIM Rules for Companies
which require that the financial information must be presented and
prepared in a form consistent with that which will be adopted in
the company's annual financial statements.
Our responsibility is to express a conclusion on the interim
financial statements in the half-yearly report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the AIM
Rules for Companies and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-yearly
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Milton Keynes
26 September 2019
Condensed consolidated statement of comprehensive income
Six months to 30 June 2019
Six months to 30 June Six months to 30 June
2019 2018
EUR 000 EUR 000
Note (unaudited) (unaudited)
------ ---------------------- --------------------------
Continuing operations
Revenue 3 33,078 25,217
Operating costs (32,993) (26,586)
Adjusted EBITDA 1,494 (84)
Depreciation and
amortisation (1,230) (946)
Performance share plan (83) (158)
Exceptional items 4 (96) (181)
---------------------------- ------ ---------------------- --------------------------
Operating profit / (loss) 85 (1,369)
Gain on financial
instruments 9 379 -
Finance costs - net (402) (369)
Profit / (loss) before
tax 62 (1,738)
------ ---------------------- --------------------------
Tax 5 22 563
Profit / (loss) for the
period 84 (1,175)
------ ---------------------- --------------------------
Items that may be
reclassified
subsequently
to profit or loss:
Exchange differences
on translation of
foreign operations (8) 35
Total comprehensive
profit / (loss) for the
period 76 (1,140)
============================ ====== ====================== ==========================
Profit / (loss) for the
period attributable to:
Owners of the company 154 (1,124)
Non-controlling interest (70) (51)
Total comprehensive profit / (loss)
for the period attributable to:
Owners of the company 146 (1,089)
Non-controlling interest (70) (51)
Profit / (loss) per share 6
Basic 0.003 (0.024)
Diluted 0.003 -
---------------------- --------------------------
Condensed consolidated balance sheet
30 June 2019
As at 30 As at 31
June 2019 December
EUR 000 2018
EUR 000
ASSETS (unaudited) (audited)
--------------------------------- ------------ ----------
Non-current assets
Goodwill 9,339 9,333
Other intangible assets 10,858 11,313
Property, plant and equipment 9,652 8,178
Other financial assets 1,606 1,605
Deferred tax assets 541 261
Total non-current assets 31,996 30,690
----------------------------------- ------------ ----------
Current assets
Inventories 2,675 2,546
Trade and other receivables 6,049 6,908
Cash and cash equivalents 5,845 5,069
Total current assets 14,569 14,523
----------------------------------- ------------ ----------
TOTAL ASSETS 46,565 45,213
=================================== ============ ==========
Condensed consolidated balance sheet (continued)
As at 30 As at 31 December
2018
June 2019 EUR 000
EUR 000 (audited)
LIABILITIES Note (unaudited)
--------------------------------------------- ------- ------------- ------------------
Current liabilities
Trade, deferred income and other payables (18,349) (16,763)
Obligations under leases 8 (1,296) (816)
Borrowings 8 (2,883) (3,185)
Provisions (383) (349)
Derivative financial instruments (29) (37)
Total current liabilities (22,940) (21,150)
--------------------------------------------------- ------- ------------- ------------------
Net current assets (8,371) (6,627)
--------------------------------------------------- ------- ------------- ------------------
Non-current liabilities
Obligations under leases 8 (2,078) (1,139)
Borrowings 8 (5,523) (6,488)
Deferred tax liabilities (2,449) (2,218)
Long-term provisions (819) (819)
Other financial liabilities 9 (2) (547)
Other liabilities (86) (343)
Total non-current liabilities (10,957) (11,554)
--------------------------------------------------- ------- ------------- ------------------
Total liabilities (33,897) (32,704)
=================================================== ======= ============= ==================
Net assets 12,668 12,509
=================================================== ======= ============= ==================
EQUITY
--------------------------------------------- ------- ------------- ------------------
Share capital 106 106
Share premium 7,035 7,035
Retained earnings 5,108 5,894
Translation reserve (45) (37)
Capital redemption reserve 114 114
Share based payment reserve 350 267
--------------------------------------------------- ------- ------------- ------------------
Equity attributable to owners of the
Company 12,668 13,379
--------------------------------------------------- ------- ------------- ------------------
Non-controlling interest - 93
Put option reserve 9 - (963)
Total equity 10 12,668 12,509
=================================================== ======= ============= ==================
Condensed consolidated statement of changes in equity
Six months ended 30 June 2019
Share Capital Share Total Non-controlling Put
capital Share Retained Translation redemption based EUR interests EUR option TOTAL
EUR 000 premium earnings reserves reserve payment 000 000 reserve EQUITY
EUR 000 EUR 000 EUR 000 EUR 000 reserve EUR 000 EUR
EUR 000 000
Balance at 1
January 2019 106 7,035 5,894 (37) 114 267 13,379 93 (963) 12,509
========= ========= ========== ============= =========== ======== ======= ================ ======== ========
Acquisition of
non-controlling
interest (note
9) - - (940) - - - (940) (23) 963 -
Credit to equity
for share based
payments - - - - - 83 83 - - 83
Total
comprehensive
profit for the
period - - 154 (8) - - 146 (70) - 76
--------- --------- ---------- ------------- ----------- -------- ------- ---------------- -------- --------
Balance at 30
June 2019
(Unaudited) 106 7,035 5,108 (45) 114 350 12,668 - - 12,668
========= ========= ========== ============= =========== ======== ======= ================ ======== ========
Share Capital Share Total Non-controlling Put
capital Share Retained Translation redemption based EUR interests EUR option TOTAL
EUR 000 premium earnings reserves reserve payment 000 000 reserve EQUITY
EUR 000 EUR 000 EUR 000 EUR 000 reserve EUR 000 EUR
EUR 000 000
Balance at 1
January 2018 106 7,035 10,716 (68) 114 159 18,062 274 (963) 17,373
========= ========= ========== ============= =========== ======== ======== ================ ======== ========
Effect of
change in
accounting
policy (note
2.1) - - (98) - - - (98) - - (98)
Adjusted
opening
balance 106 7,035 10,618 (68) 114 159 17,964 274 (963) 17,275
--------- --------- ---------- ------------- ----------- -------- -------- ---------------- -------- --------
Dividend
distribution
(note 10) - - (1,708) - - - (1,708) - - (1,708)
Credit to
equity for
share based
payments - - - - - 158 158 - - 158
Total
comprehensive
(loss) for the
period - - (1,124) 35 - - (1,089) (51) - (1,140)
--------- --------- ---------- ------------- ----------- -------- -------- ---------------- -------- --------
Balance at 30
June 2018
(Unaudited) 106 7,035 7,786 (33) 114 317 15,325 223 (963) 14,585
========= ========= ========== ============= =========== ======== ======== ================ ======== ========
Condensed consolidated cash flow statement
Six months to 30 June 2019
Six months to 30 June 2019 Six months to
EUR 000 30 June 2018
EUR 000
Note (unaudited) (unaudited)
----- --------------------------- --------------
CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES
(I) 7 2,987 (1,491)
================================================== =========================== ==============
- Purchase of intangible assets (18) (24)
- Purchase of property, plant and equipment (193) (436)
- Proceeds from disposal of property, plant and
equipment 91 2
CASH FLOWS USED IN INVESTING ACTIVITIES (II) (120) (458)
================================================== =========================== ==============
- Proceeds from leases - 137
- Proceeds from bank borrowings 250 1,032
- Repayments of obligations under leases (730) (452)
- Repayments of borrowings (1,620) (918)
- Dividends paid to shareholders - (1,708)
CASH FLOWS USED IN FINANCING ACTIVITIES (III) (2,100) (1,909)
================================================== =========================== ==============
Effect of foreign exchange rate changes (IV) 9 (39)
NET INCREASE / (DECREASE) IN CASH AND CASH
EQUIVALENTS (I+II+III+IV) 776 (3,897)
================================================== =========================== ==============
Cash and cash equivalents at the beginning of the
period 5,069 6,236
Cash and cash equivalents at the end of the
period 5,845 2,339
Notes to the condensed set of financial statements
Six months ended 30 June 2019
1. General information
GYG plc (hereinafter the "Company") 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, on 25 May 2017 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 was admitted to the AIM Market of the
London Stock Exchange. 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.
The condensed consolidated interim financial statements
("interim financial statements") for the six months ended 30 June
2019 are presented in Euro, which is the currency of the primary
economic environment in which the Group operates.
The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2018, prepared under IFRS as adopted by
the EU, have been delivered to the Registrar of Companies. The
auditor's report on the 2018 financial statements was unqualified,
did not draw attention to any matters by way of emphasis and did
not contain a statement under Section 498(2) or Section 498(3) of
the Companies Act 2006.
The interim financial statements were approved for issue by the
Board of Directors on 25 September 2019.
2. Significant accounting policies
2.1. Basis of preparation
Except as described below, the accounting policies applied in
these interim financial statements are consistent with those
applied in the Group's latest annual audit financial statements,
which comply with International Financial Reporting Standards as
adopted by the EU and also in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU and the Disclosure and
Transparency Rules (DTR) of the Financial Conduct Authority. The
financial statements have been reviewed not audited.
In the current year, the Group has adopted the amendments to
IFRSs issued by the International Accounting Standards Board (IASB)
that are mandatory effective for an accounting period that begins
on or after 1 January 2019, which mainly include "IFRS 16 -
Leases".
IFRS 16 "Leases"
IFRS 16 is the IASB's replacement of IAS 17. Its application is
effective for reporting periods beginning on or after January 1,
2019, with early adoption permitted. IFRS 16 eliminates the
classification of leases as either operating leases or finance
leases for a lessee. Leases are 'capitalised' by recognising the
present value of the lease payments and showing them as a
right-of-use asset either separately or together with property,
plant and equipment (criteria applied by the Group). IFRS 16
replaces the straight-line operating lease expense for those leases
applying IAS 17 with a depreciation charge for the lease asset
(included within operating costs) and an interest expense on the
lease liability (included within finance costs). The Group has
applied the standard from its mandatory adoption date of 1 January
2019, using the modified retrospective approach and measuring the
asset at an amount equal to the present value of the remaining
lease payments discounted using an incremental borrowing rate,
adjusted by the amount of any prepaid or accrued lease
payments.
The Group has applied the below practical expedients permitted
under the modified retrospective approach:
- Exclude leases for measurement and recognition for leases
where the term ends within 12 months from date of initial
application.
- Apply a single discount rate (incremental borrowing rate) to a
portfolio of leases with similar characteristics, based on current
rates paid to comparable borrowings
The impact on the balance sheet as of 1 January 2019 for the
adoption of IFRS 16 is summarised as follows:
IFRS 16
adoption effect
-----------------
EUR000
-----------------
Non-current assets: Property,
plant and equipment - Right
of use asset 2,126
Current liabilities: Lease
liabilities (601)
Non-current liabilities: Lease
liabilities (1,525)
-----------------
The impact in the income statement as of 30 June 2019 is as
follows:
Coating Supply Total
-------- ------- ------
Decrease in "Other operating
expenses" (239) (62) (301)
Increase in "Depreciation" 234 60 294
Increase in "Finance costs" 11 4 15
-------- ------- ------
Loss before tax 6 2 8
-------- ------- ------
The previous period, the Group adopted the "IFRS 15 - Revenue
from contracts with customers" and "IFRS 9 - Financial
instruments".
IFRS 9 "Financial instruments"
IFRS 9 is the IASB's replacement of IAS 39 Financial Instruments
"Recognition and Measurement". This standard introduces a new
expected loss impairment model and limited changes to the
classification and measurement requirements for financial assets.
The Group has applied the simplified impairment approach for trade
receivables established by the standard, and has recognised a loss
allowance based on expected credit losses amounting to EUR98
thousand at the date of the initial application.
IFRS 15 "Revenue from contracts with customers"
IFRS 15 specifies how and when an IFRS reporter will recognise
revenue. Given the characteristics of the existing contracts with
customers and once the five-step analysis established in the
Standard has been completed, the Group has concluded that its
adoption has not had any material impact in these financial
statements.
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 30 June 2019 of EUR38.6m.
- Bank facilities totalling EUR14.6 million of which EUR4.9
million were drawn and EUR9.7 million were undrawn as of 30 June
2019.
- Net current liabilities include deferred income of EUR5.1
million, 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. In March 2019, a
waiver was signed with the financial institutions for the leverage
covenant for June 2019 (covenant based on last twelve months
figures and therefore impacted by the negative EBITDA reported in
H2 of 2018), but achieving the other financial covenants required
by the syndicated loan.
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.
2.3 Adjusted EBITDA
Adjusted Earnings before Interest, Taxation, Depreciation and
Amortisation ("Adjusted EBITDA") is a non-IFRS measure used by
Directors to assess the operating performance of the Group.
The "Adjusted EBITDA" is also used as a metric to determine
management remuneration as well as being measured within the
financial covenants calculations.
"Adjusted EBITDA" is defined as operating profit before
depreciation and amortisation, impairment, performance share plan
and exceptional items.
As a non-IFRS measure, the Company's calculation of "Adjusted
EBITDA" may be different from the calculation used by other
companies and therefore comparability may be limited.
2.4 Impairment of goodwill
The Group performs an annual impairment review for goodwill or
more frequently if there are indications that these might be
impaired.
Testing is carried out by allocating the carrying value of these
assets to cash-generating units (CGUs) and determining the
recoverable amounts of those CGUs. The recoverable amount is the
higher of the fair value minus the costs of selling and its value
in use. Value in use calculations are based on cash-flow
discounting methods.
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 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.
2.5 Seasonality
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
cruising months. This has historically introduced a level of
seasonality to the Company's revenue with an H2 weighting to the
key Refit revenues. Whilst the signing of New Build contracts will
help to mitigate the historical seasonality of Refit, management
expect the usual H2 weighting of the Refit sector to continue to
benefit the Group in the second half.
3. Segment information
The Group's 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 six month period ended 30 June 2019 and 2018:
Consolidated six months to 30 June 2019 (unaudited) Coating Supply Total reportable segments
EUR000 EUR000 EUR000
-------- ------- --------------------------
Revenue 27,338 5,740 33,078
======== ======= ==========================
Gross Profit 5,047 1,577 6,624
======== ======= ==========================
Adjusted EBITDA 604 890 1,494
Depreciation and amortisation (1,230)
Performance share plan (83)
Exceptional items (96)
Operating Profit 85
Gain on financial instruments 379
Finance costs - net (402)
Profit before tax 62
==========================
Consolidated six months to 30 June 2018 (unaudited) Coating Supply Total reportable segments
EUR000 EUR000 EUR000
-------- ------- --------------------------
Revenue 19,942 5,275 25,217
======== ======= ==========================
Gross Profit 3,407 1,366 4,773
======== ======= ==========================
Adjusted EBITDA (709) 625 (84)
Depreciation and amortisation (946)
Performance share plan (158)
Exceptional items (181)
Operating Loss (1,369)
Finance costs - net (369)
Loss before tax (1,738)
==========================
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.
Six months Six months
to 30 June to
2019 (unaudited) 30 June 2018
(unaudited)
------------------ --------------
EUR000 EUR000
------------------ --------------
Spain 17,264 13,622
United Kingdom - 1,440
Rest of Europe 10,495 5,771
Rest of World 5,319 4,384
33,078 25,217
================== ==============
3.2 Information about major customers
There are no revenues from transactions with individual
customers which contribute 10% or more to the Group's revenue for
the period ended 30 June 2019 or 30 June 2018.
4. Exceptional Items
The following table provides a breakdown of exceptional
items:
Six months Six months
to 30 June to 30 June
2019 (unaudited) 2018 (unaudited)
------------------ ------------------
EUR000 EUR000
------------------ ------------------
Restructuring costs (96) (181)
(96) (181)
================== ==================
Restructuring costs for the six months ended 30 June 2019 and 30
June 2018 are related to departure of employees and other fees as a
part of an ongoing cost saving plan.
5. Income Tax
The tax impact for the period has been calculated using the
effective tax rate per country in which the group operates, arising
to 35% at group level for the six months ended 30 June 2019. This
rate is higher than the Spanish rate and other tax rates where the
Group operates, as a consequence of the effect of some tax timing
differences.
6. Earnings / (loss) per share: basic and diluted
From continuing operations
Basic earnings/(loss) 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/(loss) per share have been calculated on a
similar basis taking into account dilutive potential shares.
Adjusted basic earnings/(loss) 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).
Six months to Six months
30 June 2019 to
(unaudited) 30 June
2018 (unaudited)
---------------- -------------------
Earnings/(loss) for the
period attributable to
shareholders (EUR000) 154 (1,124)
Weighted average number
of shares 46,640,000 46,640,000
Basic earnings/(loss) per
share (EUR) 0.003 (0.024)
================ ===================
Adjusted basic earnings
per share (EUR) 0.006 (0.010)
================ ===================
Dilutive weighted average
number of shares 47,777,975 47,364,350
---------------- -------------------
Diluted earnings/(loss) 0.003 -
per share (EUR)
================ ===================
Adjusted diluted earnings/(loss) 0.006 -
per share (EUR)
================ ===================
The number of shares disclosed within the dilutive weighted
average number of shares in the prior period to 30 June 2018 has
been restated, as the shares included would be antidilutive, and
hence should be excluded as per the requirements of IAS 33. The
change in shares has had no material impact on the diluted losses
per share. The change has also had no impact on the assets,
liabilities, reserves or profits and losses of the Group.
7. Notes to the cash flow statement
Six months Six months
to 30 June 2019 to 30 June 2018
EUR 000 EUR 000
(unaudited) (unaudited)
----------------- -----------------
Profit/(loss) for the period before tax 62 (1,738)
----------------- -----------------
- Depreciation and amortisation 1,230 946
- Performance share plan 83 158
- Gain on financial instruments (379) -
- Finance income (86) (46)
- Finance costs 471 412
- Exchange differences 19 9
Adjustments to profit/(loss) 1,338 1,479
----------------- -----------------
- (Increase)/decrease in inventories (128) 789
- Decrease in trade and other receivables 825 3,772
- Increase/(decrease) in trade and other payables 1,535 (5,522)
Changes in working capital 2,232 (961)
----------------- -----------------
- Interest (paid) (252) (229)
- Income tax paid (393) (42)
Other cash flows used in operating activities (645) (271)
----------------- -----------------
CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES (I) 2,987 (1,491)
================= =================
8. Borrowings and obligations under leases
31 December
30 June 2019 2018
EUR000 EUR000
(unaudited) (audited)
------------- ------------
Syndicated loan 7,705 8,626
Capitalised costs -
net (466) (571)
Revolving credit facility 1,167 1,027
Lease liabilities 3,374 1,955
Other financial liabilities - 591
Total borrowings 11,780 11,628
============= ============
Amount due for settlement
within 12 months 4,179 4,001
============= ============
Amount due for settlement
after 12 months 7,601 7,627
============= ============
Additional permitted bank credit facilities were 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.
As of 30 June 2019, the Group also has at its disposal
non-recourse factoring facilities which limits amounts to EUR5,025
thousand, of which EUR1,201 were drawn, and factoring with recourse
which limits amounts to EUR3,000 thousand, completely undrawn.
As a result of the above agreements, at year end the Group
has:
-- Bank credit facilities totalling EUR14.6 million of which
EUR4.9 million were drawn and EUR9.7 million were undrawn as of 30
June 2019.
-- Bank guarantees up to EUR13.6 million, of which EUR2.6
million were drawn as of 30 June 2019.
9. Acquisitions
On 30 June 2019, the Group completed the acquisition of ACA
Marine, SAS, acquiring the remaining 30% of the issued share
capital for an amount of EUR167 thousand. This agreement included
the cancellation of the Put and Call Option Agreement that was in
place, and therefore those balances related to the ACA Put Option
registered under the captions "Put option reserve" and "Other
financial liabilities" have been adjusted, generating a gain of
EUR379 thousand.
10. Dividends
No dividend was declared or paid during the six months ended 30
June 2019. A final dividend of GBP1,492,480 (EUR1,708,000) or 3.2
pence per ordinary share was paid in June 2018 in relation to the
previous financial year.
11. Related party transactions
Services provided
30 June 2019 30 June 2018
------------- -------------
EUR000 EUR000
------------- -------------
Global Yacht Finishing,
S.L. 20 20
20 20
============= =============
Services received
30 June 2019 30 June 2018
------------- -------------
EUR000 EUR000
------------- -------------
Quoque Ltd. 103 -
Global Yacht Finishing,
S.L. 179 177
282 177
============= =============
GYG leases offices from Global Yacht Finishing, S.L. (being
Rupert Savage (Sales & Commercial Director) and Mark Conyers
(Rolling Stock Director) shareholders in this entity).
Also in 2019 Quoque Ltd (company owned by a close family member
of the Chief Executive Officer) has provided consultancy services
to GYG.
All these transactions were undertaken at arm's length basis and
on normal commercial terms and were pre-approved by the Board.
Balances
30 June 31 December
2019 2018
-------- ------------
EUR000 EUR000
-------- ------------
Current liabilities
Atko, S.A.R.L. 331 194
Global Yacht Finishing,
S.L. 13 170
344 364
======== ============
12. Financial instruments
Set out below are the carrying values and fair values of the
Group's financial instruments:
30 June
2019
(unaudited) 31 December
2018
(audited)
-------------- -------------
EUR000 EUR000
-------------- -------------
Financial assets
Cash and other financial assets 5,845 5,069
Loans and receivables - long term 1,606 1,605
7,451 6,674
============== =============
Financial liabilities
Amortised cost - borrowings (note 8) 8,406 9,082
Finance lease liabilities (note 8) 3,374 1,955
Other financial liabilities (note 8) - 591
Put option (note 9) - 546
Derivative instruments not designated
hedge accounting relationships 29 37
Other 2 1
11,811 12,212
============== =============
As of 30 June 2019 and 31 December 2018, "Loans and receivables
- long term" comprise of a cash retention made by a client
amounting to EUR673 thousand, amounts recoverable from a supplier
under a warranty claim amounting to EUR800 thousand and the
remainder relates to guarantees paid to tenants to cover
responsibilities derived from the leasing contracts.
IFRS 13 requires the classification of financial instruments
measured at fair value to be determined by reference to the source
of inputs used to derive fair value. The fair value of the net
investment in finance leases has been calculated by discounting the
expected future cash flows at the market interest rate.
13. Post Balance sheets events
No events have occurred after 30 June 2019 that might
significantly influence the information reflected in these
consolidated 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
IR CKPDNBBKBBCB
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