TIDMGYG
RNS Number : 6942T
GYG PLC
22 July 2020
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.
22 July 2020
GYG plc
("GYG", the "Company" and together with its subsidiaries, the
"Group")
2019 Final Results
Order Book providing more forward visibility than ever
before
GYG (AIM: GYG), the market leading superyacht painting,
maintenance and supply company, today announces its audited Final
Results for the year ended 31 December 2019.
Financial Highlights
-- Group revenue increased 41.8% to EUR63.8m (FY18: EUR45.0m)
o Coatings (Refit and New Build) revenue increased 51.5% to
EUR53.7m (FY18: EUR35.5m)
o Supply revenue up 6.3% to EUR10.1m (FY18: EUR9.5m)
-- Adjusted EBITDA(1) increased to EUR4.5m (FY18: loss of EUR0.9m)
-- Operating profit of EUR1.3m (FY18: operating loss of EUR4.3m)
-- Profit before tax increased to EUR0.8m (FY18: loss of EUR4.6m)
-- Net debt position(2) of EUR8.2m at 31 December 2019 (FY18: EUR7.8m )
-- Cash of EUR5.5m at 31 December 2019 (EUR5.1m at 31 December 2018)
Operational Highlights
-- Six major contract wins in the New Build sector during the
year and EUR11.2m of New Build revenue generated in 2019 (FY18:
EUR3.7m)
-- Significantly improved the Group's Total Order Book to
EUR42.7m as at 30 June 2020 up from EUR38.6m at 30 June 2019
-- 46% increase in the number of Refit projects undertaken
during the year, generating EUR42.5m of revenue (FY18:
EUR31.8m)
-- Expanded customer base and service offering in the Supply
division with renewed focus on CRM systems and collaboration with
Coatings division
-- Entered collaboration agreement with Akzo Nobel to develop
and bring to market an application methodology for its new
sprayable filler product
-- Restructured senior management team to provide greater focus
on important drivers including sales, operations and logistics
-- Several strategic initiatives implemented to improve gross
margins and deliver operational efficiencies
Order Book
The Order Book at 30 June 2020 provides more forward visibility
than ever before:
Order Book at: Total Order Current Year Current Year Forward Order
Book +1 Book
30 June 2018 EUR29.9m EUR11.2m EUR13.1m EUR5.6m
------------ ------------- ------------- --------------
30 June 2019 EUR38.6m EUR15.3m EUR18.2m EUR5.1m
------------ ------------- ------------- --------------
30 June 2020 EUR42.7m EUR16.4m EUR20.7m EUR5.6m
------------ ------------- ------------- --------------
Outlook and COVID-19
-- Encouraging first half of 2020 following 2019 operational
improvements and increased levels of activity in both New Build and
Refit, providing a robust outlook
-- Contingency plans implemented to manage effects of COVID-19
leading to two-week suspension of projects in Spain, UK and
France
-- Projects in Northern Europe and USA continued with some
disruption due to adjustments to operating protocols and travel
restrictions
-- Majority of operations restored by early May, complying with
appropriate health and safety measures
-- Bank facilities improved and balance sheet strengthened to provide resilience against COVID-19 uncertainties
-- No projects cancelled during COVID-19 period enabling the
Group to enter H2 with a record Order Book
-- Strong sales momentum in H1 with the signing of several major
new Refit contracts for immediate start
(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.
Analyst Conference Call
There will be a conference call/webcast for sell-side analysts
at 10:30am BST this morning, the details of which can be obtained
from FTI Consulting.
Remy Millott, Chief Executive of GYG plc, commented:
"2019 was a transformational year for GYG and I am pleased that
we ended the year with a record Order Book that provides both
consistency and sustainability of earnings. Having signed six New
Build contracts in the year and further wins in 2020, there is no
doubt that management's focus on the Northern European shipyards
has delivered results and helped to offset the seasonality of the
Refit market.
Having invested in systems and processes through 2019, the
team's focus for 2020 has been and remains on improving our gross
margins to deliver a stronger Group EBITDA performance, along with
improving cash flows and reducing debt.
With regard to the COVID-19 pandemic, I would like to thank the
team for their professionalism and agility during this time. The
health and safety of our staff, suppliers and customers remains our
top priority and thanks to the specific improvements made during
2019, we were well equipped to respond quickly and effectively.
With the appropriate health and safety measures in place, the
projects which were temporarily suspended are now underway and we
can continue our high standard of service across our
operations.
The Group has had an encouraging first half of 2020 and GYG's
outlook is healthy. Our brands are well positioned to exploit
further opportunities both in Europe and the USA to deliver
sustainable growth and increasing shareholder value. The Board
looks to the future 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
John Goold, Dominic King 3829 5000
Dan Bate, Nick Cowles, Jordan Warburton
FTI Consulting (Financial PR ) Tel: +44 (0) 20
Alex Beagley 3727 1000
Fiona Walker
Rafaella de Freitas
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, Pinmar Yacht Supply, and
Technocraft. 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,
containment and the removal and repair of fittings
-- New Build: fairing and painting of new vessels as part of the build process
-- Supply: the sale and delivery of maintenance materials,
consumables, spare parts and equipment primarily to superyachts and
trade customers
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.
CHAIRMAN'S STATEMENT
2019 was a transformational year for the Group from which I am
pleased to report a solid set of results and a much-improved
operational platform. The Group delivered a substantial increase in
revenues over 2018 as a result of its strategy to increase share in
the New Build sector, alongside a stronger performance in the Refit
sector following the return to more normalised market
conditions.
Significant progress has been made during 2019 to increase our
share in the larger yacht segment (LOA >70m) of the growing New
Build market in Northern Europe, with six major contract wins
contributing to a strengthening of the forward Order Book going in
to 2020.
Management have made significant changes to the organisation
over the course of the year, focusing on systems, processes and
core business activities aimed at improving margins and enhancing
both the quality and sustainability of earnings. The process and
system improvements implemented during the year will provide a more
stable and scalable platform on which to continue the Group's
strategic growth, which will deliver operational efficiencies and
improved financial performance going forward.
FINANCIAL RESULTS
The Group delivered a 41.8% increase in revenues in the year
ended 31 December 2019 to EUR63.8m (FY18: EUR45.0m). The Coatings
division achieved a 51.5% increase in revenues to EUR53.7m (FY18:
EUR35.5m) as a result of continued penetration in the New Build
sector and a strong performance in Refit following the return to
more normalised levels of demand. The Supply division delivered
revenues of EUR10.1m (FY18: EUR9.5m), an increase of 6.3%.
The improved trading performance resulted in an adjusted EBITDA
of EUR4.5m (FY18: loss of EUR0.9m) and an operating profit before
tax of EUR1.3m (FY18: loss of EUR4.3m). The EBITDA margin of 7.1%
(FY18: (2.0%)) reflects the early signs of improvement in
operational performance.
EARNINGS PER SHARE AND DIVIDS
The net profit for the year was EUR0.7m (FY18: loss of EUR3.2m)
creating an earnings per share of EUR0.02 (FY18: loss per share of
EUR0.06) and an adjusted basic earnings per share of EUR0.06 (FY18:
loss per share of EUR0.02).
It is the Board's intention to return to the dividend list at
the earliest appropriate opportunity, however the Board believes it
was in the best interest of the Company not to declare a dividend
in 2019 as it continues to strengthen the balance sheet and expand
the scale of its activity.
FINANCIAL POSITION
The Group's financial position has strengthened marginally
following the return to profitability with net cash increasing
slightly over 2018 levels. The Group adopted IFRS 16 during 2019 so
all lease obligations are now recognised as liabilities on the
balance sheet with an offsetting asset value recognising the
associated benefit of those leases.
In April 2020, the Group announced that it had reached an
agreement with its banks to change the repayment terms of one of
its loans, a bullet loan, to extend the payment dates. As the
COVID-19 pandemic spread across the world, and the scope for
additional impacts on our business grew, the Spanish government put
a number of programmes in place to provide financial stability for
Spanish companies. The Group entered into discussions about
accessing one of these programmes in an effort to provide access to
additional capital if it became necessary. On 30 June, GYG was
provided with new borrowing facilities of EUR3.0m through one of
these government sponsored programmes which has a twelve-month
repayment holiday and then is repaid over the subsequent 24
months.
As part of this arrangement, the Group agreed to maintain the
original repayment schedule for the bullet loan. By entering into
the new facilities and agreeing to maintain the original payment
schedule on the bullet loan, the Group's working capital
projections and cash position over the next few years has been
materially improved. The Directors concluded that the uncertainty
surrounding how the pandemic might develop meant this was a prudent
and sensible step to take. The Group's banking facilities now total
EUR29.6m.
PEOPLE AND ORGANISATIONAL DEVELOPMENT
Management have made significant progress in strengthening the
team and improving core processes and controls. They are currently
investigating opportunities to upgrade IT systems to increase
automation, improve operational efficiency and scale for future
growth.
Following the resignation of Gloria Fernandez, Chief Financial
Officer, in July 2019, Kevin McNair was appointed as the new Group
CFO, having served as Interim CFO since March 2019.
CURRENT TRADING AND OUTLOOK
During 2019, the Coatings division signed six major New Build
contracts for projects commencing in 2020/2021 which has
significantly increased the Group's share in the Northern European
market and expanded the New Build customer base to two major new
yards. Post-period end, the team signed a further contract for an
80m New Build yacht, scheduled to start in Q4 2020. The sales focus
remains on extending market share for 2020-2023 by winning new
orders with existing shipyards and converting opportunities with
new clients, further reducing the impact of Refit seasonality.
Following the completion of major new infrastructure
developments by the Refit shipyards in Barcelona and the USA, with
the capacity to accommodate the growing 70m+ fleet, the Group is
well positioned to exploit the strong growth forecast in this
market segment both in Europe and the USA.
The Supply division remains focused on the large yacht fleet and
extending its service proposition. The team will refresh and launch
a new Pinmar Yacht Supply brand in H2 2020 while utilising the new
CRM system to better target its marketing efforts to the 70m+
fleet.
The strong momentum experienced in H2 2019 continued into 2020,
particularly in the Coatings division, resulting in increased
levels of activity in both New Build and Refit in the first
quarter.
Since mid-March when the COVID-19 pandemic spread through Europe
and the USA, I have been impressed with the way in which GYG has
reacted and responded. Invoking its contingency plans, the Group
adapted its operations to comply with appropriate health and safety
procedures and, whilst some projects have been delayed, none have
been cancelled. As such, the market outlook is healthy and the
Board looks to the future with continued confidence.
Stephen Murphy
Non-Executive Chairman
CHIEF EXECUTIVE'S REPORT
I am pleased to report our results for the year ended 31
December 2019, in which we have made significant progress across
all areas of the Group. Our New Build strategy started to deliver
meaningful results with six contract wins secured in the year.
This, coupled with the return to a normalised Refit market, has
resulted in a solid performance in the Coatings division. Trading
in the Supply division continued to deliver steady growth in line
with expectations.
During the year we restructured the senior management team and
started several important initiatives aimed at improving our gross
margins and delivering operational efficiencies. These initiatives
have started to impact results and management will remain focused
on these developments to further enhance our 2020 trading results
and future EBITDA performance.
In the last few months, the world has been faced with the
COVID-19 pandemic and as a Group we have adapted and responded
appropriately. Within such changes, the health and safety of our
employees remains our top priority and I would like to thank them
for their resilience, adaptability and professionalism during this
time.
FINANCIAL OVERVIEW
The Group delivered revenues of EUR63.8m in the year ended 31
December 2019 (FY18: EUR45.0m) an increase of 41.8% with an
operating profit of EUR1.3m (FY18: loss of EUR4.3m) and an adjusted
EBITDA of EUR4.5m (FY18: loss of EUR0.9m) with a net profit of
EUR0.7m (FY18: net loss of EUR3.2m). Our gross margins improved as
a result of the higher production levels, with our average gross
margin for 2019 at 23.5%, up from 17.9% in FY18. We ended the year
with cash of EUR5.5m (FY18: EUR5.1m) and net debt of EUR8.2m, up
from EUR7.8m in FY18.
STRATEGY
Coatings
We have made significant progress with our New Build strategy
over the last 12 months adding six major contracts to our Order
Book and are confident that our strategic decision to focus on the
Northern European yards remains valid. These yards represent the
premium segment of the 70m+ superyacht New Build market and are the
most suited to GYG's high quality and technically advanced fairing
and painting services. We have made very good progress in
developing preferred supplier relationships with targeted yards
that value disciplined project management, high capacity ability,
deliverability and premium quality craftsmanship. The Group has
achieved a significant increase in its market share of this niche
market segment with plenty of headroom for continued growth both
within the yards it currently serves and through developing
targeted new relationships with other leading shipbuilders.
Remaining at the forefront of application technology and quality
standards is a key part of GYG's unique New Build proposition and
our recent collaboration with Akzo Nobel to bring its sprayable
filler to the New Build market promises to be another important
differentiator by greatly reducing the time taken to fill and fair
large superyachts.
The investment the Group has made in developing its CRM system
to facilitate intelligence led marketing campaigns backed up by a
more effective sales and tendering process has seen solid returns
in terms of higher conversion rates and increased pipeline
velocity. We will leverage this powerful tool as we continue to
grow our market share in the higher value segments. During 2019 the
Group successfully consolidated its brand portfolio to leverage its
market leading global brand, Pinmar. It has successfully migrated
the previous Rolling Stock and ACA Marine customers and rolled out
the Pinmar brand across all its global locations giving the Group
more consistency and better clarity to the market.
We remain closely aligned to our key Refit shipyard partners and
continue to invest in our facilities and resources to match the
growth at these strategic locations that have and continue to
develop the necessary infrastructure to accommodate the large
superyacht Refit programmes. In 2019, we saw a significant upturn
in capacity with the new facilities in Barcelona, MB92, and the
USA, Savannah Yacht Center coming online. These substantial
increases in capacity for large yachts alongside those of Lurssen
in Germany, Feadship and Oceanco in Holland, all of whom have
opened new Refit facilities to service their growing fleets,
provide further opportunities for growth. Our strong relationships
with the major fleet management companies continues to evolve as we
see an increasing number of large yachts coming under professional
management.
Supply
Our growth strategy for the Supply division is focused on the
large yacht fleet and extending our service proposition beyond our
physical locations so we can capture a greater share of their
annual spend. On 1 June, the Group announced the re-positioning of
Pinmar Yacht Supply to the superyacht market, with new branding,
better presentation of our retail facilities and more focused
digital marketing to the superyacht fleet. The deployment of the
CRM system coupled with the improvements we have made in account
management, warehouse efficiency and logistics, support this
initiative.
DIVISIONAL REVIEW
GYG's activities are segmented between two divisions, Coatings
and Supply. For the year ended 31 December 2019 the Coatings
division increased revenues by 51.5 % to EUR53.7m (FY18: EUR35.5m)
and an adjusted EBITDA of EUR3.6m (FY18: loss of EUR1.5m). The
Supply division delivered revenues of EUR10.1m (FY18: EUR9.5m) and
an adjusted EBITDA of EUR0.9m (FY18: EUR0.6m).
Operating profit
The increase in revenues across the Group led to a significant
increase in operating profits which totalled EUR1.3m (FY18: loss of
EUR4.3m). At the adjusted EBITDA level, this showed a similar
improvement which totalled EUR4.5m (FY18: loss of EUR0.9m).
COATINGS DIVISION
New Build
Following the adoption of the Group's 2018 New Build marketing
strategy, management has invested substantial time developing
relationships directly with the leading New Build shipyards in
Northern Europe. The Group has been invited to tender for an
increased number of contracts and has secured more work as a
preferred paint partner contracted directly by the shipyard. This
has resulted in a significant uplift in our win rate and delivered
a stronger forward Order Book for New Build in 2020/2021.
During 2019, the Group generated EUR11.2m (FY18: EUR4.0m) of
revenues primarily from two major New Build contracts in Holland
and Germany which commenced in Q4 2018. These two New Build
projects enabled the Group to offset some of the seasonal downturn
in the Refit sector during the summer, facilitating better asset
utilisation with reduced manpower and sub-contractor costs. Both
these projects will complete in Q3 2020 with labour and management
resources moving to several new projects starting in both new and
existing shipyards. As we enter H2 2020, we are gearing up to start
work on an unprecedented six New Build projects in Holland and
Germany, five of which are 70m+ and include the well documented
180m research vessel REV.
Refit
The Refit market saw a return to more normalised trading
patterns in 2019 with a significant uplift in demand spurred by the
delayed or postponed projects from 2018. Furthermore, the
commissioning of major new infrastructure in key Refit shipyards
both in Europe and the USA served to increase the capacity
particularly for the growing 70m+ and 90m+ fleets. As the global
market leader with a dominant share of the 70m+ and 90m+ segments,
the Group was well positioned to exploit the upturn in demand
winning significantly more orders for larger vessels with increased
average value than in previous years. The Group undertook 46% more
major Refit projects in 2019 than the previous year, generating
revenues of EUR42.2m (FY18: EUR31.8m).
Having a strong, consistent and visible Order Book for Refit
enables the operations department to plan and control manpower,
materials and equipment much more efficiently. During the year the
team made improvements in the resource utilisation, materials
management and information systems. The full effects of these
improvements will become evident during 2020 as they are rolled out
across our global operations, leading to improved gross margins and
underpinning the quality of earnings.
SUPPLY DIVISION
The Supply division's turnover increased by 6.3% to EUR10.1m
reflecting a solid performance in a competitive market. The trade
business continues to exhibit steady growth from improvements in
account management and business development. A consolidation of
warehousing capacity, coupled with organisational changes to
purchase and supply chain management, have led to efficiency gains
and cost reductions together with improvements in stock management
and logistics. The full benefits of these initiatives will
materialise in 2020.
Progress has been made in expanding both the customer base and
service offering from the superyacht direct Supply division. During
2019, the Coatings CRM system was developed for yacht supply
enabling the sales team to access the Group's market database and
to start leveraging the synergies with the Coatings sales team who
are in communication with the same fleet. Such progress and
initiatives demonstrate a major growth opportunity for the Supply
division.
Brand recognition and awareness across the market is growing and
will be further enhanced as the Group promotes the refreshed Pinmar
Yacht Supply image and launches a new intelligence driven marketing
campaign specifically targeting the 70m+ fleet.
OPERATIONAL REVIEW
During 2019 the Group restructured the senior management team to
provide greater focus on the important drivers including sales,
operations and logistics. This is part of management's continued
direction to implement several efficiency and productivity
initiatives aimed at improving gross margin and reducing fixed
costs. We started to see the benefits of these initiatives in Q4
2019 and expect the full effects to become evident in 2020,
enhancing both the quality and sustainability of the Group's
earnings.
The Group continues to innovate and invest in new application
technology, leveraging its strong relationships with the main
superyacht paint manufacturers. In 2019 the Group entered a
collaboration agreement with Akzo Nobel to develop and bring to
market an application methodology for its new sprayable filler
product. This is anticipated to deliver a significant reduction in
the time taken to fill and fair large superyachts. With demand
increasing in the 70m+ New Build segment, shipyards are looking for
ways to reduce delivery times; fairing and painting is one of the
longest individual processes during the outfitting phase. As such,
management believes this new filler system will be extremely
attractive for shipyards and will help to further differentiate the
GYG proposition. This collaboration follows the Group's pioneering
adoption of electrostatic topcoat application, which is delivering
significant quality and environmental benefits, further asserting
GYG's position leading the industry, being at the forefront of new
technologies and standards in superyacht finishing.
GYG continues to develop its human resources function through a
combination of structured in-house training programmes and
strategic recruitment. We have, and continue to, strengthen the
management team introducing a mix of industry experience and
related business expertise. Our management operate with
well-defined objectives and key performance indicators ensuring a
focus on the main business agenda. During 2019 we introduced an
incentive scheme for the painting teams to benefit from the
successful achievement of cost, time and quality goals at the
project level which is proving to be very motivational.
Our IT team continue to work on a programme of system
developments to automate business processes and provide better
management information leading to improvements in operational
planning and control.
MARKET DEVELOPMENTS
Our target market, the 40m+ superyacht fleet, continues to grow
at a steady 3.5% with an average of 66 new vessels added to the
fleet each year. Independent market research predicts that the 40m+
fleet will continue to deliver a similar number of yachts per year
through 2024 as the growth rate reduces to a compound average
growth rate (CAGR) of around 3.2%. A detailed analysis of the
forward order books of the New Build yards indicates that the 70m+
and 90m+ segments will deliver higher growth rates of 4.3% and 4.6%
respectively, evidencing the trend for larger superyachts. This is
particularly positive for GYG given its strategic targeting of the
shipyards that are constructing the larger, 70m+, vessels.
The Refit market continues to exhibit progressive growth with a
forecast CAGR from 2019-2024 of 3.4% at the unitary level. Market
estimates suggest that the current annual value of the Refit paint
market is c.EUR233m and will grow to an estimated c.EUR285m by 2024
(CAGR 3.4%) with the 70m+ and 90m+ segments signalling higher
growth rates, which again is positive for GYG which has a market
leading share of these segments.
CURRENT TRADING
I am pleased with the progress we made in 2019 and feel
confident that we are well placed to take advantage of the
continued market growth that is forecast. We entered 2020 with a
record Order Book (Order Book: Jan 2020 EUR44.4m, Jan 2019
EUR33.9m) that provides both consistency and sustainability of
earnings. The Order Book at 30 June 2020 provides more forward
visibility than ever before:
Order Book at: Total Order Current Year Current Year Forward Order
Book +1 Book
30 June 2018 EUR29.9m EUR11.2m EUR13.1m EUR5.6m
------------ ------------- ------------- --------------
30 June 2019 EUR38.6m EUR15.3m EUR18.2m EUR5.1m
------------ ------------- ------------- --------------
30 June 2020 EUR42.7m EUR16.4m EUR20.7m EUR5.6m
------------ ------------- ------------- --------------
The forward visibility of the Order Book enables our operations
team to plan our resources efficiently. This will, together with
the system and process improvement initiatives that we have
implemented, facilitate significant improvement in our gross
margins and the Group's EBITDA performance which is one of our main
objectives for 2020, along with improving cash flows and reducing
debt.
GYG has reacted and responded appropriately during the
exceptional circumstances presented to the Group over the last few
months due to the COVID-19 pandemic. The strengthening of the
management team in 2019 together with the improvements to IT
systems and organisational processes mean the Group was well
equipped to respond quickly and effectively to the impact of the
COVID-19 pandemic. Having invoked its contingency plans on 8 March
when the virus started to spread across Europe, the Group
maintained operations with enhanced health and safety protocols in
place for front line staff, and all back-office staff began working
remotely in line with the various government guidelines and
regulations. During a two-week period (30 March - 14 April) of more
stringent regulatory restrictions in Spain, UK and France, the
Group was forced to temporarily suspend projects and close its
retail stores. Following the improvements in resource planning and
the introduction of more flexible labour contracts during 2019, the
Group was able to rapidly reduce its labour costs during the short
period of reduced activity.
Spanish and French operations were restarted on 15 April with
testing protocols in place for front line staff. UK operations were
re-started on 4 May. The Supply division maintained service to
yachts and trade clients through online ordering and deliveries,
and retail stores were re-opened on 4 May once government
restrictions permitted. New Build and Refit projects in Holland,
Germany and the USA continued with limited disruption as a result
of travel restrictions and adjustments to working practices to
accommodate changes to shipyard procedures and health and safety
protocols. The health and safety of all employees, suppliers and
customers remains GYG's top priority and we will endeavour to
continue servicing our customers while maintaining our financial
and operational resilience.
The superyacht New Build, Refit and Supply markets are stable
and GYG's Order Book remains robust for 2020 and beyond. Despite
the small number of projects where start dates have been delayed,
there have been no cancellations. Sales activity has been high
during the period with video communications replacing physical
travel. Some owners have written off the summer 2020
cruising/charter season and are instead taking the opportunity for
early maintenance work, which has led to a number of major Refit
contracts being signed for an immediate start. Overall, despite the
short period of disruption to operations, the Group is now
operating above 90% capacity with a record Order Book going into Q3
2020. At this juncture, the Board remains confident that it will
meet the current market expectations for 2020.
Outlook
Whilst there are encouraging signs regarding containment of the
virus in Europe and the USA, the future impact of the virus is
unknown and the broader economic impacts are impossible to assess
at this stage. Importantly, as outlined above, the Group has not
witnessed the cancellation of any contract and the sales team is
extremely busy as owners and management companies look to take
advantage of the restricted summer period to attend to maintenance.
The demand for superyacht refits is neither perishable nor
replaceable as it is driven by the requirement to both maintain the
quality of the asset and comply with its class registration and
insurance.
The New Build market remains robust and the Group continues to
engage with a number of Northern European shipyards on upcoming
projects. There is no doubt that the superyacht client base of
approximately 2,500 ultra-high net worth individuals has a track
record of resilience even in difficult market conditions and GYG
looks forward to continuing to service its clients' requirements
across its global markets. The Group has successfully implemented
adjustments to its operating protocols enabling it to continue
production safely and efficiently in the new paradigm. It has
emerged from the period of restricted operations with solid
momentum and is well placed to fulfil its strong Order Book and
deliver sustainable growth in earnings.
Remy Millott
Chief Executive Officer
FINANCIAL REVIEW
FINANCIAL PERFORMANCE
Year ended
31 December 2019 Coatings Supply Total reportable segments
EUR000 EUR000 EUR000
Revenue 53,718 10,109 63,827
========= ======= ==========================
Adjusted EBITDA 3,628 880 4,508
-------------------- --------- ------- --------------------------
Year ended
31 December 2018 Coatings Supply Total reportable segments
EUR000 EUR000 EUR000
Revenue 35,458 9,506 44,964
========= ======= ==========================
Adjusted EBITDA (1,460) 545 (915)
-------------------- --------- ------- --------------------------
Revenue in the year ended 31 December 2019 increased 41.8% to
EUR63.8m (FY18: EUR45.0m). This was driven principally by a 51.5%
increase in turnover in the Coatings division, reflecting the
return to more normal trading conditions in the Refit market after
a challenging year in 2018 (as described in the 2018 report and
accounts) and the early stages of growth in New Build revenue.
Additionally, the Supply division revenue grew by 6.3% growth in
FY19.
As a result of the increase in revenue, operating costs (not
including exceptional items, impairment, performance share plan
costs, depreciation and amortisation), increased by 27.2% from
EUR49.2m in FY18 to EUR62.6m in FY19. The growth in operating costs
was significantly lower than the increase in revenue during the
year, resulting in:
-- an operating profit of EUR1.3m in the year (FY18: loss of EUR4.3m);
-- an adjusted EBITDA of EUR4.5m (FY18: loss of EUR0.9m); and
-- a net profit, excluding exceptional items, impairment and
performance share plan costs, for the year of EUR1.1m (FY18: net
loss of EUR1.7m).
The exceptional items of EUR0.3m in the year (FY18: EUR0.9m)
related mainly to restructuring costs and as part of a cost saving
plan which included redundancies and other costs associated with
reorganising and restructuring parts of the Group.
Financial expenses of EUR0.8m in the year (FY18: EUR0.7m) mainly
related to interest on the syndicated loan signed in March 2016,
various working capital facilities, finance leases and foreign
exchange rate.
EARNINGS PER SHARE AND DIVIDS
Net profit for the year was EUR0.7m (2018: loss of EUR3.2m).
Profit per share was EUR0.02 (FY18: loss of EUR0.06 per share) and
adjusted basic profit per share was EUR0.06 (FY18: loss per share
EUR0.02).
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 of intangible assets,
depreciation of tangible assets and performance share plan costs
(considering the tax effect of these adjustments).
Year ended Year ended
31 December 31 December
2019 2018
-------------- --------------
Earnings/(losses) for the period
attributable to shareholders (EUR000) 753 (3,016)
Weighted average number of shares 46,640,000 46,640,000
Basic earnings/(losses) per share
(EUR) 0.02 (0.06)
============== ==============
Adjusted basic earnings/(losses)
per share (EUR) 0.06 (0. 02)
============== ==============
Dilutive weighted average number
of shares 47,777,975 47,364,350
-------------- --------------
Diluted earnings/(losses) per
share (EUR) 0.02 (0.06)
============== ==============
Adjusted diluted earnings/(losses)/per
share (EUR) 0. 06 (0. 02 )
============== ==============
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 EUR5.5m at 31 December 2019
compared to EUR5.1m as at 31 December 2018. The increase year on
year was driven principally by the management of working capital
and increased EBITDA. As a result, the net debt as at 31 December
2019 was EUR8.2m, compared to EUR7.8m as at 31 December 2018.
During the year, the Group adopted IFRS 16 as described in the
financial statements which involved the Group reclassifying EUR2.0m
of operating leases as borrowings during the period.
Total net assets on the balance sheet were EUR13.3m as at 31
December 2019, compared to EUR12.5m as at 31 December 2018,
reflecting the improved levels of revenue and profit during the
year.
The group has factoring facilities with the Spanish bank,
Bankia, that are categorised as both recourse and non-recourse
arrangements.
One of the factoring agreements, titled Factoring Without
Recourse, had historically been treated as a without recourse
arrangement, and the related trade receivables and current
financial liabilities were derecognised. The terms of that
agreement have been reassessed during the year, and it has been
concluded that substantially all risks and rewards in relation to
insolvency and late payment had not been transferred to Bankia, and
as a consequence did not meet the requirements of IFRS 9 to
derecognise an asset and liability alongside with a financial
liability.
As a result of the reassessment the comparatives for the year
ended 31 December 2018 have been restated. Trade receivables
alongside with current financial liabilities associated with
factoring facilities amounting to EUR1.2 million respectively, that
were derecognised in the prior year, have been reinstated in the
consolidated statement of financial position as at 31 December
2018. In relation to the cash flow statement, the cash flow from
operating activities has been restated in relation to trade and
other receivables (see note 13) and the cash flows used in
financing activities has been restated in relation to proceeds from
bank borrowings by EUR1.2 million respectively. The prior year
adjustment has a net impact of nil on the net assets. It also has
no impact on the consolidated statement of comprehensive
income.
Subsequent to the year end, the Directors have agreed a new
factoring without recourse arrangement with Bankia. The new agreed
terms and conditions for this facility are designed to allow it to
meet the requirements of IFRS 9 for factoring without recourse
CASH FLOW
Net cash from operating activities was EUR3.0m for the year
(FY18: EUR1.6m). Net cash used in investing activities was EUR0.7m
for the year (FY18: EUR0.8m). Net cash used in financing activities
was EUR1.8m for the year (FY18: EUR1.9m) mainly corresponding to
the repayment of existing borrowings and finance leases.
Overall net cash inflow for the year was EUR0.5m compared to an
outflow of EUR1.2m for FY18.
FINANCIAL OUTLOOK
As set out in the Chief Executive's Report, the Directors are
confident about the Group's prospects going forward and are
forecasting an improved financial performance in 2020. That having
been said, the uncertainty surrounding the future evolution of the
COVID pandemic is significant and is discussed in detail in the
notes to the consolidated financial statements. For this reason,
the audit opinion in the 2019 accounts contains an emphasis of
matter in respect of going concern as a result of COVID-19 although
the audit opinion will remain unqualified. As things stand today,
the Directors are confident of the Group's ability to trade
successfully through this going forward but, like all businesses,
we are operating in a rapidly changing environment with a material
element of unknown risk.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
Note Year ended Year ended
31 December 2019 EUR 31 December 2018 EUR
000 000
---------- ----------------------- -----------------------
Continuing
operations
Revenue 3 63,827 44,964
Operating costs (62,568) (49,233)
Adjusted EBITDA 4,508 (915)
Depreciation and
amortisation (2,808) (1,886)
Impairment - (480)
Performance share
plan (108) (108)
Exceptional items 4 (333) (880)
------------------------ ---------- ----------------------- -----------------------
Operating profit /
(loss) 1,259 (4,269)
Gain on financial
instruments 379 417
Finance costs (810) (737)
Profit / (loss)
before tax 828 (4,589)
---------- ----------------------- -----------------------
Tax 5 (145) 1,392
Profit / (loss) for
the year 683 (3,197)
---------- ----------------------- -----------------------
Items that may be
reclassified
subsequently
to profit or loss:
Exchange differences
on translation of
foreign operations (33) 31
Total comprehensive
profit / (loss) for
the year 650 (3,166)
======================== =========================== ===========================
Profit / (loss) for
the year
attributable to:
Owners of the Company 753 (3,016)
Non-controlling
interest (70) (181)
Total comprehensive profit / (loss) for the year
attributable to:
Owners of the Company 720 (2,985)
Non-controlling
interest (70) (181)
Earning /(loss) per
share (EUR) 6
From continuing
operations
Basic 0.02 (0.06)
Diluted 0.02 (0.06)
---------- ----------------------- -----------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
2019 EUR 2018 EUR
000 000
ASSETS Note Restated
--------------------------------- ----- --------- ----------
Non-current assets
Goodwill 7 9,350 9,333
Other intangible assets 10,448 11,313
Property, plant and equipment 10,353 8,178
Other financial assets 144 1,605
Deferred tax assets 508 261
Total non-current assets 30,803 30,690
---------------------------------- ----- --------- ----------
Current assets
Inventories 2,535 2,546
Trade and other receivables 8,656 8,107
Cash and cash equivalents 5,529 5,069
Total current assets 16,720 15,722
---------------------------------- ----- --------- ----------
Total assets 47,523 46,412
================================== ===== ========= ==========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
2018
2019 EUR '000
LIABILITIES Note EUR '000 Restated
--------------------------------------------- ------- ---------- ----------------------------
Current liabilities
Trade, deferred income and other payables (17,468) (16,763)
Obligations under leases 8 (1,571) (816)
Borrowings 8 (5,062) (4,384)
Provisions (468) (349)
Derivative financial instruments (14) (37)
Total current liabilities (24,583) (22,349)
---------------------------------------------- ------- ---------- ----------------------------
Net current (liabilities) / assets (7,863) (6,627)
---------------------------------------------- ------- ---------- ----------------------------
Non-current liabilities
Obligations under leases 8 (2,184) (1,139)
Borrowings 8 (4,915) (6,488)
Deferred tax liabilities (2,555) (2,218)
Long-term provisions (19) (819)
Other financial liabilities - (547)
Other liabilities - (343)
Total non-current liabilities (9,673) (11,554)
---------------------------------------------- ------- ---------- ----------------------------
Total liabilities (34,256) (33,903)
============================================== ======= ========== ============================
Net assets 13,267 12,509
============================================== ======= ========== ============================
EQUITY
--------------------------------------------- ------- ---------- ----------------------------
Share capital 9 106 106
Share premium 7,035 7,035
Retained earnings 5,707 5,894
Translation reserve (70) (37)
Capital redemption reserve 114 114
Share based payment reserve 375 267
---------------------------------------------- ------- ---------- ----------------------------
Equity attributable to owners of the
Company 13,267 13,379
---------------------------------------------- ------- ---------- ----------------------------
Non-controlling interest - 93
Put option reserve - (963)
Total equity 13,267 12,509
============================================== ======= ========== ============================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
Capital Share Non-controlling Put
Share Share Retained Translation redemption based interests option TOTAL
capital premium earnings reserves reserve payment Total EUR reserve EQUITY
EUR EUR EUR EUR EUR reserve EUR 000 EUR EUR
000 000 000 000 000 EUR 000 000 000
000
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
Transactions with
owners in their
capacity
of owners - - (1,708) - - 108 (1,600) - - (1,600)
Loss for the year (3,016) 31 - - (2,985) (181) - (3,166)
Total
comprehensive
loss for the
year - - (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
========= ========= ========== ============= =========== ======== ======== ================ ======== ========
Acquisition of
non-controlling
interest - - (940) - - - (940) (23) 963 -
Credit to equity
for
share based
payments - - - - - 108 108 - - 108
Transactions with
owners in their
capacity
of owners - - (940) - - 108 (832) (23) 963 108
Profit for the
year - - 753 (33) - - 720 (70) - 650
Total
comprehensive
income for the
year - - 753 (33) - - 720 (70) - 650
Balance at 31
December
2019 106 7,035 5,707 (70) 114 375 13,267 - - 13,267
========= ========= ========== ============= =========== ======== ======== ================ ======== ========
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2019
2019 EUR 000 2018 EUR 000
Note Restated
----- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES (I) 11 2,960 1,599
==================================================================== ============= =============
- Purchase of intangible assets (82) (47)
- Purchase of property, plant and equipment (739) (769)
* Proceeds from disposal of property, plant and
equipment 92 7
CASH FLOWS USED IN INVESTING ACTIVITIES (II) (729) (809)
==================================================================== ============= =============
- Proceeds from obligations under finance leases - 191
- Proceeds from bank borrowings 2,925 2,317
- Repayment of obligations under finance leases (1,631) (871)
- Repayment of borrowings (2,927) (1,836)
(167) -
* Payments to acquire shares from non-controlling
interests
- Dividends paid to shareholders - (1,708)
CASH FLOWS USED IN FINANCING ACTIVITIES (III) (1,800) (1,907)
==================================================================== ============= =============
Effect of foreign exchange rate changes (IV) 29 (50)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (I+II+III+IV) 460 (1,167)
==================================================================== ============= =============
Cash and cash equivalents at the beginning of the year 5,069 6,236
Cash and cash equivalents at the end of the year 5,529 5,069
NOTES
For the year ended 31 December 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.
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
These consolidated financial statements were prepared by the
Board of Directors in accordance with the application of
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and the interpretations issued by the IFRS
Interpretations Committee (IFRS IC) and with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
The consolidated financial statements have been prepared under
the historical cost convention unless indicated otherwise in the
notes to the consolidated financial statements.
The principal accounting policies adopted are set out below.
2.2. Going concern
These financial statements have been prepared on a going concern
basis, which assumes the Group and parent company will continue to
be able to meet their liabilities as they fall due, within 12
months of the date of approval of these financial statements.
The Group meets its day-to-day working capital requirements from
cash flows generated from operations and banking facilities. The
Group has committed banking facilities which are due to be repaid
in March 2021 with a bullet payment of EUR4m.
In June 2020, following the COVID-19 pandemic, the Group entered
into additional new EUR3m bank facilities with its existing banking
group. These new facilities have a grace period of 12 months,
followed by 48 monthly instalments. In addition, a waiver was
received in relation to compliance with financial covenants
attached to the existing bank loans throughout the going concern
assessment period. These facilities were put in place to provide
increased liquidity headroom to operate following the COVID-19
pandemic and coupled with operational cash flows to enable
settlement of the existing bank facilities as they fall due.
In evaluating the going concern assumption, the Group have
prepared cash flow forecasts to December 2021, together with
sensitivity analyses. The Group considered the adequacy of the
facilities in the light of the current and projected trading
performance, and strong Order Book and are confident the Group will
continue to operate within its available facilities for the
foreseeable future, including the settlement of the bullet payment
of the existing bank facilities.
The forecasts include a number of material assumptions with
regards to the duration or severity of the impact of the COVID-19
pandemic. Given the uncertainty at the time of the publication,
there is a risk that liquidity may not be in line with the
sensitised forecasts and that further action will be necessary to
ensure that sufficient liquidity will be available to meet
liabilities as they fall due.
Given the information available, current trading and orders
being received, the Directors are confident that the forecasts will
be met, and sufficient liquidity will be available to meet
liabilities as they fall due, including the bullet payment on the
existing bank facilities, and therefore believe it is appropriate
to prepare the financial statements on a going concern basis.
However, if the impact of the COVID-19 pandemic were to be more
severe with more significant impacts on operations the Group may
not have sufficient cash resources to meet its liabilities as they
fall due, which indicates the existence of a material uncertainty
which may cast significant doubt for the Group and parent company
with regards to their ability to continue as a going concern. The
financial statements do not include the adjustments that would
result if the Group and parent company were unable to continue as a
going concern.
3. Segment information
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.
Any transaction between reportable segments is performed on an
arm's length basis.
3.1. Business segments
Segment information about the above businesses is presented
below for the year ended 31 December 2019 and 2018:
Year ended 31 December 2019
Total reportable
Coating Supply segments
-------- ------- -----------------
EUR000 EUR000 EUR000
Revenue 53,718 10,109 63,827
======== ======= =================
Gross profit 12,731 2,254 14,985
======== ======= =================
Adjusted EBITDA 3,628 880 4,508
Depreciation and amortisation (2,808)
Performance share plan (108)
Exceptional items (333)
Operating profit 1,259
Gain on financial instruments 379
Finance costs (810)
Profit before tax 828
=================
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 items (880)
Operating Loss (4,269)
Gain on financial instruments 417
Finance costs (737)
Loss before tax (4,589)
=================
Segment results include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis.
At 31 December 2019 and 2018 the Group has the following
specific assets allocated to the business segments:
31 December 2019
Total reportable
Coating Supply segments
--------- -------- -----------------
EUR000 EUR000 EUR000
Goodwill 8,502 848 9,350
Inventories 157 2,378 2,535
Trade and other receivables 7,493 1,163 8,656
Trade, deferred income and
other payables (14,041) (3,427) (17,468)
========= ======== =================
31 December 2018
restated
Total reportable
Coating segments
restated Supply restated
---------- -------- -----------------
EUR000 EUR000 EUR000
Goodwill 8,485 848 9,333
Inventories 109 2,437 2,546
Trade and other receivables 7,080 1,027 8,107
Trade, deferred income and
other payables (13,336) (3,427) (16,763)
========== ======== =================
Assets, including PPE and certain intangibles, are used across
the Group and are not, therefore, attributable to any specific
segment.
3.2. Geographical location
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
2019 2018
------------- -------------
EUR000 EUR000
------------- -------------
Spain 31,434 27,187
United Kingdom 128 1,422
Rest of Europe 23,659 8,225
Rest of the World 8,606 8,130
63,827 44,964
============= =============
At 31 December 2019 the Group has non-current assets allocated
to Europe and "Rest of the World" for an amount of EUR 28,591
thousand and EUR2,212 thousand, respectively ( EUR 28,647 thousand
and EUR2,043 thousand, respectively, at 31 December 2018).
4. Exceptional items
The following table provides a breakdown of exceptional
items:
Year ended Year ended
31 December 31 December
2019 2018
------------- -------------
EUR000 EUR000
------------- -------------
Transaction fees - (127)
Restructuring costs (333) (753)
(333) (880)
============= =============
Restructuring costs for the year 2019 and 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 2018 are mainly related to
professional fees in relation to an aborted transaction.
The tax effect of the above exceptional costs amounts to EUR72
thousand for the year ended 31 December 2019 (EUR183 thousand for
the year ended 31 December 2018).
5. Tax
5.1 Tax recognised in profit or loss
Year ended Year ended
31 December 31 December
2019 2018
------------- -------------
EUR000 EUR000
------------- -------------
Corporation Tax
Current year (55) (74)
Prior years - 75
------------- -------------
(55) 1
------------- -------------
Deferred tax
Timing differences 157 428
Tax losses (247) 963
------------- -------------
(90) 1,391
------------- -------------
(145) 1,392
============= =============
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 profit/(loss) as follows:
Year ended Year ended
31 December 31 December
2019 2018
------------- -------------
EUR000 EUR000
------------- -------------
Profit/(Loss) before
tax from continuing
operations 828 (4,589)
------------- -------------
Tax at the Spanish corporation
tax rate (25%) (207) 1,147
Overseas tax differences 6 52
Tax effect of incomes
/ (expenses) that are
not considered in determining
tax profit 3 39
Utilisation of previously
unrecognised losses 82 32
Other differences (29) 122
(145) 1,392
------------- -------------
6. Earning/(loss) per share
Year ended Year ended
31 December 31 December
2019 2018
-------------- --------------
Earnings/(losses) for
the year attributable
to shareholders (EUR000) 753 (3,016)
Weighted average number
of shares 46,640,000 46,640,000
Basic earnings/(losses)
per share (EUR) 0.02 (0.06)
============== ==============
Adjusted basic earnings/(losses)
per share (EUR) 0.06 (0.02)
============== ==============
Dilutive weighted average
number of shares 47,777,975 47,364,350
-------------- --------------
Diluted earnings/(losses)
per share (EUR) 0.02 (0.06)
============== ==============
Adjusted diluted earnings/(losses)
per share (EUR) 0.06 (0.02)
============== ==============
7. Goodwill and Intangible assets
Goodwill
Goodwill
---------
EUR000
---------
Cost
At 1 January 2018 9,292
Exchange differences 41
---------
At 31 December 2018 9,333
Exchange differences 17
---------
At 31 December 2019 9,350
=========
Carrying amount
At 31 December 2019 9,350
=========
At 31 December 2018 9,333
=========
At 1 January 2018 9,292
=========
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
2019 2018
------------ ------------
EUR000 EUR000
------------ ------------
Coating 8,502 8,485
Supply 848 848
9,350 9,333
============ ============
8. Borrowings and obligations under leases
31 December
31 December 2018
2019 Restated
------------ ------------
EUR000 EUR000
------------ ------------
Syndicated loan 6,788 8,626
Capitalised costs -
net (313) (571)
Revolving credit facility 527 1,027
Factoring facility 2,714 1,199
Other financial liabilities 261 591
Total borrowings 9,977 10,872
============ ============
Amount due for settlement
within 12 months 5,062 4,384
============ ============
Amount due for settlement
after 12 months 4,915 6,488
============ ============
31 December 31 December
2019 2018
------------ ------------
EUR000 EUR000
------------ ------------
Obligations under leases 3,755 1,955
Total obligations under
leases 3,755 1,955
============ ============
Amount due for settlement
within 12 months 1,571 816
============ ============
Amount due for settlement
after 12 months 2,184 1,139
============ ============
8.1 Summary of the borrowing arrangements
Syndicated loan -
On 3 March 2016, the Group subsidiary, Hemisphere Coating
Services, S.L.U., signed a syndicated loan agreement with three
financial institutions, expiring on 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 on 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 +3%.
The loan requires compliance with certain financial covenants.
At 31 December 2019 the Group has 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.
Additionally, the Group has at its disposal:
-- Revolving credit facilities up to EUR 1.5m.
-- Factoring and discounting facilities up to EUR 14.8m.
-- Bank guarantees up to EUR10.3m, of which EUR2.8m were drawn as of 31 December 2019.
As a result of the above agreements, at year end the Group has
bank facilities totalling EUR26.6m of which EUR8.9m were drawn and
EUR17.7m were undrawn as of 31 December 2019.
Prior year numbers have been restated. A detailed explanation is
set out in note 13.
8.2 Obligations under leases
As of 31 December 2019, the Group had the following minimum
lease payments due to lessors in accordance with current contracts
in place:
Minimum lease payments
-----------------------
As at
31 December 2019
-----------------------
EUR000
Amounts payable under Obligations under leases:
Within one year 1,571
In the second to fifth years inclusive 2,156
After five years 28
3,755
=======================
Finance lease liabilities were included in borrowings until 31
December 2018, but were reclassified to lease liabilities on 1
January 2019 in the process of adopting the new leasing
standard.
As of 31 December 2018, the Group had the following minimum
finance lease payments due to lessors (including, where applicable,
the purchase options) in accordance with current contracts in
place:
Minimum lease payments
-----------------------
As at
31 December 2018
-----------------------
EUR000
Amounts payable under finance leases:
Within one year 816
In the second to fifth years inclusive 1,139
1,955
=======================
The financial lease contracts are formalised in euros and have
fixed interest rates in accordance with the financial market.
8.3 Obligations under operating leases
From 1 January 2019, the Group has recognised right-of-use
assets for these leases, except for short term and low-value
leases
As of 31 December 2018, the Group had outstanding commitments
for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
Minimum lease payments
-----------------------
As at
31 December 2018
-----------------------
EUR000
Amounts payable under operating leases:
Within one year 590
In the second to fifth years inclusive 1,408
After five years 52
2,050
=======================
The Group recognised EUR903 thousand as expenses in the year
ended 31 December 2018 for operating lease payments.
9. Equity
At 31 December 2018 and 2019 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.
No dividend was declared or paid during the year ended 31
December 2019. 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)
pro-rated for the period for which the Company had been AIM quoted
for the year ending 31 December 2017.
At 31 December 2019 the Group registered a share based payment
reserve amounting to EUR375 thousand based on the agreements.
10. Acquisitions
On 30 June 2019, the Group completed the acquisition of ACA
Marine, SAS, acquiring the remaining 30% to Atko, SARL 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.
11. Notes to the Cash Flow Statement
Year ended Year ended
31 December 2019 EUR 000 31 December 2018
Restated EUR 000
=========================== ===================
Profit / (loss) for the year before tax 828 (4,589)
--------------------------- -------------------
- Depreciation and amortisation 2,808 1,886
- Impairment - 480
- Performance share plan 108 108
- Gain on financial instruments (379) (417)
- Finance net costs 810 744
- Exchange differences (27) 11
Adjustments to profit / (loss) 3,320 2,812
--------------------------- -------------------
- Decrease in inventories 12 521
- (Increase)/decrease in trade and other receivables (549) 3,415
- Increase in trade and other payables 520 324
Changes in working capital (17) 4,260
--------------------------- -------------------
- Interest paid (491) (616)
- Income tax paid (680) (268)
Other cash flows used in operating activities (1,171) (884)
--------------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES 2,960 1,599
=========================== ===================
Prior year numbers have been restated. A detailed explanation is
set out in note 13.
12. Post Balance sheets events
Subsequent to 31 December 2019, the COVID pandemic spread across
the world. The impact of the pandemic on the Group is set out in
the Strategic Report contained in the annual report and
consolidated financial statements for the year ended 31 December
2019. As part of its response to the pandemic, the Group entered
into an agreement with its banks to access EUR3.0m of new borrowing
facilities to provide additional liquidity in case the pandemic
continued for a longer than anticipated period. No other events
have occurred after 31 December 2019 that might significantly
influence the information reflected in these consolidated financial
statements.
13. Restatement of prior period balances
The Group has factoring facilities with the Spanish bank,
Bankia, that are categorised as both recourse and non-recourse
arrangements.
One of the factoring agreements, titled Factoring Without
Recourse, had historically been treated as a without recourse
arrangement, and the related trade receivables and current
financial liabilities were derecognised. The terms of that
agreement have been reassessed during the year, and it has been
concluded that substantially all risks and rewards in relation to
insolvency and late payment had not been transferred to Bankia, and
as a consequence did not meet the requirements of IFRS 9 to
derecognise an asset and liability alongside with a financial
liability.
As a result of the reassessment the comparatives for the year
ended 31 December 2018 have been restated. Trade receivables
alongside with current financial liabilities associated with
factoring facilities amounting to EUR1.2m respectively, that were
derecognised in the prior year, have been reinstated in the
consolidated statement of financial position as at 31 December
2018. In relation to the cash flow statement, the cash flow from
operating activities has been restated in relation to trade and
other receivables and the cash flows used in financing activities
has been restated in relation to proceeds from bank borrowings by
EUR1.2m respectively. The prior year adjustment has a net impact of
nil on the net assets. It also has no impact on the consolidated
statement of comprehensive income.
Subsequent to the year end, the Directors have agreed a new
factoring without recourse arrangement with Bankia. The new agreed
terms and conditions for this facility are designed to allow it to
meet the requirements of IFRS 9 for factoring without recourse.
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
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