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GYG – from confidence “can deliver continued growth” on AIM IPO to trading “significantly weaker than expected” just a year later!

By Steve Moore | Thursday 12 July 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

On 5th July 2017 it was “GYG, a market leading superyacht painting, supply and maintenance company, is pleased to announce the commencement… of dealings of its ordinary shares on AIM… Placing price 100p, gross proceeds of the placing £6.9 million… Zeus Capital is acting as the company's nominated adviser and broker”. Now a trading update commencing “trading has been significantly weaker than expected”. Uh oh…

This is stated to be due to lower than expected project wins in New Build (“bid on a number of material New Build contracts during H1 2018 which were unsuccessful”) and some additional delays in anticipated Refit contracts. As a result, “revenue for the six months ended 30 June 2018 of approximately €25.1 million and approximately breakeven at the adjusted EBITDA level… expects full year revenue to be flat on 2017 and adjusted EBITDA to be materially below the board's expectations at approximately €5 million”.

Adjusted EBITDA is of course bullshit earnings - the stated compares to €7.2 million for the 2017 calendar year, which generated even an adjusted pre-tax profit of €4.4 million and the company ended the year with net debt of €6.7 million. CEO Remy Millott though argues “despite the first half of the year being difficult for the group and the industry as a whole, we remain confident that the superyacht refit market is returning to normal trading patterns... we have made significant progress in winning contracts in the New Build sector and this, combined with large Refit contracts in the pipeline for 2019, ensure that we are well placed to take advantage of the many opportunities that are being presented”.

Hmmm. And then again on AIM admission Remy and co. were stating “GYG’s core addressable market (new build and refit Superyacht painting), was worth approximately €290 million per annum in 2015. The market is forecast to grow six per cent. per annum, on average, from 2015 to 2020, driven primarily by growth in the refit market... the directors and proposed directors believe that they can deliver continued growth”.

Unsurprisingly, the shares have resultantly now slumped – to sub 70p. This still though capitalises the company at more than £32 million and, given the above, I certainly wouldn’t want to be holding. It’s an entry into the AIM IPO roll-call of shame for;

Chairman – Stephen Murphy, CEO – Remy Millott, CFO – Gloria Fernandez, MD – Rupert Savage, Non-Exec – Richard King, Nominated Adviser & Broker – Zeus Capital (AGAIN!), PR - FTI Consulting.

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