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Global Yachting Group

Delays continue into H2

GYG Plc (LON:GYG) has released H1 results which, as expected, reflect the challenging trading conditions the company has faced during the period. Operational challenges in key refit locations, and slower than expected growth in the new build division has impacted trading in the first half, as previously flagged. Clearly trading conditions have been challenging in H1 and a number of external factors have held back performance to date. We leave our full year forecasts unchanged for now, albeit any further disruptions to the operations during the period would put these at risk.

Interim results: GYG has announced H1 results to 30 June 2018, with revenues -26% corresponding to an adjusted EBITDA (pre-exceptional items and share based payments) loss of €0.1m. It was flagged on the trading statement of 12 July that H1 adjusted EBITDA would be “approximately breakeven.” Net debt at the half year is €10.5m, up from €6.8m at the same time last year and €6.7m at the end of FY17. An interim dividend has not been declared, albeit it remains the current intention of the board to pay a final dividend at the year-end depending on H2 trading conditions.

Key performance drivers: As reported in July, it has taken longer than expected to develop the necessary relationships and capturing short term new build business in H1 2018 has proven difficult. There are currently three confirmed new build orders, which has resulted in a record FY 2019 order book. We had also seen delays in this division due to the extraordinary sequence of hurricanes, flow through into the first half of this year. The impact of contract deferrals has continued to impact this business into H2 2018. Supply has also seen a challenging six months due to lower activity levels in New Build and Refit for reasons discussed above. Revenue was flat at €5.3m and was impacted by five key trade accounts. We do not believe there are any competitive pressures.

Forecast assumptions: Clearly trading conditions have been challenging in H1 and into H2 with external factors holding back performance to date. We leave our full year forecasts unchanged for now, based on the H2 order book, albeit we recognise that challenges remain and any further disruptions to the operations during the period would put these at risk.

Outlook: The order book for the remainder of the year remains healthy. The difficulties faced in the first half and subsequent underperformance in the year to date means the group will need to avoid further operational disruptions and execute its H2 order book and near-term pipeline very efficiently to meet full year expectations. Industry dynamics remain attractive with GYG Plc well positioned to benefit.