The board of GYG plc (LON:GYG) provided an update in relation to various matters, as set out below.
Update re: Nobiskrug Shipyard and the Company’s financial position
The Company announced, on 13 April 2021, that administrators had been appointed at the Nobiskrug Shipyard in Germany. The Company has three active contracts and certain invoices outstanding, relating to work completed in 2021 at the shipyard, totalling approximately €2.8m (excluding VAT).
The Company has, since April, continued in constructive discussions with the various parties involved, with a view to agreeing a programme of works and a payment schedule for completion of the contracts, which both minimises GYG’s financial exposure and achieves a satisfactory outcome for the end clients.
On numerous occasions during this period, it appeared to the Board that a satisfactory resolution was imminent. The discussions have, however, taken longer to conclude than the Board had originally anticipated. Whilst the Board continues to be confident in achieving a positive outcome for the Company, and none of the outstanding balances due to the Company are in dispute, the Board cannot guarantee a swift resolution to this matter.
Accordingly, the Board now expects that, as a result of the continuing unforeseen delay in resolving the Nobiskrug situation, in combination with the normal seasonal trading profile of the business, the Company will suffer a temporary working capital shortfall within the next one to two weeks, without an injection of bridge funding.
Loan Agreement
Having regard to the current status of the situation at Nobiskrug, the Company has agreed terms for North Atlantic Smaller Companies Investment Trust plc (“NASCIT”, an associate of Harwood Capital LLP (“Harwood”) , the Company’s second largest shareholder) to provide the Company with a short-term loan (“Loan” or “Loan Agreement”) for €3 million which will be advanced immediately. The Company has, since 9 April 2021, been in an offer period (as defined in The City Code on Takeovers and Mergers), with Harwood identified as a possible offeror.
The Loan, which will be secured by way of an assignment over the outstanding invoices related to work performed to date by the Company for the Nobiskrug Shipyard, attracts interest at 10% p.a.. There are no arrangement fees associated with the Loan, which can be repaid by the Company at any time without penalty on or before its maturity date of 31 December 2021.
The Board intends to repay the Loan following resolution of the situation at Nobiskrug and payment of the amounts owed to the Company pursuant to the related outstanding invoices.
Related party transaction
NASCIT is a related party under the AIM Rules for Companies (“AIM Rules”), being an associate of Harwood Capital LLP, a substantial shareholder. Entry into the Loan Agreement therefore constitutes a related party transaction under the AIM Rules. Accordingly, the Directors (each of whom is considered by the Board to be independent of NASCIT), consider, having consulted with Singer Capital Markets Advisory LLP, acting in its capacity as the Company’s nominated adviser, that the terms of the Loan are fair and reasonable insofar as the Company’s shareholders are concerned.
Update on trading for the six months ended 30 June 2021
Turnover and activity levels across the Group were broadly in line with the Board’s expectations during H1 2021. This included the benefit of some revenue deferred from Q4 2020, as previously reported.
Overall, and, notwithstanding the ongoing situation at Nobiskrug and the consequential effect on the Company’s short-term funding position as described above, the Board is broadly satisfied with the Group’s trading performance for the period and the order book position remains strong.
The Company will release a more detailed update on trading, for the six months ended 30 June 2021, during August.
Spanish Tax Authority – audit
The Company also announces that the Spanish Tax Authority has recently conducted an audit into certain legacy tax matters relating to a period several years prior to the Company’s IPO on AIM in 2017. The audit is now nearing its formal conclusion and agreement in principle has now been reached as to the amount owed by the Company. Accordingly, the Board has made a provision of €1.1 million in the Company’s accounts.
