Founded in 2012 by the merger of two superyacht painting brands, Pinmar and Rolling Stock, GYG plc (formerly Global Yachting Group) now also includes the ACA Marine, Pinmar Supply and Technocraft brands. It also has the accolade of being one of the few publicly listed supply companies within the superyacht industry, following its Initial Public Offering (IPO) on the London Stock Exchange’s AIM market in July 2017. Specialising in superyacht painting, supply and maintenance, since undertaking this next step in its growth, it has been something of a roller-coaster ride for the company and market as a whole, with the company experiencing a particularly difficult year in 2018.
The problems faced by the company in 2018 were caused by multiple factors, including smaller than anticipated project wins for new-build yachts and delays in refit contracts which were partly due to refit market turbulence and reasons beyond the company’s control. This resulted in GYG having to warn on profit, as it would not be able to reach the expectations set by the City. Speaking to CEO Remy Millott following two recent profit growth announcements, it’s clear that the company has moved beyond these initial teething problems and the outlook for the Group is looking decidedly sunnier going forward. Sitting down with Millott, we find out why a company like GYG would decide to put all their cards on the table and open themselves up to public scrutiny through an IPO and discover his vision for the future of the Group. 
We did a private equity deal with Lonsdale Capital Partners who bought 60% of our shares, exiting some of the small minority shareholders along the way. That was supposed to be a five-year deal but ended up being a two-year deal as Lonsdale saw a significant upside to their investment which was faster than was initially expected. We started to perform very well and the Director of that fund said to me, “I’ve got to inform you, Remy, we’re probably looking to exit earlier than originally planned so you should start thinking about what you’re going to do next.” I felt that to realise our growth plans and start increasing market share in the new-build sector where the really big contracts are, we needed to have a clear, long-term strategy for ownership of the Group going forward. I looked at the IPO option, and everyone was supportive including our private equity investors. They still own 19% and like the business and its growth pipeline a lot. The company has performed well for them and they remain very supportive.
Talk us through the process of completing the IPO.
Once we agreed on the IPO option and everyone was fully behind the idea, we found a broker, Zeus Capital, who advised us on the process of becoming a public company, which we successfully did in July 2017. It happened very quickly: we started in February and for a relatively small yacht business to get an IPO done in a few months was really quite impressive! 
After the IPO, people noticed us more because there are only one or two listed businesses in the industry. When we walk into these big northern European shipyards and sit in front of the Managing Director and CEOs, there is a lot more respect from them on the basis of what we have achieved. Sitting there with very big investor funds behind us and being able to offer GYG parent company guarantees for these big contracts is a very good thing and gives us credibility. Doing business with a listed company gives people a lot more comfort and that has certainly helped us win market share in new build.
The downside of being a listed business is that it’s quite taxing on the management team and a lot of new skills and information have been learned and applied to meet these demands. If you want to be successful on the market you have to do lots of investor relationship work and there is a lot more reporting that goes on. Of course, if you are having a bad time, then everybody knows about it. This is the same in any listed business: when things are going well, it’s great, but when things are going badly, we get a tough time. We’re certainly enjoying it - it has been very worthwhile and I am confident that this business can perform really well on the market going forward.
Within the yachting industry, larger yachts and new-build projects are often highly confidential, how do you deal with this as a publicly listed company?
Well, we can deal with it much better than most - we cannot make public announcements that may be sensitive to our share price so we have to keep everything confidential in terms of performance. We report twice a year, which is in June and at the end of the year and any news that flows out of us in the meantime can’t happen without a very strict structure around it. Of course, there is a fine balance to strike, but for the shipyards, that also gives them confidence because we can’t talk about what we’re doing. Most of these contracts have non-disclosure agreements and everyone is very respectful of them. The industry has changed and there is a lot more professionalism around protecting those confidential things.
Thinking about the future of the superyacht market: how dependent is your growth on the leading shipyards? In other words, if they don’t sell big yachts, will that make it difficult for your company to grow?
Well, organically yes. Our organic growth plans are quite ambitious so we are looking to increase market share in many areas of Europe and the USA. If there is a downturn in the future production of large yachts that will affect our new-build revenues. It’s important to note however, that this won’t impact our refit business because even though they might not be building as many new yachts there is still a huge fleet out there that needs servicing and maintaining.
As for the market outlook, we do constant health checks and conduct market research which gives us good quality information to share with investors. So far, the new-build yards seem very positive. The upper end of the market (70-90m+), which is the one we are most interested in, was growing throughout the financial crisis and is still growing today. That doesn’t look like it’s going to change anytime soon, so that’s a real positive outlook for us. 
Are there other threats or risks to your business that you might need to prepare for in the future?
As you know, we had a poor 2018, and we can’t attribute all of that just to the fault of the industry. As a business, we need to be more prepared for a market downturn. We have restructured the senior management team and have placed more emphasis on accountability within the business. We have also installed a CRM system and are much more proactive in terms of leads and contacting people with a far more structured sales team. We now have much better visibility of our sales pipeline and have been successful in growing our order books two years in advance, so that will obviously give us a lot more flexibility if there is a downturn in any area of the business.
Do you see the opportunity to potentially diversify the business and move outside of the yachting industry?
I can’t see that with this business. Market research tells us that between 2019 and 2022-3, the estimated new-build segment is worth 1.2 billion just for paint, so there is a huge organic growth opportunity for the business there. The market expects significant growth so we will obviously be looking at acquisitions going forward which may not be core business. I very much doubt that we will move outside the industry, but within the industry, I am looking at various opportunities that could complement our core business.
Could this potentially include buying a shipyard going forward?
Potentially, but it would have to be a very strategic deal because we work in so many shipyards and we wouldn’t want to compete with one of the shipyards with which we are closely working with. If we bought a shipyard and it started competing with MB92, that would be suicidal! But if it was a shipyard that could work with other shipyards in a way that was compatible with our refit partners and ourselves then why not! 
Last year you announced two substantial new-build contracts in northern Europe: a 140-metre superyacht and a 94-metre superyacht, and you have announced three contracts for new builds over 70 metres in northern Europe since the end of 2018. What does a 100m+ boat represent for you in terms of revenue?
What I can tell you is that the contract prices for our work on yachts over 70 metres can be anything between 3-12 million euros. This depends on the square metres, how much volume a yacht has got and how much of the boat we are working on. The 100m+ boats can be anything over 7-8 million euros and upwards.
What has been the most challenging moment for you personally working in this business?
Trying to get through our profit warnings last year was probably one of my toughest moments. I think people have a lot of trust in what you say and what the business can do. Being a junior in the market and having to go back with profit warnings after such a short period of time was disappointing for our investors. The investors stuck with us: they, like us, are very motivated, hence why I spend a lot of time keeping them up to date with what we’re doing. We are very lucky and we’ve got some fantastic investment funds on board. They like this business and the industry and are looking forward to the next phase of our success. 
I’d love to get this business to 100 million market cap as quickly as possible. My focus is on making our business more efficient, improving margins and promoting growth.
I want to thank all of our loyal clients and partners in the industry for their confidence in supporting us as we look forward to the next few years of success with them. So many shipyards have invested a lot of money in the last couple of years, such as Lürssen buying Blohm + Voss and MB92’s acquisition of Composite Works plus their upgrade in Barcelona, Rybovich and Savannah in the USA. There are a large number of shipyards gearing for growth and we are looking forward to helping them grow their businesses in the future.
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