Global Ports Regulatory News (GPH)

Global Ports Holding Plc

Full year results for the twelve months ended 31st December 2018

Global Ports Holdings announces record full year results 

Global Ports Holding Plc ("GPH" or "Group"), the world's largest independent cruise port operator, today announces its unaudited results for the twelve months ending 31 December 2018.

Overview

Group - Strong full year performance

· Total consolidated revenues were $124.8m in the period up 7.2% yoy (5.0% ccy)

· Record full year Segmental EBITDA - up 12.7% to $90.7m (up 10.6% ccy), full year Adjusted EBITDA - up 11.2% to $83.7m (up 8.9% ccy), in line with management expectations

· On a statutory (IFRS) basis operating profit improved by 229.4% to $35.9m which was primarily driven by the 7.2% increase in revenue, a partial reversal of replacement provisions for Spanish cruise ports ($12.2m) and the positive effect of our Turkish Lira based cost structure at our operations located in Turkey. Share of profit of equity-accounted investees grew strongly in the period, up 124% to $5.6m (FY 2017: $2.5m), with Net Finance Cost rising to $32.9m (FY 2017: $24.0m) driven principally by a negative foreign exchange effect on the Group's Eurobond debt. There was therefore an overall rise in profit before tax of 182% to $8.6m (FY 2017: loss of $10.5m).  

Cruise - A year of substantial progress

· Record full year Cruise revenue up 9.2% to $54.9m (4.7% ccy) and record Cruise Segmental EBITDA up 16.8% to $37.6m (12.0% ccy)

· Strong performance primarily driven by Creuers (Barcelona and Malaga cruise ports) reflecting a beneficial PAX mix in the year and a strong contribution from the equity accounted associate ports (Lisbon, Singapore and Venice), offset by the previously highlighted weaker performance from Valletta in the year

· Significant progress on strategic goal of delivering inorganic growth. Signed a management agreement for Havana cruise port and a concession agreement for Zadar Gazenica cruise port

· Further significant and potentially transformational progress made by the group since year end, with a concession agreement signed in Antigua and Barbuda and preferred bidder status awarded in Nassau, The Bahamas

· Consolidated and managed portfolio passenger volumes increased by 8.8% in the year. While passenger volumes remained subdued for our Turkish cruise ports in 2018, we expect to welcome a significant increase in passengers at Ege Port in 2019 

Commercial - robust performance for full year, H2 volume weakness offset by new services

· Commercial Revenue up 5.8% to $69.9m (5.1% ccy) and Commercial Segmental EBITDA up 10.0% to $53.1m (9.7% ccy).

· General & Bulk Cargo volumes fell 9.2% and TEU throughput fell by 5.1%

· Volumes in traditional cargo categories were notably weak towards the end of the year but this impact was largely offset by the positive benefits of the continued drive to diversify and grow revenues in new areas

· New services introduced in the year or planned for 2019 include a new storage facility, Ro-Ro service, dangerous liquid handling and a further expansion of our oil drilling support services capabilities

The board intends to meet before the end of March 2019 to consider the dividend for the full year. If the board believes it is appropriate to do so, it will recommend a final dividend for the year at this stage. There can be no certainty as to the timing or the final outcome and we will provide further announcements, as appropriate, in due course.

Outlook & current trading

Overall 2019 has started well and operational results are overall in line with management expectations, with Cruise trading ahead of expectations, offset by some continued weakness in Commercial. Due to the seasonal nature of the business, the first quarter of the year is always the quietest trading period in particular for the cruise business but also the commercial divisions of GPH. Therefore, Q1 trading trends do not inform the trend for the full year.

Cruise passenger volumes are in line with our expectations year to date. As we look to the remainder of the year we are particularly pleased to see a significant increase in calls scheduled for Ege Port, Turkey. While we look forward to a stronger performance from Valletta in 2019 and to a full year contribution from our management agreement in Havana, which is delivering ahead of expectations.

Elsewhere we continue to work on improving the cruise port experience for cruise lines and cruise passengers across our portfolio and we are looking forward to delivering on a number of projects in this area in 2019, particularly the refurbished retail facilities at Barcelona which are scheduled to be completed in Q1.

We have achieved significant progress with our inorganic growth plans in Cruise during 2018, signing a management agreement for Havana cruise port and a concession agreement for Zadar Gazenica cruise port. Since the year end we have signed a concession agreement in Antigua and Barbuda and were awarded preferred bidder status in Nassau, The Bahamas. We continue to work with all stakeholders towards successful conclusion on these agreements including financing where required, although there can be no certainty as to the timing or that the final conditions will be satisfied and we will provide further announcements, as appropriate, in due course.

Trading at our Commercial Ports is currently slightly behind our expectations at the Segmental EBITDA level. Container volumes are broadly in line with last year, however, General & Bulk volumes are currently down significantly year on year, primarily driven by a sharp drop in cement volumes in Port Akdeniz since year end. However, the success of our strategy to diversify revenues at our commercial ports means we currently expect to largely offset this impact at the EBITDA level in 2019.

We expect to once again deliver mid to high single digit organic growth in Adjusted EBITDA in 2019.

Emre Sayin, Chief Executive Officer said;

"I am proud of our performance in the year, record passenger volumes, record Adjusted EBITDA, our first new port investments since IPO, including a management agreement for Havana, our first in the Americas and the extension of Bodrum concession by 49 years is a reflection of considerable progress across the Group in 2018. Since the year end overall trading has been in line with our expectations and with an active pipeline of new port opportunities we look to 2019 with confidence."

Notes- For full definitions and explanations of each Alternative Performance measures in this statement please refer to the Glossary of Alternative Performance Measures.

1. All $ refers to United States Dollar unless otherwise stated

2. Segmental EBITDA is calculated as income/(loss) before tax after adding back: interest; depreciation; amortisation; unallocated expenses; and specific adjusting items

3. Adjusted EBITDA calculated as Segmental EBITDA less unallocated (holding company) expenses

4. Underlying Profit is calculated as profit / (loss) for the year after adding back: amortization expense in relation to Port Operation Rights and the one-off expenses related to the IPO and deduction of reversal of replacement provisions

5. Adjusted earnings per share is calculated as underlying profit divided by weighted average number of share

6. Performance at constant currency is calculated by translating foreign currency earnings from our consolidated cruise ports, management agreements and associated ports for the current period into $ at the average exchange rates used over the same period in the prior year.

7. Passenger numbers refer to consolidated and managed portfolio consolidation perimeter, hence it excludes equity accounted associate ports Venice, Lisbon and Singapore

8. Revenue allocated to the Cruise segment is the sum of revenues of consolidated and managed portfolio

9. EBITDA allocated to the Cruise segment is the sum of EBITDA of consolidated cruise ports and pro-rata Net Profit of equity accounted associate ports Venice, Lisbon and Singapore and the contribution from the Havana management agreement

Notes to Editors

GPH is the world's largest cruise port operator with an established presence in the Mediterranean, Caribbean, Atlantic and Asia-Pacific regions. GPH was established in 2004 as an international port operator with a diversified portfolio of interests in cruise and commercial ports. As an independent cruise port operator, the group holds a unique position in the cruise port landscape, positioning itself as the world's leading cruise port brand, with an integrated platform of cruise ports serving cruise liners, ferries, yachts and mega-yachts. As the world's sole cruise ports consolidator, GPH's portfolio consists of investments in or management of 15 cruise ports and two commercial ports in 9 countries and continues to grow steadily. 8.5 million cruise passengers globally were handled across our portfolio of cruise ports in 2018. The group also offers commercial port operations which specialise in container, bulk and general cargo handling.

For further information, please contact:

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Chief Executive Officer's Review

We can reflect very positively on GPH's performance in 2018.

It was a year where we grew organically, delivered further progress in our ancillary services and we also took important steps to grow our physical reach during the year. Most notably, we expanded our footprint into the Caribbean for the first time with the award of a management agreement for Havana Cruise Port, in line with our desire to diversify through entry into the Americas. We also strengthened our Mediterranean presence with our first port concession in Croatia (Zadar).

Our headline financials were Total Revenue of $124.8m, Adjusted EBITDA up 11.2% to $83.7m, Underlying profit was $26.6m and Profit after tax was $7.1m. We are also equally pleased to have delivered on non-financial goals that we set out a year ago. These included strengthening of our senior team, successfully extending our Bodrum concession and improving the awareness of and the strength of the Global Ports Holding brand.

Cruise

Our cruise business delivered record passenger numbers, record revenue and record Cruise segmental EBITDA in the year, while we also added new ports to our portfolio for the first time since the IPO. Our new ports in the portfolio include a concession agreement at Zadar and a management agreement at Havana.

During the year we refined our ancillary services into three main areas of focus: port services; retail and rental services; and passenger and destination services. We also introduced a new port service evaluation process, which we believe will allow us to better identify tailored services that we can introduce at each relevant port, allowing us to offer an integrated service package to cruise passengers and cruise ships.

On the challenges side, the performance of Turkish cruise ports in 2018 continued to be impacted by the major cruise lines pulling out of Turkey in the previous year, due to geopolitical tensions. Our response has been one of 'active patience'. We have continued to invest in our facilities, and during the year we launched a concerted marketing campaign to the cruise lines. This has started to bear fruit; with all of the major cruise lines starting to return to Turkey, we are looking forward to strong growth in passengers to Ege Port in particular in 2019.

Following the year-end we have signed agreements for the cruise ports in Antigua and Barbuda and were awarded preferred bidder for Nassau, Bahamas and are working towards a full financial close on each. All remain conditional until such times as all conditions are fulfilled. In addition, we are targeting at least one additional new cruise port investment or agreement in 2019 and continue to work on securing concession extensions at a number of cruise ports.

GPH's cruise ports operate in a fundamentally attractive industry, benefiting from a number of structural growth drivers. The current cruise ship order book remains positive, providing a strong underlying growth in cruise passenger numbers for at least the next decade, while the long term trend for overall international tourism remains strong.

The long booking pattern for cruise holidays further increases the attractiveness of the industry, with economic and city based geo-political threats rarely having a noticeable impact on passenger volume. While the continued growth and emergence of middle classes in developing and emerging markets is creating further growth in the number of people who want to travel and enjoy new experiences.

Commercial

Despite cargo volumes falling in the year, 2018 witnessed the highest Segmental EBITDA performance recorded from our Commercial business.

This Commercial EBITDA performance, was driven by a number of factors. During the year, our ports continued to add new services to drive diversification in their cargo exposure and more importantly their Revenue and EBITDA exposure.

For example, Port Akdeniz opened a new warehouse facility and related bonded warehouse services during 2018, while our oil drilling support services work continues to perform well and is creating potential opportunities for us to expand some of these services to other customers. Port Adria's EBITDA growth of 112% in the year was due to the growth of the ongoing business and also revenues from project cargos in the first quarter.

In addition, Port Akdeniz benefitted from the weakness in the Turkish lira due to the port's cost structure being around 70% in local currency, while revenues are almost all exclusively collected in US dollars. Without this effect, Port Akdeniz would have experienced, all other things being equal, an EBITDA decline of 1.8% in the year.

Our commercial ports did experience a slowdown in the latter part of Q4, we believe it was the caused by the cumulative effect of a number of individual factors.

Our commercial ports are not immune to the impact of macro-economic factors such as trade tariffs and their associated impact on global trade in general. While for most of the year we saw no significant direct impact from tariffs or slowing trade, we believe the general uncertainty around global trade played a part in the slowdown experienced by our commercial ports.

In addition, the volatility in the Turkish Lira caused uncertainty amongst importers and exporters, particularly following changes made to currency regulations, although it has no direct impact on our port operations. Finally, the decision by Turkiye Denizcilik Isletmeleri A.S. ("TDI") who is a state-owned company responsible for the operation of certain harbors and shipyards in Turkey, to transfer land that was being used by GPH at Port Akdeniz to the neighbouring Free Trade Zone increased competition for some cargo.

Notwithstanding these factors and the volume slowdown, the year on year growth in Commercial EBITDA stands as testament to the work being done to diversify revenues at Port Akdeniz.

Outlook

For our Cruise business, the global backdrop remains extremely positive. The order books of the world's shipyards, with a record high of 124 new cruise ships being built for launch between 2019-2027, remains very supportive of the global outlook for the cruise industry and cruise passenger volumes. In addition, the industry continues to attract new customers, both by nationality and demographic. For example, millennials are one of the fastest growing passenger segments of the cruise industry.

There is a stark contrast globally between cruise ports and airports. While airports have undergone a significant transformation over the last two decades or so, cruise ports and their passenger focused infrastructure have languished largely unchanged since the 1980s. We believe this has created a unique opportunity for cruise port development globally, including the development of retail and port services at key ports, transforming the cruise port experience for all stakeholders.

We believe the majority of global cruise ports need both transformational investment and a step change in the experience and services offered to passengers and cruise ships. With our experience and know-how, we believe we can play a key role in this development process.

For our Commercial business, the operating environment remains relatively stable, while cargo volumes fell in late Q4. The Turkish economy is recovering from a challenging period and our continued push into diversifying our revenues means that we believe we will be able to largely offset any further volume declines and we look forward to further developing our diversified services.

2019 is set to be an exciting and potentially transformational year for the group. Cruise Segmental EBITDA growth of 12.0% ccy signals the underlying strength of our cruise business and its potential for growth. While the cruise ports in both Antigua and Barbuda and Nassau in The Bahamas currently handle over 4m passengers' a year between them, successfully adding them to our portfolio would more than double our current cruise passenger volumes.

Overall we look into 2019 and beyond with continued confidence on the growth prospects of the group.

Please refer to Footnotes above or for full definitions and explanations of each measure in this statement please refer to the Glossary of Alternative Performance Measures

Group business and finance review

Revenue for the year was $124.8m, up 7.2% (5.0% in constancy currency) and Adjusted EBITDA increased 11.2% (8.9% in constant currency) to $83.7m, with underlying profit falling 6.8% to $26.6m and profit after tax of $7.1m.

Full year growth in consolidated and managed portfolio passengers was 8.8%, driven by the pro rata contribution from our Havana management agreement in the year, while total passenger volumes in our portfolio volumes grew 20% to 8.4m, driven by strong growth from our equity accounted associate ports (Venice, Lisbon and Singapore). Combined these ports welcomed 4.0m passengers, growth of 37% in the year.

Cruise Revenue increased 9.2% to $54.9m (FY 2017: $50.3m), and Cruise segmental EBITDA increased by 16.8% to $37.6m (FY 2017: $32.2m). The performance of our equity accounted associate ports (Venice, Lisbon and Singapore) was a particular driver of this strong growth, with their pro-rata net income contributing at the Segmental and Adjusted EBITDA level $5.6m, (FY 2017: $2.5m). Excluding the impact of our equity accounted associates, Cruise EBITDA growth was at 7.8% (3.4% ccy). On a constant currency basis, full year cruise revenue was $52.7m and Cruise segmental EBITDA was $36.1m.

Overall Commercial Port operations performed in line with our expectations for Segmental EBITDA for the full year, although Q4 volumes were weaker than expected. Commercial revenues rose by 5.8% in the period to $69.9m (FY 2017: $66.1m). Port Akdeniz increased revenues by 2.3% to $59.9m (FY 2017: $58.5m), while Port Adria grew revenues by 32.8% to $10.0m (FY 2017: $7.5m) (27.3% ccy).

Commercial Segmental EBITDA grew by 10.0% to $53.1m in the year, with both ports contributing to this growth. Port Adria delivered EBITDA growth of 112% (103% ccy). As previously disclosed, project cargo which was deferred from 2017 was a significant contributor to this strong performance. EBITDA at Port Akdeniz increased by 5.9%, with this growth due to the weaker Turkish Lira to $. Commercial segmental EBITDA margin of 76.0% was an increase of rose 290bps.

During Q4 volume declines increased at our Commercial ports. General & Bulk Cargo volumes fell 9.2% in the year, recording a 16.8% decline in H2 2018, while in Containers volumes fell 5.1% in the year, with a 10% decline in H2 2018.

Central costs increased by 34% yoy, reflecting a full year of UK Plc costs, our investment in central costs to create a sustainable platform for growth, including the strengthening of the management team, this was partially offset by weakness in the Turkish Lira which reduced central costs by $0.6m.

Total consolidated revenues were $124.8m in the period up 7.2% YoY. On a statutory (IFRS) basis operating profit improved by 229.4% to $35.9m which was primarily driven by the 7.2% increase in revenue, a reversal of replacement provisions for Spanish cruise ports ($12.2m) and the positive effect of our Turkish Lira based cost structure at our operations located in Turkey. Share of profit of equity-accounted investees grew strongly in the period, up 124% to $5.6m (FY 2017: $2,5m), with Net Finance Cost rising to $32.9m (FY 2017: $24.0m) driven principally by a negative foreign exchange effect on the Group's Eurobond debt. There was therefore an overall rise in profit before tax of 182% to $8.6m (FY 2017: loss of $10.5m).  

Turkey

During the period there was significant volatility in regard to the Turkish Lira, albeit Q4 signalled a return to a more stable period for the currency. We are a global business and our revenues are in hard currency reflecting our global footprint and global industry standard norms so there has been no tangible direct impact on the business. Nevertheless, we believe the general uncertainty around the currency and some of the regulation changes that followed it, although not directly applicable to us, had a negative impact on Q4 volumes at Port Akdeniz.

In revenue terms, 52% (FY 2017: 49.7%) of the revenue generated was in Euros and 48% (FY: 2017 50.3%) of the revenue generated was in US dollars, with negligible amounts in Turkish Lira. In terms of costs, at each of our ports the majority of costs are incurred in local currency. For all non-Turkish ports, (with the exception of equity associate Singapore) this means Euro costs matching Euro revenues.

In our Turkish cruise ports the vast majority of our revenues in 2018 were in Euros, however for 2019 we have changed our tariffs to $, while the majority of our costs will remain in Turkish Lira. At Port Akdeniz, 90% of volumes are exports which are based on underlying trades denominated in hard currencies. Our container revenues are generated with major international shipping lines and as is industry standard their revenues are generated in $, and the ultimate exporters in the case of marble are hundreds of small marble producers/exporters, all of whom are exporting marble in $ prices. The majority of general and bulk cargo goods that we are handling for export are traded in $, again in keeping with global industry standards.

Looking into 2019, trading at Port Akdeniz at the EBITDA level has been in line with our expectations year to date. While general and bulk volumes remain weak we expect to largely offset any continued weakness through the continued growth in our new services. While in Cruise, we expect to welcome a significant increase in passengers at Ege port in 2019. All the major cruise lines are starting to return to Turkey in 2019 and continue to talk very positively about the booking and pricing trends they are experiencing for cruise holidays that have Turkey on the itinerary. We currently expect further capacity to be added to the Turkish market in 2020.

Cruise Ports Business Review

The outlook for the global cruise industry remains extremely positive. The global cruise ship order book, which currently sits at a record high of 124 new ships between 2019-2027, remains very supportive of the outlook for the global cruise industry and cruise passenger volumes.

In addition, not only is the total number of cruise ships set to grow, the ships are getting increasingly larger in terms of berths per vessel. In 2017, average berths per vessel was 1,466, while the average size for the 124 new ships on order is over 3,000 berths per ship. We believe the underlying structural growth in overall passenger volumes remains very supportive of our growth strategy in cruise.

Based on current known orders and the greater size of new ships once completed, the implied average global cruise passenger growth rate will be c4-5% per annum over the medium term, with new supply arguably creating its own demand.

As the world's largest cruise port operator we are uniquely positioned to benefit from this structural growth and, in conjunction with our cruise line partners, play an active role in not just managing this growth but also helping drive it.

We welcomed 4.4m cruise passengers to our consolidated and managed portfolio in 2018, a growth rate of 8.7%. While at all ports including Venice, Lisbon and Singapore, our equity accounted associate ports we welcomed 8.4m passengers (FY 2017: 7.0m), a very pleasing growth rate of 20%.

In terms of cruise passenger growth, a headline growth rate of 8.7% is pleasing. Trends at most ports point to a stronger underlying performance, albeit the organic growth rate was just 0.6%. 2018 was always expected to be a relatively subdued year for passenger volume growth at Valletta, however, a number of weather related cancellations in Q1 and Q3 meant passenger volumes fell 8.7% in the year. In addition, an issue over inadequate dredging by the port authority at Ravenna meant that in H2 cruise lines cancelled most of scheduled calls for the remainder of the year, leading to a 86% drop in passengers in H2. If we exclude these two ports, organic passenger volumes rose 3.8% in the year, a rate of growth that is more in keeping with that of the industry.

Cruise Revenue increased 9.2% to $54.9m (FY 2017: $50.3m), while Cruise segmental EBITDA rose to $37.6m, a growth rate of 16.7%. The revenue from our cruise ports in 2018 were almost exclusively Euro based, with most ports also incurring costs in Euros, with the exception of our Turkish ports which have a largely Turkish Lira cost base. In 2019 our Turkish cruise ports will charge cruise lines in $. On a constant €/$ currency basis, full year revenue was $52.7m and Cruise segmental EBITDA was $36.1m, a growth rate of 4.8% and 12.0% respectively.

Our ancillary services performed well in the year, with further services developed across most of our ports. In 2018, we launched a service evaluation process at our ports to identify potential new services that would be attractive to cruise ships that call at each of our ports. While we continued to refine our Guest Information Centers, refurbished and improved and in some cases extended our retail areas. We were delighted to agree terms and start work on refurbishing the retail areas of two of the terminals at Barcelona cruise port, the work is expected to be completed in time for the 2019 cruise season. We look forward to further progress in the delivery of our ancillary services strategy across our portfolio in 2019.

Our equity accounted associates (Venice, Lisbon and Singapore), performed particularly strongly in the year, with a pro-rata net income contribution at the Group EBITDA level of $5.6m (FY 2017: $2.5m). Excluding the impact of our equity accounted associates, Cruise Segmental EBITDA growth in 2018 was 7.8% (3.4% ccy). While it is still early in the process, we are very pleased with the performance of our management agreement in Havana, Cuba, which is delivering ahead of expectations.

While there is much work to be done to conclude the agreements announced since the year end, if they do conclude successfully, we believe they will be transformational for the group.

In line with our expectations, Creuers (Barcelona & Malaga), performed strongly in the year. We welcomed 2.5m passengers in 2018, an increase of 5.1% compared to the same period last year. H2 2018 volumes were flat year on year, in line with our expectations, after a strong H1 2018. Revenue of $31.6m (FY 2017: $27.4m) was up 15.3% yoy in the period, with a constant currency increase of 10.6%.

Yield per PAX and revenue growth in excess of passenger volume growth was driven by a favourable turnaround passenger mix at Barcelona, 65% vs 61%, a trend that was sustained throughout the year.

Creuers delivered EBITDA for the period of $19.8m (FY 2017: $17.6m), up 12.7% yoy, on a constant currency basis EBITDA grew 8.1%. Creuers EBITDA margin of 62.7% was lower than the 64.1% achieved in FY 2017, driven by a weaker performance from Malaga in H2 2018. However, we are confident on the outlook for Malaga in 2019, with planned tariff increases and recent actions take on ancillary services likely to drive an improved performance in 2019.

We were pleased with the performance of our ancillary revenues at Creuers during the year, with notable drivers of performance including increased additional security and extra luggage handling and water supply during the year. However, the most exciting development for ancillary revenue at Barcelona is still to come. In 2019 to date, we have been refurbishing our retail and food and beverage offering at two of the terminals at Barcelona, as well as welcoming a well-known Spanish coffee chain to open a coffee shop in what was unused office space. This work should transform the passenger experience at these terminals and we look forward to opening the new facilities in time for the 2019 Mediterranean cruise season.

2018 has been a challenging year for Valletta, a year that was expected to see a drop in passenger volumes was negatively hit by increase in the number of weather related cancellations during the winter months and a significant summer storm in the region. However, Valletta still welcomed 711k passengers during the year (FY 2017: 779k), with its unique position for West Med and East Med itineraries, it is testament to the attractions of this port.

Valletta's revenue for the year was $13.0m (FY 2017: $12.9m), an increase of 0.8% but a fall in constant currency terms of 3.3%. The revenue outperformance vs passenger volumes was primarily driven by higher yields per PAX over the year. This increased per PAX yield was primarily driven by the positive impact of tariff increases that came into effect during the year.

EBITDA of $6.4m reduced by 6.2% (FY 2017: $6.8m), with a constant currency fall of 10.1%. This divergence from modest growth in revenue was primarily the result of increased costs associated with the hosting of Med Cruise General Assembly in the first half of the year and the impact of lost retail sales due to the yoy drop in passenger numbers. With the demographic of the cruise ships that cancelled due to the weather being a particular factor.

As expected, 2018 was a subdued year for passenger volumes at Ege Port, with 189k passengers welcomed in 2018, which was effectively flat on the same period in 2017. Revenue of $4.7m was a decrease of 3.5%, a 7.4% decline in constant currency terms. EBITDA rose 4.4% in the year to $3.1m (0.1% in constant currency).

Ancillary revenues were down in the year, with the primary driver of this being the impact of the weak Turkish Lira on Turkish ferry passengers' propensity to travel and the knock on impact on associated duty free sales. In Ege Port the vast majority of our revenues in 2018 were in Euros, however for 2019 we have changed our tariffs to $, while the majority of our costs will remain in Turkish Lira.

Looking into 2019, we are very pleased with current booking trends and expect to welcome a significant increase in passengers at Ege port in 2019. All the major cruise lines are returning to Turkey in 2019 and continue to talk very positively about the booking and pricing trends they are experiencing for cruise holidays that have Turkey on the itinerary both for 2019 and 2020. We currently expect further capacity to be added to the Turkish market in 2020.

Other Cruise revenue reflects the revenue contribution of our smaller cruise port concessions and our management agreement in Havana. While Other Cruise EBITDA reflects the EBITDA contribution of these concessions, as well as the net income contribution of our equity associate ports (Venice, Lisbon and Singapore) and the contribution from our management agreement in Havana.

In 2018 we welcomed 1m cruise passengers at our Other Cruise ports (excluding equity accounted associates), an increase of 42.3% on FY 2017, although organic volumes fell -4.2%. Revenue of $5.7m (FY 2017: $5.2m) increased by 9.8% compared to the same period last year, 5.3% in constant currency. Other Cruise EBITDA of $8.3m increased by 70.8% compared to the same period last year, 63.8% in constant currency, driven by the strong contribution from our associated cruise ports and the first time pro rata contribution from our management agreement in Havana.

Unfortunately, Ravenna had a very challenging year due to an inadequate dredging programme by the port authority. This resulted in most cruise lines cancelling all calls. If this is not resolved by the port authority, 2019 and 2020 will be challenging years for Ravenna. However, it is important to note that Ravenna cruise port concession expires in December 2020.

Our management agreement for Havana only contributed for part of the year and while there is much work to be done by all stakeholders to transform this port and the passenger experience, we are very pleased with the performance so far, which is ahead of our expectations. The port currently has capacity of two berths and in 2017 welcomed c328k cruise passengers, a growth rate of 156% compared to 2016 and in 2018 it welcomed c633k passengers, a growth rate of 92%.

Our other Turkish ports (Bodrum and Antalya) continue to suffer from the sharp drop in passenger numbers experienced in 2017, while these ports should benefit from the wider recovery of cruise in Turkey, they will not experience the same kind of pick up in performance that we are expecting from Ege in 2019.

Equity accounted associate ports

Our equity accounted associate ports, Venice, Lisbon and Singapore performed very strongly in the year, reporting total passenger volume growth of 37% to 4.0m, compared to the 2.9m reported in 2017. Lisbon's good performance since it opened the new state of the art terminal has continued, with passenger volumes of 578k in the year, 10.9% growth on 2017. However, Lisbon's operating profit has been held back by increased security costs associated with the new facilities and the fact that not all of the new terminals F&B facilities were open during the period. However, we are pleased to report that these facilities should now be open for the 2019 cruise season. The stand out performer was Singapore, which more than doubled cruise passengers in the year. Overall the pro-rata net income from our equity accounted associates contributed $5.6m at the Segmental and Adjusted EBITDA level.

New Ports and partnerships

2018 marked a return to inorganic growth for the business. We signed a 15-year management agreement for Havana cruise port, Cuba - our first in the Americas and signed a 20-year concession agreement for Zadar Gazenica cruise port. We also signed a partnership agreement with Dreamlines, a fast-growing online travel agency dedicated to cruises.

The signing of the agreement for Havana represented an important milestone in the group's development, marking our first step into the Americas. Under the terms of the management agreement, GPH is to use its global expertise and operating model to manage all of the cruise port operations over the life of the agreement. While there is much work to be done by all stakeholders in terms of the longer term plans for this port and the planned infrastructure investment by the government, we have so far been very pleased with the performance of this port.

The 20-year concession for Zadar Gazenica cruise port, Croatia has further expanded our presence in the Adriatic. We operate the cruise ship passenger port and terminal services, an international ferry terminal, Ro-Ro services, vehicles and passenger services as well as the extensive commercial area. We only took over the operations in November 2018, however, we have been working hard to secure the right mix of tenants for the retail space in the terminal and have started to promote the attraction of Zadar to the cruise lines.

During 2018 we provided a convertible loan to Dreamlines, a fast-growing online travel agency dedicated to cruises and entered into a partnership with them. Dreamlines is now the 2nd largest online travel agent for cruise bookings in the world, and the largest ex US. Based on its unique online platform and supported by more than 300 cruise sales experts Dreamlines sells cruise products online, via phone and email.

It operates in twelve countries around the world, and has tripled booking volumes over the last three years. The partnership will allow GPH to work with Dreamlines on ways to promote its cruise ports and destinations to cruise customers worldwide as well as explore the potential for the development of additional retail and service opportunities, particularly pre and post cruise, which in the medium term could enhance and broaden our ancillary revenues.

New Ports 2019

After the year end we announced the signing of a 30-year concession agreement with the Government of Antigua and Barbuda for cruise port operations in Antigua on an exclusive basis. This concession marked the Group's important second step in its expansion into the Americas, after the signing of Havana in 2018. Under the concession terms, as well as managing the cruise port operations in Antigua, GPH will also finance the completion of the ongoing construction of a new pier which will allow the port to handle Oasis class ships. The Group will also invest in improving the current retail facilities and designing and financing the construction of new purpose-built retail and F&B facilities.

The successful commencement of the concession is subject to a number of final conditions being satisfied, including, amongst others, the Group securing suitable financing. Full financial closure and commencement of the concession is expected to occur in H1 2019, although there can be no certainty as to the timing or that the final conditions will be satisfied.

In February 2019, the Government of the Bahamas awarded, Nassau Cruise Port Ltd ("NCP"), a consortium comprising GPH, the Bahamian Investment Fund ("BIF") and the Yes Foundation the cruise port tender for a 25-year concession for the Prince George Wharf and related areas, at Nassau cruise port.

Nassau is one of the most popular cruise destinations in the world with passengers attracted to its natural beauty, unique characteristics and cultural heritage, while its close proximity to the United States means it is within easy cruising distance of the primary home ports in the United States. The Nassau cruise port is one of the leading destination ports in the world and welcomes 3.7 million passengers per annum.

GPH is working with all stakeholders towards the successful signing of a concession agreement and full financial closure, although there can be no certainty as to the timing or that the final conditions will be satisfied.

Commercial Ports Business Review

Overall Commercial Port operations performed in line with our expectations in the year, with Commercial revenues increasing by 5.8% to $69.9m (FY 2017 $66.1m) and Commercial Segmental EBITDA increasing by 10.0% to $53.1m (FY 2017 $48.3m).

In terms of volumes, our ports experienced a decline of 9.2% in General & Bulk Cargo volumes in the period, with H2 2018 recording a 16.8% decline. While in Containers, volumes fell 5.1% in the year, with volumes declining 11.1% in H2 2018. Our commercial ports are not immune to the impact of macro-economic factors such as trade tariffs and their associated impact on global trade in general. While for most of the year we saw no significant direct impact from tariffs or slowing trade, we believe the general uncertainty around global trade played a part in the slowdown. More details on this decline in volumes at each port is provided below.

In terms of yields, total container yields were up 3% in the year, while cargo yields increased 2.6%. Port Adria's overall strong performance was pleasing after the completion of the capex program in 2017. Port Akdeniz benefitted from the weakness in the Turkish lira due to the port's cost structure being around 70% in local currency, while revenues are almost all exclusively collected in US dollars.

We continue to focus on delivering further diversification of the cargo volumes at commercial ports, further information on the services we are introducing are detailed below.

Our largest commercial port, Port Akdeniz reported revenue growth of 2.3% to $59.9m in the period, with EBITDA rising 5.9% to $49.2m, with the EBITDA margin rising to 82.1%. General & Bulk cargo volumes, having declined by 5.9% at the half year, declined 7.8% for the full year.

In terms of TEU, volumes at Port Akdeniz declined by 6.9% in the year, a clear acceleration in the modest 0.4% decline in H1 2018. Total marble volumes declined by 8.9% in the year, with a particularly sharp drop of 23.1% in Q4 2018. While total volumes remain relatively small, TEU export volumes for non-marble rose 35.8% in the period, which is an encouraging trend as we continue with our strategy to diversify the port's volumes and revenues. TEU full container import volumes fell 21% in the year.

Our commercial ports did experience a slowdown in the latter part of Q4, we believe it was the caused by the cumulative effect of a number of individual factors. Our commercial ports are not immune to the impact of macro-economic factors such as trade tariffs and their associated impact on global trade in general. While for most of the year we saw no significant direct impact from tariffs or slowing trade, we believe the general uncertainty around global trade played a part in the slowdown.

In addition, the volatility in the Turkish Lira caused uncertainty amongst importers and exporters, particularly following changes made to currency regulations. Finally, the decision by Turkiye Denizcilik Isletmeleri A.S. ("TDI") to transfer land that was being used by GPH at Port Akdeniz to the neighbouring Free Trade Zone has increased competition for some cargo. Nevertheless, we continue to focus on delivering further diversification of our cargo volumes and believe we will be able to largely offset any further volume declines.

During 2018 Port Akdeniz opened a new warehouse facility and related bonded warehouse services, while our oil drilling support services work continues to perform well and is creating potential opportunities for us to expand some of these services to other customers.

In 2019 we plan to start facilitating a Ro-Ro service from Antalya to Trieste, Italy. This will create a new route for imports/exports in the region to and from Europe, and fill a sizeable gap in Antalya and our hinterland's logistic capabilities. It is early stage but this service could open up the sizable mainland Europe market to many local producers in the Antalya region. We also continue to evaluate the opportunity to open a logistics centre and associated services.

Port of Adria grew strongly in 2019, reporting revenue growth of 32.8% to $10.0m and EBITDA growth of 112% to $3.9m. On a constant currency basis revenue grew 27.7% and EBITDA grew 103%. As previously disclosed, project cargo volumes were handled during H1 2018.

TEU yields rose 11.7% to $106.1 and revenue per ton rose 133% to $25.1, excluding project cargo revenue per ton rose 46.4% to $13.8.

General & Bulk Cargo volumes fell 18.8%, having been up strongly at the half year stage. While H2 2019 was not expected to deliver the strong growth achieved in H1 2018, the decline was more significant than expected, particularly in the last few months of the year.

There was a number of reasons for this decline, steel coils volumes fell sharply in the last few months, with the knock on impact of global trade tariffs and trade barriers likely to be the cause of this decline. We continue to monitor developments in steel coils closely. Cement volumes also fell, with volume, lost to competing ports and road transportation. Volumes of imported MDF boards were negatively impacted by volatility in the Turkish Lira, the boards are imported from Turkey, and increased shipping rates also hit demand for the boards.

Container volumes increased 2.4% in the year, although volumes generally declined towards the end of the year, the overall impact was relatively small. Notable areas of volume declines included aluminium ingots, copper concentrate and cigarettes and tobacco, no specific reason has been identified for this decline.

Despite the decline in both volumes towards the end of the year, we are pleased to report that General & Bulk and Container volumes year to date are trading in line with management expectations and the performance delivered in the same period in 2018.

We continue to work on growing the volumes handled by this port. Later this year we expect to launch a Ro-Ro service, while we are in talks with a number of parties including importers, exporters and shipping lines about the introduction of new cargos at the port during 2019.

Financial Review

Total consolidated revenues were $124.8m in the period up 7.2% YoY. On a statutory (IFRS) basis operating profit improved by 229.4% to $35.9m which was primarily driven by the 7.2% increase in revenue, a reversal of replacement provisions for Spanish cruise ports ($12.2m) and the positive effect of our Turkish Lira based cost structure at our operations located in Turkey. Share of profit of equity-accounted investees grew strongly in the period, up 124% to $5.6m (FY 2017: $2,5m), with Net Finance Cost rising to $32.9m (FY 2017: $24.0m) driven principally by a negative foreign exchange effect on the Group's Eurobond debt. There was therefore an overall rise in profit before tax of 182% to $8.6m (FY 2017: loss of $10.5m).

The tax charge decreased by $2.1m for the period to $1.5m (FY 2017: $3.6m) principally due to movements related to deferred tax. The result was Profit after tax for the year of $7.1m, of which $770k was attributable to ordinary shareholders.

Management use certain alternative performance measures to assess the financial performance of the Group's business that are termed "non-IFRS measures" because they are not calculated in accordance with IFRS. However, they are used internally by management as key measures to assess the performance of the group and management believes that these measures allow for a better understanding of the company's operating performance. In particular, Segmental EBITDA is a Key Performance Indicator for the group.

Full year Segmental EBITDA was up 12.7% at $90.7m (10.6% ccy), driven by the positive performance of Cruise Segmental EBITDA, which was up 16.8% to $37.6m (12.0% ccy) and Commercial Segmental EBITDA which was up 10.0% to $53.1m (9.7% ccy)

Unallocated expenses

Unallocated expenses consist of Holding Company costs which increased to $7.0m in the year (FY 2017: $5.2m). This increase was primarily driven by a full 12 months of UK Plc related expenses vs 2017 and an increase in senior management headcount during the year.

Adjusted EBITDA, which is Segmental EBITDA less unallocated expenses was consequently up 11.2% to $83.7m (8.9% ccy).

Depreciation and Amortisation Costs,

Depreciation and amortisation costs increased to $44.7m in the year ($2017: $42.8m). This was primarily due to increased leasehold improvements depreciation of $1.4m, with a modest $0.6m increase in port operation rights amortisation to $31.6m (FY 2017 $31.0m).

Specific Adjusting Items in Operating Profit

As of 31 December 2018, specific adjusting items comprised project expenses amounting to $9.6m (FY 2017: $16.3m), reversal of replacement provisions of $12.2m (FY 2017: $0.1m) and other specific adjustment items $0.1m (FY 2017: $2.8m)

During 2018, the Group engaged an expert to provide an updated estimate of the likely capital expenditure required to replace the port equipment assets. This estimated expenditure was significantly lower than previous estimates, related to a reduction in the number of components of the port equipment and infrastructure that would require replacement. As a result, an amount of $12.2m was released from the provision in 2018.

Please see the Glossary of alternative performance measures (APM) in the consolidated financial statements for full details of Alternative Performance Measures.

Net Finance Costs

The Group's net finance charge in the period was $32.9m, an increase on the $24.0m charge in FY 2017. Due to Turkish Lira Depreciation against $ in the year the group has both a foreign exchange charge and gain associated with this. The Finance charge increased to $60.9m (FY 2017: $39.8m) primarily due to a non-cash loss when revaluing the Eurobond debt as this is issued by a Turkish Lira denominated, 100% owned entity within the group, along with non-cash revaluation losses on Turkish entities foreign currency dominated liabilities. Finance income increased to $28.0m due to non-cash revaluations gains on Turkish entities foreign currency dominated assets. Net interest expense stayed relatively stable at $25.2m (2017: $25.6m) due to the fact group's gross debt at period end was relatively stable at 31 December 2018 $347.1m (31st December 2017: $341.7m) and interest rates payable were also stable principally due to fact group's major borrowing, GLI Eurobond has a fixed interest rate.

Taxation

Global Ports Holding is a multinational group and as such is liable for taxation in multiple jurisdictions around the world. The Group's tax charge for the period was $1.5m (FY 2017: $3.6m). The lower tax rate compared with prior years is the result of principally due to movements related to deferred tax. On cash basis which was Group's income taxes paid was consistent amounting to $7.3m (FY 2017: $8.1m),

Earnings Per Share

The Group's Basic earnings per share was 1.23c (FY 2017: -26.01c), this increase is in line with the improvement in profit for the year attributable to owners of the company to $770k (2017: loss of $15.6m). Underlying earnings per share of 42.3c (FY 2017: 47.6c), was primarily driven by the adding back of the amortisation of port operating rights of $31.6m and the deduction of the reversal of replacement provisions $12.2m. Underlying earnings per share is underlying profit divided by weighted average number of shares. Underlying profit decreased by 6.8% to $26.6m, driven by an increased amortisation expense in relation to port operation rights $31.6m (FY 2017: $31.0m), charge of unrealised portion of unhedged portion of GLI Eurobond, the subtraction of the reversal of replacement provisions in Spanish ports and $9.6m of project costs.

Cash Flow and Investment

Operating cash flow was $61.1m (FY 2017: $46.0m). Capital expenditure during the period was $14.8m, an increase on the $13.9m incurred in FY 2017 and compares to the H1 2018 capital expenditure of $5.6m (H1 2017: $10.6m). In 2018, notable areas of expenditure included $1.7m on office and terminal improvement in Barcelona, $2m in port operating rights for the extension in Bodrum, $4.4m on enhancements to superstructure in Port Akdeniz, $3.3m on enhancements to superstructure in Port of Adria. The group entered a strategic partnership with Dreamlines GmbH ("Dreamlines") during the year and concurrently provided a €10 million convertible loan note to Dreamlines.

Balance Sheet

Gross debt at period end was $347.1m (31st December 2017: $341.7m), the increase was mainly driven by a European Bank of Reconstruction and Development loan drawdown received by Port of Adria for the infrastructure investments, partially offset by a repayment of part of Barcelona Port Investments S.L (BPI) loan. The Leverage Ratio as per GPH's Eurobond covenant requirement declined to 4.2x at 31st December 2018 (31st December 2017: 4.5x), vs a covenant requirement of 5.0x.

At 31st December 2018 net debt was $267.6m (31st December 2017: $227.5m) Increase was mainly driven by the change in gross debt described above and Cash used for investments and capex activity the year. The group's Net Debt/Adjusted EBITDA ratio was 3.2x times as at 31st December 2018 (31st December 2017: 3.1x).

GLOSSARY OF ALTERNATIVE PERFORMANCE MEASURES (APM)

These financial statements includes certain measures to assess the financial performance of the Group's business that are termed "non-IFRS measures" because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS, or are calculated using financial measures that are not calculated in accordance with IFRS. These non-GAAP measures comprise the following;

Segmental EBITDA

Segmental EBITDA calculated as income/(loss) before tax after adding back: interest; depreciation; amortisation; unallocated expenses; and specific adjusting items.

Management evaluates segmental performance based on Segmental EBITDA. This is done to reflect the fact that there is a variety of financing structures in place both at a port and Group-level, and the nature of the port operating right intangible assets vary by port depending on which concessions were acquired versus awarded, and which fall to be treated under IFRIC 12. As such, management considers monitoring performance in this way, using Segmental EBITDA, gives a more comparable basis for profitability between the portfolio of ports and a metric closer to net cash generation. Excluding project costs for acquisitions and one-off transactions such as the IPO as well as unallocated expenses, gives a more comparable year-on-year measure of port-level trading performance.

Management is using Segmental EBITDA for evaluating each port and group-level performances on operational level. As per management's view, some specific adjusting items included on the computation of Segmental EBITDA.

Specific adjusting items

The Group presents specific adjusting items separately. For proper evaluation of individual ports financial performance and consolidated financial statements, Management considers disclosing specific adjusting items separately because of their size and nature. These expenses and incomes include project expenses; being the costs of specific M&A activities and the costs associated with appraising and securing new and potential future port agreements, employee termination expenses, income from insurance repayments, replacement provisions and other provision expenses and other insignificant expenses.

Specific adjusting items comprised as following,

Adjusted EBITDA

Adjusted EBITDA calculated as Segmental EBITDA less unallocated (holding company) expenses.

Management uses Adjusted EBITDA measure to evaluate Group's consolidated performance on an "as-is" basis with respect to the existing portfolio of ports. Notably excluded from Adjusted EBITDA, the costs of specific M&A activities and the costs associated with appraising and securing new and potential future port agreements. M&A and project development are key elements of the Group's strategy in the Cruise segment. Project lead times and upfront expenses for projects can be significant, however these expenses (as well as expenses related to raising financing such as IPO or acquisition financing) do not relate to the current portfolio of ports but to future EBITDA potential. Accordingly, these expenses would distort Adjusted EBITDA which management is using to monitor the existing portfolio's performance.

A full reconciliation for Segmental EBITDA and Adjusted EBITDA to profit before tax is provided in the Segment Reporting Note 2 to these financial statements.

Underlying Profit

Management uses this measure to evaluate the profitability of the Group normalised to exclude the specific non-recurring expenses and income, and adjusted for the non-cash port intangibles amortisation charge, giving a measure closer to actual net cash generation, which the directors' consider a key benchmark in making the dividend decision. Underlying Profit is also consistent with Consolidated Net Income (CNI), as defined in the Group's 2021 Eurobond, which is monitored to ensure covenant compliance.

Underlying Profit is calculated as profit / (loss) for the year after adding back: amortization expense in relation to Port Operation Rights and specific non-recurring expenses and income.

Adjusted earnings per share

Adjusted earnings per share is calculated as underlying profit divided by weighted average per share.

Management uses these measures to evaluate the profitability of the Group normalised to exclude the one-off IPO costs and adjusted for the non-cash port intangibles amortisation charge, giving a measure closer to actual net cash generation, which the directors' consider a key benchmark in making the dividend decision. Underlying Profit is also consistent with Consolidated Net Income (CNI), as defined in the Group's 2021 Eurobond, which is monitored to ensure covenant compliance.

Underlying profit and adjusted earnings per share computed as following;

Net debt

Net debt comprises total borrowings (bank loans, Eurobond and finance leases net of accrued tax) less cash, cash equivalents and short term investments.

Management includes short term investments into the definition of Net Debt, because these short term investment are comprised of marketable securities which can be quickly converted into cash.

Net debt comprised as following;

Leverage ratio

Leverage ratio is used by management to monitor available credit capacity of the Group.

Leverage ratio is computed by dividing gross debt to Adjusted EBITDA.

Leverage ratio computation is made as follows;

CAPEX

CAPEX represents the recurring level of capital expenditure required by the Group excluding M&A related capital expenditure.

CAPEX computed as 'Acquisition of property and equipment' and 'Acquisition of intangible assets' per the cash flow statement.

Cash conversion ratio

Cash conversion ratio represents a measure of cash generation after taking account of on-going capital expenditure required to maintain the existing portfolio of ports.

It is computed as Adjusted EBITDA less CAPEX divided by Adjusted EBITDA.

Hard currency

Management uses the term hard currency to refer to those currencies that historically have been less susceptible to exchange rate volatility. For the year ended 31 December 2018 and 2017, the relevant hard currencies for the Group are US Dollar, Euro and Singaporean Dollar.

the accompanying notes form part of these financial statements

the accompanying notes form part of these financial statements

(*) Please refer to note 1.

the accompanying notes form part of these financial statements

the accompanying notes form part of these financial statements

(*) Please refer to Note 1.

the accompanying notes form part of these financial statements

the accompanying notes form part of these financial statements

1 Basis of preparation

Global Ports Holding PLC is a public company incorporated in the United Kingdom and registered in England and Wales under the Companies Act 2006. The address of the registered office is 34 Brook Street 3rd Floor, London W1K 5DN, United Kingdom. Global Ports Holding PLC is the parent company of Global Liman Isletmeleri A.S. and its subsidiaries (the "Existing Group"). The majority shareholder of the Company is Global Yatırım Holding.

These condensed Financial Statements have not been audited.

The financial information for the year ended 31 December 2018 contained in this News Release was approved by the Board on 12 March 2019. These condensed Financial Statements for the year ended 31 December 2018 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority. They have been prepared in accordance with EU endorsed International Financial Reporting Standards ("IFRSs") but do not comply with the full disclosure requirements of these standards.

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2018 or 2017. The financial information for 2017 is derived from the statutory accounts for 2017 which have been delivered to the registrar of companies. The previous auditor has reported on the 2017 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for 2018 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies in due course.

On 17 May 2017, the Group completed the initial public offering ("IPO") of its ordinary shares and was admitted to the standard listing segment of the Official List of the Financial Conduct Authority ("FCA") and is trading on the main market of the London Stock Exchange.

As part of a restructuring accompanying the IPO of the Group on 17 May 2017, Global Ports Holding PLC replaced Global Liman Isletmeleri A.S. as the parent company of the Group by way of a Share exchange agreement. Under IFRS 3 this has been accounted for as a group reconstruction under merger accounting. The results for the Group for the period from 1 January 2017 to 31 December 2017 have been presented as if Global Ports Holding PLC was the parent company from 1 January 2017. The prior year comparatives reflect the consolidated results of the Group under Global Liman Isletmeleri A.S.

Accounting policies

With the exception of those changes described below the accounting policies adopted of these Condensed Financial Statements are consistent with those described on pages 172 - 185 of the Annual Report and Financial Statements for the year ended 31 December 2017.

In the year ended 31 December 2018, the Group applied a number of amendments to IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2018. The Group has adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments from 1 January 2018. A number of other new standards are effective from 1 January 2018 but they do not have a material effect on the Group's financial statements.

The effect of initially applying these standards is mainly attributed to the following:

IFRS 15 - Revenue from contracts with customers: IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control - at a point in time or over time- can require judgement. Given the nature of the business, the Group does not have significant long-term contractual agreements in place with its customers as the majority of the Group's revenues are derived from a short-term set of activities performed whilst a ship is docked in one of its Cruise or Commercial ports. These fees are usually agreed at the time based on the applicable port tariff and are charged based on the actual services performed. Revenue is then recognised when the invoice is issued as the ship departs the port, after all services have been provided. The only potentially longer services performed by the Group are the land services in relation to storing of cargo and project cargo operations, and rental income, where performance obligations might be performed over a period greater than a few weeks.

The Group has adopted IFRS 15 using the cumulative effect method (without practical expedients), with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 January 2018). Adoption of the new standard has not had a material effect on the Group's revenue recognition. Accordingly, the information presented for 2017 has not been restated - i.e. it is presented, as previously reported, under IAS 18 and related interpretations. Additionally, the disclosure requirements in IFRS 15 have not generally been applied to comparative information.

IFRS 9 - Financial Investments: The Group adopted IFRS 9 on 1 January 2018. IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement.

I. Classification and measurement of financial assets and financial liabilities

Given the nature of the Group's financial assets held, no material changes to the classification and measurement of financial instruments have been identified, in particular in relation to the carrying value of financial assets under the IFRS 9 'expected loss model'.

II. Impairment of financial assets

The Group has performed an analysis of the groups receivables profile, by nature of its business and its clients and historical performance of its receivables. The adoption of the expected credit loss approach has not resulted in a material change in provision for impairment loss as at 31 December 2018.

III. Hedge accounting

In relation to hedge accounting, the Group has immaterial cash flow hedges using interest rate swaps and a net investment hedge which was effective in 2017 and which is expected to remain fully effective under IFRS 9. All hedging relationships designated under IAS 39 at 31 December 2017 met the criteria for hedge accounting under IFRS 9 at 1 January 2018 and are therefore regarded as continuing hedging relationships.

Correction of errors

During 2018, the Group discovered following two errors in 2017 financial statements. The errors had been corrected by restating each of the affecting financial statement line items for prior periods. The following paragraphs summarise the impacts on the Group financial statements;

In the prior year financial statements, the narrative for line items of "inventory" and "other current assets" was inadvertently transposed as $4,947 thousand and $1,714 thousand on the face of the balance sheet, respectively. The restated presentation reflects the appropriate position.

In the prior year financial statements, 1 January 2017 opening share capital was recorded at $33,836 thousand; share premium at $54,539 thousand; and a merger reserve of nil. The effects of the group restructuring transactions in early 2017 were reflected as entries in 2017. The Directors now consider that a more appropriate presentation was that the share capital at 1 January 2017 should have been recognised at the reorganised amount of $354,805 thousand with an amount of $266,430 thousand in the merger reserve and share premium of nil. This is because the transaction was accounted for as a Group reconstruction under merger accounting and the consolidated financial statements were prepared as a continuation of the existing Group. 

2 Segment reporting

a) Products and services from which reportable segments derive their revenues

The Group operates various cruise and commercial ports and all revenue is generated from external customers such as cruise liners, ferries, yachts, individual passengers, container ships and bulk and general cargo ships.

b) Reportable segments

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision-maker, in deciding how to allocate resources and assessing performance.

The Group has identified two main segments as commercial and cruise businesses. Under each main segment, Group had presented its operations on port basis as an operating segment, as each port represents a set of activities which generates revenue and the financial information of each port is reviewed by the Group's chief operating decision-maker in deciding how to allocate resources and assess performance. Spanish Ports are aggregated due to the Group's operational structure. The Group's chief operating decision-maker is the Chief Executive Officer ("CEO"), who reviews the management reports of each port at least on a monthly basis.

The CEO evaluates segmental performance on the basis of earnings before interest, tax, depreciation and amortisation excluding the effects of specific adjusting income and expenses comprising project expenses, bargain purchase gains and reserves, board member leaving fees, employee termination payments, unallocated expenses, finance income, finance costs, and including the share of equity-accounted investments which is fully integrated into GPH cruise port network ("Adjusted EBITDA" or "Segmental EBITDA"). Adjusted EBITDA is considered by Group management to be the most appropriate profit measure for the review of the segment operations because it excludes items which the Group does not consider to represent the operating cash flows generated by underlying business performance. The share of equity-accounted investees has been included as it is considered to represent operating cash flows generated by the Group's operations that are structured in this manner.

The Group has the following operating segments under IFRS 8:

§ BPI ("Creuers" or "Creuers (Barcelona and Málaga)"), VCP ("Valetta Cruise Port"), Ege Liman ("Ege Ports-Kuşadası"), Bodrum Liman ("Bodrum Cruise Port"), Ortadoğu Liman (Cruise port operations), POH, Lisbon Cruise Terminals, SATS - Creuers Cruise Services Pte. Ltd. ("Singapore Port"), Venezia Investimenti Srl. ("Venice Investment" or "Venice Cruise Port") and La Spezia Cruise Facility Srl. ("La Spezia") which fall under the Group's cruise port operations.

§ Ortadoğu Liman (Commercial port operations) ("Port Akdeniz-Antalya") and Port of Adria ("Port of Adria-Bar") which both fall under the Group's commercial port operations.

The Group's reportable segments under IFRS 8 are BPI, VCP, Ege Liman, Ortadoğu Liman (Commercial port operations) and Port of Adria (Commercial port operations). Bodrum Cruise Port, Italian Ports, Ortadoğu Liman (Cruise operations) and Port of Adria (Cruise Operations) that do not exceed the quantitative thresholds for reporting information about operating segments have been included in Other.

Global Depolama does not generate any revenues and therefore is presented as unallocated to reconcile to the consolidated financial statements results.

Assets, revenue and expenses directly attributable to segments are reported under each reportable segment.

Any items which are not attributable to segments have been disclosed as unallocated.

b) Reportable segments (continued)

(i) Segment revenues, results and reconciliation to profit before tax

The following is an analysis of the Group's revenue, results and reconciliation to profit before tax by reportable segment:

(*) Please refer to glossary of alternative performance measures (APM).

The Group did not have inter-segment revenues in any of the periods shown above.

b) Reportable segments (continued)

(ii) Segment assets and liabilities

The following is an analysis of the Group's assets and liabilities by reportable segment for the years ended: