Global Ports Regulatory News (GPH)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION (EU) NO 596/2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

21 August 2017

Global Ports Holding Plc

Unaudited interim results for the six months ended 30 June 2017

Good performance in the Commercial segment; strong Cruise passenger number growth although financial performance impacted by weakness in Turkish Cruise ports

Global Ports Holding PLC ("GPH" or the "Group"), the world's largest independent cruise port operator, today announces its unaudited results for the six months ending 30 June 2017.

Key Financials & KPI Highlights

Financial and Operational Highlights

· Solid Commercial segment performance unaffected by Turkish geopolitical developments

· Strong cruise passenger number growth, although financial performance impacted by ongoing weakness in consumer sentiment towards higher margin Turkish cruise ports

o Overall Segmental EBITDA down 7.2% to USD 32.2m

o Ongoing weakness in sentiment for Turkish cruise ports led to decline in Cruise Segmental EBITDA of USD 3.6m to USD 10.1m

o Solid increase of Commercial Segmental EBITDA by 4.9% to USD 22.1m

o Additional negative forex impact from weaker Euro (-3.1% compared to first half 2016) affects translation of Euro earnings of all cruise ports and Port of Adria

· Loss after tax for the period was USD 6.7m (H1 2016: Profit after tax for the period: USD 0.4m) which included USD 15.1m amortisation expense in relation to Port Operation Rights

· Strong operating cash flow of USD 25.2m during the reporting period (compared to USD 29.5m in H1 2016)

· Robust financial profile with Net Debt1 / EBITDA2 of 2.9x, in line with financial policy

· Good progress in Cruise segment's M&A pipeline

· Interim dividend of GBP 21.6p per share

Strategic Highlights and Outlook

· For the 2017 full year Segmental EBITDA is expected to show single-digit growth from FY16 despite lower contribution from Turkish cruise ports

· Good progress is being made in projects in the Group's strong M&A pipeline and the Group will make further announcements as appropriate

Emre Sayın, Chief Executive Officer said;

"While geopolitical developments have had a negative effect on our Turkish Cruise revenues, our Turkish Commercial segment is robust and has performed well. Our M&A pipeline of international cruise ports remains strong with progress being made on a number of our target acquisitions and we will update the market as these progress. Our overall strategy of expanding our global footprint of cruise ports from the Mediterranean to the Caribbean and Asia, as set out at the IPO, remains on track. The result of this will be a reduction in the significance of our Turkish cruise port operation to our overall business."

Mr. Emre SAYIN, Chief Executive Officer and the senior management of Global Ports Holding PLC will hold a conference call with equity investors and analysts to discuss these interim results on 21 August 2017 at 9:00 UK time (BST). Below are the details for the conference call.

International dial-in details below

Participant Pin Code: 511 199 02#

The person responsible for arranging the release of this announcement on behalf of GPH is Ismail Ozer, Investor Relations Analyst.

For further information, please contact:

Global Ports Holding PLC

Asli Su Ata, Head of Investor Relations

Ismail Ozer, Investor Relations Analyst

Telephone: +90 212 244 60 00

Email: investor@globalportsholding.com

Brunswick Group LLP

Azadeh Varzi

Imran Jina

+44 (0) 20 7404 5959

Email: GPH@brunswickgroup.com

This announcement does not constitute an invitation and should not be taken as an inducement to engage in any investment activity and is for the purpose of providing information about the Company. Certain information contained in this announcement constitutes "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "target," "intend," "continue" or "believe," or the negatives thereof, other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company described herein may differ materially from the events, results or performance reflected or contemplated in such forward-looking statements. Any projections, forecasts and estimates contained herein are based upon certain assumptions that the Company considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize and/or that actual events and consequences thereof will vary significantly from the assumptions upon which projections contained herein have been based. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, the Company is under no obligation to update or keep current such information. Unless otherwise indicated, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date.

Certain data in this announcement, including financial, statistical, and operating information has been rounded. As a result of the rounding, the totals of data presented and the percentages in tables changes in this announcement may vary slightly from the actual arithmetic total or percentages as calculated from the rounded data.  

H1 2017 Financial Performance Overview

Having successfully completed the London IPO of GPH in May this year, the Group raised net primary proceeds of USD 73m which will be used to develop and expand the Group's Cruise business.

Overall revenues during the period declined by 5.7% from H1 2016 (USD 52.7m) to USD 49.7m and Segmental EBITDA margins fell 110bps to 64.7%. Ongoing geopolitical developments led to a deterioration of consumer sentiment towards Turkey, and a significant decline in cruise calls at the Turkish cruise ports (particularly Ege) which had a material impact on Cruise revenues. However, weakness in Turkish cruise ports has been partly offset by the strong performance in the Commercial business, which is insulated from regional instability. During this period, Commercial revenue was up 1.6% and Commercial Segmental EBITDA up 4.9% YoY. Also, we have seen a strong performance in our European portfolio of cruise ports, with revenues up at Valetta and in the Other Cruise segment in this period.

Cruise segment volumes in the first half are typically lower as it includes the seasonality impact of a quiet Q1 period. The first half of 2017 saw strong overall 14.1% growth in total cruise passenger numbers driven by a combination of organic growth in Valetta Cruise Port and inorganic growth from first time consolidation of small Italian ports (part of the Other Cruise segment). GPH's European cruise ports experienced above-average passenger growth fully compensating the decline in Turkish ports, however, overall Cruise revenues and passenger yields declined mainly due to loss of passenger volume in the higher margin Turkish ports.

Turkish ports had a weak start to the main season (end of May / June), in particular Ege Port, which is behind management expectations. Cruise lines decided on short notice that cruise ships would not to call at the Turkish ports due to the ongoing geopolitical challenges and consumer sentiment. Renovation of the shopping mall in Ege Port during Q1 and parts of Q2 had an additional impact on revenues (primarily ancillary revenues) as well as Segmental EBITDA. The Cruise Segmental EBITDA decline is mainly attributable to Ege Port, which has the highest margin among GPH's cruise ports, such that a loss in Turkish passenger volume and lower ancillary revenues diluted total Segmental EBITDA margin.

Cruise Segmental EBITDA was also negatively impacted by Euro/USD fluctuations and passenger mix. All cruise ports' revenues are mainly Euro denominated and fluctuations of the average Euro/USD exchange rate compared to H1 2016 negatively impacted revenues and Segmental EBITDA reported in USD. In addition Creuers' (Barcelona and Malaga) Segmental EBITDA margin was impacted by changes in the passenger mix between turnaround and transit passengers, and between Barcelona and Malaga.

Commercial Port Operations performed well during the period. Commercial revenues were USD 31.3m in H1 2017, up 1.6% year-on-year, due to strong growth in container volumes (up 16.7% YoY), along with a 7.2% increase in general and bulk cargo compared to H1 2016. The main driver of this growth was the strong increase in marble and cement exports at Port Akdeniz as well as new general cargo customers which helped overall cargo volume expansion. Container yields are broadly flat, while cargo yields are down 25% due to lower project cargo volumes and an increase in steel coils volumes (in particular in Port of Adria).

Commercial Segmental EBITDA increased by 4.9% to USD 22.1m driven by double-digit growth in Antalya, which more than offset the lower Segmental EBITDA in Port of Adria attributable to lower project cargo, which is more volatile by nature. Commercial Segmental EBITDA margin grew by 220 bps from H1 2016, largely due to strong growth in Antalya's Segmental EBITDA margin as a result of operational improvements and higher share of high-margin container business.

Segment Review

Cruise Segment

H1 2017 Detailed Financial Review - Cruise Segment

1Passenger numbers refer to consolidation perimeter, hence excluding equity pick-up entities Venice, Lisbon and Singapore

There is some seasonality effect in our first-half financials given Q1 is the low season in the cruise business in the Mediterranean (the main cruise season starts at the end of May) and therefore H1 should not be used to extrapolate full year performance. Thanks to its well diversified portfolio, GPH saw cruise passenger numbers rise by a significant 14.1% in H1 2017 YoY (through organic and inorganic growth). This was driven by above-market growth in the European ports and the first-time consolidation of the small Italian ports since acquisition (acquisition completed late 2016).

All GPH cruise ports' tariffs are denominated in Euro. The average Euro/USD exchange rate during the period resulted in the Euro weakening by 3.1% compared to the same period last year which negatively impacted the Group's revenues and Segmental EBITDA in its reporting currency USD.

Turkish ports have disappointed and continue to show decline in cruise calls due to the ongoing geopolitical tension in Turkey and the Eastern Mediterranean. However, the first half of 2017 demonstrated the resilience of the GPH cruise network, and the growth of the European ports has more than offset the decline in Turkish passenger volumes (up by 2.6% organic passenger growth rate for all cruise ports). Furthermore, GPH's management believe that this weakness is temporary and our Turkish cruise ports will grow to pre-crisis levels once the geopolitical tensions soften.

Despite the overall positive volume trend in passengers, revenues and Segmental EBITDA from cruise operations have declined. Turkish ports are the more profitable ports in the GPH portfolio with industry-leading Segmental EBITDA margins due to high yields and high share of ancillary revenue. A lower contribution from them (further impacted by the renovation of the shopping mall in Ege Port) could not be fully offset by the other ports in terms of revenue and Segmental EBITDA.

As stated in the IPO process, GPH is actively focusing on increasing ancillary revenues in its cruise ports. We have strengthened our team for these opportunities by creating the position of Ancillary Services Director and were able to recruit a senior professional with a relevant track record in the aviation industry. The absolute decline in total ancillary revenues is mainly due to Ege Port where renovations (which have now been completed) have resulted in lost rental revenue and lower revenue-share from our tenants due to lower traffic.

For the half-year ended 30 June 2017, Creuers (Barcelona and Malaga) received 351 cruise calls bringing in 895,101 cruise passengers, of which 476,455 were turnaround passengers and 418,646 were transit passengers. Creuers generated revenues of USD 10m which is broadly flat and down by 1.6% on H1 2016 and Segmental EBITDA of USD 5.4m down by 9.2% YoY. Revenue and Segmental EBITDA were impacted by changes in the passenger mix. Malaga Cruise Port reported strong growth in turnaround passengers, whereas the transit passenger growth mainly came from Barcelona; Malaga Cruise Port has lower margins compared to Barcelona Cruise Port.

Valletta Cruise Port, with its unique position for West Med and East Med itineraries, contributed significantly to GPH's H1 2017 passenger and Segmental EBITDA performance. In H1 2017, Valletta Cruise Port received 317 cruise calls bringing in 311,152 cruise passengers, of which 83,983 were turnaround passengers and 227,169 were transit passengers. Segmental EBITDA of the Valletta Cruise Port was up by 7.0% to USD 2.6m, implying a 340bps increase in Segmental EBITDA margin, thanks to the increasing share of turnaround passengers in the passenger mix. Operational performance, both revenue and Segmental EBITDA, trailed volume growth mainly due to the growth mostly coming in Q1 2017 and benefitting from a good winter season but at preferential winter rates. In addition, lower travel retail as well as a weaker EUR (on average compared to H1 2016) has also impacted operating figures.

In H1 2017, Ege Port had total of 61 cruise calls bringing in 45,962 cruise passengers and a total of 149 ferry calls bringing in 15,771 ferry passengers with a total of 61,733 passengers visiting the port. Ege Port revenues and Segmental EBITDA declined by 70.3% and 77.3%, respectively, due to i) renovation works in Ege Port's shopping mall and ii) the decline in number of calls and passenger numbers starting in May. The unexpected decline in passenger volumes was due to cruise lines deciding on short notice to substitute Turkish ports (mainly with Greek island ports) due to negative perception of Turkey among foreign tourists. We remain cautious for the remainder of the year but expect a recovery in passenger volume in the mid-term because of the attractiveness of Turkish ports for cruise lines and passengers.

Cruise M&A Pipeline

As communicated during the IPO process, inorganic expansion is an important part of GPH's growth strategy. During the first half of 2017 and since the IPO further progress has been made with respect to our M&A pipeline and GPH will update the market as these projects further progress.

Commercial Business

H1 2017 Detailed Financial Review - Commercial Business

TEU throughput increased by 16.7% in H1 2017 YoY thanks to strong marble export at Port of Akdeniz. TEU yields softened slightly by 2.2% due to changes in TEU mix. General & bulk cargo volume was up 7.2% driven by new general cargo agreement signed at Port of Adria and growth in cement exports in Antalya. Due to lower volumes of project cargo in H1 the yield decreased to USD 6.9 from USD 9.2 last year.

Revenue growth was below volume growth mainly due to lower project cargo volumes as well as a weaker Euro (on average compared to first half 2016) resulting in lower reported revenues from the Euro denominated Port of Adria. Segmental EBITDA for the Commercial business was USD 22.1m in H1 2017, up 4.9% on H1 2016, translating into c.220bps improvement in Segmental EBITDA margin. The improvement was driven by an increase in high-margin TEU business, increased operational efficiencies and a favorable currency environment in Turkey.

Group Financial Performance

Capital Expenditure

Capital Expenditure for H1 2017 was USD 10.6m, primarily to fund the modernisation programme at Port of Adria (investment in equipment and machinery) completed in H1 2017, and renovation works for Ege Port's shopping mall.

Debt Profile

Net debt at 30 June 2017 decreased to USD 215m from USD 284m at 2016YE mainly due to net IPO proceeds of USD 73m and the collection of related party loans of USD 27.7m. The Group's Net Debt to EBITDA ratio of 2.9x is in line with GPH's financial policy as communicated during the IPO process. The Leverage Ratio as per the Eurobond issued by Global Liman Isletmerleri A.S. (100% subsidiary of GPH) is 4.7x versus a covenant of 5.0x.

Liquidity and Funding (IPO)

· Global Ports Holding Listed on the London Stock Exchange in May 2017

· Offer Price: 740 pence per GPH share

· Offer size: USD 207m (including USD 7m over-allotment option)

· Free float of 34.37% while GIH and EBRD hold 60.60% and 5.03% respectively

· The Group raised net primary proceeds of USD 73m which will be used to develop and expand the Group's Cruise business

Capital Reduction

As of July 2017, the nominal value of each of the ordinary shares in the capital of GPH has been reduced from £5.00 to £0.01. While the total equity of GPH remains unchanged, this reduction of capital has created distributable reserves of USD 427.0m.

Dividends

In line with GPH's dividend policy communicated in its IPO process, GPH's Board of Directors has approved an interim dividend for the first half 2017 of GBP 21.6p per share. This will be paid on 29 September 2017 to shareholders on the register on 1 September 2017.

Principal risks and uncertainties

The principal risks and uncertainties to which the Group is exposed are the same as those disclosed in the prospectus relating to Global Ports Holding PLC dated 2 May 2017 available on GPH's website.

Global Ports Holdings PLC

Interim condensed consolidated financial statements

For the six months ended 30 June 2017

Contents

Responsibility Statement

We confirm that to the best of our knowledge:

a) The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and 

c) The interim management report includes a fair review of the information required by DTR 2.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board,

Chief Financial Officer

Ferdag Ildir

19 August 2017

Independent Review Report Global Ports Holding PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the interim condensed consolidated income statement, the interim condensed statement of other comprehensive income, the interim condensed consolidated statement of financial position, the interim condensed consolidated statement of changes in equity, the interim condensed consolidated cash flow statement and related notes 1 to 19. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2a, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

London, United Kingdom

19 August 2017

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 100 New Bridge Street, London EC4V 6JA, United Kingdom. Global Ports Holding PLC is the ultimate holding company of Global Liman Isletmeleri A.S. and its subsidiaries (the "Existing Group").

These unaudited condensed interim consolidated financial statements of Global Ports Holding PLC (the "Company", and together with its subsidiaries, the "Group") for the six months ended 30 June 2017 were authorised for issue in accordance with a resolution of the directors on 19 August 2017.

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.

a) Basis of preparation

The annual financial statements of Global Ports Holding PLC are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union and the requirements of the Disclosure and Transparency Rules ("DTR") of the FCA in the United Kingdom as applicable to interim financial reporting.

The interim condensed financial statements represent a 'condensed set of financial statements' as referred to in the DTR issued by the FCA. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the historical financial information available in Part XX of prospectus relating to Global Ports Holding PLC dated 2 May 2017 (the "Prospectus") available on the Company website.

The financial information contained in this report for the six months ended 30 June 2016 and 30 June 2017 is unaudited. The interim condensed consolidated income statement and other comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, and the condensed consolidated statement of cash flows for the six months ended 30 June 2017 have been reviewed by the auditor. The information for the year ended 31 December 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.

b) Going concern

The Directors have assessed the latest forecast future cash flows which indicate that the Group has sufficient resources to cover the Group's cash needs for at least twelve months after the date of approval of these interim financial statements. They are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future, and thus they continue to adopt the going concern basis of accounting in accordance with IAS 34 in preparing the interim financial statements.

c) Accounting Policies

The accounting policies adopted in the preparation of the Group's interim condensed consolidated financial statements are consistent with those followed in the preparation of the historical financial information available in Part XX of the Prospectus available on the Company website.

The critical accounting judgements, estimates and assumptions made by management of the Group and applied in the accompanying interim condensed consolidated financial statements for the six months ended 30 June 2017 are consistent with those applied in the preparation of the historical financial information available in Part XX of the Prospectus, with the exception of those relating to the IPO as detailed here.

2 Accounting Policies (continued)

c) Accounting Policies (continued)

On 17 May 2017, immediately prior to the IPO, the Company became the parent company of the Group through the acquisition of the full share capital of Global Liman İşletmeleri A.Ş., in exchange for 55,000,000 £5 shares in the Company issued to the previous shareholders, pro rata to their previous interests in Global Liman İşletmeleri A.Ş. As of this date, the Company's share capital increased from £1 to £275,000 thousand (USD 354,805 thousand). From that point, in the consolidated financial statements, the share capital became that of GPH PLC. The previously recognised share capital of USD 33,836 thousand and share premium of USD 54,539 thousand was eliminated with a corresponding negative merger reserve recognized of USD 266,430 thousand.

As a common control transaction, this does not meet the definition of a business combination under IFRS 3 Business Combinations and as such, falls outside the scope of the standard. In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, guidance has been taken from alternative accounting frameworks, and the introduction of the Company as the parent of the Group has been accounted for in accordance with the group restructuring principles set out in FRS 102.

Also on 17 May 2017, the Group completed an IPO, achieving a standard listing on the London Stock Exchange. During the listing, an additional 7,826,962 £5 shares were issued for net proceeds of USD 73,035 thousand, giving additional share capital of USD 50,492 thousand and additional share premium of USD 22,543 thousand. Following the IPO, the Company had 62,826,963 £5 ordinary shares in issuance.

Post period end the Group undertook a capital reduction as described in Note 19.

The following standards are in issue but not yet adopted by the Group:

§ IFRS 9 Financial Instruments, effective from 1 January 2018

§ IFRS 15 Revenue from contracts with customers, effective from 1 January 2018

§ IFRS 16 Leases, effective from 1 January 2019

The Group is currently evaluating the impact of adopting these new accounting standards.

d) Foreign currency

Transactions in foreign currencies are translated into the respective functional currencies of the Group entities by using the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies carried at historical cost should be retranslated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss.

The Group entities use United Stated Dollars ("USD"), Euro or Turkish Lira ("TL") as their functional currencies since these currencies represent the primary economic environment in which it operates. These currencies are used to a significant extent in, or have a significant impact on, the operations of the related Group entities and reflect the economic substance of the underlying events and circumstances relevant to these entities. Transactions and balances not already measured in the functional currency have been re-measured to the related functional currencies in accordance with the relevant provisions of IAS 21 The Effect of Changes in Foreign Exchange Rates.

For the purpose of the interim condensed consolidated financial statements, US Dollars has been chosen as the presentation currency by management to facilitate the investors' ability to evaluate the Group's performance and financial position in relation to similar companies domiciled in different jurisdictions, and to eliminate the depreciating effect of TL against hard currencies, considering all subsidiaries of the Company are earning revenues in hard currencies.

2 Accounting Policies (continued)

d) Foreign currency (continued)

Assets and liabilities of those Group entities with a different functional currency than the presentation currency of the Group are translated into the presentation currency of the Group at the rate of exchange ruling at the reporting date. The income and expenses of the Group entities are translated into the presentation currency at the average exchange rates for the period. Equity items, except for net income, are translated using their historical costs. These foreign currency differences are recognised in "other comprehensive income" ("OCI"), within equity under "translation reserves".

Below are the foreign exchange rates used by the Group for the periods shown.

As at 30 June 2017, 31 December 2016 and 30 June 2016, foreign currency exchange rates of the Central Bank of the Turkish Republic were as follows:

For the six months ended 30 June 2017, 30 June 2016 and for the year ended 31 December 2016, average foreign currency exchange rates of the Central Bank of the Turkish Republic were as follows:

e) Alternative performance measures

This interim condensed set of 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 include Segmental EBITDA or Adjusted EBITDA (as defined below).

Segmental EBITDA or Adjusted EBITDA, as calculated by the Group, is defined as earnings before interest, tax, depreciation and amortisation excluding the effects of exceptional and other non-cash 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 investees, which are fully integrated into GPH cruise port network.

Segmental EBITDA is the measure used by management to assess the trading performance of our businesses and is therefore the measure of segmental performance that the Group presents under IFRS.

Segmental EBITDA is presented because it eliminates potential differences in performance caused by variations in capital structures (affecting net finance costs), tax positions (such as the availability of net operating losses against which to relieve taxable profits), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortisation expense).

Segmental EBITDA is also adjusted for exceptional and other non-cash items because they are considered to hinder comparison of the trading performance of the Group's businesses either year-on-year or with other businesses.

Adjusted EBITDA or Segmental EBITDA is reconciled to profit before income tax in Note 3.

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 each port 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. 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 amortization ("EBITDA") excluding the effects of exceptional and other non-cash 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 investees which is fully integrated into the 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 Company 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:

§ Barcelona Port Investments SL ("BPI"), Valletta Cruise Port Plc ("VCP"), Ege Liman İşletmeleri A.Ş. ("Ege Liman"), Bodrum Liman İşletmeleri A.Ş. ("Bodrum Liman"), Ortadoğu Antalya Liman İşletmeleri A.Ş. ("Ortadoğu" or "Akdeniz"), Port Operation Holding Srl ("POH"), Lisbon Cruise Terminals LDA ("Port of Lisbon" or "LCT"), SATS - Creuers Cruise Services Pte. Ltd. ("Singapore Cruise 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 (Commercial port operations) and Port of Container Terminal and General Cargo ("Port of Adria" or "Port of 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. Segments that do not exceed the quantitative thresholds for reporting information about operating segments have been included in Other.

Ravenna Terminal Passenger ("Ravenna"), Cagliari Terminal Passenger Srl ("Cagliari") and Catania Terminal Passenger Srl ("Catania") (consolidated under POH) were acquired at the end of 2016, therefore they did not generate any revenue for the Group in 2016.

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. Unallocated comprises holding company related items.

3 Segment reporting (continued)

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:

3 Segment reporting (continued)

b) Reportable segments (continued)

(*) As of 30 June 2017, exceptional and other non-cash items comprising project expenses amounting to USD 4,317 thousand (30 June 2016: USD 2,209 thousand, 31 December 2016: USD 5,306 thousand), employee termination expenses amounting to USD 179 thousand (30 June 2016: USD 187 thousand, 31 December 2016: USD 1,758 thousand), other provisions reversed amounting to a gain of USD 811 thousand (30 June 2016: a loss of USD 78 thousand, 31 December 2016: a loss of USD 853 thousand), replacement provision expenses amounting USD 1,278 thousand (30 June 2016: USD 1,210 thousand, 31 December 2016: USD 2,600 thousand) and other expenses consists of donations, insurance, commissions amounting to USD 312 thousand (30 June 2016: USD 352 thousand, 31 December 2016: USD 1,889 thousand).

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

(ii) Segment assets and liabilities

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