Global Ports Regulatory News (GPH)

Global Ports Holding Plc

Interim results for the six months ended 30 June 2018

Global Ports Holdings announces record interim results, outlook for full year now towards upper end of expectations

Global Ports Holding Plc ("GPH" or "Group"), the world's largest independent cruise port operator, today announces its unaudited results for the six months ending 30 June 2018.

Overview

Group - Positive performance in 2018 continues

· Total consolidated revenues were $56.6m in the period up 13.7% yoy (7.5% ccy)

· Record H1 Segmental EBITDA - up 25.2% at $40.3m (20.1% ccy), H1 Consolidated EBITDA - up 20.4% to $36.1m (14.2% ccy) in line with management expectations

· Proposed interim dividend of $17.5m, consistent with H1 2017

· Loss for the period of $3.6 million (H1 2017: $6.7m) was mainly due to $16.0m of amortisation expense in relation to port operation rights (H1 2017 $14.8m). Net Finance Cost being flat, the change in underlying profit is driven by (i) change in Operating Profit, (ii) the higher income from Equity accounted investees, partly offset by (iii) higher tax charge (which is eventually due to higher operating profits). Management expect to report a profit in 2019

Cruise - Strong H1 results

· Passenger growth of 6.2% yoy, with 1.6m PAX handled in the period

· Record H1 revenue and EBITDA, up 21.1% and 45.5% respectively (9.7% and 29.7% in constant currency), driven by strong performance at Creuers (Barcelona and Malaga cruise ports) and growth in ancillary services revenues. The equity accounted associate ports Venice, Lisbon and Singapore also rose strongly yoy

· Port agreement signed to operate Havana cruise port - our first in the Americas - and awarded port operating rights for Zadar Gazenica cruise port, subject to signed final concession agreement

· Partnership agreement signed with Dreamlines, a fast-growing online travel agency for cruises

Commercial - robust performance continues 

· General & Bulk Cargo volumes -1.6% and TEU Throughput 0.6%

· Total Commercial Revenue and EBITDA up 9.3% and 16.0% respectively, to $34.2m and $25.6m

· Port Adria's performance continues to improve strongly after completion of investment program, increase of EBITDA at Port Akdeniz supported by weak Turkish Lira

Outlook & current trading

The Group has delivered a strong performance in H1 2018 and trading since the period end has been in line with management expectations. We therefore now expect to deliver full year results towards the upper end of our previously stated expectation of mid to high single digit organic growth in constant currency Revenue and Consolidated EBITDA.

Emre Sayin, Chief Executive Officer said;

"We have seen a record performance in the first half of the year, driven by good organic growth. Passenger volumes at our cruise ports have been strong and we are pleased with robust growth at our commercial ports. In our cruise business, we are pleased with the signing of the agreement in Havana- our first in the Americas - and the award of the port operating rights at Zadar, in line with our growth strategy. We have seen good growth in ancillary revenues. Cruise EBITDA growth of 45.5%, corresponds to 29% in constant currency, ahead of our expectations for the period. In our Commercial business, the performance of Port Adria is very encouraging, following the completion of our capex programme, while Port Akdeniz continues to perform well.

Trading since the period end at both our cruise and commercial ports has continued to perform in line with our expectations. Despite significant volatility in Turkish lira during this period, business has not been affected because we are a global business with over 95% of revenues in hard currency. We look forward to welcoming a record number of passengers to our cruise ports in 2018 and expect to deliver full year results towards the upper end of expectations."

Notes

1. Passenger numbers refer to consolidation perimeter, hence excluding equity accounted associate ports Venice, Lisbon and Singapore

2. All $ refers to USD unless otherwise stated

3. Segmental EBITDA figures indicate only operational port companies; excludes GPH HQ expenses

4. Revenue allocated to cruise segment equals sum of revenues of consolidated cruise ports excluding equity accounted associate ports Venice, Lisbon and Singapore

5. EBITDA allocated to cruise segment includes sum of EBITDA of consolidated cruise ports and pro-rata Net Profit of equity accounted associate ports Venice, Lisbon and Singapore

6. Loss for the period of $3.6 million (H1 2017: $6.7m) was mainly due to $16.0m of amortisation expense in relation to port operation rights (H1 2017 $14.8m). Net Finance Cost being flat, the change in underlying profit is driven by (i) change in Operating Profit, (ii) the higher income from Equity accounted investees, partly offset by (iii) higher tax charge (which is eventually due to higher operating profits).

7. Performance at constant currency calculated by translating € earnings from our consolidated cruise ports for the current period into $ at the average exchange rates used over the same period in the prior year.

8. EPS for H1 2017 is calculated using the avg weighed number of shares for period, including the period prior to IPO. Using the number of shares at the end of H1 2017, EPS for H1 2017 would have been 18.2c

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 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 14 cruise ports and two commercial ports in 9 countries and continues to grow steadily. GPH provides services for more than 7.0 million passengers reaching an annual market share of 23% in the Mediterranean. The group also offers commercial port operations which specialize in container, bulk and general cargo handling.

For further information, please contact:

Global Ports Holding Plc

Martin Brown, Investor Relations Director

Telephone: +44 (0) 7947 163 687 Email: martinb@globalportsholding.com

Brunswick Group LLP

Nina Coad

Imran Jina

Telephone: +44 (0) 207 404 5959 Email: GPH@brunswickgroup.com

A copy of this report will be available on our website www.globalportsholding.com today from 0700hrs (BST).

Investor Presentation

An analyst and investor presentation will be held today at Brunswick's offices, 16 Lincolns Inn Fields, London, WC2A 3ED at 0900 hrs (BST) with registration from 0830 hrs.

For those unable to attend, a live conference call will be available at 0900 hrs (BST).

Dial-in Number +442071943759

PIN: 31403082#

Access to the slide presentation during this live event is available http://event.on24.com/wcc/r/1817767-1/CB1CB21DB2FE235BB1C29EFD89DF82C6?partnerref=rss-events

Group performance review

Group performance in the first half of 2018 improved on the same period last year, with group revenue up 13.7% (7.5% in constancy currency) to $56.6m (H1 2017: $49.7m) and consolidated EBITDA up 20.4% (14.2% in constant currency) to $36.1m (H1 2017: $29.9m), with underlying profit before tax up 8.5% to $12.4m. The consolidation perimeter is comparable between H1 2018 and the same period last year, hence all growth is organic growth exclusively, the recently completed management contract for Havana cruise port had no impact on H1 2018 financials.

The first half of our financial year is typically lower in terms of cruise passenger volumes due to the seasonally low Q1, hence trends during first half are not fully informative for full-year trends. Nevertheless we are pleased to have welcomed 1.62m cruise passengers (H1 2017: 1.53m, FY 2017: 4.1m) to our consolidated cruise ports, an organic growth rate of 6.2%. While at all ports, including equity accounted associate ports Venice, Lisbon and Singapore, we welcomed 2.7m passengers (H1 2017: 2.2m, FY 2017: 7.0m).

Cruise Revenue in the first half increased 21.1% to $22.4m (H1 2017: $18.5m, FY 2017: $50.3m), and Cruise segmental EBITDA grew almost twice as much at 45.2% to $14.7m, which was at the upper end of our expectations. The performance of our equity accounted associate ports (Venice, Lisbon and Singapore), with a pro-rata net income contribution at the Group EBITDA level, was a particular driver of this strong growth ($2.7m H1 2018 and $0.9m H1 2017). However, excluding the impact of our equity accounted associates, Cruise EBITDA growth was still strong at 28% (14.2% ccy). On a constant currency basis, first half cruise revenue was $19.9m and Cruise segmental EBITDA was $13.1m.

Commercial Port operations performed in line with our expectations for the period, with Commercial revenues rising by 9.3% in the period to $34.2m (H1 2017: $31.3m). While Port Akdeniz revenues were flat, Port Adria's 88.9% growth in revenue (68.5% ccy) was the driver of the revenue growth at our Commercial ports.

Commercial Segmental EBITDA increased by 16.0% to $25.6m driven by the strong performance from Port Adria which delivered EBITDA growth of 253% (215% ccy). While project cargo, deferred from 2017 as previously disclosed, was a significant contributor to this strong performance, the actions taken under our wider port improvement plan are also continuing to come through. Port Akdeniz delivered EBITDA growth of 8.3%, mainly due to the weaker Turkish Lira to $. Segmental EBITDA margin rose 434bps to 74.9%.

Central costs increased by 89% yoy, reflecting a full six months impact of Plc costs vs H1 2017, and our investment in central costs to create a sustainable platform for growth, including the strengthening of the management team as well as the timing impact of some annual costs being incurred fully in H1 2018.

Loss for the period of $3.6 million (H1 2017: $6.7m) was mainly due to $16.0m of amortisation expense in relation to port operation rights (H1 2017 $14.8m). Net Finance Cost being flat, the change in underlying profit is driven by (i) change in Operating Profit, (ii) the higher income from Equity accounted investees, partly offset by (iii) higher tax charge (which is eventually due to higher operating profits).

Turkey

During the period there has been significant volatility in regard to the Turkish Lira. While we of course hope for a period of stability the impact of such moves is relatively immaterial to Global Ports Holding. We are a global business and our revenues are in hard currency reflecting our global footprint and global industry standard norms.

During the first six months of the year, in consolidated revenue terms, 50.5% (FY 2017: 49.7%) of the revenue generated was in Euros and 49.5% (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 vast majority of costs are incurred in local currency. For all our 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 are in Euros, Euro tariffs are cruise industry standard for ports across the Mediterranean, Adriatic and Aegean Seas, while the majority of our costs are in Turkish Lira. At Port Akdeniz, where 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 denominated in $, again in keeping with global industry standards.

Cruise Ports Business Review

The backdrop to the global cruise industry remains extremely positive. The global cruise ship order book, which currently sits at a record high of 113 new ships between 2018-2027, 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 113 new ships on order is over 3,000 berths per ship, the underlying structural growth in overall passenger growth remains very supportive of our strategy.

Based on current known orders and the greater size of new ships once completed, this implies the average global cruise passenger growth rate is c4-5% per annum over the medium term according to Cruise Industry News, 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 helping drive this growth.

While the first half of our financial year is typically lower in terms of cruise passenger volumes due to the fact it includes the seasonally low Q1, we nevertheless welcomed 1.62m (H1 2017: 1.53m, FY 2017: 4.1m) cruise passengers to our consolidated cruise ports, an organic growth rate of 6.2%. While at all ports including equity accounted associate ports Venice, Lisbon and Singapore we welcomed 2.7m (H1 2017: 2.2m, FY 2017: 7.0m).

In the first half Cruise Revenue increased 21.1% to $22.4m vs H1 2017 $18.5m and Cruise segmental EBITDA grew almost twice that rate at 45.2% to $14.7m. The revenue from our cruise ports are almost exclusively Euro based at present, with most ports also incurring costs in Euros, with the exception of our Turkish ports which have a largely Turkish Lira cost base. On a constant €/$ currency basis, first half cruise revenue was $19.9m and Cruise segmental EBITDA was $13.1m, a growth rate of 7.9% and 29.5% respectively.

The performance of our equity accounted associates (Venice, Lisbon and Singapore), with a pro-rata net income contribution at the Group EBITDA level, was a particular driver of this strong growth ($2.5m H1 2018 and $0.8m H1 2017). Excluding the impact of our equity accounted associates, Cruise EBITDA growth was 28% (14% ccy).

H1 2018 has been a strong period for our ancillary services business, with tangible results now being delivered. While total ancillary revenue growth was 16% in the period, 4% in constant currency, the underlying performance at our ports was very strong. Excluding Valletta, which suffered a weather related drop in PAX in the period and our Turkish ports, ancillary revenue grew 53% (36% in ccy) in the period.

Our Guest Information Centers continue to deliver good results both in revenues and guest satisfaction and we continue to work on further developing this service as our teams learn from their experiences. We are in detailed discussions with a third party over our plans for the redevelopment of our retail offering and our Iberian ports and provide investors with an update when it is appropriate to do so.

Creuers (Barcelona & Malaga), in line with our expectations, performed strongly in the period, welcoming 1.0m (H1 2017: 0.9m) passengers in H1 2018, an increase of 14.4% on the same period last year. Revenue of $13.3m (H1 2017: $10.0m) was up 34% yoy in the period, with a constant currency increase of 20%.

The increase in yield per PAX and revenue growth in excess of passenger volume growth was driven by a favourable turnaround passenger mix at Barcelona, 65.2% vs 60.7% in H1 2017, and growth in ancillary revenues at both ports.

Creuers delivered EBITDA for the period of $8.0m (H1 2017: $5.4m), up 49.6% yoy, on a constant currency basis EBITDA grew 33%. The increase in Creuers EBITDA margin of 5.29% to 59.8% was primarily driven by the positive gearing impact of the higher PAX volumes and favourable turnaround passenger mix in the period.

Our ancillary revenues at Creuers increased by 49.1% in the period, 33% in constant currency. In addition to being underpinned by strong PAX growth in the period, notable drivers of the ancillary revenue growth at Creuers included increased additional security and extra luggage handling and water supply.

Valletta, with its unique position for West Med and East Med itineraries, continues to contribute strongly to the group, welcoming 282k passengers (H1 2017: 311k), a decrease of 9.2% vs the same period last year. This yoy reduction in passenger volumes in H1 2018 was driven by an increase in the number of weather related cancellations during the winter months. Given current scheduling commitments, we expect the negative percentage impact on PAX volumes to reduce for the full year.

Valletta's revenue for the period was $5.7m (H1 2017: $5.2m), an increase of 9.8% yoy. However, on a constant currency basis revenue fell 2.1%. With this outperformance vs passenger volumes being primarily driven by higher yields per PAX, which rose 21.0% in the period, 7.9% in constant currency. This increased per PAX yield was primarily driven by the positive impact of planned tariff increases.

Valletta delivered $2.5m of EBITDA in the period, a decrease of -0.6% yoy (H1 2017: $2.6m), albeit on a constant currency basis, EBITDA fell 11.0%. This divergence from the trend in revenue was primarily the result of increased costs associated with the hosting of Med Cruise General Assembly during the period.

Ancillary revenues at Valletta increased by 7.6% in the period, a fall of 4% in constant currency. This performance was largely driven by the decrease in PAX volumes during the period, offset by the impact of a rise in the ancillary yield per PAX. The rise in the yield per PAX was driven by a number of factors, most notably stable ancillary revenues from areas not directly related to PAX volumes as well as an improvement in the performance of our GICs.

Ege Port welcomed 62k passengers in the period (H1 2017: 62k), broadly flat yoy. Revenue of $1.7m (H1 2017: $1.7m) was +0.5% on the same period last year, while EBITDA of $0.95m (H1 2017: $0.97m) was down 2.4% on yoy.

Ancillary revenues fell by 4.9% in the period, -15% in constant currency. Ege's retail operations are the driver of this decline, with the low PAX volumes continuing to impact total spend on retail, while a drop in Turkish ferry PAX as a result of the weak Turkish Lira has impacted duty free sales. However, we will shortly open some additional retail space which we expect to have a positive impact on ancillary revenue in 2019 and beyond.

While Ege Port has performed in line with our expectations for the period, passenger numbers remain significantly below historic norms. However, looking beyond 2018 we are very pleased with current scheduling trends for 2019 and 2020. Perhaps most importantly Carnival, Norwegian and Royal Caribbean have now all scheduled calls for 2019.

Other Cruise reflects the contribution of our smaller cruise ports and the net income contribution of our minority holdings at Venice, Lisbon and Singapore, which is reported in Other Cruise EBITDA.

In H1 2018 we welcomed 0.26m passengers at our Other Cruise ports (excluding equity accounted associates), a decline of -1.9% on H1 2017. Revenue of $1.6m (H1 2017: 1.6m) was down -0.7% on the same period last year. While EBITDA of $3.2m (H1 2017: $1.2m) was +157.2% on the previous period.

In terms of ports operated by GPH, we have been particularly pleased by the performance of Cagliari and Catania where profitability is continuing to improve since we acquired the ports. Our other Turkish ports (Bodrum and Antalya) continue to suffer from the sharp drop in PAX numbers experienced in 2017, however, as with Ege, scheduling trends for 2019 and 2020 are positive.

Equity accounted associate ports

Our equity accounted associate ports, Venice, Lisbon and Singapore performed well in the period, reporting total PAX volumes of 1.1m, an increase of 64% on the 0.7m reported H1 2017. Lisbon has continued to perform well since the state of the art terminal was opened, reporting 14.7% growth in passenger numbers to 0.22m (H1 2017: 0.19m). However, progress in Lisbon's underlying EBITDA 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. Our equity accounted associates contributed $2.7m H1 2018 vs $0.9m H1 2017.

New Ports and partnerships

During the period we signed a 15 year management agreement for Havana cruise port, Cuba - our first in the Americas and were awarded the port operating rights for Zadar Gazenica cruise port, subject to signed final concession agreement, as well as signing 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 agreement, use its global expertise and operating model to manage all of the cruise port operations over the life of the agreement. As consideration, the Group will be paid a management fee that is based on a number of factors including passenger numbers, with growth based incentives. In addition to operating the cruise port operations, the Group will continue to work with our Cuban partners on the design and technical specification of the cruise port investment program, including proposed new terminals. Once these have been completed Global Ports Holding will take responsibility for the marketing and commercialisation of these new facilities.

The cruise port agreement is part of significant investment by Cuba into the port area and the tourism infrastructure in Havana. The port currently has capacity of two berths and in 2017 welcomed c328,000 cruise passengers, a growth rate of 156% compared to 2016, with over 500,000 cruise passengers forecast for 2018. As part of Cuba's significant investment program into the port and surrounding area the number of berths will increase to six by 2024, significantly increasing the passenger capacity of the Havana port. This management contract was secured shortly before the period and has not impacted the financial performance during the period.

The proposed concession agreement for Zadar Gazenica cruise port, Croatia will see us 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. In 2017, Zadar welcomed 124k passengers, with schedule calls for 2018 suggesting that this will grow to close to 150k passengers for 2018.

We look forward to working with the relevant authorities and partners in both regions to drive increased passenger volumes at both ports.

During the period we were delighted to announce GPH had entered into an exclusive partnership with, and simultaneously made an investment into Dreamlines. Founded in 2012, Dreamlines is a fast-growing online travel agency dedicated to cruises and is now the 2nd largest online travel agent for cruise bookings in the world, and the largest ex US. It operates in twelve countries around the world (Australia, Austria, Brazil, France, Germany, Italy, Netherlands, Russia, Singapore, Switzerland, UK and USA), and has tripled booking volumes over the last three years, delivering 40% YoY organic growth in 2017.

Based on its unique online platform and supported by more than 300 cruise sales experts Dreamlines sells cruise products online, via phone and email. The exclusive partnership with Dreamlines will allow GPH to deepen our understanding of passengers' whole cruise experience as we continue to build our knowledge and expertise in B2C service and product offerings around cruise ports. 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.

Commercial Ports Business Review

Commercial Port operations performed in line with our expectations in the period, with Commercial revenues rising by 9.3% in the period to $34.2m (H1: 2017 $31.3m). While Port Akdeniz revenues were flat in the period, Port Adria's 88.9% growth in revenue was the clear driver of the revenue growth at our Commercial ports.

In terms of volumes, General & Bulk Cargo volumes, our ports experienced a decline of -1.6% tonnes in the period, driven by a -5.9% reduction in General & Bulk Volumes at Port Akdeniz. While the strong growth at Port Adria was driven by good volumes of project cargo during the period, as previously highlighted. Overall TEU throughput increased 0.6% in the period.

In terms of yields, total container yields were down very slightly, while Port Adria's project cargo drove a 30.1% increase in cargo yields, excluding this project cargo, cargo yields were up 4.0%.

Commercial Segmental EBITDA increased by 16.0% to $25.6m driven by the strong performance from Port Adria and the positive impact of the move in the $/TL exchange rate at Port Akdeniz due to the port's cost structure being c70% in local currency while revenues are almost all exclusively collected in $.

Port Akdeniz, our largest commercial port, delivered revenue that was flat on last year at $28.0m, while EBITDA rose 8.3% to $23.1m. General & Bulk Cargo volumes were down 5.9%, driven by the continuation of a trend highlighted earlier in the year, namely lower levels of cement exports and coal imports. Cement volumes, as expected have started to pick up and coal volumes are expected to improve in the second half. There was good growth in volumes of fertiliser and barite in the period.

In terms of TEU, Port Akdeniz experienced a modest decrease of -0.4% in H1 2018 vs the same period last year. Total marble volumes were down -3.7%, however, this was largely offset by other fully loaded export containers increasing by 29% in the period. Total revenue was flat yoy despite cargo handling revenue being slightly lower, this was the result of growth in vessel service revenues such as pilotage and towage which are not included in cargo handling revenue or per TEU or per Tonne calculations.

EBITDA increased by 8.3% in the period, driven by the positive impact of the Turkish Lira to $ exchange rate, stripping out this benefit EBITDA was flat yoy.

Port of Adria performed well in the period, with strong underlying volumes in addition to project cargo helping to drive the strong 88.9% and 252.7% yoy improvements in revenue and EBITDA respectively. Port of Adria's functional currency is € for the almost all of its revenues and costs, so the foreign exchange impact is predominately translational. On a constant currency basis revenue grew 68% and EBITDA grew 214%.

While the previously deferred project cargo volumes helped drive this performance, the underlying business performed strongly in line with our expectations. Having only recently completed the capex program to modernise the port and improve its efficiency we are very pleased with the performance of Port Adria.

General & Bulk Cargo tons were up 43.6% on H1 2017, excluding the wind turbine project cargo, volumes were up 30%, with this strong performance primarily driven by strong import volumes across a wide range of commodities and goods. TEU throughput growth of 4.3% was driven by a general improvement in volumes of both import and export containers volumes.

TEU yields rose 19.9% to $108.2 and excluding project cargo, revenue per ton increased by 10.7% to $12.5. However, in constant currency TEU yields increased by 7% and cargo yields reduced by -1.3%, with these changes driven by cargo mix.

Financial Overview

Loss for the period of $3.6 million (H1 2017: $6.7m) was mainly due to $16.0m of amortisation expense in relation to port operation rights (H1 2017 $14.8m). Net Finance Cost being flat, the change in underlying profit is driven by (i) change in Operating Profit, (ii) the higher income from Equity accounted investees, partly offset by (iii) higher tax charge (which is eventually due to higher operating profits).

Specific Adjusting Items in Operating Profit

As of 30 June 2018, specific adjusting items comprising project expenses amounting to $3.6m (H1 2017: $4.3m) and other specific adjustment items $0.6m (H1 2017: $1.0m) Please see note 2e in the interim condensed consolidated financial statements for more details.

Finance Costs

The Group's net finance charge in the period was $11.4m, no material change compared to H1 2017 ($10.9m).

Taxation

Global Ports Holding is a multinational group and as such is liable for taxation in multiple jurisdictions around the world. The Group's underlying tax charge for the period was $1.5m (H1 2017: $0.2m), representing an effective underlying tax charge of 16.22% (H1 2017: 12.13%). The higher tax rate compared with prior years is the result of the growth in the portfolio; ports within Europe generally having higher effective tax rates compared to Turkish ports and also an increase in Turkish tax rate from 20% in 2017 to 22% for the years 2018, 2019 and 2020.

Earnings Per Share

The Group's underlying earnings per share were 19.7c (H1 2017: 20.1c), primarily driven by operational growth and equity accounted associates, which was partially offset with the depreciation of Euro against US Dollar. Basic earnings per share was -6.0c (H1 2017: -11.3c), the change is explained by the same drivers on underlying earnings per share.

Cash Flow and Investment

Operating cash flow was $24.5m (H1 2017: $21.7m). Capital expenditure during the period was $5.6m, a significant decrease on the $10.6m incurred in H1 2017. The yoy decrease was driven by the fact that last year we completed the modernisation program at Port of Adria and renovation works in Ege Port's shopping mall in H1 2017. In, H1 2018 the group spent approximately $2.7m on enhancements to superstructure in Port Akdeniz, $0.9m on enhancements to superstructure in Port of Adria and $1m on terminal improvements in Creuers del Port de Barcelona in H1 2018. The group has entered a strategic partnership with Dreamlines GmbH ("Dreamlines") and concurrently invested €10 million into Dreamlines in the form of a convertible loan note.

Balance Sheet

At 30th June 2018 net debt was $253.1m (31st December 2017: $227.5m) Increase was mainly driven by EBRD loan and some additional credit lines used, partially offset by BPI loan early repayment made in March 2018 and cash created during the period. The group's Net Debt/Adjusted EBITDA ratio was 3.0x times as at 30th June 2018 (31st December 2017: 3.1x).

Gross debt at period end was $354.8m (31st December 2017: $341.7m), the increase was mainly driven by a EBRD loan drawdown received by Port of Adria for the infrastructure investments, partially offset by a repayment of part of BPI loan. The Leverage Ratio as per GPH's Eurobond improved to 4.2x at 30th June 2018 (31st December 2017: 4.5x), vs a covenant of 5.0x.

Impact of Foreign Currency Movements

All of GPH's European, Turkish and Adriatic cruise ports operate in Euros, with the majority of costs being in Euros at our non Turkish cruise ports. Our Commercial port, Port of Adria receives revenues in Euros and the majority of its costs are incurred in Euros. The translation of profits from these port operating entities are not hedged and as a result, the movement of the US dollar and Euro exchange rates directly affects the Group's reported results.

The vast majority of our revenues at our Turkish cruise ports are in Euros, while the majority of costs are in Turkish Lira. Our Commercial port, Port of Antalya, receives revenues in US Dollars and c70% of its costs are incurred in Turkish Lira. The group does not hedge this exposure as a result, the movement of the US dollar and Euro exchange rates to the Turkish Lira directly affects the Group's reported results.

In the first half of 2018, the group was impacted by favourable movements against the prior year, particularly with respect to $ against the Euro and Turkish Lira. The details of the foreign exchange rates used in the period can be found in Note 2 d) of the consolidated financial statements.

Dividend

The board has proposed an interim dividend of $17.5m (27.9c per share), which will be paid no later than 31 October 2018.

Global Ports Holding PLC

Interim condensed consolidated financial statements

For the six months ended 30 June 2018

Contents

Responsibility Statement

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU,

· the interim management report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and 

b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board,

Ayşegül BENSEL

Vice Chairperson

17 August 2018

INDEPENDENT REVIEW REPORT TO GLOBAL PORTS HOLDING PLC

Conclusion

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 2018 which comprises the interim condensed consolidated income statement, the interim condensed consolidated 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 the related explanatory notes.

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 2018 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

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 UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) 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.

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 DTR of the UK FCA.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.

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.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this 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 reached.

John Luke

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London, E14 5GL

United Kingdom

17 August 2018

Global Ports Holding PLC Interim Financial Report 2018

Interim condensed statement of other comprehensive income

(*) In the prior year end accounts the narrative for line items of "inventory" and "other current assets" was inadvertently switched on the face of the balance sheet. The above comparative now reflects the appropriate position.

Global Ports Holding PLC Interim Financial Report 2018

Interim condensed consolidated statement of changes in equity (continued)

(*) In the prior period interim financial report share capital had been recorded at $33,836k; share premium at $54,539; and a merger reserve of nil as at 1 January 2017. However, as a result of the group restructuring transaction in early 2017, it should have been accounted for as if the group had always existed in the current form for the entire period, including the comparative. The share capital at 1 January 2017 should have been recognised at the reorganised amount of $354,805k with an amount of $266,430k in the merger reserve and share premium of nil. 

Global Ports Holding PLC Interim Financial Report 2018

Interim condensed consolidated statement of changes in equity (continued)

(*) In the prior period interim financial report share capital had been recorded at $33,836k; share premium at $54,539; and a merger reserve of nil as at 1 January 2017. However, as a result of the group restructuring transaction in early 2017, it should have been accounted for as if the group had always existed in the current form for the entire period, including the comparative. The share capital at 1 January 2017 should have been recognised at the reorganised amount of $354,805k with an amount of $266,430k in the merger reserve and share premium of nil.

(**) The Group acquired three Italian cruise ports in September 2016 and October 2016. In accordance with IFRS 3 Business Combinations the previously reported provisional acquisition values were finalized during 2017 giving rise to a previously unrecognized gain on bargain purchase of USD 131 thousand and the 2016 financial information has been restated to reflect this gain and the final asset and liability figures.

Global Ports Holding PLC Interim Financial Report 2018

Notes to the interim condensed set of financial statements

1 General information

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 2018 were authorised for issue in accordance with a resolution of the directors on 17 August 2018.

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.

2 Accounting policies

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 consolidated financial statements as at and for the year ended 31 December 2017 available on the Company website.

The financial information contained in this report for the six months ended 30 June 2017 and 30 June 2018 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 2018 have been reviewed by the auditor. The comparative figures for the financial year ended 31 December 2017 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's previous auditor and delivered to the registrar of companies. The report of the previous auditor was (i) unqualified, (ii) did not include a reference to any matters to which the previous 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.

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

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2017.

2 Accounting Policies (continued)

c) Accounting Policies (continued)

The changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 31 December 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: 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 fees charged for retail space rental, where performance obligations might be performed over a period greater than a few days, and project cargo operations, where performance obligations might be performed over a period greater than a few weeks. Currently revenue is recognised over time for these services and thas not changed materially under IFRS 15.

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.

The following table summarises the impact, net of tax, of transition to IFRS 9:

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