Earnings Release • Aug 21, 2019
Earnings Release
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Global Ports Holding Plc ("GPH" or "Group"), the world's largest independent cruise port operator, today announces its unaudited results for the six months ended 30 June 2019.
| Financial Summary | H1 2019 | H1 2019 6 CCY |
H1 2018 YoY Growth (%) |
YoY CCY Growth (%) |
|
|---|---|---|---|---|---|
| 1 Total Revenue (\$m) |
54.6 | 56.4 | 56.6 | -3.4% | -0.2% |
| 2 Segmental EBITDA (\$m) |
39.1 | 40.3 | 40.3 | -3.1% | 0.0% |
| Adjusted EBITDA (\$m) | 34.8 | 36.0 | 36.1 | -3.5% | -0.2% |
| 3 Operating Profit (\$m) |
1.3 | 6.5 | -80.2% | ||
| Profit/(Loss) before tax (\$m) | (13.8) | (2.1) | |||
| Profit/(Loss) after tax (\$m) | (15.8) | (3.6) | |||
| 4 Underlying profit for the period (\$m) |
0.9 | 12.4 | -92.4% | ||
| EPS (c) | (26.0) | (6.0) | |||
| 5 Adjusted EPS (c) |
1.5 | 19.7 | |||
| DPS (c) | 19.9 | 27.9 | -28.7% | ||
| Net Debt | 351.1 | 253.1 | 38.7% | ||
| Net debt excluding impact of IFRS 16 | 290.1 | 253.1 | 14.6% |
We continue to work on diversifying Port Akdeniz's revenue streams and driving volume to Port Adria to capitalise on our previous capex improvements at this port. While, our commercial ports are not immune to macro-economic factors, historically our volumes have always recovered over time.
Looking into 2020, current booking trends are in line with our expectations, with the continued momentum in bookings to both Ege Port and Bodrum particularly pleasing for both 2020 and 2021.
While our other cruise ports continue to perform in line with our expectations. Our work to transform the retail experience at our ports continues to gather momentum, the new travel retail experience in Barcelona has been well received and we are pleased to already be experiencing strong increased passenger spend.
Trading at our commercial ports was affected by the macro-economic environment, with both cargo and container volumes weak in the period and so far in Q3 volumes have remained weak.
We expect to deliver low single digit growth in organic adjusted EBITDA 10 for the full year.
Emre Sayin, Chief Executive Officer said;
"We have seen another record performance from our Cruise business in the first half of the year, with strong growth in passenger volumes translating into strong growth in Cruise EBITDA. We are pleased with the significant progress made in our new port investment strategy and expect to achieve further significant progress in the second half of the year.
Our commercial ports are not immune to macro-economic factors and as a result recent trading has been challenging. Our previous experience suggests that the trading performance will improve over time and we continue to work to diversify the revenue streams at our commercial ports.
Trading since the period end at our Cruise ports has continued to be in line with our expectations, while weak trading trends at our Commercial ports have thus far continued into H2 2019. We expect to deliver low single digit growth in organic EBITDA for the full year."
Notes- F or full definitions and explanations of each A lternativ e Performance measures in this statement please refer to Note 2f
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 investor and analyst enquiries: | For media enquiries: | ||
|---|---|---|---|
| Global Ports Holding, Investor Relations | Brunswick Group LLP | ||
| Martin Brown, Investor Relations Director | Azadeh Varzi and Imran Jina | ||
| Telephone: +44 (0) 7947 163 687 | Telephone: +44 (0) 20 7404 5959 | ||
| Email: [email protected] | Email: [email protected] |
A copy of this report will be available on our website www.globalportsholding.com today from 0700hrs (BST).
An analyst and investor call will be held today at 9.30am, Dial-in Number: +44 207 194 3759
Access to the slide presentation will be available at http://www.globalportsholding.com/reports-presentations
| Key Financials | H1 2019 | H1 2019 6 CCY |
H1 2018 | YoY Growth (%) |
YoY CCY Growth (%) |
|---|---|---|---|---|---|
| Total Revenue (\$m) | 54.6 | 56.4 | 56.6 | -3.4% | -0.2% |
| 8 Cruise Revenue (\$m) |
23.9 | 25.4 | 22.4 | 6.6% | 13.3% |
| Commercial Revenue (\$m) | 30.8 | 31.1 | 34.2 | -10.0% | -9.1% |
| Segmental EBITDA (\$m) | 39.1 | 40.3 | 40.3 | -3.1% | 0.0% |
| 9 Cruise EBITDA (\$m) |
16.8 | 17.9 | 14.7 | 14.3% | 21.7% |
| Commercial EBITDA (\$m) | 22.3 | 22.4 | 25.6 | -13.1% | -12.6% |
| Adjusted EBITDA (\$m) | 34.8 | 36.0 | 36.1 | -3.5% | -0.2% |
| Segmental EBITDA Margin | 71.6% | 71.4% | 71.3% | ||
| Cruise Margin | 70.5% | 70.6% | 65.8% | ||
| Commercial Margin | 72.4% | 72.0% | 74.9% | ||
| Adjusted EBITDA Margin | 63.7% | 63.8% | 63.8% | ||
| Profit/(Loss) before tax (\$m) | (13.8) | (2.1) |
| KPIs | |||
|---|---|---|---|
| 7 Passengers (m PAX) |
2.06 | 1.63 | 26.8% |
| General & Bulk Cargo ('000 tons) | 458 | 795 | -42.4% |
| Container Throughput ('000 TEU) | 106 | 123 | -14.4% |
Group performance in the first half of 2019 was marginally weaker than the same period last year, with group revenue down 3.4% (-0.2% in constancy currency) to \$54.6m (H1 2018: \$56.6m) and Adjusted EBITDA down 3.5% (-0.2% in constant currency) to \$34.8m (H1 2018: \$36.1) with underlying profit falling 92.4% to \$0.9m and loss after tax of - \$15.8m.
The adoption of IFRS 16 resulted in a total Adjusted EBITDA positive impact of \$1 .5m in the period and the full year Adjusted EBITDA impact is expected to be c\$3.0m. Further details on the impact of IFRS 16, including a segmental breakdown of the EBITDA impact is provided in Note 3 to these financial statements. All 2019 figures in this statement are under IFRS 16 unless otherwise stated, prior year figures are not restated for IFRS 16.
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 very pleased to have grown cruise passenger volumes by 26.8% to 2.06m cruise passengers (H1 2018: 1.6m, FY 2018: 4.4m), with strong organic passenger growth of 8.6%. While at all ports, including equity accounted associate ports Venice, Lisbon and Singapore, we welcomed 3.3m passengers (H1 2018: 2.7m, FY 2018: 8.4m), growth of 21.2%.
Cruise Revenue in the first half grew by 6.6% \$23.9m (H1 2018: \$22.4m, FY 2018: \$54.9m), and Cruise EBITDA grew by 14.3% to \$16.8m, in line with our expectations. This strong performance was broad based, with particularly pleasing growth from both Valletta and Ege Port in the period, delivering EBITDA growth of 46% and 44% respectively. With the performance from Ege Port strongly supporting the outlook for growth in Turkish cruise passenger volumes in both 2019 and 2020. On a constant currency basis, first half cruise revenue was \$25.4m and Cruise EBITDA was \$17.9m.
The performance of our Commercial Port operations in the period was disappointing and underperformed compared to our original expectations. Commercial revenues fell by 10.0% to \$30.8m in the period (H1 2018: \$34.2m, FY 2018: \$69.9m). Revenues from Port Akdeniz fell by 6.1% while Port Adria's revenue fell by 27.5%, reflecting the previously highlighted absence of wind turbine project cargo in 2019.
Commercial EBITDA fell by 13.1% to \$22.3m, with both ports reporting a decline. Port Akdeniz delivered a reported decline in EBITDA of 10.6% to \$20.7m, with General & Bulk cargo volumes remaining weak in Q2 and Container volumes weakening in Q2 vs a stable performance in Q1.
Port of Adria reported an EBITDA decline of 36.3% to \$1.6m. However, excluding the one off positive impact of project cargo in H1 2018, Port Adria's underlying performance was positive. Ex project cargo EBITDA grew 35%, and on an ex project cargo and pre IFRS 16 basis EBITDA still grew 15.7%. Despite the significant drop in volumes and revenue our Commercial EBITDA margin fell by just 260bps to 72.4%.
Central costs increased in the period, rising by 1.0% compared to an 89% increase in H1 2018 and a 34% increase in FY 2018. While underlying central costs increased by 12.2% ex the positive impact of the weaker Turkish Lira vs USD and IFRS 16, the reduction in in the underlying growth rate reflects that our significant investment in central costs, including the strengthening of the management team began to annualise in the period.
Loss after tax for the period of \$15.8 million (H1 2018: \$3.6m) is driven by an increase in net finance costs to \$18.4m (H1 2018: \$11.4m), offset by an increase in income from equity accounted associates to \$3.3m (H1 2018: \$2.7m), while tax expense increased to \$1.9m (H1 2018: \$1.5m). The increased net finance costs are primarily due to non-cash loss when revaluing the Eurobond debt, along with non-cash revaluation losses on Turkish entities foreign currency dominated liabilities. Net interest expenses increased only slightly to \$12.7m (H1 2018: \$12.1m). The higher tax charge reflects higher taxable profit contribution from cruise operations and lower taxable profits from commercial ports, which are in lower tax jurisdictions.
Since the period end we have announced that in light of the emerging opportunities in our cruise business that we were undertaking a strategic review of the Group. The purpose of the strategic review is to explore ways to maximise value for all stakeholders and includes a range of potential corporate activity including a sale of certain assets as well as strategic investments and partnerships. The process remains at an early stage and there can be no certainty as to the final outcome. A further announcement will be made when it is appropriate to do so.
During the period we made significant progress with our new port investment strategy during the period. A concession agreement was signed for Antigua and Barbuda, our JV was named preferred bidder for Nassau and our other JV successfully bid for the port operator of La Goulette, Tunisia. While each of these new projects has still to complete, we are confident that successful financial conclusion and final agreements will be reached.
In addition to these projects, we are also in the final stages of completing the purchase of the Autoridad Portuaria de Malagas's (Malaga Port Authority) 20.0% holding in the Malaga cruise port concession for EUR1.5m. This will take Creuers ownership to 100% of the Malaga cruise port concession and GPH's effective ownership to 62%.
The long term growth fundamentals of the cruise industry continue to provide a very supportive back drop for our cruise business. The global cruise ship order book, currently sits at a record high of 124 new ships on order for delivery between 2019-2027, an increase of 10% in 12 months.
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.
In the near term there is a significant number of cruise ships that are likely to sail in the Caribbean or Europe set for delivery over the remainder of 2019, 2020, 2021 and 2022. We look forward to welcoming these cruise ships to our ports in the years ahead.
While the order book provides visibility over the long term growth rate, the long lead time on cruise holiday bookings vs land based tourism and cruise lines ability to manage yields means visibility over passenger volumes over the short term is also strong.
| Cruise Port Operations H1 2019 H1 2019 CCY | 6 H1 2018 YoY Growth (%) YoY CCY Growth (%) | ||||
|---|---|---|---|---|---|
| Revenue (USD m) | 23.9 | 25.4 | 22.4 | 6.6% | 13.3% |
| Segmental EBITDA (USD m) | 16.8 | 17.9 | 14.7 | 14.3% | 21.7% |
| Segmental EBITDA Margin | 70.5% | 70.6% | 65.8% | ||
| Passengers (m)1 | 2.1 | - | 1.63 | 26.8% | |
| Turnaround Passengers | 0.7 | 0.7 | 9.7% | ||
| Transit Passengers | 1.3 | 1.0 | 38.5% | ||
| Yield (USD, rev per pax) | 11.6 | 12.3 | 13.8 | -16.0% | -10.6% |
The first half of our financial year is currently lower in terms of cruise passenger volumes vs the second half due to the fact it includes the seasonally low Q1 for cruise in the Mediterranean. Despite the seasonal low, we still welcomed 2.1m (H1 2018: 1.6m, FY 2018: 4.4m) cruise passengers to our consolidated and managed cruise ports in the period, a pleasing growth rate of 26.8%. On an organic basis, which excludes the impact of our management agreement in Havana, our passenger volume growth rate was 8.6% vs 9.2% in H1 2018. At all ports including equity accounted associate ports Venice, Lisbon and Singapore we welcomed 3.3m (H1 2018: 2.7m, FY 2018: 8.4m).
In the first half Cruise Revenue increased 6.6% to \$23.9m vs H1 2018 \$22.4m and Cruise Segmental EBITDA once again grew faster than revenue, delivering growth of 14.3% to
\$16.8m (H1 2018: \$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 USD revenue base and Turkish Lira cost base. On a constant EUR/\$ currency basis the first half cruise performance was even stronger, with revenue growth of 13.3% to \$25.4m and Cruise EBITDA growth of 21.7% to \$17.9m. Excluding the performance of our equity accounted associates (Venice, Lisbon and Singapore), with a pro-rata net income contribution at the Cruise EBITDA level of \$3.3m (H1 2018: \$2.7m), Cruise EBITDA grew by 12.6% yoy.
We continue to drive growth in on our ancillary revenues, with three main areas of focus: port services; retail and rental services; and passenger and destination services. There were some important developments in the period in this area of the business, most notably in Retail and Rental Services, with the opening of new immersive travel retail in two of the terminals at Barcelona. The new areas have received positive feedback from passengers and the uplift in associated revenue has been very pleasing. Since the period end we issued an RFP for the retail and duty free areas for four of our ports, Malaga, Zadar, Cagliari and Catania. We look forward to receiving submissions in Q3 before deciding on the best way forward for these ports.
While our plans to grow our Port Services revenues continues to progress, our port service evaluation process identified tailored services that we could introduce at each relevant port in order to allow us to offer an integrated service package to cruise passengers and cruise ships. Having concluded the review, we have focussed our actions on a number of our larger ports and we are taking action to fill any gaps in our offering at these ports. While our Destination Services offering continues to see us drive improvements in the service we offer passengers through our Guest Information Centers (GICs).
The last couple of years have been challenging for our Turkish cruise ports, however our 'active patience' approach of continuing to invest in our facilities and a step up in our marketing in 2018 is beginning to deliver, with a 31% growth in passengers in H1 2019 at Ege Port, our key Turkish port. During the period, we hosted the MedCruise General Assembly at Ege Port, providing a great platform to reenergise the industry's interest in the port and region. We currently expect a slightly higher growth in passenger volumes at Ege Port in H2 2019, with passenger volume growth in 2020 currently expected to be even higher.
During H1 we reorganised the management of our cruise operations under a new regional structure, with the creation of three regions, East Mediterranean, West Mediterranean and Americas regions. This new structure reflects our growing global operations, including our pipeline of new port investments, and will help us maintain operational discipline while providing a strong platform for our next stage of growth.
During the period significant progress was made towards the implementation of our new port investment strategy, we signed a 30-year concession agreement for Antigua and Barbuda, our joint venture was awarded the cruise port tender for Nassau, Bahamas and our joint venture was notified that its bid for the operator of La Goulette, Tunisia had been successful.
We are in the final stages of full financial closure in Antigua & Barbuda and now expect this to be achieved before the end of Q3 2019. We look forward to welcoming this port and the c800k passengers that visit every year into our portfolio shortly.
Nassau, Bahamas is one of the largest cruise ports in the world and welcomes 3.7m passengers per annum. We remain in advanced stage discussions with local and international banks over long term bank financing for the concession. Signing of the concession agreement, full financial closure and commencement of the concession is expected to occur before the end of 2019.
Our joint venture with MSC Cruises S.A was successful in acquiring Goulette Shipping Cruise, the company that operates the cruise terminal in La Goulette, Tunisia during the period. Full closure and commencement of the concession is expected in Q4 2019.
All remain conditional until such times as all conditions are fulfilled. In addition to new port investments we continue to work on securing concession extensions at a number of our ports in our current portfolio.
| Creuers (Barcelona and Malaga) | H1 2019 H1 2019 CCY | 6 H1 2018 YoY Growth (%) YoY CCY Growth (%) | |||
|---|---|---|---|---|---|
| Revenue (USD m) | 12.5 | 13.4 | 13.3 | -6.3% | 0.2% |
| Segmental EBITDA (USD m) | 7.7 | 8.3 | 8.0 | -3.7% | 3.1% |
| Segmental EBITDA Margin | 61.7% | 61.7% | 60.1% | ||
| Passengers (m)1 | 1.04 | 1.02 | 1.7% | ||
| Turnaround Passengers | 0.56 | 0.58 | -3.7% | ||
| Transit Passengers | 0.48 | 0.44 | 8.7% | ||
| Yield (USD, rev per pax) | 12.0 | 12.9 | 13.0 | -7.9% |
Creuers (Barcelona & Malaga), in line with our expectations, grew passenger volumes by 1.7% in the period, welcoming 1.0m (H1 2018: 1.0m) passengers in H1 2019. Revenue of \$12.5m (H1 2018: \$13.3m) was down 6.3% yoy, although in constant currency terms revenue increased 0.2%.
Despite the modest passenger growth, the change in the passenger mix, with Malaga experiencing a sharp drop in turnaround passengers in the period, negatively impacted passenger yields, revenues and EBITDA in the period. Creuers delivered EBITDA for the period of \$7.7m (H1 2018: \$8.0m), down 3.7% yoy, on a constant currency basis EBITDA grew 3.1%.
During the period we opened the new retail and duty free areas in two terminals in Barcelona in partnership with our concessionaire. The results have been impressive, with passenger feedback very positive on the new immersive retail areas and most importantly sales have risen strongly. In Malaga we will shortly undertake a refurbishment of the cafeteria area of the Palmeral terminal, further improving the passenger experience. We are also taking action to offer a "one stop shop" integrated service package to cruise lines at both ports.
We are also in the final stages of completing the purchase of the Autoridad Portuaria de Malagas's (Malaga Port Authority) 20.0% holding in the Malaga cruise port concession for EUR1.5m. This will take Creuers ownership to 100% of the Malaga cruise port concession and GPH's effective ownership to 62%. As well as changing the financial ownership, we believe this action will allow us to drive additional operational improvements at the port.
| Valletta Cruise Port | H1 2019 | H1 2019 6 CCY |
H1 2018 YoY Growth (%) | YoY CCY Growth (%) |
|
|---|---|---|---|---|---|
| Revenue (USD m) | 6.2 | 6.7 | 5.7 | 10.1% | 17.8% |
| Segmental EBITDA (USD m) | 3.7 | 4.0 | 2.5 | 46.3% | 56.6% |
| Segmental EBITDA Margin | 59.6% | 59.6% | 48.3% | ||
| Passengers (m)1 | 0.39 | 0.28 | 39.8% | ||
| Turnaround Passengers | 0.11 | 0.1 | 79.5% | ||
| Transit Passengers | 0.29 | 0.22 | 29.2% | ||
| Yield (USD, rev per pax) | 15.8 | 16.9 | 20.1 | -21.3% |
Valletta performed very strongly during the period, with passenger growth of 39.8% to 0.39m (H1 2018: 0.28m). Revenue for the period grew 10.1% to \$6.2m (H1 2018: 5.7m) or 17.8% in constant currency terms. EBITDA grew 46.3% in the period to \$3.7m (H1 2018: \$2.5m), with constant currency growth of 56.6%.
The divergence in revenue growth from passenger growth is primarily driven by passenger spending habits at our self-managed travel retail offering and our area management revenues. Within the passenger mix in the period, there was particularly strong growth in turnaround passengers, while turnaround passengers tend to generate higher port services revenues, their retail spend tends to be far lower. With this impact felt more acutely in Valletta compared to our other ports given that we self-manage the travel retail operation.
The area management revenues at Valletta such as rent from waterfront restaurants are not directly related to passenger volume, therefore do not rise or fall in line with passenger growth. Our primary port revenues grew in line with passenger growth.
After a challenging and weather impacted 2018, it has been pleasing to see Valletta return to form in such a manner. Looking into H2 2019 the passenger volume growth should normalise.
| Ege Port | H1 2019 H1 2019 CCY | 6 H1 2018 YoY Growth (%) YoY CCY Growth (%) | |||
|---|---|---|---|---|---|
| Revenue (USD m) | 2.3 | 2.3 | 1.7 | 32.4% | 32.4% |
| Segmental EBITDA (USD m) | 1.4 | 1.4 | 0.9 | 43.5% | 43.5% |
| Segmental EBITDA Margin | 59.0% | 59.0% | 54.5% | ||
| Passengers (m)1 | 0.08 | 0.06 | 30.9% | ||
| Turnaround Passengers | 0.01 | 0.01 | -3.4% | ||
| Transit Passengers | 0.07 | 0.05 | 36.8% | ||
| Yield (USD, rev per pax) | 28.3 | 28.0 | 1.1% |
The last few years have been particularly challenging for our Turkish cruise ports, however as we have highlighted for some time, 2019 is the starting point for the recovery in passenger volumes. This start of this recovery can be seen in the 30.9% growth in cruise passenger volumes in the period. This strong volume growth translated into revenue growth of 32.4% to \$2.3m (H1 2018: \$1.7m), with our Turkish ports now charging in USD there was no translational FX impact in the period.
EBITDA of \$1.4m (H1 2018: \$0.9m) was up 43.5% year on year, with the uplift in the margin to 59.0% helped by the positive impact the weak Turkish Lira given the predominately Turkish Lira cost base at the port.
Looking into H2 2019, the passenger volume growth rate should be higher than in H1 2019 but more importantly, looking into 2020 the passenger growth rate should accelerate yoy as the recovery trend continues to build, while 2021 already shows growth on 2020 reservations.
| Other Cruise | H1 2019 H1 2019 CCY | 6 H1 2018 YoY Growth (%) YoY CCY Growth (%) | |||
|---|---|---|---|---|---|
| Revenue (USD m) | 2.8 | 3.0 | 1.6 | 72.7% | 84.9% |
| Segmental EBITDA (USD m) | 4.0 | 4.3 | 3.2 | 25.3% | 34.1% |
| Passengers (m)1 | 0.54 | 0.26 | 111.5% | ||
| Turnaround Passengers | 0.05 | 0.01 | 376.8% | ||
| Transit Passengers | 0.50 | 0.25 | 100.5% |
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 smaller cruise port concessions and our management agreement in Havana, as well as the net income contribution of our equity associate ports (Venice, Lisbon and Singapore).
Cruise passenger volumes grew 111.5% in the period, although on an organic basis passenger volumes fell 3.3%. Revenue grew 72.7% in the period, 84.9% in constant currency, on an organic basis revenue grew 22.0% to \$2.0m. EBITDA grew 25.3% to \$4.0m, on an organic basis EBITDA grew 11.7%.
During the period US authorities prohibited authorised travel via cruise ships under the People to People program, leading to the US cruise lines to redeploy cruise ships away from Havana. Our management agreement is focussed on us advising on cruise port operation best practice for Havana cruise port, GPH has not invested in the port. We continue to monitor the situation and are actively engaged with all stakeholders. In light of the redeployment of US cruise lines we do not expect a material contribution from this management agreement in the foreseeable future.
Our equity accounted associate ports, Venice, Lisbon and Singapore once again performed well, reporting total PAX growth of 12.9% to 1.2m (H1 2018: 1.1m). Overall the prorata net income contribution from our equity accounted associate ports contributed to Other Cruise EBITDA was \$3.3m (H1 2018: \$2.7m) during the period, a growth rate of 21.6% on the same period last year.
H1 2019 has proven to be a challenging period for our Commercial ports business, with Port Akdeniz in particular suffering from weak general and bulk cargo volumes throughout the period and weak container volumes in Q2. 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 and we believe the general uncertainty around global trade has been the primary driver of the slowdown experienced by Port Akdeniz.
| H1 2019 H1 2019 CCY 6 |
H1 2018 YoY Growth (%) YoY CCY Growth (%) | ||||
|---|---|---|---|---|---|
| Commercial | |||||
| Revenue (USD m) | 30.8 | 31.1 | 34.2 | -10.0% | -9.1% |
| Segmental EBITDA (USD m) | 22.3 | 22.4 | 25.6 | -13.1% | -12.6% |
| Segmental EBITDA Margin | 72.4% | 72.0% | 74.9% | ||
| General & Bulk Cargo ('000) | 458 | 795 | -42.4% | ||
| Throughput ('000 TEU) | 106 | 124 | -14.6% | ||
| Yield (USD, Revenue per tonnes) | 7.4 | 9.0 | -16.9% | ||
| Yield (USD, Revenue per TEU) | 168.1 | 176.3 | -4.6% |
Our Commercial port operations delivered a decline in revenue of 10.0% to \$30.8m (H1 2018: \$34.2m). While Commercial EBITDA fell by 13.1% to \$22.3m (H1 2018: \$25.6m). Overall our volumes were weak in the period, with General and Bulk cargo volumes declining by 42.4% and Throughput container volumes falling by 14.6%, this overall volume decline was driven a fall in volumes at Port Akdeniz.
In terms of yields, total throughput container yields were down 4.6%, while cargo yields were down 16.9%, with the drop in cargo yields reflecting the impact of Port Adria's project cargo in H1 2018. Port Akdeniz benefitted from the weakness in Turkish Lira due to the port's cost structure being around 70% in local currency, while revenues are almost exclusively in \$. However, while the weak Turkish Lira generated a direct benefit, there was also an unsubstantiated indirect cost in terms of the uncertainty created by the volatility and weakness in the Turkish Lira.
| Port Akdeniz | H1 2019 H1 2019 CCY | 6 H1 2018 YoY Growth (%) YoY CCY Growth (%) | |||
|---|---|---|---|---|---|
| Revenue (USD m) | 26.3 | 26.3 | 28.0 | -6.1% | -6.1% |
| Segmental EBITDA (USD m) | 20.7 | 20.7 | 23.1 | -10.6% | -10.6% |
| Segmental EBITDA Margin | 78.7% | 78.7% | 82.7% | ||
| General & Bulk Cargo ('000) | 335 | 695 | -51.8% | ||
| Throughput ('000 TEU) | 80 | 98 | -18.7% | ||
| Yield (USD, Revenue per tonnes) | 6.4 | 6.5 | -1.0% | ||
| Yield (USD, Revenue per TEU) | 188.1 | 194.1 | -3.1% |
Port Akdeniz, our largest commercial port, reported a revenue decline of 6.1% to \$26.3m (H1 2018: \$28.0m), with EBITDA declining 10.6% to \$20.7m (H1 2018: \$23.1m) and the EBITDA margin fell to 78.7%.
General & Bulk Cargo volumes fell sharply, declining by 51.8%, albeit the rate of decline in Q2 moderated vs Q1. Throughput container volumes fell by 18.7% in the period, with Q2 volumes down sharply after a stable performance in Q1. Total marble volumes fell by 22.1% in the period, with import containers also down sharply, falling 21.6%. The small decline in yields reflects the product and services mix in the period rather than a change in the underlying pricing.
While the expansion of the free trade zone has had an impact on volumes in some General & Bulk cargo, particularly in bagged cement and barite, we believe the largest driver of volume declines has been the macro-economic environment. Global trade tariffs and barriers to trade in general are harmful to trade volumes and we believe the general uncertainty around global trade, particularly involving China, has been a primary driver of the slowdown experienced by Port Akdeniz.
Looking into H2 2019, the outlook for both General & Bulk cargo volumes and Throughput container volumes continues to look uncertain. An agreement to end the current escalation of trade tariffs and barriers involving China and a general improvement in Chinese GDP growth are, we believe, the most likely catalysts for a meaningful improvement, particularly in Throughput container volumes. Our previous experience suggests that the trading performance will improve over time and we continue to work to diversify the revenue streams at our commercial ports.
As previously disclosed, on 29 April 2019, the Competition Authority of the Republic of Turkey notified Global Ports Holding's subsidiary in Turkey, Ortadoğu Antalya Liman İşletmeleri A.Ş ("Port Akdeniz"), that it has commenced an investigation into Port Akdeniz due to an alleged breach of Article 6 of the Law on the Protection of Competition, Law No. 4054 due to excessive pricing concerns on certain services. Further to our statement in Q1, Ortadoğu Antalya Liman İşletmeleri A.Ş ("Port Akdeniz") has submitted the first set of defence on 28 May 2019. By law, the Competition Authority of the Republic of Turkey has 6 months from the submission date to evaluate the defences and prepare an investigation report. The Competition Authority may, at its sole discretion, extend the preparation period by additional 6 months. A further announcement will be made when it is appropriate to do so.
| Port Adria | H1 2019 H1 2019 CCY | 6 H1 2018 YoY Growth (%) YoY CCY Growth (%) | |||
|---|---|---|---|---|---|
| Revenue (USD m) | 4.5 | 4.8 | 6.2 | -27.5% | -22.4% |
| Segmental EBITDA (USD m) | 1.6 | 1.7 | 2.5 | -36.3% | -31.8% |
| Segmental EBITDA Margin | 35.0% | 35.0% | 39.9% | ||
| General & Bulk Cargo ('000) | 122.7 | 100.1 | 22.6% | ||
| Throughput ('000 TEU) | 25.9 | 25.6 | 1.2% | ||
| Yield (USD, Revenue per tonnes) | 10.3 | 26.2 | -58.1% | ||
| Yield (USD, Revenue per TEU) | 106.6 | 108.2 | -1.6% |
While at the headline level Port of Adria's performance in the period looks disappointing, there was a number of one offs that impacted the performance, most notably the project cargo impact in H1 2018. Excluding this impact, the underlying performance was positive.
Revenue fell 27.5% in the period to \$4.5m (H1 2018: \$6.2m) and EBITDA fell 36.3% to \$1.6m (H1 2018: \$2.5m). However, excluding the one off positive impact of project cargo in H1 2018, revenue fell by 5.7%, while underlying EBITDA increased by 35.0%. On a pre-IFRS 16 basis, the underlying EBITDA growth was still an impressive 15.7%, reflecting lower costs
General & Bulk Cargo volumes rose an impressive 22.6% in the period, driven primarily by the continued strength in steel coil exports which has followed the completion of an investment programme by the manufacturer. While Throughput container volumes rose a more modest 1.2%.
We continue to work on growing the volumes at this port and remain in talks with a number of parties, both importers and exporters about introducing new cargoes at the port during 2019.
It looks increasingly likely that UK will exit the EU in the coming months and while the indirect impact on any business cannot be known for sure, we believe that Brexit does not pose a material issue for the group, either directly or indirectly. The long lead times on the booking of cruise holidays and the consistently high rates of occupancy achieved by cruise lines are supportive of our view. We also note recent comments from major cruise lines on their confident outlook for the rest of 2019 and 2020. We do not believe our commercial business has any significant direct exposure to any fall out from Brexit. While of course any wider impact on economic confidence and global trade could have an indirect impact on our commercial ports, we believe this impact would be limited. The group has no port operations in the UK.
Loss after tax for the period of \$15.8 million (H1 2018: \$3.6m) is driven by an increase in net finance costs to \$18.4m (H1 2018: \$11.4m), offset by an increase in income from equity accounted associates to \$3.3m (H1 2018: \$2.7m), while tax expense increased to \$1.9m (H1 2018: \$1.5m). The increased net finance costs are primarily due to non-cash loss when revaluing the Eurobond debt, along with non-cash revaluation losses on Turkish entities foreign currency dominated liabilities. Net interest expenses increased only slightly to \$12.7m (H1 2018: \$12.1m). The higher tax charge reflects higher taxable profit contribution from cruise operations and lower taxable profits from commercial ports, which are in lower tax jurisdictions.
As of 30 June 2019, specific adjusting items comprising project expenses amounting to \$4.7m (H1 2018: \$3.6m), provisions \$1.0m (H1 2018: \$0.3m) and other specific adjustment items \$1.2m (H1 2018: \$0.3m) Please see note 2 f in the interim condensed consolidated financial statements for more details.
The Group's net finance charge in the period was \$18.4m, an increase on the \$11.4m charge in H1 2018. This increase was primarily due to the Turkish Lira depreciation against \$ in the year, which creates a foreign exchange charge and gain on liabilities and assets respectively.
This occurs for two reasons. Firstly, the group's Eurobond is issued by Global Liman, a 100% owned entity within the group with a functional currency of Turkish Lira. When the Turkish Lira depreciates against the \$ a non-cash foreign exchange loss occurs when revaluing the Eurobond debt, while a non-cash foreign exchange gain should occur if the Turkish Lira appreciates against the \$. Secondly, although all our Turkish ports charge in \$, they must legally keep the accounting books in Turkish Lira, so when the Turkish Lira depreciates against the \$ this results in non-cash foreign exchange losses on revaluing the Turkish entities' foreign currency denominated liabilities and non-cash foreign exchange gains on revaluing the Turkish entities foreign currency assets.
During the period net finance expenses increased to \$29.0m (H1 2018: \$22.3m), primarily due to a non-cash foreign exchange loss when revaluing the Eurobond debt of \$13.1m (H1 2018: \$9.3m), net interest expenses increased slightly to \$12.7m (H1 2018: \$12.1m) and interest expenses on lease obligations increased to \$1.7m (H1 2018: \$0.1m) with \$1.1m of this increase due to the adoption of IFRS 16 in the period.
Finance income fell to \$10.5m (H1 2018: \$10.9m), primarily as a result of a drop in the non-cash foreign exchange gains on Turkish entities' TL costs base to \$9.7m (H1 2018: \$10.0m).
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 \$1.9m (H1 2018: \$1.5m), representing an effective underlying tax charge of 21.02% (H1 2018: 16.22%). The higher tax charge compared with prior years is primarily the result of higher taxable profits in our Cruise business which is primarily based in higher tax jurisdictions in Europe and the lower taxable profit contribution from our commercial ports which are based in lower tax jurisdictions.
The Group's basic earnings per share was -26.0c (H1 2018: -6.0c), this decrease is in line with the decline in profit for the year attributable to owners of the company -\$16.3m (H1 2018: -\$3.8m). Adjusted earnings per share of 1.5c (H1 2018: 19.7c), reflects the decline in the underlying profit measure, which is calculated as (loss)/profit for the period after removing the impact of the amortisation of port operating rights and depreciation of right of use assets.
Operating cash flow was -\$1.3m (H1 2018: \$24.5m). The decrease in operating cash flow is primarily related to an increase in working capital of \$24.3m. This increase was driven by short term cash collaterals for new projects of \$12.4m (H1 2018: nil), a receivable related to a change in port agent in Barcelona of \$4.3m (H1 2018: nil) and a period end timing issue over receipt of a \$1.5m payment related to our oil services contract in Port Akdeniz. Since period end the short term cash collateral has been returned and the receivables related to the change in port agent and the oil services contract have been received.
Capital expenditure during the period was \$5.7m, broadly in line with the \$5.6m incurred in H1 2018. In H1 2019 the group spent approximately \$2.6m in Port Akdeniz on work related to the TPAO project, \$1.1m in Port Adria on infrastructure enhancements, \$1.0m in Creuers mostly on remodelling of terminals and security and \$0.8m in Valletta on
At 30th June 2019 net debt was \$351.1m (31 st December 2018: \$267.2m) This increase was driven by the \$60.9m impact of recognising operating leases on the balance sheet under IFRS 16 and the decrease in cash as explained on the cash flow and investment above. The group's Net Debt/Adjusted EBITDA ratio was 4.3x times as at 30 th June 2019 (31 st December 2018: 3.2x). Excluding the IFRS 16 impact net debt increased to \$290.1m (31 st December 2018: \$267.2m) and the Net Debt/Adjusted EBITDA ratio was 3.6x.
Gross debt at period end was \$410.0m (31 st December 2018: \$347.1m), with this increase driven by the adoption of IFRS 16, excluding this impact, gross debt was \$349.0m. The Leverage Ratio as per GPH's Eurobond was 4.2x at 30 th June 2019 (31 st December 2018: 4.2x), vs a covenant of 5.0x, the leverage ratio excludes the IFRS 16 impact, in line with the bond descriptions.
All of GPH's European 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 US Dollars, 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 exchange rates to the Turkish Lira directly affects the Group's reported results.
In the first half of 201 9, the group was impacted by unfavourable movements against the prior year in respect of the US Dollar against Euro and a favourable movement in respect of the US Dollar against the Turkish Lira. The details of the foreign exchange rates used in the period can be found in Note 2 e) of the consolidated financial statements.
Having reviewed carefully the progress made in regard to opportunities for investment in new cruise ports the board has proposed an interim dividend of \$12.5m (19.9c per share), The interim dividend is to be paid on 29 November to shareholders on the register on 1 November 2019. This is in keeping with the board's state minimum dividend policy which was communicated at the time of the IPO.
| H1 2019 | ||||
|---|---|---|---|---|
| Reported Impact of IFRS 16 H1 2019 Pre IFRS 16 H1 2018 Reported | ||||
| Income Statement | ||||
| Segmental EBITDA | 39.1 | 1.4 | 37.7 | 40.3 |
| Adjusted EBITDA | 34.8 | 1.5 | 33.3 | 36.1 |
| Depreciation and Amortisation | (23.3) | (1.2) | (22.1) | (22.6) |
| Net Finance Costs | (18.4) | (1.1) | (17.4) | (11.4) |
| Balance Sheet | ||||
| Segment Assets | 656.4 | 58.9 | 597.5 | 606.5 |
| Unallocated Assets | 48.1 | 0.7 | 47.4 | 95.1 |
| Segment Liabilities | 267.1 | 60.2 | 206.9 | 228.8 |
| Unallocated Liabilities | 283.4 | 0.7 | 282.7 | 264.7 |
| Gross Debt | 409.9 | (60.9) | 349.0 | 354.8 |
| Net Debt | 351.1 | (60.9) | 290.1 | 253.1 |
| Adjusted EBITDA (annualised) | 82.5 | 1.5 | 80.9 | 81.4 |
| Leverage Ratios | ||||
| Gross Debt/EBITDA | 5.0 | 4.2 | 4.4 | |
| Net Debt/EBITDA | 4.3 | 3.6 | 3.1 |
Forthe six months ended 30 June 2019
| Responsibility Statement | 16 |
|---|---|
| Independent Review Report to Global Ports Holding PLC | 17 |
| Primary Statements | |
| Interim condensed consolidated statement of profit or loss and other comprehensive income | 18-19 |
| Interim condensed consolidated statement of financial position | 20 |
| Interim condensed consolidated statement of changes in equity | 21-23 |
| Interim condensed consolidated cash flow statement | 24 |
We confirmthat to the best of our knowledge:
By order of the Board,
MehmetKUTMAN Chairman 19August 2019
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 2019 which comprises the interimcondensed consolidated statement of profit or loss and othercomprehensive income, the interimcondensed consolidated statement of financial position, the interimcondensed consolidated statement ofchanges in equity, the interimcondensed consolidated cash flowstatement and the related explanatory notes.
Based on our review, nothing has come to ourattention that causes us to believe that the condensed set of financialstatements in the half-yearly financial report for the sixmonths ended 30 June 2019 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 ConductAuthority ("the UKFCA").
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 financialand accounting matters,and applying analyticaland other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements ormaterial inconsistencies with the information in the condensed set of financialstatements.
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 ofallsignificant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
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 DTRof the UKFCA.
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 financialstatements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility is to express to the company a conclusion on the condensed set of financialstatements in the half-yearly financial report based on our review.
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 reviewhas 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 orassume responsibility to anyone other than the company for our reviewwork, for this report, or for the conclusions we have reached.
John Luke for andon behalf ofKPMGLLP CharteredAccountants 15 Canada Square London, E14 5GL United Kingdom 19August 2019
| (USD'000) | Notes | Six months ended 30 June 2019 (Unaudited) |
Six months ended 30 June 2018 (Unaudited) |
Year ended 31 December 2018 (Audited) |
|---|---|---|---|---|
| Revenue | 5 | 54,609 | 56,556 | 124,812 |
| Cost ofsales | (38,593) | (37,789) | (77,523) | |
| Gross profit | 16,016 | 18,767 | 47,289 | |
| Other income | 1,132 | 3,200 | 19,728 |
| (1,293) | |||
|---|---|---|---|
| (15,993) | |||
| (13,834) | |||
| 1,288 | 6,514 | 35,897 | |
| 27,955 | |||
| (60,867) | |||
| (18,437) | (11,355) | (32,912) | |
| 3,320 | 2,730 | 5,631 | |
| (13,829) | (2,111) | 8,616 | |
| 7 | (1,931) | (1,527) | (1,480) |
| (15,760) | (3,638) | 7,136 | |
| 770 | |||
| 6,366 | |||
| (15,760) | (3,638) | 7,136 | |
| 6 6 (Loss) / Profit for the period / yearattributable to: |
(1,744) (7,801) (6,315) 10,526 (28,963) (16,317) 557 |
(1,040) (9,189) (5,224) 10,942 (22,297) (3,789) 151 |
The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying IFRS 16 is recognised in retained earnings at the date of initialapplication. See Note 2.
| (USD'000) | Notes | Six months ended 30 June 2019 (Unaudited) |
Six months ended 30 June 2018 (Unaudited) |
Year ended 31 December 2018 (Audited) |
|---|---|---|---|---|
| Othercomprehensiveincome Items that will not be reclassifiedsubsequently |
||||
| to profit or loss | ||||
| Remeasurement of defined benefit liability | (5) | 12 | (19) | |
| Income taxrelating to items that will not be reclassified subsequently to profit or loss | -- | (3) | 4 | |
| (5) | 9 | (15) | ||
| Items that may be reclassifiedsubsequently to profit or loss | ||||
| Foreign currency translation differences | 17,225 | 26,294 | 42,107 | |
| Cash flowhedges -effective portion ofchanges in fair value | 77 | (17) | 155 | |
| Cash flowhedges - realized amounts transferred to income statement | (119) | 53 | (216) | |
| Losses on a hedge ofa net investment | (18,183) | (37,342) | (59,630) | |
| (1,000) | (11,012) | (17,584) | ||
| Other comprehensive loss for the year, net of income tax | (1,005) | (11,003) | (17,599) | |
| Total comprehensive loss for the year | (16,765) | (14,641) | (10,463) | |
| Totalcomprehensive loss attributable to: | ||||
| Owners of the Company | (16,861) | (11,811) | (12,315) | |
| Non-controlling interests | 96 | (2,830) | 1,852 | |
| (16,765) | (14,641) | (10,463) | ||
| Basic anddiluted(loss) / earnings per share | ||||
| (cents per share) | 12 | (26.0) | (6.0) | 1.23 |
The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying IFRS 16 is recognised in retained earnings at the date of initialapplication. See Note 2.
The notes on pages 12 to 39 are an integral part of these condensed consolidated interimfinancialstatements
| Notes | As at 30 June 2019 (USD '000) (Unaudited) |
As at 31 December 2018 (USD '000) (Audited) |
As at 30 June 2018 (USD '000) (Unaudited) |
|
|---|---|---|---|---|
| Non-current assets | ||||
| Property and equipment | 128,150 | 129,351 | 131,110 | |
| Intangibleassets | 374,759 | 392,361 | 410,036 | |
| Right of UseAssets | 2 | 59,658 | -- | -- |
| Goodwill | 13,485 | 13,485 | 13,699 | |
| Equity-accounted investees | 26,524 | 26,003 | 23,538 | |
| Other investments | 15 | 12,617 | 12,013 | 11,782 |
| Deferred tax assets | 7 | 2,635 | 3,066 | 1,492 |
| Other non-current assets | 4,591 | 4,626 | 4,964 | |
| 622,419 | 580,905 | 596,621 | ||
| Current assets | ||||
| Tradeand other receivables | 8 | 42,916 | 19,999 | 16,881 |
| Duefromrelated parties | 14 | 1,057 | 1,027 | 1,730 |
| Other investments | 72 | 72 | 705 | |
| Other current assets | 4,315 | 3,336 | 5,677 | |
| Inventory | 1,468 | 1,454 | 1,791 | |
| Prepaid taxes | 24 | 1,363 | 722 | |
| Cash and cash equivalents | 58,795 | 79,829 | 100,999 | |
| 108,647 | 107,080 | 128,505 | ||
| Total assets | 731,066 | 687,985 | 725,131 | |
| Current liabilities | ||||
| Loansand borrowings | 10 | 58,295 | 48,755 | 48,074 |
| Tradeand other payables | 17,785 | 15,279 | 13,975 | |
| Dueto related parties | 14 | 504 | 542 | 250 |
| Dividends payable | 9 | 16,821 | -- | -- |
|---|---|---|---|---|
| Current tax liabilities | 7 | 2,911 | 2,459 | 2,430 |
| Provisions | 11 | 1,974 | 955 | 1,156 |
| 98,290 | 67,990 | 65,885 | ||
| Non-current liabilities Loansand borrowings |
10 | 351,654 | 298,296 | 306,747 |
| Other financial liabilities | 2,088 | 3,408 | 2,551 | |
| Derivativefinancial liabilities | 15 | 669 | 617 | 788 |
| Deferred tax liabilities | 7 | 89,582 | 92,294 | 96,304 |
| Provisions | 11 | 7,388 | 8,862 | 20,316 |
| Employee benefits | 836 | 797 | 837 | |
| 452,217 | 404,274 | 427,543 | ||
| Total liabilities | 550,507 | 472,264 | 493,428 | |
| Net assets | 180,559 | 215,721 | 231,703 | |
| Equity | ||||
| Sharecapital | 811 | 811 | 811 | |
| Legal reserves | 13,038 | 13,030 | 13,030 | |
| Share based payment reserves | 275 | -- | -- | |
| Hedging reserves | (213,618) | (195,393) | (173,069) | |
| Translation reserves | 214,918 | 197,247 | 179,901 | |
| Retained earnings | 75,845 | 108,981 | 121,628 | |
| Equity attributable to equity holders of the Company | 91,269 | 124,676 | 142,301 | |
| Non-controlling interests | 89,290 | 91,045 | 89,402 | |
| Total equity | 180,559 | 215,721 | 231,703 |
The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying IFRS 16 is recognised in retained earnings at the date of initialapplication. See Note 2.
The notes on pages 12 to 39 are an integral part of these condensed consolidated interimfinancialstatements
| Non | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share | Legal | Share based | Hedging | Translation | Retained | controlling | Total | |||
| (USD'000) | Notes | capital | reserves | paymentreserves | reserves | reserves | earnings | Total | interests | equity |
| Balance at 1 January 2019 (Audited) | 811 | 13,030 | -- | (195,393) | 197,247 | 108,981 124,676 | 91,045 215,721 | |||
| Adjustment on initialapplication of IFRS | ||||||||||
| 16 (net of tax) (*) | -- | -- | -- | -- | -- | -- | -- | -- | -- | |
| Adjustedbalance at 1 January 2019 | 811 | 13,030 | -- | (195,393) | 197,247 | 108,981 124,676 | 91,045 215,721 | |||
| Loss for the year | -- | -- | -- | -- | -- | (16,317) (16,317) | 557 (15,760) | |||
| Othercomprehensive (loss) / income for the year |
-- | -- | -- | (18,225) | 17,671 | 10 | (544) | (461) | (1,005) | |
| Total comprehensive (loss) / income for the year |
-- | -- | -- | (18,225) | 17,671 | (16,307) (16,861) | 96 (16,765) | |||
| Transactions with owners of the | ||||||||||
| Company | ||||||||||
| Transactions with non-controlling | ||||||||||
| interest | -- | -- | -- | -- | -- | -- | -- | -- | -- | |
| Transfer to legal reserves | -- | 8 | -- | -- | -- | (8) | -- | -- | -- | |
| Equity settled share-based payment | ||||||||||
| expenses | -- | -- | 275 | -- | -- | -- | 275 | -- | 275 | |
| Dividends | 9 | -- | -- | -- | -- | -- | (16,821) (16,821) | (1,851) (18,672) | ||
| Totalcontributions and distributions | -- | 8 | 275 | -- | -- | (16,829) (16,546) | (1,851) (18,397) | |||
| Total transactions with owners of the | ||||||||||
| Company | -- | 8 | 275 | (18,225) | 17,671 | (33,136) (33,407) | (1,755) (35,162) | |||
| Balance at 30 June 2019 (Unaudited) | 811 | 13,038 | 275 | (213,618) | 214,918 | 75,845 | 91,269 | 89,290 180,559 |
(*) The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach,comparative information is not restated and the cumulative effect of initially applying IFRS 16 is recognized in retained earnings at the date of initialapplication. See Note 2.
The notes on pages 12 to 39 are an integral part of these condensed consolidated interimfinancialstatements
| (USD'000) | Notes | Share capital |
Legal reserves |
Hedging reserves |
Translation reserves |
Retained earnings |
Total | Non-controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2018 (Audited) | 811 | 13,012 | (135,763) | 150,626 | 143,148 171,834 | 92,896 264,730 | |||
| Loss for the year Othercomprehensive (loss) / income for |
-- | -- | -- | -- | (3,789) | (3,789) | 151 | (3,638) | |
| the year | -- | -- | (37,306) | 29,275 | 9 | (8,022) | (2,981) (11,003) | ||
| Total comprehensive (loss) / income for the year |
-- | -- | (37,306) | 29,275 | (3,780) (11,811) | (2,830) (14,641) | |||
| Transactions with owners of the Company Transactions with non-controlling interest |
-- | -- | -- | -- | -- | -- | -- | -- | |
| Transfer to legal reserves | -- | 18 | -- | -- | (18) | -- | -- | -- | |
| Dividends | 9 | -- | -- | -- | -- | (17,722) (17,722) | (664) (18,386) | ||
| Totalcontributions and distributions | -- | 18 | -- | -- | (17,740) (17,722) | (664) (18,386) | |||
| Total transactions with owners of the Company |
-- | 18 | (37,306) | 29,275 | (21,520) (29,533) | (3,494) (33,027) | |||
| Balance at 30 June 2018 (Unaudited) | 811 | 13,030 | (173,069) | 179,901 | 121,628 142,301 | 89,402 231,703 |
The notes on pages 12 to 39 are an integral part of these condensed consolidated interimfinancialstatements
| (USD'000) | Notes | Share capital |
Legal reserves |
Hedging reserves |
Translation reserves |
Retained earnings |
Total | Non-controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2018 (Audited) | 811 | 13,012 | (135,763) | 150,626 | 143,148 171,834 | 92,896 264,730 | |||
| (Loss) / income for the year Othercomprehensive (loss) / income for |
-- | -- | -- | -- | 770 | 770 | 6,366 | 7,136 | |
| the year | -- | -- | (59,630) | 46,621 | (76) (13,085) | (4,514) (17,599) | |||
| Total comprehensive (loss) / income for the year |
-- | -- | (59,630) | 46,621 | 694 (12,315) | 1,852 (10,463) | |||
| Transactions with owners of the Company Transactions with non-controlling interest |
-- | -- | -- | -- | -- | -- | 94 | 94 | |
| Transfer to legal reserves | -- | 18 | -- | -- | (18) | -- | -- | -- | |
| Dividends | 9 | -- | -- | -- | -- | (34,843) (34,843) | (3,797) (38,640) | ||
| Totalcontributions and distributions | -- | 18 | -- | -- | (34,861) (34,843) | (3,703) (38,546) | |||
| Total transactions with owners of the Company |
-- | 18 | (59,630) | 46,621 | (34,167) (47,158) | (1,851) (49,009) | |||
| Balance at 31 December 2018 (Audited) | 811 | 13,030 | (195,393) | 197,247 | 108,981 124,676 | 91,045 215,721 |
The notes on pages 12 to 39 are an integral part of these condensed consolidated interimfinancialstatements
| (USD'000) (USD'000) (USD'000) Notes (Unaudited) (Unaudited) (Audited) Cash flows fromoperating activities Loss for the period / year (15,760) (3,638) 7,136 Adjustments for: Depreciation of PPEand RoUassetsand amortization expense 23,302 22,586 44,668 Share of profit ofequity-accounted investees, net of tax (3,320) (2,730) (5,631) Gain on disposal of property plant and equipment (17) (12) (142) Financecosts (excludingforeign exchange differences) 6 15,016 12,866 26,623 Financeincome(excludingforeign exchange differences) 6 (871) (1,014) (1,684) Foreign exchange differences on financecostsand income, net 6 4,294 (497) 7,973 Incometaxexpense 7 1,931 1,524 1,480 Employment termination indemnity reserve 72 99 39 Equity settled share-based payment expenses 275 -- -- (Charges to) / reversal of provision 1,316 148 (12,000) Operating cash flowbefore changes in operating assets andliabilities 26,238 29,332 68,462 Changes in: - tradeand other receivables (22,917) (1,027) (4,297) - othercurrent assets 426 1,404 3,510 - related party receivables (30) -- 572 - other non-current assets 128 57 412 - tradeand other payables (79) (2,064) (71) - related party payables (38) (187) 59 - provisions (1,821) (244) (64) Post-employment benefits paid (21) (58) (131) Cash generatedby operations before benefit andtax payments 1,886 27,213 68,452 Incometaxes paid (3,137) (2,737) (7,345) Netcash generatedfromoperating activities (1,251) 24,476 61,107 Investing activities Acquisition of property and equipment (5,589) (5,431) (11,896) Acquisition of intangibleassets (69) (151) (2,911) Proceeds fromsale of property and equipment 22 11 234 Bond and short-terminvestment income -- -- (30) Proceeds fromsale of investments -- 13,822 13,944 Bank interest received 140 840 348 Dividends fromequity accounted investees 2,849 -- 541 Other investment in FVTPLinstruments -- (11,782) (11,977) Advances given for tangibleassets (172) (152) (85) Netcash usedin investing activities (2,819) (2,843) (11,832) Financing activities Equity injection by minorities to subsidiaries -- -- 94 Cash inflowfromrelated parties -- (159) -- Cash outflowto related parties -- 20 -- Dividends paid to equity owners 9 -- (17,722) (34,843) Dividends paid toNCIs 9 (538) -- (3,797) Interest paid (12,574) (11,666) (23,902) Proceeds fromborrowings 19,250 34,770 44,205 Repayments of borrowings (13,224) (23,929) (34,697) Repayments of leseliabilities (2018: payment of financeleaseliabilities) (*) (2,433) (809) (1,427) Netcash usedin financing activities (9,519) (19,495) (54,367) Net (decrease) / increase in cash andcash equivalents (13,589) 2,138 (5,092) Effect of foreign exchangeratechanges on cash and cash equivalents (7,445) (587) (14,527) Cash andcash equivalents at beginning of year 79,829 99,448 99,448 |
Six monthsended30 June 2019 | Six monthsended30 June 2018 | Yearended31December 2018 | |
|---|---|---|---|---|
| Cash andcash equivalents atendof year | 58,795 | 100,999 | 79,829 |
(*) The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach,comparative information is not restated and the cumulative effect
The notes on pages 12 to 39 are an integral part of these condensed consolidated interimfinancialstatements
Global Ports Holding PLCis a public limited company listed on the London Stock Exchange,and incorporated in the United Kingdomand registered in England and Wales under the Companies Act 2006. The address of the registered office is 34 Brook Street 3rd Floor, London, England, W1K 5DN, United Kingdom. Global Ports Holding PLC is the ultimate holding company of Global Liman IsletmeleriA.S.and its subsidiaries (the "Group").
These unaudited condensed interimconsolidated financialstatements of Global Ports Holding PLC(the "Company",and together with its subsidiaries, the "Group") for the sixmonths ended 30 June 2019were authorised for issue in accordance with a resolution of the directors on 19August 2019.
This condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance with the InternationalAccounting 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 Kingdomas 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 financialstatements and should be read in conjunction with the consolidated financialstatements as at and for the year ended 31 December 2018 available on the Company website. Also, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financialstatements.
The financial information contained in this report for the six months ended 30 June 2018 and 30 June 2019 is unaudited. The interim condensed consolidated income statement and other comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement ofchanges in equity,and the condensed consolidated statement of cash flows for the sixmonths ended 30 June 2019 have been reviewed by the auditor. These interimfinancial statements were authorised for issue by the Company's board of directors on 19 August 2019.
The comparative figures for the financial year ended 31 December 2018 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditorand delivered to the registrar ofcompanies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way ofemphasis without qualifying their report,and (iii) did not contain a statement undersection 498 (2) or (3) of the Companies Act 2006.
The Group operates 14 ports in 8 different countries and is focusing on increasing its number of Ports in different geographical locations to support its operations and diversify economic and political risks.As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
The directors have a reasonable expectation that the Group and its subsidiaries have adequate resources to continue in operationalexistence for the foreseeable future. Thus they continue to adopt the going concern basis ofaccounting in preparing the condensed consolidated financialstatements.
The Company is not expecting any significant impact on its operations fromthe UKdecision to leave European Union.
The adoption of IFRS 16 does not impact the ability of the Group to comply with its Gross debt to EBITDAcovenant. Details described on Note 10.
In the application of the Group's accounting policies, the directors are required to make judgements,estimates and assumptions about the carrying amounts ofassets and liabilities that are not readily apparent fromother sources. The estimates and associated assumptions are based on historicalexperience and other factors that are considered to be relevant.Actual results may differ fromthese estimates.
The estimates and underlying assumptions used on the preparation of these interimfinancial statements are same as those used in the Group's consolidated financial statements as at and for the yearended 31December 2018,except for the newsignificant judgements related to lessee accounting under IFRS 16, which are described in Note 2(d)(i).
Except as described below, the accounting policies applied in these interimfinancial statements are the same as those applied in the Group's consolidated financial statements as at and for the yearended 31 December 2018. 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 2019.
The Group has initially adopted IFRS 16 Leases from1 January 2019.
IFRS 16 introduced a single, on-balance sheet accounting model for lessees.As a result, the Group,as a lessee, has recognised right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. Lessoraccounting remains similar to previous accounting policies.
The Group has applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 January 2019. Accordingly, the comparative information presented for 2018 has not been restated - i.e. it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below.
Previously, the Group determined at contract inception whetheran arrangement was orcontained a lease under IFRIC4 Determining Whetheran Arrangement contains a Lease. The Group now assesses whethera contract is orcontains a lease based on the newdefinition ofa lease. Under IFRS 16,a contract is, orcontains,a lease if the contract conveys a right to control the use ofan identified asset fora period of time in exchange forconsideration.
On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into orchanged on orafter 1 January 2019.
The Group leases a variety of assets, principally land, building and cars.
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities formost leases - i.e. these leases are on-balance sheet.
However, the Group has elected not to recognise right-of-use assets and lease liabilities forshort termleases (e.g.car rentals). The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The Group presents right-of-use assets are presented as a line itemon the face of financials. The carrying amounts of right-of-use assets are as below.
| In thousands ofUSD | Right of Use |
|---|---|
| Balance at 1 January 2019 | 61,233 |
| Balance at 30 June 2019 | 59,658 |
The Group presents lease liabilities in loans and borrowings in the statement of financial position.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted forcertain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whethera purchase orextension option is reasonably certain to be exercised ora termination option is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease termfor some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.
On transition to IFRS 16, the Group recognised right-of-use assets and additional lease liabilities. For the annual year starting at 1 January 2019, the Right-of-use assets have been measured at an amount equal to the lease liability,adjusted by the amount ofany prepaid oraccrued lease payments. The impact on transition is summarized below.
| In thousands ofUSD | 1 January 2019 |
|---|---|
| Right of use assets | 61,233 |
| Lease liabilities | 62,328 |
| Prepayments | 328 |
| Accruals | (1,423) |
When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 January 2019. The weightedaverage rate applied is 3.4%.
| In thousands ofUSD | 1 January 2019 |
|---|---|
| Operating lease commitment at 31December 2018 as disclosed in the Group's consolidated financialstatements | 158,860 |
| Discounted using the incremental borrowing rate at 1 January 2019 | 61,268 |
| Finance lease liabilities recognised as at 31December 2018 | 1,905 |
| Recognition exemption forshort-termleases | (35) |
| Lease liabilities recognised at 1 January 2019 | 63,138 |
Previously, the Group classified property leases as operating leases under IAS 17. These include land and buildings. The leases run for the period of the signed concession agreement. Some concession agreements include clauses and regulations to renewthe lease foran additional period after the end of the non-cancellable period.
Some leases provide foradditional rent payments that are based on changes in local price indices.
At transition, for leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing rate as at 1 January 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments - the Group applied this approach to leases.
The Group used the following practicalexpedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17.
The accounting policies applicable to the Group as a lessorare not different fromthose under IAS 17. The Group is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor. However, the Group has applied IFRS 15 Revenue fromContracts with Customers to allocate consideration in the contract to each lease and non-lease component.
As a result of initially applying IFRS 16, in relation to the leases that were previously classified as operating leases, the Group recognised USD59,658 thousand of right-of-use assets and USD 60,946 thousand of lease liabilities as at 30 June 2019.
Also in relation to those leases under IFRS 16, the Group has recognised depreciation and interest costs, instead of port rent and operating lease expenses. During the sixmonths ended 30 June 2019, the Group recognised USD1,162 thousand of depreciation charges and USD1,063 thousand of interest costs fromthese leases.
For the impact of IFRS 16 on segment information and EBITDA, see Note 3.
The Group presents lease liabilities in 'loans and borrowings' in the statement of financial position. The adoption of IFRS 16 does not impact the ability of the Group to comply with its Gross debt to EBITDAcovenant. Details described on Note 10.
On 1 January 2019, the Group established share option programthat entitles key management personnel to receive shares in the Company based on the performance of the Company during the vesting period. Under this program, holders of vested option are entitled to receive shares of the Company at the grant date. Currently, this programis limited to key management personneland othersenioremployees.
The option will be settled by physical delivery ofshares.
On 1 January 2019, the Group granted 204,000 Restricted Stock Units (RSUs) to employees that entitle themto a share payment after three years of service. The RSUs will be granted at the end of three-year vesting period and paid after two year holding period. Shares issued under the LTIP are subject to a dilution limit of up to 3% over 10 years, which will be monitored by the Committee. Upon vesting of an RSU, Employees must pay the par value in respect of each share that vests. Employees are also responsible to declare and pay the taxrelated to gains from RSUs to the authorities.
The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number ofawards that meet the related service and non-market performance conditions at the vesting date.
The IASBissuedAnnual Improvements as at 15March 2019. The amendments are effective afterannual period started as of 1 January 2019.
The following standards are effective:
Earlierapplication is permitted.
The following standards are in issue but not yet adopted by the Group:
The Group is currently evaluating the impact of adopting these new accounting standards. Management is expecting the adoption of the amendments has had no major impact on the Group's consolidated financial position or performance of the Group. Furtheranalysis will be included on the consolidated financialstatements as at and for the yearended 31December 2019.
Transactions in foreign currencies are translated into the respective functionalcurrencies 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 historicalcost 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 they operate. 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 Efect 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 similarcompanies domiciled in different jurisdictions,and to eliminate the depreciating effect of TLagainst hard currencies, considering allsubsidiaries of the Company are earning revenues in hard currencies.
Assets and liabilities of those Group entities with a different functionalcurrency 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".
Beloware the foreign exchange rates used by the Group for the periods shown.
As at 30 June 2019, 31December 2018 and 30 June 2018, foreign currency exchange rates of the Central Bank of the Turkish Republic were as follows:
| 30 June 2019 31 December 2018 30 June 2018 | |||
|---|---|---|---|
| TL/USD | 0.1738 | 0.1901 | 0.2193 |
| Euro/USD | 1.1382 | 1.1458 | 1.1641 |
For the sixmonths ended 30 June 2019, 30 June 2018 and for the year ended 31 December 2018, average foreign currency exchange rates of the Central Bank of the Turkish Republic were as follows:
| Six months ended30 June 2019 Six months ended30 June 2018 Year ended31 December 2018 | |||
|---|---|---|---|
| TL/USD | 0.1783 | 0.2450 | 0.2078 |
| Euro/USD | 1.1297 | 1.2093 | 1.1764 |
This interimcondensed 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, orare calculated using financial measures that are not calculated in accordance with IFRS. In order to account for the impact of IFRS 16, which is applied in the Group financials using the modified retrospective approach,comparative information is not restated,and the impact has been presented as a separate reconciling itemon computations. These non-GAAPmeasures comprise the following.
Segmental EBITDAcalculated as income/(loss) before taxafteradding 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 Grouplevel, 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 unallocated expenses, gives a more comparable year-on-year measure of port-level trading performance.
Management uses Segmental EBITDAto evaluate each port and group-level performances on operational level.
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 frominsurance repayments, replacement provisions and other provision expenses and otherexpenses including donations, membership fees and specialconsumption taxes.
Specific adjusting items comprised as following,
| Six months ended 30 June 2019 (USD'000) (Unaudited) |
Six months ended 30 June 2018 (USD'000) (Unaudited) |
Year ended 31 December 2018 (USD'000) (Audited) |
|
|---|---|---|---|
| Project expenses | 4,683 | 3,646 | 9,594 |
| Employee termination expenses | 419 | 112 | 147 |
| Replacement provisions | 256 | -- | 677 |
| Provisions / (reversal of provisions) | 997 | 306 | (12,210) |
| Otherexpenses | 510 | 175 | (690) |
| Specific adjusting items | 6,865 | 4,239 | (2,482) |
Adjusted EBITDA calculated as Segmental EBITDAless unallocated (holding company)expenses.
Management uses an 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 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.
Afull reconciliation for Segmental EBITDAandAdjusted EBITDA to profit before taxis provided in the Segment Reporting Note 3 to these financialstatements.
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, depreciation expense in relation to Right-of-use assets and specific non-recurring expenses and income.
Adjusted earnings pershare is calculated as underlying profit divided by weighted average pershare.
Management uses these measures 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'considera key benchmark in making the dividend decision.
Underlying profit and adjusted earnings pershare computed as following;
| Six months ended | Six months ended | Year ended | |
|---|---|---|---|
| 30 June 2019 | 30 June 2018 | 31 December 2018 | |
| (USD'000) | (USD'000) | (USD'000) | |
| (Unaudited) | (Unaudited) | (Audited) | |
| (Loss) / Profit for the Period | (15,267) | (3,638) | 7,136 |
| Impact of IFRS 16 | (493) | -- | -- |
| (Loss) / Profit for the Period | (15,760) | (3,638) | 7,136 |
| Amortisation of port operating rights | 15,543 | 16,045 | 31,648 |
| Depreciation of right-of-use assets | 1,162 | -- | -- |
| Reversal of replacement provisions | -- | -- | (12,209) |
| Underlying Profit | 945 | 12,407 | 26,575 |
| Weighted average number ofshares | 62,826,963 | 62,826,963 | 62,826,963 |
| Adjustedearnings per share (pence) | 1.5 | 19.7 | 42.3 |
Net debt comprises total borrowings (bank loans, Eurobond and finance leases net ofaccrued tax) less cash,cash equivalents and short terminvestments.
Management includes short terminvestments into the definition of Net Debt, because these short terminvestment are comprised of marketable securities which can be quickly converted into cash.
Net debt comprised as following;
| (USD'000) | (USD'000) | (USD'000) | |
|---|---|---|---|
| (Unaudited) | (Unaudited) | (Audited) | |
| Current loans and borrowings | 58,295 | 48,074 | 48,755 |
| Non-current loans and borrowings | 351,654 | 306,747 | 298,296 |
| Lease liabilities recognized due to IFRS 16 application | (60,945) | -- | -- |
| Gross debt | 349,004 | 354,821 | 347,051 |
| Cash and bank balances | (58,795) | (100,999) | (79,829) |
| Short termfinancial investments | (72) | (705) | (72) |
| Net debt | 290,137 | 253,117 | 267,150 |
| Equity | 180,559 | 231,703 | 215,721 |
| Net debt to Equity ratio | 1.61 | 1.09 | 1.24 |
Leverage ratio is used by management to monitoravailable credit capacity of the Group.
Leverage ratio is computed by dividing gross debt toAdjusted EBITDA.
Leverage ratio computation is made as follows;
| Six months ended | Six months ended | Year ended | ||
|---|---|---|---|---|
| 30 June 2019 | 30 June 2018 | 31 December 2018 | ||
| (USD'000) | (USD'000) | (USD'000) | ||
| (Unaudited) | (Unaudited) | (Audited) | ||
| Gross debt | 409,949 | 354,822 | 347,051 | |
| Lease liabilities recognised due to IFRS 16 application | (60,945) | -- | -- | |
| Gross debt, net of IFRS 16 impact | 349,004 | 354,822 | 347,051 | |
| Adjusted EBITDA(annualized) | 80,903 | 81,401 | 83,714 | |
| Impact of IFRS 16 on EBITDA | 1,542 | -- | -- | |
| AdjustedEBITDA(annualized) | 82,445 | 81,401 | 83,714 | |
| Leverage ratio | 4.23x | 4.36x | 4.15x |
CAPEXrepresents the recurring level ofcapitalexpenditure required by the Group excluding M&Arelated capitalexpenditure.
CAPEXcomputed as 'Acquisition of property and equipment'and 'Acquisition of intangible assets' per the cash flowstatement.
| Six months ended 30 June 2019 (USD'000) (Unaudited) |
Six months ended 30 June 2018 (USD'000) (Unaudited) |
Year ended 31 December 2018 (USD'000) (Audited) |
|
|---|---|---|---|
| Acquisition of property and equipment | 5,589 | 5,431 | 11,896 |
| Acquisition of intangible assets | 69 | 151 | 2,911 |
| CAPEX | 5,658 | 5,582 | 14,807 |
2 Accounting Policies (continued)
Cash conversion ratio represents a measure ofcash generation after taking account of on-going capitalexpenditure required to maintain the existing portfolio of ports.
It is computed as Adjusted EBITDAless CAPEXdivided byAdjusted EBITDA.
| Six months ended | Six months ended | Year ended | ||
|---|---|---|---|---|
| 30 June 2019 | 30 June 2018 | 31 December 2018 | ||
| (USD'000) | (USD'000) | (USD'000) | ||
| (Unaudited) | (Unaudited) | (Audited) | ||
| Adjusted EBITDA(annualized) | 80,903 | 81,401 | 83,714 | |
| Impact of IFRS 16 on EBITDA | 1,542 | -- | -- | |
| AdjustedEBITDA, net ofIFRS 16 impact | 82,445 | 81,401 | 83,714 | |
| CAPEX | (5,658) | (5,582) | (14,912) | |
| Cash converted after CAPEX | 76,787 | 75,819 | 68,802 | |
| Cash conversion ratio | 93.1% | 93.1% | 82.2% |
Management uses the termhard currency to refer to those currencies that historically have been less susceptible to exchange rate volatility. For the period ended 30 June 2019 and 2018,and for the yearended 31December 2018, the relevant hard currencies for the Group are US Dollar, Euro and Singaporean Dollar.
The Group operates various cruise and commercial ports and all revenue is generated fromexternalcustomers such as cruise liners, ferries, yachts, individual passengers, container ships and bulk and generalcargo ships.
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 howto allocate resources and assessing performance.
The Group has identified ports in each country with same operations as an operating segment, separately, as each country represents a set of activities which generates revenue and the financial information of ports are reviewed by the Group's chief operating decision-maker in deciding how to allocate resources and assess performance. The Group's chief operating decisionmaker is the Chief Executive Officer ("CEO"), who reviews the management reports ofeach port at least on a monthly basis.
The CEO evaluates segmental performance on the basis of earnings before interest, tax, depreciation and amortisation ("EBITDA") 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 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 İşletmeleriA.Ş. ("Ege Liman"), BodrumLiman İşletmeleriA.Ş. ("BodrumLiman"), OrtadoğuAntalya Liman İşletmeleriA.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.
GlobalDepolama does not generate any revenues and therefore is presented as unallocated to reconcile to the consolidated financialstatements results.
Assets, revenue and expenses directly attributable to segments are reported undereach reportable segment.
The basis ofsegmentation and the basis ofmeasurement of the segment profit or loss has not changed fromthe latest annual financialstatements.
Any items which are not attributable to segments have been disclosed as unallocated.
The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective approach. Under this approach, comparative information is not restated (see Note 2). In order to account for the application of IFRS 16, management has presented as separate reconciling items the impact of IFRS 16 on segmentaland adjusted EBITDA, segment assets, segment liabilities, depreciation, finance costs.
As a result, the Group recognised USD59,658 thousand of right-of-use assets and USD 60,946 thousand of liabilities fromthose lease contracts. The assets and liabilities are included in BPI, VCP, Other Cruise Ports, Ortadoğu Liman and Port ofAdria segments as at 30 June 2019. The Group recognises depreciation and interest costs, instead of operating lease expense (see Note 2d). During the sixmonths ended 30 June 2019, in relation to those leases, the Group recognised USD1,162 thousand of depreciation charges and USD 1,063 thousand of additional interest costs fromleases.
i. Segment revenues, results and reconciliation to profit before tax
| Other Cruise | Ortadoğu | Total | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|
| USD '000 | BPI | VCP | Ege Liman | Ports | Total Cruise | Liman Port of Adria | Commercial | Consolidated | |
| Six months ended 30 June 2019 (Unaudited) | |||||||||
| Revenue | 12,500 | 6,249 | 2,299 | 2,809 | 23,857 | 26,277 | 4,475 | 30,752 | 54,609 |
| Segmental EBITDA | 7,719 | 3,721 | 1,358 | 4,027 | 16,825 | 20,690 | 1,568 | 22,258 | 39,083 |
| Segmental EBITDA pre IFRS 16 | 7,106 | 3,425 | 1,358 | 3,757 | 15,646 | 20,656 | 1,352 | 22,008 | 37,654 |
| IFRS 16 impact on Segmental EBITDA | 613 | 296 | -- | 270 | 1,179 | 34 | 216 | 250 | 1,429 |
| Unallocated expenses | (4,283) | ||||||||
| AdjustedEBITDA | 34,800 | ||||||||
| IFRS 16 impact on Adjusted EBITDA | 114 | ||||||||
| Reconciliation to profit before tax | |||||||||
| Depreciation and amortisation expenses | (23,302) | ||||||||
| IFRS 16 impact on depreciation and amortization expenses | (1,162) | ||||||||
| Specificadjusting items* | (6,890) | ||||||||
| Financeincome | 10,526 | ||||||||
| Financecosts | (28,963) | ||||||||
| IFRS 16 impact on finance costs | (1,063) | ||||||||
| (Loss) / profit before income tax | (13,829) | ||||||||
| Six months ended 30 June 2018 (Unaudited) | |||||||||
| Revenue | 13,348 | 5,676 | 1,736 | 1,627 | 22,387 | 27,997 | 6,172 | 34,169 | 56,556 |
| Segmental EBITDA | 8,017 | 2,544 | 946 | 3,214 | 14,721 | 23,145 | 2,460 | 25,605 | 40,326 |
| Unallocated expenses | (4,257) | ||||||||
| AdjustedEBITDA | 36,069 | ||||||||
| Reconciliation to profit before tax | |||||||||
| Depreciation and amortisation expenses | (22,586) | ||||||||
| Specificadjusting items* | (4,239) | ||||||||
| Financeincome | 10,942 | ||||||||
| Financecosts | (22,297) | ||||||||
| (Loss) / profit before income tax | (2,111) | ||||||||
| Year ended 31 December 2018 (Audited) | |||||||||
| Revenue | 31,577 | 13,017 | 4,650 | 5,670 | 54,914 | 59,887 | 10,011 | 69,898 | 124,812 |
| Segmental EBITDA | 19,793 | 6,399 | 3,084 | 8,331 | 37,607 | 49,184 | 3,928 | 53,112 | 90,719 |
| Unallocated expenses | (7,005) | ||||||||
| AdjustedEBITDA | 83,714 | ||||||||
| Reconciliation to profit before tax | |||||||||
| Depreciation and amortisation expenses | (44,668) | ||||||||
| Specificadjusting items* | 2,482 | ||||||||
| Financeincome | 27,955 | ||||||||
| Financecosts | (60,867) | ||||||||
| (Loss) / profit before income tax * Please refer toNote 2 (f) for alternative performance measures(APM) on pages 16 to 19. |
8,616 |
3 Segmentreporting (continued)
b. Reportable segments (continued)
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:
| USD '000 | BPI | VCP Ege Liman Other Cruise Ports Total Cruise Ortadoğu Liman Port of Adria Total Commercial Total Consolidated | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 30 June 2019 (Unaudited) | |||||||||
| Segment assets | 162,789 129,149 | 45,691 | 15,963 | 353,592 | 227,440 | 75,402 | 302,842 | 656,434 | |
| Right-of-use assets | 12,341 | 33,668 | -- | 4,658 | 50,667 | 84 | 8,188 | 8,272 | 58,939 |
| Equity-accounted investees | -- | -- | -- | 26,524 | 26,524 | -- | -- | -- | 26,524 |
| Unallocated assets | 48,108 | ||||||||
| Right-of-use assets | 719 | ||||||||
| Total assets | 731,066 | ||||||||
| Segment liabilities | 74,241 | 71,014 | 11,573 | 12,186 | 169,014 | 59,312 | 38,788 | 98,100 | 267,114 |
| Lease liabilities recognized under IFRS 16 | 12,248 | 33,858 | -- | 4,730 | 50,836 | -- | 9,385 | 9,385 | 60,221 |
| Unallocated liabilities | 283,393 | ||||||||
| Lease liabilities recognized under IFRS 16 | 725 | ||||||||
| Total liabilities | 550,507 | ||||||||
| 31 December 2018 (Audited) | |||||||||
| Segment assets | 152,341 | 96,756 | 48,117 | 12,789 | 310,003 | 220,984 | 67,672 | 288,656 | 598,659 |
| Equity-accounted investees | -- | -- | -- | 26,003 | 26,003 | -- | -- | -- | 26,003 |
| Unallocated assets | 63,323 | ||||||||
| Total assets | 687,985 | ||||||||
| Segment liabilities | 66,652 | 35,248 | 13,202 | 7,048 | 122,150 | 56,969 | 29,725 | 86,694 | 208,844 |
| Unallocated liabilities | 263,420 | ||||||||
| Total liabilities | 472,264 |
| 30 June 2018 (Unaudited) Segment assets Equity-accounted investees Unallocated assets Total assets |
-- | 157,627 101,532 -- |
51,022 -- |
14,869 23,538 |
325,050 23,538 |
211,925 -- |
69,552 -- |
281,477 -- |
606,527 23,538 95,066 725,131 |
|---|---|---|---|---|---|---|---|---|---|
| Segment liabilities Unallocated liabilities Total liabilities |
81,982 | 38,166 | 14,147 | 6,440 | 140,735 | 59,433 | 28,601 | 88,034 | 228,769 264,659 493,428 |
| Other Cruise |
Ortadoğu | Port of | Total | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| USD'000 | BPI | VCP Ege Liman | Ports | Total Cruise | Liman | Adria | Commercial | Unallocated | Consolidated | |
| Six months ended30 June 2019 (Unaudited) | ||||||||||
| Depreciation and amortisation expenses | (5,873) | (1,613) | (1,427) | (1,746) | (10,659) | (10,882) | (1,607) | (12,489) | (154) | (23,302) |
| Depreciation of right of use assets recognised under IFRS 16 |
(372) | (352) | -- | (110) | (834) | (34) | (192) | (226) | (102) | (1,162) |
| Additions to non-current assets | ||||||||||
| - Capitalexpenditures | 948 | 826 | 36 | 102 | 1,912 | 2,608 | 1,109 | 3,717 | 29 | 5,658 |
| Total additions to non-current assets | 948 | 826 | 36 | 102 | 1,912 | 2,608 | 1,109 | 3,717 | 29 | 5,658 |
| Six months ended30 June 2018 (Unaudited) | ||||||||||
| Depreciation and amortisation expenses | (5,826) | (1,326) | (1,581) | (1,760) | (10,493) | (10,517) | (1,472) | (11,989) | (104) | (22,586) |
| Additions to non-current assets | ||||||||||
| - Capitalexpenditures | 1,101 | 259 | 46 | 203 | 1,609 | 2,988 | 900 | 3,888 | 85 | 5,582 |
| Total additions to non-current assets | 1,101 | 259 | 46 | 203 | 1,609 | 2,988 | 900 | 3,888 | 85 | 5,582 |
| Year ended31 December 2018 (Audited) | ||||||||||
| Depreciation and amortisation expenses | (11,350) | (2,595) | (3,027) | (3,359) | (20,331) | (21,342) | (2,875) | (24,217) | (120) | (44,668) |
| Additions to non-current assets | ||||||||||
| - Capitalexpenditures | 2,074 | 927 | 259 | 2,361 | 5,621 | 4,761 | 3,443 | 8,204 | 982 | 14,807 |
| Total additions to non-current assets | 2,074 | 927 | 259 | 2,361 | 5,621 | 4,761 | 3,443 | 8,204 | 982 | 14,807 |
b) Reportable segments (continued) 4. (iv) Geographical information
5.
6. The Port operations of the Group are managed on a worldwide basis, but operational ports and management offices are primarily in Turkey, Montenegro, Malta, Spain and Italy. The geographic information below analyses the Group's revenue and non-current assets by countries. In presenting the following information, segment revenue has been based on the geographic location of port operations and segment non-current assets were based on the geographic location of the assets.
| Six monthsended | Six monthsended | Yearended | |
|---|---|---|---|
| 30 June 2019 | 30 June 2018 | 31December 2018 | |
| (USD'000) | (USD'000) | (USD'000) | |
| Revenue | (Unaudited) | (Unaudited) | (Audited) |
| Turkey | 29,860 | 30,276 | 66,985 |
| Montenegro | 4,475 | 6,172 | 10,042 |
| Malta | 6,249 | 5,677 | 13,017 |
| Spain | 12,500 | 13,348 | 31,577 |
| Italy | 1,514 | 1,083 | 3,191 |
| Croatia | 11 | -- | -- |
| 54,609 | 56,556 | 124,812 | |
| As at | |||
| As at | 31December | As at | |
| 30 June 2019 | 2018 | 30 June 2018 | |
| (USD'000) | (USD'000) | (USD'000) | |
| Non-current assets | (Unaudited) | (Audited) | (Unaudited) |
| UK | 13,363 | 12,048 | 148 |
| Turkey | 234,027 | 243,224 | 265,512 |
| Spain | 136,591 | 129,695 | 136,434 |
| Malta | 127,308 | 94,703 | 96,839 |
| Montenegro | 72,512 | 65,202 | 65,243 |
| Italy | 6,412 | 6,962 | 7,420 |
| Croatia | 3,063 | -- | -- |
| Unallocated | 29,143 | 29,071 | 25,030 |
| 622,419 | 580,905 | 596,626 | |
Non-current assets relating to deferred taxassets and financial instruments (including equity-accounted investees)are presented as unallocated. Non-current assets as at 30 June 2019 include the right of use assets recognised under IFRS 16.
1. (v) Information about majorcustomers
The Group did not have a single customer that accounted formore than 10% of the Group's consolidated net revenues in any of the periods presented.
Sales fromthe Cruise business are more heavily weighted towards the second half of the calendar year with, on average,approximately 62% ofannual sales arising during the July to December period for the last three years. In 2018, 45% of the Group's full year revenue fell in the first sixmonths, 43% in 2017 and 46% in 2016.
The Group's operations and main revenue streams are those described in the last annual financialstatements. The Group's revenue is derived mainly fromcruise and commercial operations.
othercruise ports TotalCruise PortAkdeniz Port ofAdria TotalCommercial TotalConsolidated
For the six month period 30 June, revenue comprised the following:
BPI VCP EP
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Point in time | ||||||||||||||||||
| Container revenue | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 14,930 | 18,948 | 2,757 | 2,770 | 17,687 | 21,718 | 17,687 | 21,718 |
| Landing fees | 10,889 | 11,324 | 2,510 | 2,150 | 784 | 298 | 1,160 | 1,076 | 15,343 | 14,848 | -- | -- | -- | -- | -- | -- | 15,343 | 14,848 |
| Portservice revenue | 753 | 772 | 483 | 377 | 757 | 844 | 181 | 191 | 2,174 | 2,184 | 8,448 | 3,202 | 104 | 142 | 8,552 | 3,344 | 10,726 | 5,528 |
| Cargo revenue | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 2,151 | 4,749 | 1,055 | 2,602 | 3,206 | 7,351 | 3,206 | 7,351 |
| Domestic water sales | 164 | 342 | -- | -- | 20 | 44 | 4 | 11 | 188 | 397 | 19 | 23 | 9 | 7 | 28 | 30 | 216 | 427 |
| Income from duty free operations | -- | -- | 1,875 | 1,776 | -- | -- | -- | -- | 1,875 | 1,776 | -- | -- | -- | -- | -- | -- | 1,875 | 1,776 |
| Other revenue | 104 | -- | 153 | -- | 235 | 86 | 421 | 42 | 913 | 128 | 382 | 512 | 237 | -- | 619 | 512 | 1,532 | 640 |
| Over time Rental income | ||||||||||||||||||
| 590 | 910 | 1,228 | 1,373 | 503 | 464 | 230 | 307 | 2,551 | 3,054 | 347 | 563 | 313 | 651 | 660 | 1,214 | 3,211 | 4,268 | |
| Habana Management fee | -- | -- | -- | -- | -- | -- | 813 | -- | 813 | -- | -- | -- | -- | -- | -- | -- | 813 | -- |
| Total | 12,500 13,348 | 6,249 | 5,676 | 2,299 1,736 | 2,809 1,627 | 23,857 22,387 | 26,277 27,997 | 4,475 6,172 | 30,752 | 34,169 | 54,609 | 56,556 |
The following table provides information about receivables,contract assets and contract liabilities fromcontracts with customers;
| Revenue | Periodended 30 June 2019 (USD'000) |
Periodended 30 June 2018 (USD'000) |
Yearended 31December 2018 (USD'000) |
|---|---|---|---|
| Receivables, which areincluded in 'tradeand other receivables' | 19,865 | 15,277 | 12,129 |
| Contract assets | 3,084 | 243 | 797 |
| Contract liabilities | (1,427) | (672) | (879) |
| 21,522 | 14,848 | 12,047 |
The contract assets primarily relate to the Group's rights to consideration for work completed but not billed at the reporting date on Commercial services provided to vessels and rental agreements. The contract assets are transferred to receivables when the rights become unconditional. This occurs when the Group issues an invoice to the customer.
The contract liabilities primarily relate to the advance consideration received from customers for providing services, for which revenue is recognised over time. These amounts will be recognised as revenue when the services has provided to customers and billed, which was based on the nature of the business less than one week period.
The amount of \$879 thousand recognised in contract liabilities at the beginning of the period has been recognised as revenue for the period ended 30 June 2019.
The amount of revenue recognised in the period ended 30 June 2019 fromperformance obligations satisfied (or partially satisfied) in previous periods is \$797 thousand. This is mainly due to the nature of operations.
No information is provided about remaining performance obligations at 30 June 2019 that have an originalexpected duration of one year or less,as allowed by IFRS 15.
Finance income comprised the following:
| Six months ended30 June 2019 | Six months ended30 June 2018 | Year ended31 December 2018 | |
|---|---|---|---|
| (USD'000) | (USD'000) | (USD'000) | |
| Finance income | (Unaudited) | (Unaudited) | (Audited) |
| Other foreign exchange gains (*) | 9,653 | 9,927 | 26,271 |
| Interest income on related parties | -- | 297 | 449 |
| Interest income on banks and others | 725 | 692 | 470 |
| Interest income fromhousing loans | 5 | -- | 33 |
| Gain on sale ofmarketable securities | -- | 9 | -- |
| Other income | 143 | 17 | 732 |
| Total | 10,526 | 10,942 | 27,955 |
(*) The Group's foreign exchange gains arise mainly through its operations in Turkey, depreciation of TLagainst thefunctionalcurrencies of theseentities results in a benefit as thecost baseis significantly more weighted to TLthan therevenues.
The income fromfinancial instruments within the category financialassets at amortized costs is USD870 thousand (30 June 2018:USD1,010 thousand, 31December 2018:USD952 thousand).
Finance costs comprised the following:
| Six months ended30 June 2019 | Six months ended30 June 2018 | Year ended31 December 2018 | |
|---|---|---|---|
| (USD'000) | (USD'000) | (USD'000) | |
| Finance costs | (Unaudited) | (Unaudited) | (Audited) |
| Interest expense on loans and borrowings | 12,671 | 12,140 | 25,005 |
| Foreign exchange losses on loans and borrowings (*) | 13,068 | 9,260 | 19,827 |
| Interest expense on lease obligations | 1,655 | 103 | 192 |
| Other foreign exchange losses | 879 | 171 | 14,417 |
| Other interest expenses | 8 | 161 | 17 |
| Letter of guarantee commission expenses | 118 | 120 | 158 |
| Loan commission expenses | 365 | 34 | 103 |
| Unwinding of discounts during the year | 122 | 149 | 303 |
| Othercosts | 77 | 159 | 845 |
| Total | 28,963 | 22,297 | 60,867 |
(*) TheGroup's foreign exchangelossesarisemainly through its USDdenominated borrowings held in aTurkish Lirafunctionalcurrency entity.
The interest expense for financial liabilities not classified as fair value through profit or loss is USD14,334 thousand (30 June 2018: USD 12,404 thousand, 31 December 2018: USD 25,325 thousand).
Income tax expense is recognised based on management's estimate of the average annual effective income tax rate for each relevant taxing jurisdiction and applied individually to the interim period pre-taxincome ofeach jurisdiction. The estimated average annual tax rate used for the year to 30 June 2019 is 21.02%, increasing compared to 16.22% for the sixmonths ended 30 June 2018. The increase in the estimated tax rate is mainly due to higher taxable profits in the cruise ports which are based in higher tax jurisdictions combined with higher tax rates in Europe and lower taxable profit fromcommercial ports which are based in lower taxjurisdictions.
| Six months ended30 June 2019 | Year ended31 December 2018 | Six months ended30 June 2018 | |||
|---|---|---|---|---|---|
| (USD'000) | (USD'000) | (USD'000) | |||
| (Unaudited) | (Audited) | (Unaudited) | |||
| Trade receivables | 22,950 | 12,926 | 15,520 | ||
| Deposits and advances given(*) | 18,185 | 5,602 | 12 | ||
| Other receivables | 1,781 | 1,471 | 1,349 | ||
| Total trade andother receivables | 42,916 | 19,999 | 16,881 |
(*) The increase in deposits and advances given is related to cash collaterals for issuance of guarantee letters in Italy and Tunusia.
Venetto Sviluppo, the 51% shareholder ofAPVS, which in turn owns a 53% stake in Venezia Terminal Passegeri S.p.A (VTP), has a put option to sell its shares in APVS partially or completely (up to 51%) to Venezia Investimenti (VI). This option originally can be exercised between 15th May 2017 and 15th November 2018, extended until the end of November 2021. If VS exercises the put option completely, VI will own 99% ofAPVS and accordingly 71.51% of VTP. The Group has given a guarantee letter for its portion of 25% in VI, which in turn has given the fullamount of call option as guarantee letter to VS.
The Group bid to acquire Goulette Shipping Cruise, the company that operates the cruise terminal in La Goulette, Tunisia. During the finalization of concession agreement, Group provided a
cash collateral to Tunisia government authority. The majority of these cash collateral have been returned back post period end.
Dividend distribution declarations are made by the Company in GBP and paid in USD in accordance with its articles ofassociation, after deducting taxes and setting aside the legal reserves as discussed above.
GPH PLC declared a 2018 final dividend of GBP 0.212 per share to its shareholders on 24 May 2019 and paid it o n 5 July 2019, giving a distribution of GBP 13,319 thousand (USD16,849 thousand). Other dividend distributions in 2019 were made by Valletta Cruise Port to other shareholders, on which they have non-controlling interest, amounting to USD 1,786, and Cagliari to othershareholders amounting to USD65.
GPH PLC declared on 13August 2018 and paid on 26 October 2018,a 2018 interimdividend of GBP0.215 per share to its shareholders, giving a distribution of GBP13,571 thousand (USD 17,710 thousand).
GPH PLC declared 2017 final dividend of GBP 0.201 per share to its shareholders on 12 March 2018 and paid on 9 May 2018, giving a distribution of GBP 12,628 thousand (USD 17,132 thousand).
The total dividends paid in 2018 were USD 34,843 thousand. Other dividend distributions were made by Valletta Cruise Port to other shareholders, on which they have non-controlling interest, amounting to USD1,320, BPI to othershareholders amounting to USD2,409,and Cagliari to othershareholders amounting to USD68.
Loans and borrowings comprised the following:
| As at | As at 31 December |
As at | |
|---|---|---|---|
| 30 June 2019 | 2018 | 30 June 2018 | |
| (USD'000) | (USD'000) | (USD'000) | |
| Short termloans andborrowings | (Unaudited) | (Audited) | (Unaudited) |
| Short termportion of Eurobond issued (i) | 18,549 | 18,558 | 18,551 |
| Short termbank loans | 3,339 | 12,031 | 6,600 |
| TL | 3,259 | -- | 533 |
| Othercurrencies | 80 | 12,031 | 6,067 |
| Short termportion of long termbank loans | 33,125 | 16,853 | 21,612 |
| TL | 834 | 575 | 332 |
| Othercurrencies | 32,291 | 16,278 | 21,280 |
| Lease obligations | 3,282 | 1,313 | 1,311 |
| Finance leases | 1,564 | 1,313 | 1,311 |
| Lease obligations recognized under IFRS 16 | 1,718 | -- | -- |
| Total | 58,295 | 48,755 | 48,074 |
| As at | |||
|---|---|---|---|
| As at | 31 December | As at | |
| 30 June 2019 | 2018 | 30 June 2018 | |
| (USD'000) | (USD'000) | (USD'000) | |
| Long termloans andborrowings | (Unaudited) | (Audited) | (Unaudited) |
| Long termportion of Eurobonds issued (i) | 231,972 | 231,666 | 231,198 |
| Long termbank loans | 58,946 | 66,038 | 74,332 |
| TL | 25 | 25,565 | 224 |
| Othercurrencies | 58,921 | 40,473 | 74,108 |
| Finance lease obligations | 60,736 | 592 | 1,217 |
| Finance leases | 1,509 | 592 | 1,217 |
| Lease obligations recognized under IFRS 16 | 59,227 | -- | -- |
| Total | 351,654 | 298,296 | 306,747 |
(i) The sales process of the Eurobond issuances amounting to USD 250 million with 7 years of maturity, and a 8.125% coupon rate based on 8.250% reoffer yield was completed on 14 November 2014. Coupon repayment are made semi-annually. The bonds are quoted on the Irish Stock Exchange.
Eurobonds contain the following key financialcovenants:
If a concession termination event occurs at any time, Global Liman (the "Issuer") must offer to repurchase all of the notes pursuant to the terms set forth in the indenture (a "Concession Termination Event Offer"). In the Concession Termination Event Offer, the Issuer will offera "Concession Termination Event Payment" in cash equal to 100% of the aggregate principalamount of notes repurchased, in addition to accrued and unpaid interest and additionalamounts, ifany, on the notes repurchased, to the date of purchase (the "Concession Termination Event Payment Date"), subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant interest payment date.
According to the Eurobond issued by Global Liman, the consolidated leverage ratio may not exceed 5.0 to 1 (incurrence covenant). The consolidated leverage ratio as defined in the Eurobond includes Global Liman as the issuer and all of its consolidated subsidiaries excluding the Malaga Cruise Port and Valletta Cruise Port (both being Unrestricted Subsidiaries as defined in the Eurobond). Irrespective of the consolidated leverage ratio, the issuer will be entitled to incurany orall of the following indebtedness:
Group debt covenants are calculated based on applicable IFRSs as of the time the lease obligations were initially recognised. Therefore, the group debt covenants as at period end have not been affected fromthe transition to IFRS 16. Management willassess in the future forany new transactions that will be entered into, depending on the nature of them, whether debt covenants' calculations are affected.
For the period ended 30 June, the movements of the provisions as below:
| Port ofAdriaConcession fee | Italian Ports Concession fee | Unused | ||||
|---|---|---|---|---|---|---|
| Replacement provisions for Creuers (*) |
provision (**) | provision (***) | vacations | Legal | Other | Total |
| 9,817 | ||||||
|---|---|---|---|---|---|---|
| Reversal due to IFRS 16 | ||||||
| (1,809) | ||||||
| 1,461 | ||||||
| (144) | ||||||
| (12) | ||||||
| 122 | ||||||
| (73) | ||||||
| 9,362 | ||||||
| 7,388 | ||||||
| 1,974 | ||||||
| 9,362 | ||||||
| 6,138 -- 256 -- -- 97 (39) 6,452 6,452 -- 6,452 |
1,432 (1,432) -- -- -- -- -- -- -- -- -- |
1,668 (377) -- (132) -- 25 (9) 1,175 908 267 1,175 |
206 -- 100 -- -- -- (18) 288 -- 288 288 |
200 -- 1,083 (12) (12) -- (5) 1,254 -- 1,254 1,254 |
173 -- 22 -- -- -- (2) 193 28 165 193 |
(*) As part of the concession agreement between Creuers and the Barcelona and Malaga Port Authorities entered in 2013, the Company has an obligation to maintain the port equipment in good operating condition throughout its operating period,and in addition return the port equipment to the PortAuthorities in a specific condition at the end of the agreement.
(**) On 27 December 2013, the Government of Montenegro and Container Terminal and General Cargo JSC-Bar ("CTGC") entered into an agreement regarding the operating concession for the Port ofAdria-Bar which terminates on 27 December 2043. Fromthe fourth year of the agreement, CTGC had an obligation to pay a concession fee to the Government of Montenegro of Euro 500,000 per year until the end of the agreement. The expense relating to this concession agreement is recognized on a straight-line basis over the concession period, giving rise to an accrual in the earlier years. For the annual year starting at 1 January 2019, the Group has adopted option 2 of modified retrospective approach under which Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. The Group reversed this accrual through Right of use asset as explained on Note 2 (d) (i).
(***) On 16 December 2009, Ravenna Port Authority and Ravenna Passenger Terminal S.r.l. ("RTP")entered into an agreement regarding the operating concession for the Ravenna Passenger Terminal which terminates on 27 December 2019. RTP had an obligation to pay a concession fee to the Port Authority of Euro 86,375 per year until end of concession. The expense relating to this concession agreement is recognized on a straight-line basis over the concession period, giving rise to an accrual in the earlier years.
On 13 June 2011, Catania Port Authority and Catania Cruise Terminal S.r.l. ("CCT") entered into an agreement regarding the operating concession for the Catania Passenger Terminal which terminates on 12 June 2026. CCT had an obligation to pay a concession fee to the Catania Port Authority of Euro 135,000 per year untilend ofconcession. The expense relating to this concession agreement is recognized on a straight-line basis over the concession period, giving rise to an accrual in the earlier years.
On 14 January 2013, Cagliari Cruise Port ("CCP") and Cagliari Port Authority entered into an agreement regarding the operating concession for the Cagliari Cruise Terminal which terminates on 13 January 2027. CCP had an obligation to pay a concession fee to the Cagliari Port Authority of Euro 44,315.74 per year untilend of concession. The expense relating to this concession agreement is recognized on a straight-line basis over the concession period, giving rise to an accrual in the earlier years. For the annual year starting at 1 January 2019, the Group has reclassified this accrual to lease liabilities related to IFRS 16.
The Group presents basic earnings per share ("basic EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, less own shares acquired.
During the year, the Group introduced share-based payments as part of its long-termincentive plan to directors and senior management. The shares to be granted to the participants of the scheme are only considered as potential shares when the market vesting conditions are satisfied at the reporting date. None of the market conditions are satisfied at the reporting date and therefore there is no dilution of the earnings per share oradjusted earnings per share (Note 2f). There are no other transactions that can result in dilution of the earnings per share or adjusted earnings pershare (Note 2f).
Earnings pershare is calculated by dividing the profit attributable to ordinary shareholders, by the weighted average number ofshares outstanding.
| As at | |||
|---|---|---|---|
| As at | As at | 31 December | |
| 30 June 2019 | 30 June 2018 | 2018 | |
| (USD'000) | (USD'000) | (USD'000) | |
| (Unaudited) | (Unaudited) | (Audited) | |
| (Loss) / Profit attributable to owners of the Company | (16,317) | (3,789) | 770 |
| Weighted average number ofshares | 62,826,963 | 62,826,963 | 62,826,963 |
| Basic and diluted (loss) / earnings pershare (cents pershare) | (26.0) | (6.0) | 1.23 |
On 6 June 2013, the Turkish Constitutional Court partially annulled a law that prevented operators of privatised facilities from applying to extend their operating term. The respective Group companies then applied to extend the concession terms of Port Akdeniz-Antalya, Ege Port-Kuşadasıand BodrumCruise Port to give each concession a total termof 49 years fromoriginal grant date.After these applications were rejected, the respective Group companies filed lawsuits with administrative courts challenging the decisions.
After going through legal proceedings, BodrumCruise Port's application for the extension of concession termis accepted by the relevant administrative authority. The extension agreement is executed on December 2018 which has extended the remaining concession period to 49 years. The original concession agreement was due to expire in December 2019 and following this new agreement the concession will nowexpire in December 2067.
Port Akdeniz-Antalya filed lawsuits against Privatization Administration and the General Directorate of Turkey Maritime Organization requesting cancellation with respect to rejection of the extension applications. The Court dismissed the case and the Group lawyers appealed the Court decision to the Council of State. The Counsel of State rejected the appeal of Port Akdeniz-Antalya and approved the decision of the Court. The Group lawyers have applied to the Council of State for reversal of this judgement and the case is still pending.
The 30 June 2019 financialstatements have been prepared assuming the current concession length.
Ege Port-Kuşadası filed lawsuits against Privatization Administration and General Directorate of Turkey Maritime Organization requesting cancellation with respect to rejection of the extension applications. The Court dismissed the case and the Group lawyers appealed the Court decision to the Council of State. The Counsel of State accepted the appeal and reversed the Court's judgement in favor of Ege Port-Kuşadası. The Privatization Administration applied to the Council of State for reversal of this judgement and this time, the Council of State has changed its standpoint and approved the Court's decision against Ege Port-Kuşadası. In this regard, Ege Port-Kuşadası has submitted an individualapplication to the Constitutional Court. Constitutional Court has rendered its decision against Ege Port-Kuşadası and the judicial process for the extension of the concession period has been concluded against Ege Port-Kuşadası. Accordingly, upon expiration of the concession period in 2033, Ege Port-Kuşadasıwill need to participate in the tender for newconcession term.
The 30 June 2019 financialstatements have been prepared assuming the current concession length.
On 29April 2019, the CompetitionAuthority notified PortAkdeniz, that it has commenced an investigation into PortAkdeniz due to an alleged breach ofArticle 6 of the Lawon the Protection of Competition, Law No. 4054 due to excessive pricing concerns on certain services. Port Akdeniz has engaged legal representation and submitted a full defence against allallegations on 28 May 2019. By law, the Competition Authority has 6months fromthe submission date to evaluate the defences and prepare an investigation report which can be extended by an additional 6 months. At this stage, the claimhas not been matured and it depends on the result of the final investigation report to be issued by the Competition Authority. Whole process before the Competition Authority may take up to 18months (excluding the possibility to file an administrative lawsuit against a negative decision of the CompetitionAuthority).
The Port of Adria-Bar (Montenegro) is a party to the disputes arising from the collective labour agreement executed with the union by Luka Bar AD (former employer/company), which was applicable to Luka BarAD employees transferred to Port ofAdria-Bar. The collective labouragreement has expired in 2010, before the Port was acquired by the Group under the name of Port of Adria-Bar. However, a number of lawsuits have been brought in connection to this collective labour agreement seeking (i) unpaid wages for periods before the handover of the Port to the Group, and (ii) alleged underpaid wages as of the start of 2014. On March 2017, the Supreme Court of Montenegro adopted a Standpoint in which it is ruled that collective labour agreement cannot be applied on rights, duties and responsibilities foremployees of Port ofAdria-Barafter September 30th, 2010.Although the Standpoint has established a precedent that has applied to the claims for the period after September 30th, 2010; there are various cases pending for claims related to the period of October 1st, 2009 - September 30th, 2010. In respect of the foregoing period of one year, the Port of Adria-Bar has applied to the Constitutional Court to question the alignment of the collective labour agreement with the Constitution, Labor Law and general collective agreement. The Port of Adria-Bar is notified that the application for initiating the procedure for reviewing the legality of the Collective Agreement has been rejected due to a procedural reason, without evaluating the arguments submitted. The Management is now in discussions with the local lawyers to determine defences for any potentialclaimand take it to the highercourt and eventually to European courts for final decision once we exhaust local lawavenue.
Global Liman İşletmeleriAŞ, as the majority shareholder of one of its subsidiaries, has paid a share purchase amount of 1,500,000 USD to the shareholder of the relevant subsidiary, and the shareholder has not transferred its shares in the subsidiary to Global Liman. Global Liman has initiated an action of debt against the shareholder. It is expected that the case would resolve for the return of the share purchase amount or the completion of the share transfer.
One of ourclients in the cement business has initiated a lawsuit against Port Akdenizin relation to a commercial dispute on the fees payable by that client for its import and export transactions in 2018. Furthermore, a counter-claimhas been initiated by Port Akdenizfor an amount due fromthis client in relation to loading services provided and extra fees incurred due to delays. Both cases are pending before the competent court.
Aprovision is recognised in respect of this matter.
There are no changes in the related parties of these interim financial statements compared to those used in the Group's consolidated financial statements as at and for the year ended 31 December 2018,except for European Bank of Reconstruction and Development ("EBRD"), which sold its shares in GPHPLC.
All related party transactions between the Company and its subsidiaries have been eliminated on consolidation and are therefore not disclosed in this note.
Current receivables fromrelated parties comprised the following:
| As at | |||
|---|---|---|---|
| As at | 31 December | As at | |
| 30 June 2019 | 2018 | 30 June 2018 | |
| (USD'000) | (USD'000) | (USD'000) | |
| Currentreceivables fromrelatedparties | (Unaudited) | (Audited) | (Unaudited) |
| GlobalYatırımHolding | 681 | 602 | 478 |
| Adonia Shipping (*) | 61 | 67 | 855 |
| NaturelGaz(*) | 73 | 72 | 74 |
| Straton Maden | 67 | 73 | 92 |
| GlobalMenkul | -- | -- | 141 |
| IEGGlobal | 57 | 57 | -- |
| Global Ports Holding BV | 3 | 47 | 22 |
| Lisbon Cruise Terminals lda | -- | 37 | -- |
| Adamas | 9 | -- | -- |
| Aristaeus Limited | 9 | -- | -- |
| Mehmet Kutman | 1 | 17 | 20 |
| Ayşegül Bensel | -- | 1 | -- |
| Others (*) | 96 | 54 | 48 |
| Total | 1,057 | 1,027 | 1,730 |
(*) These amounts are payments in advance forcontracted work. These have an interest rate changed of 9.75% p.a.as at 30 June 2019 (31December 2018: 9.75%, 30 June 2018: 8.50%).
Current payables to related parties comprised the following:
| As at | ||||
|---|---|---|---|---|
| As at | As at | |||
| 30 June 2019 | 31 December 2018 30 June 2018 |
|||
| (USD'000) | (USD'000) | (USD'000) | ||
| Current payables to relatedparties | (Unaudited) | (Audited) | (Unaudited) | |
| Mehmet Kutman | 344 | 153 | 157 | |
| Global Sigorta (*) | 41 | 309 | 57 | |
| GlobalMenkul (*) | -- | 1 | 1 | |
| Ayşegül Bensel | 114 | 53 | -- | |
| Other | 5 | 26 | 35 | |
| Total | 504 | 542 | 250 |
(*) These amounts are related to professionalservices provided. These have an interest rate of 19.50% p.a.as at 30 June 2019 (31December 2018: 19.50%, 30 June 2018: 8.50%).
Transactions with other related parties comprised the following for the following periods:
| Six months ended | Six months ended | Year ended | ||||
|---|---|---|---|---|---|---|
| 30 June 2019 | 30 June 2018 | 31 December 2018 | ||||
| (USD'000) | (Unaudited) | (Unaudited) | (Audited) | |||
| Interest | Interest | Interest | ||||
| received | Other | Received | Other | received | Other | |
| GlobalYatırımHolding | -- | -- | 297 | -- | 252 | -- |
--
| GlobalMenkul | -- | -- | -- | -- | 197 | -- |
|---|---|---|---|---|---|---|
| Total | -- | -- | 297 | -- | 449 | -- |
| USD'000 | ||||||
| Interest | Interest | Interest | ||||
| Paid | Other | Paid | Other | paid | Other | |
| GlobalYatırımHolding | -- | -- | -- | 1 | -- | -- |
| GlobalMenkul | -- | -- | -- | -- | -- | -- |
| Total | -- | -- | -- | 1 | -- | -- |
The information set out belowprovides information about howthe Group determines fair values of various financialassets and liabilities.
Determination of the fair value ofa financial instrument is based on market values when there are two counterparties willing to sell or buy,except under the conditions ofevents of default forced liquidation. The Group determines the fair values based on appropriate methods and market information and uses the following assumptions: the fair values ofcash and cash equivalents, othermonetary assets, which are short term, trade receivables and payables and long termforeign currency loans and borrowings with variable interest rates and negligible credit risk change due to borrowings close to yearend are expected to approximate to the carrying amounts.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
Except as detailed in the following table, the directors consider the carrying amounts of the Group's financialassets and financial liabilities were approximate to their fair values.
| (USD'000) | Note | As at 30 June 2019 (Unaudited) Carrying |
Fair | As at 31 December 2018 (Audited) Carrying |
Fair | As at 30 June 2018 (Unaudited) Carrying |
Fair |
|---|---|---|---|---|---|---|---|
| Financial assets Other financialassets |
12,613 | 12,613 | 12,009 | 12,009 | 11,782 | 11,782 | |
| Financial liabilities Loans and borrowings Lease obligations |
10 | 345,931 64,018 |
342,377 64,018 |
345,676 1,905 |
334,963 1,905 |
352,294 2,528 |
361,345 2,528 |
The Group's convertible debt instrument investment is issued by Dreamlines GmbH. The loan is repayable in quarterly instalments starting February 2020 until its final maturity in May 2021, unless the loan is converted into Dreamlines' equity. This feature was solely at GPH's discretion and valid until May 2019. Management decided not to exercise this option, and therefore the investment is solely a debt instrument. Key terms of the instrument include that, other financial indebtedness outstanding and incurrence ofany other debt is restricted,and the loan is secured by bank account pledges, receivable assignments and security assignment of key intellectual property.
The Group's debt instrument, issued by Dreamlines, remains to be included in Level 3 of the fair value hierarchy. On the basis that no alternative orcontradictory evidence has been identified, Management concluded that the assumption ofcontinuing to recognise the FVTPLinstrument at amortised cost at this point is reasonable.
The Group's lease obligations fair value has been obtained using the discounted cash flowmodel.
Reconciliation of financialasset:
| 2019 Unquotedequities USD'000 |
Unquotedequities | 2018 USD'000 |
|
|---|---|---|---|
| Opening Balance Total gains or losses |
12,013 | -- | |
| - in profit or loss* - in othercomprehensive income |
600 -- |
(195) -- |
|
| Purchases | -- | 11,977 | |
| Closing Balance |
12,613 | 11,782 | |
| *Gains or losses included in profit or loss attributable to assets and liabilities still held as at 30 June Foreign exchange losses Interest income |
(76) 676 |
(195) -- |
|
Other loans have been included in Level 2 of the fair value hierarchy as they have been valued using quotes available forsimilar liabilities in the active market. The valuation technique and inputs used to determine the fair value of the loans and borrowings is based on discounted future cash flows and discount rates.
The groups Eurobond liability has been included in level 1 of the fair value hierarchy as it has been valued using quotes available on its quoted market.
The fair value of loans and borrowings has been determined in accordance with the most significant inputs being discounted cash flowanalysis and discount rates.
The table belowanalyses the valuation method of the financial instruments carried at fair value. The different levels have been defined as follows:
| Level 1 | Level 2 | Level 3 | Total | ||
|---|---|---|---|---|---|
| As at 30 June 2019 (Unaudited) | Other financialassets | -- | -- | 12,613 | 12,613 |
| Derivative financial liabilities | -- | 669 | -- | 669 | |
| As at 31 December 2018 | |||||
| (Audited) | Other financialassets | -- | -- | 12,009 | 12,009 |
| Derivative financial liabilities | -- | 617 | -- | 617 | |
| As at 30 June 2018 (Unaudited) | Other financialassets | -- | -- | 11,782 | 11,782 |
| Derivative financial liabilities | -- | 788 | -- | 788 |
The valuation technique and inputs used to determine the fair value of the interest rate swap is based on future cash flows estimated based on forward interest rates (fromobservable yield curves at the end of the reporting period)and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties.
The Group paid a 2018 final dividend of GBP0.212 pershare to its shareholders on 5 July 2019, giving a distribution of GBP 13,319 thousand (USD16,849 thousand).
The Group decided to pay an interimdividend equivalent to USD0.199 pershare to its shareholders, giving a distribution of USD12,500 thousand.
The Group has reorganised its cruise operations under a new Regional structure. Under the new structure, three Regional Directors will be appointed to manage East Mediterranean, West Mediterranean andAmericas regions.
The Group announced that in light of the emerging opportunities in its cruise business it is undertaking a strategic review of the Group, which is being carried out by Goldman Sachs International. The purpose of the strategic review is to explore ways to maximise value forall stakeholders and includes a range of potentialcorporate activity including a sale ofcertain assets as wellas strategic investments and partnerships.
Category Code:IR TIDM: Sequence No.: 17241 EQS News ID: 859793
End ofAnnouncementEQS News Service
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