IR GIH Biomass - November 2017

GIH-9M-2017-Financials-Results

JCR Eurasia Rating, in its periodic review, has upgraded Global Investment Holdings (GIH or the Group) and its Cash Flows of Bond Issues to ‘BBB+ (Trk)’ on the Long Term National Local Scale and to ‘A-2 (Trk)’ on the Short Term National Local Scale.

 

JCR Eurasia Rating has evaluated GIH in an investment-level category on the national and international scales and upgraded the ratings on the Long Term National Scale from ‘BBB (Trk)’ to ‘BBB+ (Trk)’ and the Short Term National Scale from ‘A-3 (Trk)’ to ‘A-2 (Trk)’ within the scope of periodic review. The outlooks for the ratings are determined as ‘Stable’. Additionally, JCR Eurasia Rating has confirmed the Long Term International Foreign and Local Currency Ratings as ‘BBB-’.

Other notes and details of the ratings are provided below             

Long Term International Foreign  Currency	:	BBB-/ (Stable Outlook)
Long Term International Local Currency	:	BBB- / (Stable Outlook)
Long Term National Local Rating	:	BBB+ (Trk) / (Stable Outlook)
Long Term National Issue Rating	:	BBB+ (Trk)
Short Term International Foreign Currency	:	A-3 / (Stable Outlook)
Short Term International Local Currency	:	A-3 / (Stable Outlook)
Short Term National Local Rating	:	A-2 (Trk) / (Stable Outlook)
Short Term National Issue Rating	:	A-2 (Trk)
Sponsor Support	:	2
Stand Alone	:	B

Global Investment Holdings Announces Consolidated Net Revenues of TL351.8mn and EBITDA of TL113.6mn in the first six months of 2017

Global Investment Holdings (GIH or the Group) reports consolidated revenues of TL351.8mn for the first half of 2017, representing an increase of 25% compared to the same period last year; while announcing a consolidated EBITDA of TL113.6mn.  The proceeds of Global Ports Holding LSE offering of TL 360mn as secondary and F.A.B Partners (FAB) partnership of TL 245mn is not accounted for in the EBITDA line or P/L but under the equity. Total equity increased on a consolidated basis from TL908.3 in to TL 1,703.0 representing a 87% increase.

GIH announced its financial results for Q2 2017. According to the disclosure, consolidated net revenues reached TL351.8mn compared to TL280.5mn last year, representing an increase of 25%. 

GIH also announced that, in the first half of 2017, Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to TL113.6mn, compared to an EBITDA of TL97.5mn in the same period last year.

On a divisional basis, the Group’s Port Division revenues reached TL180.9mn in the first half of 2017, representing 18% increase over the same period of 2016. A significant portion of this increase is attributable to the contributions from the Group’s commercial port operations which is unaffected by Turkish geopolitical developments and the growth was driven by strong volume growth in both container and cargo business. Although the first half of 2017 saw strong overall 14% growth in total cruise passenger numbers driven by a combination of organic growth in Valetta Cruise Port and inorganic growth from first time consolidation of small Italian ports, Cruise division financial performance impacted by ongoing weakness in consumer sentiment towards higher margin Turkish cruise ports, while we have seen a strong performance in our European portfolio of cruise ports, with revenues up at Valetta and BPI in this period.  The Port Division’s segmental EBITDA was reported as TL117.1mn in H1 2017 compared to TL101.3mn over the same period in 2016. The improvement was driven by Commercial division thanks to the increase in high-margin TEU business, increased operational efficiencies and a favorable currency environment in Turkey. The strong performance in the Commercial business has been partly offset by weakness in Turkish cruise ports (particularly Ege) due to the ongoing geopolitical tension in Turkey and the Eastern Mediterranean. Segmental EBITDA was also negatively impacted by Euro/USD fluctuations and passenger mix. All cruise ports’ revenues and Port of Adria are mainly Euro denominated and fluctuations of the average Euro/USD exchange rate compared to H1 2016 negatively impacted revenues and EBITDA reported in USD. In addition, changes in the passenger mix between turnaround and transit passengers, in favor of transit passengers, also put a cap in EBITDA expansion.

The Power/Gas/Mining Division reported revenues of TL138.0mn in the first six months of 2017, representing a 40% increase over the same period in 2016, mainly driven by the gas sales and feldspar mining operations. GIH’s Power/Gas/Mining Division EBITDA consisted of CNG, feldspar mining and energy efficiency operations. Naturelgaz revenues stood at TL76.5mn as compared to TL70.0mn over the same period in 2016, excluding pipeline gas trading. Reported sales volume of H1 2017 stood at 61.6mn m3 (excluding pipeline gas), compared to 55.8mn m3 for the same period in 2016.

GIH reported a consolidated net loss of TL137.8mn in H1 2017, compared to a net loss of TL45.1mn in H1 2016. The loss does not include TL425.0mn increase in Group’s consolidated equity due to the successful IPO of the Ports Division in London Stock Exchange, where this profit is not accounted for under the P&L, but only under the equity as per IFRS 27. The main reasons behind the loss in 1H2017 were TL78.3mn one-off expenses, resulting mainly from the write-off provision of Dağören HEPP project (TL51.0mn) and project expenses incurred from intensive M&A activity at the Port segment. Additionally, the non-cash depreciation charges, and increase in net interest expenses has also impacted the bottom line. Depreciation and amortization charges have increased from TL77.7mn in H1 2016 to TL97.5mn in H1 2017. Also, the Group has incurred TL88.3mn net interest expenses in the period. Following the successful IPO of the port business, coupled with the cash commitment from FAB, net debt position of the Group has improved significantly. Consolidated Net Debt has decreased from TL2,104.9mn in Q1 2017 to TL1,216.9mn in Q2 2017. Likewise, holding stand-alone Net Debt position of TL574.1mn turned into a “Net Cash” position of TL-5.7mn, which will significantly reduce net interest expenses in the second half of the year.

Commenting on the recent developments, GIH’s CFO, Kerem Eser, underlined the significance of the partnership with FAB and Global Ports Holding’s listing on the London Stock Exchange. “The strategic partnership with FAB, an asset management firm backed by large global investors, is expected to  further accelerate Global Investment Holdings growth in Turkey as well the rest of the world as a global investor in infrastructure and energy. Global Investment Holdings’ total equity stood at TL 1,703.0mn. ” Mr. Eser also mentioned that,  “in line with its growth strategy, GPH is now listed on the London Stock Exchange, after displaying an exemplary show of dedication and team work.  Global Ports Holding received gross proceeds of 58.0mn£ (75mnUSD), which will be used to develop and expand the cruise business further into the Caribbean and Asia. Global Investment Holdings total gross proceeds in excess of 81mn£ (105mnUSD) pursuant to the Offer, will predominantly be used to pay off debt at the Holding level.”

Commenting on recent developments Chairman Mr. Mehmet Kutman , stated that "the Group will focus on its new strategy to develop regional and global enterprises only in selected core businesses, which are clean energy and infrastructure."

It was announced on March 14, 2017 that the Board of Directors of Global Investment Holdings had resolved and declared the issuance of 100 million new shares at TL 2.45 per share to be subscribed by F.A.B. Partners LP (“FAB”), and that the transaction was subject to certain regulatory approvals including the Capital Markets Board (the “CMB”).

As per CMB’s approval dated April 14, 2017, Global Investment Holding’s application regarding the capital increase has been approved, and, in line with CMB’s same dated resolution, the Board of Directors of Global Investment Holdings has resolved to issue up to 100,000,000 new shares to existing new shareholders and 100,000,000 new shares to FAB.

In this context:

• 100,000,000 shares will be offered to be issued, for two days on the 12^th and 13^th of June 2017, to those who held Global Investment Holding shares as of April 14, 2017. Those willing to use their pre-emption rights will be required to deposit the participation amounts to the account named “Global Yatırım Holding A.Ş. Capital Increase Blockage Account” with Global Securities, at TL 2.45 per share and with a take up ratio up to 51.68% of the shares that they held as of April 14, 2017. Any unused preemptive rights will be cancelled.
• Following the completion of the rights issue, 100,000,000 shares issue will be issued to and subscribed by FAB.
• Shares issued in both issues (for both the existing shareholders and FAB) will be subject to a 1-year lock-up period.

FAB is an asset management firm backed by large global strategic investors. It is founded by ex-Goldman partner Dalinc Ariburnu and his former colleagues. In August 2016, FAB acquired CIFC, a New York based U.S. asset manager which manages USD 14 bn of assets. In October 2016, FAB advised and announced the largest fund ever raised in history, the USD 100 bn “Softbank  Vision Fund”. In February 2017, FAB arranged the acquisition of Fortress together with Softbank. Fortress is a US based asset manager, which manages USD 70 bn of assets globally.

FAB focuses on long term investments in finance, technology, hospitality, infrastructure and commodities industries.

The investment by FAB affirms the trust in the future of Turkey and Global Investment Holdings, this capital injection will further accelerate Global Investment Holdings’ growth in Turkey as well the rest of the world as a global investor in infrastructure and energy.

 

Global Investment Holdings’ Board of Directors resolved and declared the issuance of 100 million new shares at TL2.45 per share, to be fully subscribed by F.A.B Partners LP (F.A.B.). The transaction is subject to certain regulatory approvals including Capital Markets Board.
 
FAB partners is an asset management firm backed by large global strategic investors including Qatar Royal Family and Sotbank. It is founded by ex-Goldman partner Dalinc Ariburnu and his former colleagues. In August 2016, with the backing of Qatar Royal family, FAB acquired CIFC, a New York based U.S. asset manager which manages USD 14 bn of assets. In October 2016, FAB advised and announced the largest fund ever raised in history, the USD 100 bn “Softbank  Vision Fund”. Last month, FAB arranged the acquisition of Fortress together with Softbank. Fortress is US based asset manager which manages USD 70 bn of assets globally.
FAB focuses on long term investments in finance, technology, hospitality, infrastructure and commodities industries.
 
The investment by F.A.B. affirms the trust in the future of Turkey and Global Investment Holdings, and this capital injection will further accelerate Global Investment Holding’s growth in Turkey as well the rest of the world as a global investor in infrastructure and energy.

 

Superior operational and financial performance marked by Passenger, Revenue and EBITDA growth despite the
challenging geo-political situation in Turkey and temporary pressure on container volumes in Port Akdeniz

GPH reports consolidated revenues of USD 114.9mn, and a consolidated EBITDA of USD 75.9mn in FY 2016. This translated into 66.1% consolidated EBITDA margin. Consolidated revenues and EBITDA registered 8.9% and 6.6% increase, respectively. When pro-forma effect of Valletta Cruise Port acquisition is taken into consideration, consolidated revenues and consolidated EBITDA remained stable in FY 2016 YoY. Segmental EBITDA grew by 9.2%, reaching USD 80.9mn in FY 2016 YoY.

Recent geo-political situation in Turkey put pressure on cruise and commercial volumes in Turkey. These events can be summarized as:
• Ongoing tensions in East Med
• The coup Attempt in Turkey in July 2016
• Investigations launched by Chinese Authorities on marble imports to China in June 2016, which partially continued in Q3 2016

However, this impact was compensated to a large extent by the contribution of GPH ports outside Turkey, and strong contribution from the commercial business. Cruise passengers in GPH ports in Turkey decreased by 41%, as opposed to an overall decrease of 67% in Turkey, thanks to world-class security measures and unique excursion choices offered by Ege Ports.

Driven by GPH’s well diversified cruise port network, GPH ports excluding Turkey managed to increase total cruise passengers by 26.8% YoY in FY 2016. The increase was mainly driven by Barcelona, Malaga, Singapore, Valletta and Lisbon. When Turkey is included, total passenger base still indicates a pleasing 10.8% YoY inorganic growth in FY 2016.

Despite the Perfect Storm environment, GPH managed to maximize revenue and EBITDA creation in FY 2016 on the back of:

• Inorganic growth: Valletta Cruise Port (Malta) and Venice Cruise Port (Italy) acquisitions
• Increasing share of turnaround passengers in total passenger mix, driven by Barcelona and Malaga; as well as extension of the cruise season
• A general traffic shift from East Med to West Med
• Tariff adjustments thanks to the tariff flexibility at operational ports due to underlying concessions
• 11.1% depreciation of TL against USD in FY 2016 compared to FY 2015, which translated into c.2.3% increase in EBITDA, as approximately 70% of costs are in TL in Turkish port operations

Total consolidated revenues came out at USD 114.9mn in FY 2016, as opposed to USD 105.5mn in FY 2015, indicating an 8.9% inorganic increase. Revenue increase is mainly driven by cruise revenues, which went up to USD 53.6mn in FY 2016, posting 14.0% growth YoY. When pro-forma effect of Valletta Cruise Port acquisition in FY 2015 is included, consolidated revenues indicate a slight 0.7% decline, while cruise revenues imply 6.3% decline due to the shrinkage at Turkish cruise ports.

On the EBITDA front, total segmental EBITDA (composed of operational companies only, excluding GPH solo expenses) posted 9.2% growth in FY 2016 YoY, at USD 80.9mn. EBITDA maximization was driven by both commercial and cruise segments. Cruise EBITDA registered 7.2% growth in FY 2016 YoY, reaching USD 36.9mn; while commercial EBITDA increased by 10.9% in the same period YoY, at USD 44.0mn. When pro-forma effect of Valletta Cruise Port acquisition in FY 2015 is included, segmental EBITDA imply 3.0% organic growth, while cruise EBITDA indicate 5.1% drop due to the shrinkage at Turkish cruise ports.

Cruise EBITDA margin lost a couple of points in FY 2016 YoY due to lower contribution from Ege Ports (Turkey) which operated at 82% EBITDA margin in FY 2015, yet still standing at a satisfactory 68.8% level. On the contrary, driven by the per TEU and per ton revenue increase at Port Akdeniz, coupled with higher yield project cargo effect at both Port Akdeniz and Port of Adria, commercial EBITDA margin posted 400bps increase (reaching 71.9%) in FY 2016 YoY. As a reminder, cruise EBITDA margin and commercial EBITDA margin for FY 2015 had stood at 73.2% and 67.9%, respectively. Strong revenue performance was mainly driven by Port Akdeniz – Antalya (commercial), Creuers (Barcelona including Malaga) and Malta; while solid EBITDA development YoY in FY 2016 was driven by Port Akdeniz – Antalya (commercial), Creuers (Barcelona including Malaga), Malta, Adria, and minorities (Venice, Lisbon and Singapore).

Net Debt / EBITDA stood at 3.7x in FY 2016 compared to 3.6x 2015YE.

Gross Debt / EBITDA stood at 4.4x in FY 2016, in line with bond covenants.

Cruise Port Operations:
Thanks to its well diversified portfolio and successful recent acquisitions, GPH managed to expand its cruise passenger base by a significant 10.8% in FY 2016 YoY, through organic and inorganic growth. Barcelona, Malaga, Singapore, Valletta (Malta) and Lisbon were the main contributors to compensate for the shrinkage at Turkish cruise ports to a large extend. Total cruise revenues and total cruise EBITDA recorded 14.0% and 7.2% growth, respectively. Cruise EBITDA margin went down from 73.2% in 9M 2015 to 68.8% in FY 2016. The decline in cruise EBITDA margin is mainly attributable to Valletta Cruise Port, which structurally has lower EBITDA margin due to retail operations; and the lower contribution from Ege Ports in Turkey in FY 2016, which operates at 70%-80% EBITDA margin (FY 2015 EBITDA Margin of Ege Ports was 82%).

On the other hand, cruise revenues and EBITDA outside Turkey posted 11.5% and 22.2% increases in FY 2016 YoY, respectively, mainly due to:
• 4.7% YoY organic growth in passenger numbers outside Turkey
• The increasing share of turnaround passengers in Barcelona and Malaga
• Ancillary revenues in Malta (commercial berthing, heavy machinery, duty free)
• EBITDA contribution from recently acquired Venice and increasing EBITDA contribution
from Lisbon and Singapore through equity pick-up

Creuers’ (Barcelona including Malaga) revenues increased by 9.8% in FY 2016 YoY, reaching USD 27.1mn, while EBITDA increased by 11.4%, reaching USD 18.0mn. Accordingly, EBITDA margin registered 95bps increase, reaching 66.5% in FY 2016. Barcelona and Malaga cruise ports’ share of turnaround passengers which are more profitable increased considerably in FY 2016 YoY, contributing to revenue and EBITDA generation. As the Eur/USD parity was flattish in FY 2016, the increase in Creuers’ revenues and EBITDA in USD terms was very similar to that in Eur terms.

Valletta Cruise Port (Malta), the recently acquired cruise port with its unique position for West Med and East Med itineraries, contributed significantly to GPH’s FY 2016 passenger, revenue and EBITDA performance. In line with GPH’s strategy to increase efficiency at the ports it acquires; Valletta Cruise Port’s revenues went up by 15.6% at USD 11.8mn revenues, indicating 15.6% increase YoY; while EBITDA surged by a solid 31.0% at USD 5.9mn in FY 2016 YoY, implying 583bps increase in EBITDA margin.

Additionally, a 20% tariff increase in Lisbon started to be applied in FY 2016, which is in line with GPH’s strategy to rationalize and optimize prices at the ports it operates.

Ege Ports (Kuşadası) revenues and EBITDA declined by 32.8% and 36.7%, respectively, in USD terms in FY 2016 YoY, due to the 36.4% shrinkage in the port’s passenger numbers due to the recent events in Turkey. Yet, Ege Ports has been among the least affected and most resilient ports in Turkey, thanks to the world-class security measures and unique excursion choices it offers. Ege Ports’ standalone captured 56% market share in Turkey in FY 2016, while GPH cruise ports in Turkey composed 73% of Turkey’s cruise ports market in the same period (as opposed to 42% in FY 2015).

Commercial Port Operations:
The impact from the general investigation launched by Chinese officials for imports of marble by the end of May 2016 was over by the end of 2016; Port Akdeniz managed to increase container levels in Q4 2016 YoY. TEU throughput of Port Akdeniz increased by 3.0%.

Meanwhile, total commercial revenues and EBITDA registered a 4.8% and 10.9% growth rates, respectively, in FY 2016 YoY, implying 395bps increase in commercial EBITDA margin (FY 2016 Commercial EBITDA Margin: 71.9%).

Tariff flexibility, depreciation of TL, a recently introduced revenue item (Verified Gross Mass - VGM) as well as other ancillary revenues (ie. container storage revenue and stuffing revenue), and project cargo element translated into stronger EBITDA and margins at Port Akdeniz. Container yield increased by 11.3% in FY 2016 YoY, reaching USD 205.9, continuing to support the margins. Almost half of the container yield increase was driven by the aforementioned new revenue items and side revenues, while the rest was attributable to tariff increase. Mainly driven by project cargo, general & bulk cargo yield surged by 18.2% in FY 2016 YoY, reaching USD 8.4 per ton. Additionally, 11.1% depreciation of TL in FY 2016 YoY, led to c.2.3% increase in EBITDA, as approximately 70% of costs are in TL in Turkish port operations. Commercial Revenues and EBITDA of Port Akdeniz increased by 6.9% and 10.2%, respectively, in FY 2016 YoY, translating into 236bps improvement in EBITDA margin in FY 2016 YoY, which stood at a solid 77.4%.

As for Port of Adria, TEU throughput registered 7.1% increase in FY 2016 YoY, while cargo volume dropped in FY 2016 YoY. This is mainly due to the change of hands of a main exporter in the region. This factory has been acquired by a Chinese company, which is expected to start operations in 2017. Container yields came out at USD 99.9/TEU in FY 2016 at Port of Adria, 2.9% higher than FY 2015 figure. Meanwhile, the weighted average container yield for combined commercial ports operations stood at USD 185.2/TEU in FY 2016, indicating a strong 9.4% increase YoY. Driven by the project cargo, general cargo revenue per ton climbed to USD 32.6 in FY 2016 from USD 9.2 in FY 2015, supporting revenue and EBITDA generation at Port of Adria. Project Cargo elements are basically the machinery, equipment and / constructions to be utilized at regional development projects. Port of Adria’s EBITDA grew by 21.5%, reaching USD 2.7mn, and implying 826bps increase in EBITDA margin.

Global Investment Holdings’ Corporate Governance Rating Improves to 8.99 from 8.79...

In the scope of Capital Markets Board’s (“CMB”) Communique on “Rating Activities and Rating Agencies in Capital Markets”, Global Investment Holdings’ Corporate Governance Rating has been reviewed by Kobirate Uluslararası Kredi Derecelendirme ve Kurumsal Yönetim Hizmetleri A.Ş.(Kobirate International Credit and Corpoarte Governance Rating: "Kobirate"),  in line with CMB’s Corpoarte Governance Principles. Accordingly, Global Investment Holding’s Corporate Governance Rating has been upgraded to 8.99 (out of 10.00) from 8.79, indicating that the Company is in good compliance with CMB’s Corporate Governance Principles.   

Kobirate has reviewed Corporate Governance Practices of Global Investment Holdings under four main categories, as follows; while improvements in “Public Disclosure & Transparency” and “Shareholders” categories contibuting the most to the overall rating improvement.

	November 2015	November 2016
Overall rating	8.79	8.99
Shareholders (25%)	88.60	91.11
Public Disclosure & Transparency (25%)	88.18	91.18
Stakeholders (15%)	88.90	90.93
Board of Directors (35%)	86.85	87.74

After Venice and Ravenna, Global Ports Holding now adds Cagliari and  Catania cruise ports to its portfolio, enhancing its presence in Italy...

In September 2016, we had announced that Global Ports Holding (“Global Ports), through its wholly owned subsidiary, purchased 51% shares of Ravenna Terminal Passeggeri S.r.l. which operates Ravenna Cruise Port.

Today, Global Ports, through its wholly owned subsidiary Ports Operation Holding, has indirectly purchased shares of the companies operating Cagliari Cruise Port and Catania Cruise Port, in addition to shares of the company providing landfall services to the cruise ship passengers in Portovenere.

As a result, Global Ports now owns:

• %70.89 indirect shares of Cagliari Cruise Port S.r.l. which operates Cagliari Cruise Port,

• %62.20 indirect shares of Catania Cruise Terminal S.r.l. which operates Catania Cruise Port,

• %53.67 indirect shares of Ravenna Terminal Passeggeri S.r.l. which operates Ravenna Cruise Port,

• %28.5 indirect shares of La Spezia Cruise Facility S.c.a.r.l which provides services in Portovenere.

Ravenna is a city of mosaics, and is a favorable destination thanks to its geographical location.  Its proximity to Venice, Bologna and the Independent Republic of San Marino, as well as the reduced travel time to Florence due to the new high speed rail connections, makes it an attractive cruise destination. The traffic in the Adriatic Sea is constantly increasing and Ravenna Cruise Port is very well positioned to benefit from the increasing traffic as one of the most appealing Italian cruise ship destinations.

Cagliari Cruise Port--located halfway between the Iberian coasts to the west; Italian coast to the east; and North African coast to the South-- provides a significant advantage of being included on different routes, while granting high-value experiences to cruise passengers and fuel-efficiency for cruise lines. Its proximity to an international airport, and the new terminal building under construction, further strengthens Cagliari’s position as a homeport of the South Sardinia’s destination.

Catania Cruise Terminal carries homeport operations in the prestigious location of the “Vecchia Dogana,” a recently renovated historic building, which also houses a shopping center. Catania Cruise Terminal has the potential to increase cruise passengers through cross-selling and leveraging on GPH’s strength in the cruise industry.

The addition of Cagliari, Catania and Ravenna cruise ports to Global Ports’ existing portfolio of Barcelona/Spain (the largest cruise port in the Mediterranean), Malaga/Spain, Venice/Italy (the largest homeport in the Meditarranean), Valletta/Malta, Lisbon/Portugal, Singapore – SATS Creuers/Singapore, Adria-Bar/Montenegro, Kuşadası/Turkey, Bodrum/Turkey, Antalya/Turkey, and Dubrovnik/Croatia (tender process continues); total passenger figures are expected to exceed 7.5 million, solidifying Global Ports’ position as the largest cruise operator in the world.

Mehmet Kutman, the Chairman of GPH indicated that, "As GPH, we are incredibly proud of the growth we have accomplished within 2016. Sticking to its acquisition pipeline, GPH has steadfastly demonstrated its leading position as the world’s largest cruise port operator, with the acquisitions of Catania, Cagliari, and Ravenna. GPH’s solid presence in Mediterranean and Asia Pacific will capture c.25% share in the Mediterranean with over 7.5 million passengers. Through our teams astounding efforts, we have achieved yet another milestone, by expanding our portfolio to 14 ports in 8 countries.”

Mr Emre Sayin, the CEO of GPH pointed out that, “After the acquisition of Venice Cruise Port; the addition of Catania, Cagliari, and Ravenna cruise ports will undoubtedly boost Global Ports’ collective marketing power and enhance its presence in Italy, with a total of close to 500,000 passengers. As the leading cruise port operator in the world, using its top-notch expertise, GPH will continue to create synergy within its growing port network.”

The sound and resilient outlook reiterated in the “Perfect Storm” environment... Revenue and EBITDA growth despite the ongoing tension in East Med, the coup attempt in Turkey in July 2016, and the temporary pressure on TEU volumes of Port Akdeniz...

GPH reports consolidated revenues of USD 90.7mn, and a consolidated EBITDA of USD 57.4mn in 9M 2016. This translated into 63.2% consolidated EBITDA margin. Consolidated revenues and EBITDA registered 11.2% and 9.7% increase, respectively. When pro-forma effect of Valletta Cruise Port acquisition is taken into consideration, where consolidated revenues and EBITDA indicate 1.7% and 2.7% growth in 9M 2016 YoY, respectively.

Recent events overshadowed the high Q3 season and put pressure on cruise and commercial volumes in Turkey. These events can be summarized as:
• Ongoing tensions in East Med
• The coup Attempt in Turkey in July 2016
• Investigations launched by Chinese Authorities on marble imports to China in June 2016, which partially continued in Q3 2016

However, this impact remained limited thanks to the contribution of GPH ports outside Turkey, and strong contribution from the commercial business. Cruise passengers in GPH ports in Turkey decreased by 39.7%, as opposed to an overall decrease of 65.3% in Turkey, thanks to world-class security measures and unique excursion choices offered by Ege Ports.

Driven by GPH’s well diversified cruise port network, GPH ports excluding Turkey managed to increase total cruise passengers by 27.6% YoY in 9M 2016. The increase was mainly driven by Barcelona, Malaga, Valletta, and Singapore. When Turkey is included, total passenger base still indicates a satisfactory 10.0% YoY inorganic growth in 9M 2016.

Despite the Perfect Storm environment, GPH managed to maximize revenue and EBITDA creation in 9M 2016 on the back of:

• Inorganic growth: Valletta Cruise Port (Malta) acquisition
• Increasing share of turnaround passengers in total passenger mix, driven by Barcelona and Malaga
• Tariff adjustments thanks to the tariff flexibility at operational ports due to underlying concessions
• 10.4% depreciation of TL against USD in 9M 2016 compared to 9M 2015, which translated into c.2.5% increase in EBITDA, as approximately 70% of costs are in TL in Turkish port operations

Total consolidated revenues came out at USD 90.7mn in 9M 2016, as opposed to USD 81.6mn in 9M 2015, indicating a 11.2% inorganic increase. Revenue increase is mainly driven by cruise revenues, which went up to USD 42.8mn in 9M 2016, posting 15.4% growth YoY. When pro-forma effect of Valletta Cruise Port acquisition in 9M 2015 is included, consolidated revenues indicate 1.7% increase, while cruise revenues imply 4.1% decline due to the shrinkage at Turkish cruise ports.

On the EBITDA front, total segmental EBITDA (composed of operational companies only, excluding GPH solo expenses) posted 10.2% growth in 9M 2016 YoY, at USD 60.3mn. EBITDA maximization was driven by both commercial and cruise segments. Cruise EBITDA registered 5.9% growth in 9M 2016 YoY, reaching USD 27.5mn; while commercial EBITDA increased by 14.1% in the same period YoY, at USD 32.9mn. When pro-forma effect of Valletta Cruise Port acquisition in 9M 2015 is included, segmental EBITDA imply 3.5% organic growth, while cruise EBITDA indicate 6.9% drop due to the shrinkage at Turkish cruise ports.

Cruise EBITDA margin stood at 64.3% in 9M 2016, losing a couple points. On the contrary, driven by the per TEU and per ton revenue increase at Port Akdeniz, coupled with higher yield project cargo effect at both Port Akdeniz and Port of Adria, commercial EBITDA margin posted 390bps increase (reaching 68.5%) in 9M 2016 YoY. As a reminder, cruise EBITDA margin and commercial EBITDA margin for FY 2015 had stood at 72.4% and 67.9%, respectively. Strong revenue and EBITDA performance in 9M 2016 YoY was mainly driven by Port Akdeniz - Antalya, Creuers (Barcelona including Malaga), Malta, and Adria.

Net Debt / EBITDA stood at 3.8x in 9M 2016 compared to 3.3x 2015YE PF (inclusive of full operational year for Malta acquisition).

Gross Debt / EBITDA stood at 4.3x in 9M 2016 compared to 4.3x in FY 2015 in line with bond covenants.

Cruise Port Operations:
Thanks to its well diversified portfolio and successful recent acquisitions, GPH managed to expand its cruise passenger base by a significant 10.0% in 9M 2016 YoY, through organic and inorganic growth. Barcelona, Malaga, Singapore, and Valletta (Malta) were the main contributors to compensate for the shrinkage at Turkish cruise ports to a large extend, and to expand the passenger base. Total cruise revenues and total cruise EBITDA recorded 15.4% and 5.9% growth, respectively. Cruise EBITDA margin went down from 70.0% in 9M 2015 to 64.3% in 9M 2016. The decline in cruise EBITDA margin is mainly attributable to the lower contribution from Ege Ports in Turkey, which operates at 70%-80% EBITDA margin.

Creuers’ (Barcelona including Malaga) revenues increased by 12.6% in 9M 2016 YoY, reaching USD 21.2mn, while EBITDA increased by an outstanding 22.9%, reaching USD 14.4mn. Accordingly, EBITDA margin registered 574bps increase, reaching 67.9% in 9M 2016. Barcelona and Malaga cruise ports’ share of turnaround passengers which are more profitable increased considerably in 9M 2016 YoY, contributing to revenue generation. As the Eur/USD parity was flat in 9M 2016, the increase in Creuers’ revenues and EBITDA in USD terms was the same in Eur terms.

Valletta Cruise Port (Malta), the newcomer in GPH network with its unique position for West Med and East Med itineraries, contributed significantly to GPH’s 9M 2016 revenue and EBITDA performance. Valletta Cruise Port posted USD 9.0mn revenues in 9M 2016, indicating 19.3% increase YoY; while reporting USD 4.0mn EBITDA in 9M 2016 YoY.

Additionally, a 20% tariff increase in Lisbon started to be applied in 9M 2016, which is in line with GPH’s strategy to rationalize and optimize prices at the ports it operates.

Ege Ports (Kuşadası) revenues and EBITDA declined by 27.1% and 31.8%, respectively, in USD terms in 9M 2016 YoY, due to the 32.9% decline in the port’s passenger numbers. Ege Ports has been among the least affected and most resilient ports in Turkey, thanks to the world-class security measures and unique excursion choices it offers. Nevertheless, Q3 was the quarter where the effect of the perfect storm was felt the strongest. Ege Ports’ standalone captured 56% market share in Turkey in 9M 2016, while GPH cruise ports in Turkey composed 70% of Turkey’s cruise ports market in the same period.

Commercial Port Operations:
The pressure on container volumes of Port Akdeniz stemming from the general investigation launched by Chinese officials for imports of marble by the end of May 2016 continued partially in Q3 2016, losing pace and signalling recovery. Port Akdeniz managed to maintain similar container levels in Q3 2016 compared to Q3 2015. TEU throughput of Port Akdeniz declined only by 0.7%, while general & bulk cargo volumes increased by 61.2% in Q3 2016 YoY. (In Q2 2016, TEU throughput and general & bulk cargo volumes had dropped by 9.9% and 25.1%, respectively, YoY.) Meanwhile, total commercial revenues and EBITDA registered a pleasing 21.7% and 26.4% growth rates, respectively, in Q3 2016 YoY.

Tariff flexibility, depreciation of TL, a recently introduced revenue item (Verified Gross Mass - VGM) as well as other side revenues (ie. container storage revenue and stuffing revenue), and project cargo element translated into stronger EBITDA and margins at Port Akdeniz. Container yield increased by 10% in 9M 2016 YoY, reaching USD 203.7, continuing to support the margins. Meanwhile, general cargo yield surged by 66% in 9M 2016 YoY, reaching USD 10.2 per ton. Additionally, 10.4% depreciation of TL in 9M 2016 YoY, led to c.2.5% increase in EBITDA, as approximately 70% of costs are in TL in Turkish port operations. EBITDA increase in constant currencies was 9.9%. Commercial Revenues and EBITDA of Port Akdeniz increased by 8.9% and 12.4%, respectively, in 9M 2016 YoY, translating into 232bps improvement in EBITDA margin in 9M 2016 YoY, which stood at a solid 74.6%.

As for Port of Adria, TEU throughput registered 12.0% increase in 9M 2016 YoY, while cargo volume dropped in 9M 2016 YoY. This is mainly due to the decrease of raw material imports made by a major producer in the region. Container yields came out at USD 100.3/TEU in 9M 2016 at Port of Adria, 6.0% higher than 9M 2015 figure. Meanwhile, the weighted average yield for combined commercial ports operations stood at USD 182.9/TEU in 9M 2016, indicating a solid 7.6% increase YoY. Driven by the project cargo, general cargo revenue per ton climbed to USD 36.9 in 9M 2016 from USD 8.1 in 9M 2015, supporting revenue and EBITDA generation at Port of Adria. Project Cargo elements are basically the machinery, equipment and / constructions to be utilized at regional development projects. Port of Adria’s total revenues remained flat (0.5% increase) at USD 6.5mn, while EBITDA surged by 50.7%, reaching USD 2.0mn, and implying 1,001bps increase in EBITDA margin.

Global Investment Holdings Announces Consolidated Net Revenues of TL479.2mn and EBITDA of TL163.4mn in the first nine months of 2016

Global Investment Holdings (GIH or the Group) reports consolidated revenues of TL479.2mn for the first nine months of 2016, representing an increase of 15% compared to the same period last year; while announcing a consolidated EBITDA of TL163.4mn.

GIH announced its financial results for 9M 2016. According to the disclosure, consolidated net revenues reached TL479.2mn compared to TL415.8mn last year, representing an increase of 15%.  Most of the business divisions under the Company contributed to this increase, with the Port and Power/Gas/Mining divisions contributing the most.

GIH also announced that, in the first nine months of 2016, Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to TL163.4mn, compared to an EBITDA of TL143.0mn in the same period last year.

On a divisional basis, the Group’s Port Division revenues reached TL264.7mn in 9M 2016, representing 22% increase over the same period of 2015. A significant portion of this increase is attributable to the contributions from the Group’s cruise port operations. Although affected by the tension and the Coupe attempt, the impact on GPH ports in Turkey was much more limited with 39.7% decline, compared to Turkey’s 65.3% decrease in overall cruise passengers, thanks to the world-class security measures at utmost priority at GPH ports and unique excursion choices Ege Ports offers. Driven by GPH’s well diversified cruise port network, even based on proforma 9M 2015 numbers, GPH ports excluding Turkey managed to increase total cruise passengers by 5.1% YoY in 9M 2016 organically. The increase was mainly driven by Barcelona, Malaga, Valletta and Singapore. When Valletta Cruise Port (VCP) acquisition effect for 9M 2015 is excluded, total passenger base including Turkey indicates a solid 10.0% YoY inorganic growth in 9M 2016. On the other hand, the division’s EBITDA was reported as TL156.1mn in 9M 2016 compared to TL123.6mn over the same period in 2015, implying a pleasing 26% growth YoY. Despite the Perfect Storm, GPH managed to maximize revenue and EBITDA creation in 9M 2016 thanks to Valletta Cruise Port (Malta) acquisition, increasing share of turnaround passengers in total passenger mix driven by Barcelona; tariff adjustments; tariff flexibility at operational ports due to underlying concessions; 10.4% depreciation of TL against US$ in 9M16 compared to 9M15 (which translated into c.2.5% increase in EBITDA, as approximately 70% of costs are in TL in Turkish port  operations). Also, Container and cargo yields continued to increase, further contributing to EBITDA growth in 9M 2016.

The Power/Gas/Mining Division reported revenues of TL170.4mn in the first nine months of 2016, representing a 4% increase over the same period in 2015, mainly driven by the Company’s feldspar mining and power generation operations. Naturelgaz revenues stood at TL130.0mn as compared to TL138.3mn over the same period in 2015, resulting from the effect of the decrease in average unit gas price, which is in line with the budget.  Division’s EBITDA consisting of CNG, feldspar mining and energy efficiency operations were reported as TL24.0mn in 9M 2016 compared to a TL22.1mn in 9M 2015. Naturelgaz EBITDA in 2015 included gains from asset sales amounting 2.0mTL. Adjusting for this one-off transaction, Naturelgaz EBITDA too was increased despite declining average gas sales prices in 2016.

At the bottom line, GIH reported a consolidated net loss of TL62.9mn in 9M 2016, compared to a net loss of TL61.1mn in 9M 2015, triggered mainly by non-cash depreciation charges and net interest expenses

Commenting on the recent developments, GIH’s CFO, Kerem Eser, underlined the significance of the recent addition of Ravenna Cruise Port to GPH’s Portfolio. “Ravenna is a city of mosaics, and is a favourable destination thanks to its geographical location.  Its proximity to Venice, Bologna and the Independent Republic of San Marino, as well as the reduced travel time to Florence due to the new high speed rail connections, makes it an attractive cruise destination. The traffic in the Adriatic sea is constantly increasing and Ravenna Cruise Port is very well positioned to benefit from the increasing traffic as one of the most appealing Italian cruise ship destinations. With the addition of Ravenna cruise ports to Global Ports’ existing portfolio of Barcelona, Malaga (Spain), Venice (Italy), Valletta (Malta), Lisbon (Portugal), Singapore – SATS Creuers (Singapore), Adria-Bar (Montenegro), Kuşadası, Bodrum, Antalya (Turkey), and Dubrovnik (Croatia, tender process continues), total passenger figure exceeds 7 million, which once again solidify Global Ports position as the largest cruise operator in the world.” Kerem Eser also added that negotiations on the share purchase of the previously announced other Italian ports are ongoing.

He further stated that aside from its CNG and Mining operations, the Group will continue its growth policy in renewable energy generation, by further developing its solar energy and biomass projects all the while seeking new opportunities in this budding sector.