Recovery speeds-up in all business lines…

Global Investment Holdings (“GIH”), a diversified conglomerate operating in 13 different countries across four continents, announced its full year consolidated results which ended 31 December 2021, and commented on recent developments.

Full year figures for Global Investment Holdings reported Consolidated Net Revenues (excluding IFRIC 12 Construction Revenue and revenues from Port Akdeniz which was sold in January 2021) of TL 1,793.7m for the full year in 2021 with a 64% increase over 2020. Consolidated Operating EBITDA (excluding Port Akdeniz) rose 153% to TL 424.9m.

Global Investment Holdings’ Chairman & CEO, Mehmet Kutman, stated:

“2021 was a year in which all our business lines mounted a strong recovery from the mixed performance caused by Covid in 2020, though they were still affected to varying degrees. Obviously, the effects of the pandemic are not wholly over, yet, the worst is over. Although we do not expect all business lines to be back to normal before 2023, we are pleased to see that the health crisis appears to be coming under control. This especially affects our cruise business, Global Ports Holding, where we have seen increased demand from cruise lines, currently running at 73% of fleet deployment. Thankfully today, the global cruise industry is operating almost normally and booking activity displays a sequential improvement. By the end of January 2022, booking levels have almost returned to pre-Omicron levels; indicating that the recovery should accelerate as the variant subsides. Most cruise lines expect close to 100% fleet deployment by Summer 2021, in time for the peak summer season. In line with such backdrop, the improvement in performance has gained further momentum in Q4 2021 in our ports business and across our entire Group. Furthermore, in February 2022 standalone, the number of calls has almost caught up with February 2019 numbers (96% of Feb 2019 levels), with Nassau having received even more calls in February 2022 than it did in February 2019. I am pleased to say that our ports division returned to positive EBITDA in July-September and in October-December with an increased pace. Nonetheless, while the revenue and profit performance of the ports division was still lacking in 2021, they performed much better than the previous year, with passenger numbers ahead of our expectations. I am very happy to see that all our business divisions displayed a superior performance in the last quarter of 2021, each and every of them contributing to the revenue and EBITDA growth, confirming the gradual switch to normalization.”

“We have continued our strategic expansion in the ports. We signed a 20-year agreement with the Port of Kalundborg to provide services for cruise passengers in Kalundborg Port, Denmark. Kalundborg is Global Ports Holding’s first port in Northern Europe; it marks an important milestone in the continued, combined growth and diversification of the company.”

“The other division we have that was most exposed to the Covid pandemic (albeit because of disruptions to trade) was mining, which I am pleased to say raised its EBITDA by nearly 2.5x. This was a direct result of international trade returning to a semblance of normality.”

“The final division that was materially exposed to the effects of the pandemic, real estate, improved its performance, with an 11% increase in EBITDA. This performance, while less eye-catching than either mining’s or the ports’, was as expected given that the Turkish vaccination program did not really take off until the middle of 2021.”

“A combination of established and now practically universally available vaccines and new treatments, and if are lucky a further diminution of Covid’s virulence should result in a still stronger 2022 for these divisions.”

The Chairman continued:
“The performance of our energy division, much less sensitive to the pandemic, was of critical importance in 2021 as it had been in 2020. The performance of both NaturelGaz and Consus Enerji were as one would expect. Despite the pandemic, the Turkish economy performed well in 2020 and surged in 2021. And in line with that, electricity market conditions were supportive. On the electricity generation side, all divisions contributed to the group’s performance. This was partly a result of our continued efforts to improve engineering at our biomass facilities, but both solar and co-generation facilities also performed strongly. In 2021, NaturelGaz’s EBITDA rose 3% to TL 98.9 million, while Consus’s EBITDA rose 54% to TL 148.2m”

The Chairman continued:
“Finally, both our financial subsidiaries had a strong performance in 2021. The merger of our asset management subsidiary with Istanbul Portföy Yönetimi in September 2020 had created one of the leading firms operating in that sector in Turkey, and we exercised our option to raise our stake in the new company to 66.6% in September 2021. I am pleased that assets under management rose from TL6.4 billion at 2020 year-end to TL23.9 billion at the end of 2021. Our brokerage subsidiary, Global Menkul Değerler had another strong year in 2021. Trading volume rose 10% to TL 247.6 billion.”

The Chairman concluded:
“Our company continues to aim to reduce its effective debt burden, a process we started with the listing of NaturelGaz. In addition, our sale of our commercial port in Antalya provided the company with a needed buffer as well as allowing us to focus on our core ports business. Also, we have successfully completed the capital increase process of GIH, which resulted in total proceeds of TL 487,180,209 to GIH. As promised, we have used the total amount of the funds from the Capital Increase in debt repayment, melting down holding solo gross debt nearly by half YoY to TL 724.6m (US$ 55.8m) at 2021YE. Through measures designed to limit cost increases, a continued improvement at the ports, and also through an eventual IPO at Consus, we believe the reduction in relative debt levels will continue.

“With respect to the current unacceptable war in Ukraine, we extend our sympathies and condolences to the country and its people. Distasteful as it is to comment on the financial consequences of a war when there is so much suffering, we have to consider its impact on our businesses. Our current expectations are that natural gas prices may rise yet further, but that this will not have a negative or positive net impact on our businesses in the energy division. With regard to the cruise division, the Black Sea was a far periphery, and while some impact may perhaps be expected at our ports in Turkey, we do not see a material impact overall. We see very little or no impact on all our other business lines.”

Commenting on the results, the Chief Financial Officer of Global Investment Holdings, Ferdağ Ildır, stated: “Our Group has been taking solid effective steps to stabilise its liquidity position and manage its long and short-term debt obligations through i) completion of the refinancing of Eurobond ii) the successful IPO of its natural gas subsidiary, Naturelgaz, on Borsa Istanbul, iii) equity injection through a rights issue in GIH, iv) the completion of the sale of the Group’s largest commercial port, Port Akdeniz, and v) the anticipated IPO of Consus Energy. We have completed the capital increase process of GIH, which resulted in total proceeds of just over TL 487.1 million to Global Investment Holdings. The total amount of the funds from the Capital Increase were used in repayment of the TL Bonds (amounting to a payment of 172.2m TL in the first three quarters and an additional 17.3m TL in October 2021) and the € 31.3mn bank loan in accordance with the fund utilization report, which should significantly reduce net interest expenses in the following quarters.”

Global Investment Holdings reported TL 1,793.7m revenues (excluding IFRIC-12 Construction Revenue and revenues from Port Akdeniz, which was sold in January 2021) in FY 2021, a robust 64% YoY growth with strong contribution from all business divisions. The sequential trend in FY 2021 compared to FY 2020 confirms that the improvement in performance has gained stronger momentum in Q4 2021 across the Group, in line with the ongoing deceleration in Covid-19 impact and strengthening activity in underlying businesses.

In FY 2021, Global Investment Holdings’ consolidated operating EBITDA jumped 153% yoy and reached TL 424.9m, driven by a strong contribution from all business divisions. EBITDA generation, which began to gain pace in Q3 2021 was much stronger in Q4 across the Group, in line with the decelerating impact of Covid-19 and strengthening activity in underlying businesses.

GIH reported a consolidated net loss of TL 111.1m in FY 2021, compared to a net loss of TL 298.6m in FY 2020. The net loss stemmed mainly from non-cash depreciation and foreign currency translation differences incurred on the Group’s long term borrowings. The bottom line incorporated TL 636.1m of non-cash charges of which TL 394.4m were depreciation and amortization, and TL 241.7m in net foreign exchange losses. Meanwhile, TL 326.1m one-off income/(expenses) included IPO expenses, project expenses, and IFRS related adjustments such as a non-cash impairment provision which relate to Venezia and Adria impairment, non-cash valuation gain from investment properties and non-cash bargain purchase gain from acquisition of İstanbul Portföy. Had the pandemic not occurred, a profit would have been shown despite the depreciation of TL against hard currencies.

Depreciation and amortization charges, despite the depreciation of Turkish Lira against hard currencies, decreased from TL 474.2m in FY 2020 to TL 394.4m in FY 2021, purely as a result of Port Akdeniz’s sale (removal of Port Akdeniz’s depreciation amounting to TL 154.9m). If the FX rate had remained the same as 2020 average, depreciation and amortization expense would have been TL 83.3m lower (excluding the amortization effect of Port Akdeniz). Also, the Group has incurred TL 241.7m in net non-cash foreign exchange losses, compared to TL 193.3m in FY 2020.

The Group’s net interest expenses in FY 2021 were TL 276.5m, as opposed to TL 319.1m the previous year. In 2021, the Group’s net interest expense decreased by 30% in US$ terms, yet the decrease in TL terms was 13% due to the depreciation of TL against hard currencies.

On a divisional basis:
Naturelgaz maintained its solid financial position despite Covid-19 impact thanks to its operational capability, efficient cost management structure and increased operations in CityGas business line. In December 2021, performance has reached a historic record level in sales volume and revenue, while such momentum continues into 2022. Naturelgaz’s net financial debt amounted to TL 85.5m at the end of 2020, but turned into a net cash position of TL 39.6m as of the end of 2021. In addition, a total of TL 32.5m in gross dividends was paid to the shareholders.

Sales volume reached 202.9mn Sm3 in 2021, representing an increase of 17% compared to 2020. The higher volume was mainly due to the increase in Citygas sales, while inorganic growth achieved by the acquisition of LNG and CNG operations of SOCAR Turkey at the end 2020 has also made a significant contribution to the increase in LNG sales volume. Revenues increased by 53% yoy, reaching TL 692.0m, reflecting the increase in sales volume especially in Citygas, the addition of LNG revenues as a result of SOCAR LNG merger and the increase in gas prices. Increasing sales volume, especially in the city gas business, increased LNG revenues after the acquisition of SOCAR LNG, and the increase in natural gas prices, contributing significantly to the increase in total revenues. Operating EBITDA was TL 98.9m. Despite the 15% increase in gross profit yoy, the 2021 EBITDA increase was limited to 3% due to the rise in operating expenses stemming from the Socar LNG acquisition as well as one-off IPO related expenses.

On the ports side, consolidated and managed portfolio passenger volumes of 1.5m in 2021 were up from the 1.3m reported in 2020; note 2020 passenger volumes included the largely pre-pandemic Q1 2020 and, in particular, the strong contribution from GPH’s Caribbean cruise ports. Thankfully, the global cruise industry is moving ever closer to operating almost normally, and booking activity shows a sequential improvement. From mid-December 2021, the cruise industry, like other tourism industries, was affected by the Omicron variant and the measures have been taken by many Governments in response to the variant. From mid-December and into February, cruise ship occupancy rates fell, while booking trends for 2022 also have been affected for a period. However, the peak of the variant seems to be behind and most governments are now well into the process of removing most Covid measures. By the end of January 2022, booking levels have almost returned to pre-Omicron levels; indicating that the recovery should accelerate. Most cruise lines expect close to 100% fleet deployment in Summer 2021, in time for the peak season in the Mediterranean. In line with such backdrop, the improvement in performance has gained further momentum in Q4 2021. On a like-for-like basis, during Q4 2021, our cruise ports received 68% of the calls and 42% of the passengers received for the same period in 2019. Furthermore, In February 2022, the number of calls has almost reached the levels achieved in February 2019 (96% of Feb 2019 levels), with Nassau having received even more calls in February 2022 than in February 2019, an important milestone in our continued recovery. Recent events in Ukraine may add some uncertainty, particularly concerning North American demand for tourism in Europe. However, currently, we have not seen any cancellations due to the situation in Ukraine, while the medium to long-term outlook is very positive, demand for cruising remains strong, and the industry expects cruise volumes to recover to pre-pandemic levels quickly.

The ports division’s revenues (excluding IFRIC-12 Construction Revenue and Port Akdeniz, Antalya which was sold in January 2021) increased by 76% in FY 2021, reaching TL 285.7m; while operating consolidated adjusted EBITDA came out at a positive TL 20.2m in FY 2021 vs a loss of TL 32.4m in FY 2020. Revenues and EBITDA in 9M 2020 benefited from the pre-pandemic first time contribution from the Caribbean ports. In line with the reduced impact of Covid due to the gradual easing of travel restrictions and the increase in number of cruise ships returning to sailing, ports’ revenue nearly quadrupled in Q4 2021 YoY, reaching TL 134.6m. Positive EBITDA generation accelerated in Q4 2021, with adjusted EBITDA reaching TL 41.8m in Q4 2021 vs TL -25.1mn in Q4 2020.

The power division’s revenues, which includes distributed energy facilities (co-generation /tri-generation), biomass and solar based energy production, rose 41% yoy, generating TL 368.6m, mainly driven by the solid performance of the operational plants. Likewise, the division generated TL 148.2m TL EBITDA in 2021, a rise of 54% YoY. The solid EBITDA growth was mainly attributable to solid operational performance in power plants.

The mining division realized 531,728 tons of product sales in 2021, up by 45% yoy, mainly due to strong feldspar demand from export markets. Export-related sales volume reached 480,204 tons while domestic sales volume came in at 51,524. The division reported revenues of TL 182.6m in 2021, more than doubling YoY. The operating EBITDA was TL 66.5m, surging 137% yoy and delivering a 35.2% operating EBITDA margin, showing significant improvement compared to the same period last year (30.5% in 2020). Volume growth mainly driven by the strengthening demand in the export markets, as well as dominancy of hard currency denominated revenues were factors supporting the improvement in profitability during the period.

The real estate division’s revenues increased by 11% yoy, standing at TL 32.7m in FY 2021, thanks to the increase in rental revenues in line with the easing of the pandemic impact starting from the second half of 2021. Meanwhile, the division reported an operating EBITDA of 13.4mn TL, compared to 11.9mn TL a year ago, indicating a 13% increase. The improvement is mainly attributable to the increasing contribution from higher EBITDA generating rental operations and is sign of a slow turnaround following Covid.

The brokerage & asset management division revenues reached 227.5mn TL, registering a robust 124% increase yoy; while operating EBITDA nearly tripled, reaching 87.9mn TL, driven by the increase in trading volumes and İstanbul Portföy’s first time full consolidation effect.

Indebtedness:
Holding standalone gross debt decreased by 46% in US$ terms to US$55.8m by 2021YE from $103.6m at 2020YE. On the other hand, the Group’s consolidated net debt increased to $556.6mn from $521.1mn at 30.09.2021. However, this increase is driven by the Nassau debt where major construction is taking place; when Nassau debt were excluded, net debt would see a $25.4m decrease at 2021YE (compared to 30.09.2021).

For 2021, we had intended to continue decreasing our indebtedness rapidly and have made good progress towards this goal. In line with this focus, we completed the capital increase process of GIH in the third quarter, with total proceeds of TL 487.1m to GIH. The total amount of the funds from the capital increase were used in repayment of the TL Bonds (amounting to TL 172.2m in the first three quarters and an additional 17.3mn TL in October 2021) and the € 31.3m bank loan in accordance with the fund utilization report.

Major operational developments and corporate activity
On the operational front, developments are on track, in line with the growth strategy by means of new acquisitions and investments mainly into core businesses, namely ports infrastructure, renewable energy and asset management. During 2021, the strategic focus remained on the core businesses and how to best insulate the Group from the impact of Covid-19.

A major development on the ports side during the period was the divestment of our concession in Port Akdeniz, in order to position Global Ports Holding Plc (GPH) as a pure-play global cruise port operator. Agreed in October 2020, this was finalised in January 2021, with the sale being materialized to QTerminals of Qatar. The sale’s successful closing was also an essential element of the Group’s refinancing strategy for the US$ 250m 8.125% Senior Unsecured Notes due 2021 (Eurobond) issued by GPH’s wholly-owned subsidiary Global Liman Isletmeleri A.S. On 7 April 2021, an offer was launched for up to US$ 75m of the Eurobond, which expired on 16 April 2021. Following the unmodified Dutch Auction procedure conducted in connection with the Offer, the total amount of cash used in connection with the offer is US$ 44.7m excluding accrued interest on the notes validly tendered and accepted. Following the completion of the tender offer, US$ 200.3m of the Eurobond remained outstanding. Furthermore, GPH completed its five-year loan agreement for up to US$ 261.3m, with leading global investment firm. As a result, GPH has concluded the early repayment of the US$ 200.3m Eurobond outstanding amount, plus accrued interest. This new investment will strengthen GPH’s balance sheet and provide flexible growth capital for GPH to pursue expansion opportunities at a dynamic juncture in the global cruise industry.

Global Ports Holding continuously monitors potential public and private acquisitions around the world. This led, for example, to, GPH signing a 20-year concession agreement to manage the cruise passenger terminal of the Port of Taranto, Italy on 30 April 2021. This has enhanced and further strengthened the GPH’s presence in the cruise sector’s core markets. Another recent development on the ports side, was the signing of a 20-year lease agreement with the Port Authority of Kalundborg to manage the cruise services in Kalundborg Port, Denmark in October 2021. Kalundborg Port is GPH’s first cruise port in North Europe, marking an important milestone in the continued development and growth of the Group. In addition, following a public tender process, the Port Authority of Las Palmas has awarded preferred bidder status to Global Ports Canary Islands S.L. (“GPCI”), an 80:20 joint venture between GPH and Sepcan S.L., to operate cruise port concessions for Las Palmas Cruise Ports. The concessions cover the port of Las Palmas de Gran Canaria, port of Arrecife (Lanzarote) and Puerto del Rosario (Fuerteventura), which have tenures of 40 years, 20 years and 20 years respectively. The Group, GPCI and the Port Authority of Las Palmas are working towards agreeing on the terms of the concession agreements. The concessions are expected to commence before the end of the current financial year, although there can be no certainty as to the timing or that the final conditions will be satisfied. Furthermore, GPH has been awarded a 12-year concession to manage the cruise services in Tarragona, Spain. In Q3 2021, a €30m investment into the port infrastructure in Tarragona Port was completed. This investment programme included a new cruise pier in the “moll de balears” which can now handle the world’s largest cruise ships, while berth capacity has been doubled to four ships at any one time. Under the terms of the agreement, GPH will invest up to € 5.5m into building a new state of the art modular cruise terminal, which will utilise solar power to ensure the sustainable provision of the terminal’s energy needs. In 2019, prior to the increase in berth capacity, Tarragona cruise port welcomed c130k cruise passengers. Tarragona is situated less than an hour’s drive from Barcelona airport and the recently completed investment into the port infrastructure and the planned new terminal will significantly improve the port’s attractiveness for turnaround operations in the region.

In the second core business area, Naturelgaz, the non-pipeline natural gas subsidiary, took a significant step towards and listed on Borsa Istanbul on 1st April 2021 following the completion of exceptionally successful IPO. The IPO has received overwhelming investor demand, with 75.3 times domestic retail investor oversubscription, 28.8 times domestic institutional investor oversubscription, and 3.5 times international institutional investor oversubscription, with total demand exceeding TL 15.5bn. Norges Bank Investment Management, out of Norway, acquired 8.3% of the total shares offered in the IPO. Naturelgaz received gross proceeds of TL 127m which will be used to develop and expand its business. The Company, while improving its leadership position in Turkey, also envisages expanding its operations to sub-Saharan countries where lack of pipeline infrastructure creates an opportunity to transport natural gas to power and industrial plants. Moreover, on 10 February 2021, Naturelgaz signed an agreement with Petrol Ofisi to create synergies in the Auto CNG business. Such development will further strengthen the position of Naturelgaz in LNG, bulk CNG, and auto CNG businesses; increasing volume and geographical coverage while diversifying the product portfolio.

Furthermore, Consus Enerji, the fully-owned subsidiary of Global Investment Holdings operating in renewable energy generation and energy efficiency, applied to the Capital Markets Board (CMB) for approval to amend the Articles of Association for the purpose of an IPO. Following the CMB approval, Consus Enerji fulfilled all the requirements and procedures to amend its Articles of Association for IPO purposes. Meanwhile, the application for the approval of the draft Domestic Prospectus prepared for the initial public offering of Consus Enerji shares has been submitted to the Capital Markets Board of Turkey on 18 February 2022.

In 2021, GIH raised its issued share capital in cash, from TL 325,888,409.93 to TL 650,000,000. The capital increase resulted in total proceeds of TL 487,180,209.05 to GIH. The total amount of the funds from the Capital Increase were used in repayment of the TL Bonds and the Euro bank loan in accordance with the fund utilization report, which should significantly reduce net interest expenses in the following quarters In the third core business line, pursuant to Capital Markets Board’s approval to exercise its option to buy an additional 40% of Istanbul Asset Management in September 2021, GIH exercised its option and increased its stake in Istanbul Asset Management from 26.6% to 66.6%, hence paving the way for full consolidation. Through the exercise of the option, Global Investment Holdings acquired 5,673,600 shares, with a nominal value of TL 1 each, corresponding to 40% of the share capital of Istanbul Asset Management for a consideration of TL 77,352,322, which has been fully paid in cash. Meanwhile, existing managing partners’ (Hasan Turgay Ozaner, Tufan Deriner and Alpaslan Ensari) stake stands at 22.3% after the transaction.

More on the finance front, 100% subsidiary of GIH, GYH Danışmanlık ve Yönetim Hizmetleri A.Ş. has been established to collect the Group’s financial services companies under one roof. All of the shares corresponding to 66.6% of Istanbul Portföy Yönetimi A.Ş. and 75% of the capital of Global Menkul Değerler A.Ş have been transferred to this new subsidiary.

As for ratings, GIH’s Corporate Governance Rating has been upgraded to 9.14 from 9.12 by Kobirate in the last quarter of 2021. Again in Q4 2021, JCR Eurasia Rating has evaluated the consolidated structure of GIH and the “Outstanding Bond Issues” in an investment grade on the national scale and assigned a LT rating of BBB (Trk), LT Int’l rating of BB with Stable outlooks.

For further information, please contact:

GIH Investor Relations
Tel: +90 212 244 60 00
E-mail: investor@global.com.tr

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