DJ Q1 2020 Trading Statement
Global Ports Holding PLC (GPH)
Q1 2020 Trading Statement
10-Jun-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Global Ports Holding Plc
Q1 2020 Trading Statement
Global Ports Holding Plc ("GPH Plc" or "Group"), the world's largest
independent cruise port operator, today issues a trading update for the
period from 1 January to 31 March 2020.
Key Financials & KPI Q1 2020 Q1 2020 Q1 2019 YoY
Highlights
Reported Constant Currency8 Reported Change
Passengers (m PAX) 1 1.3 0.5 146%
General & Bulk Cargo 286.5 196.8 46%
('000 tons)
Container Throughput 43.2 52.4 -18%
('000 TEU)
Total Revenue ($m) 2 21.4 21.5 20.7 3%
Cruise Revenue ($m) 11.0 11.1 5.4 102%
3
Commercial Revenue 10.4 10.4 15.3 -32%
($m)
Segmental EBITDA 12.2 12.2 14.1 -14%
($m) 4
Cruise EBITDA ($m) 5 5.7 5.7 3.5 61%
Commercial EBITDA 6.5 6.5 10.6 -39%
($m)
Commercial EBITDA ex 6.5 7.7 -16%
Project Cargo ($m) 6
Adjusted EBITDA ($m) 10.3 10.3 12.4 -17%
Segmental EBITDA 56.8% 56.7% 68.4%
Margin
Cruise Margin 51.5% 51.4% 64.8%
Commercial Margin 62.4% 62.3% 69.6%
Adjusted EBITDA 48.1% 48.1% 59.9%
Margin
Profit/ (Loss) for (16.5) (13.8) 20%
the period ($m)
Underlying (1.3) (1.6) -17%
profit/(Loss) for
the period ($m) 7
Q1 2020 FY 2019
Net Debt 401.1 389.2
Net Debt ex impact 337.3 324.3
of IFRS 16
Cash and Cash 56.0 63.8
Equivalents
Mehmet Kutman, Co-Founder and Chairman said:
"The Covid-19 crisis continues to cause unprecedented disruption to both
global economies and the global travel sector. As a result, we have taken
decisive action to further reduce costs and preserve cash and we now believe
that the group can withstand a scenario of no cruise ship calls until 2022
without having to raise capital.
While the crisis means cash preservation is currently the key focus, it is
clear that as the cruise industry starts to exit this crisis, significant
new port opportunities will present themselves. With a proven ability to
bring global best practice and leading health and safety protocols to ports
as well as the ability to raise financing for new projects even in the most
challenging of times, Global Ports Holding is well positioned to play an
active role as these opportunities arise."
Emre Sayin, Chief Executive Officer, said
"2020 was the year that the strategy we set at the IPO really started to
deliver operational and financial results. Our successful expansion into the
Caribbean caused a step change in our Cruise operations in Q1. Even though
the Covid-19 crisis may have derailed this outcome since March, the evidence
of this step change can still be seen in our first quarter trading.
As our commercial ports continue to trade in line with our expectations and
there are signs that cruising could slowly start in Q3, management have
recently implemented a further cost saving and cash preservation programme
to help ensure the business remains in a strong position throughout this
crisis. At the same time, we are working on enhancing our health protocols
in all GPH ports, getting ready for the new normal. I believe the cruise
industry will once again prove to be one of the most resilient and in demand
sectors within the global tourism and travel industry."
Notes
[1] Passenger numbers refer to consolidated and managed portfolio
consolidation perimeter, hence it excludes equity accounted associate ports
La Goulette, Lisbon, Singapore and Venice
[2] All $ refers to USD unless otherwise stated
[3] Revenue allocated to the Cruise segment is the sum of revenues of
consolidated and managed portfolio
[4] Segmental EBITDA figures indicate only operational companies; excludes
GPH HQ expenses
[5] EBITDA allocated to the Cruise segment is the sum of EBITDA of
consolidated cruise ports and pro-rata Net Profit of equity accounted
associate ports La Goulette, Lisbon, Singapore and Venice and the
contribution from the Havana and Ha Long Bay management agreements
[6] Commercial EBITDA Ex Project Cargo is EBITDA at Commercial Ports
excluding the contribution from the oil services project
[7] Underlying Profit is calculated as profit / (loss) for the year after
adding back: amortisation expense in relation to Port Operation Rights,
non-cash provisional income and expenses, non-cash foreign exchange
transactions and specific non-recurring expenses and income.
[8] Performance at constant currency is calculated by translating foreign
currency earnings from our consolidated cruise ports, management agreements
and associated ports for the current period into $ at the average exchange
rates used over the same period in the prior year
Investor Conference Call
An analyst and investor call will be held today at 09.30am (BST).
Please email martinb@globalportsholding.com for details
Financial highlights
? The board and management have taken further action to reduce the cost
base and conserve cash. Operating expenses across the group have now been
reduced by 75% for May to Dec 2020, generating a full year 2020 operating
expenses reduction of 60%.
? When combined with ongoing trading at the Commercial ports, management
believe that GPH can continue to trade even under a scenario of no cruise
ships until 2022, without the need to raise capital.
? Total consolidated revenues were $21.4m ($21.5m ccy) in the quarter, a
rise of 3% yoy (4% ccy).
? Segmental EBITDA was $12.2m in the quarter, a 14% yoy decline (14% ccy),
delivering a 56.8% Segmental EBITDA margin for the period.
? Adjusted EBITDA of $10.3m ($10.3m ccy) was down 17% yoy (17% ccy).
? Loss after tax for the period of $16.5m (2019: $13.8m) was impacted in
Q1 2019 $10.5m of non-cash amortisation of port operating rights (2019:
$8.4m) and non-cash FX charges totalling $3.9m (2019: $3.3m).
? Underlying loss for the period was $1.3m vs $1.6m in 2019 and reflects
loss after tax for the period after adding back $10.5m of port operating
rights amortisation vs $8.4m in 2019.
Cruise
Passengers ('000 PAX) Q1 2020 Q1 2019 PAX Change (%)
Creuers (Barcelona/Malaga) 119 252 -53%
Valletta 40 78 -49%
Ege Port 1.8 5.1 -66%
Nassau 834 0 n/a
Other Cruise Ports 258 174 48%
Total Cruise Ports 1,253 506 146%
? Total cruise revenue rose by 102% yoy to $11.0m ($11.1m ccy) for the
period vs $5.4m in Q1 2019.
? The first time contribution of our new ports in Nassau and Antigua
drove this strong revenue growth compared to Q1 2019 despite the
negative impact of Covid-19 across our cruise port portfolio towards the
end of the quarter.
? Passenger volumes rose 146% yoy to 1.25m, driven by the first time
contribution from the new Caribbean ports.
? The Covid-19 pandemic had a significant impact on passenger volumes
towards the end of the quarter, with the global cruise industry
effectively ceasing operations globally for the first time in its
history.
? Cruise EBITDA was $5.7m ($5.7m ccy) in the period, up 61% vs the $3.5m
reported in Q1 2019.
? Cruise EBITDA margin fell to 51.5%, reflecting the reduction in
contribution from equity associate ports, which are only accounted for
at the EBITDA level.
? The EBITDA growth, despite the negative impact of Covid-19, in the
period was driven by the first time Q1 contribution from our new Caribbean
ports. Excluding these new ports, EBITDA fell by $3.1m yoy.
? Despite the Covid-19 impact, the reported passenger volumes and revenue
and EBITDA figures highlight the strong contribution that our new
Caribbean ports are expected to make to the portfolio in the years ahead.
Both in terms of financial contribution and in terms of the geographic and
seasonal balance that they bring to the portfolio.
? Nassau Cruise Port's recent successful $150m 8.0% coupon private bond
offering, underpins the strength and attractions not only of this project
but of the global cruise industry. The proceeds will support the
significant planned investment into transforming Nassau Cruise Port into
one of the iconic cruise destinations in the world. Transforming the
experience for cruise passengers, locals and the cruise lines, generating
jobs and driving economic growth.
? Since the onset of the Covid-19 crisis, management have taken a number
of actions to reduce costs and preserve cash across the cruise port
portfolio, more details on these actions and measures can be found below.
Commercial
Volumes Q1 2020 Q1 2019 Change (%)
Port Akdeniz-Antalya
General & Bulk 268 144 86%
Cargo ('000)
Throughput ('000 31.4 39.3 -20%
TEU)
Port Adria
General & Bulk 18.6 52.9 -65%
Cargo ('000)
Throughput ('000 11.8 13.1 -9%
TEU)
Total General & 286.5 196.8 46%
Bulk Cargo
('000)
Total Throughput 43.2 52.4 -18%
('000 TEU)
? Total commercial revenues declined by 32% yoy to $10.4m for the period
($10.4m ccy) vs $15.3m in Q1 2019. Excluding the impact of the previously
disclosed oil services contract in Q1 2019, revenue fell 16%.
? Total Container volumes declined by 18% yoy, in line with management
expectations. Q1 2020 Container performance compares to a positive
comparative period performance. Q1 2019 Container volume growth was +2.6%
yoy compared to steep volume declines in Q4 2018, Q2 2019 and Q3 2019.
? Total General & Bulk cargo volumes rose 46% yoy.
? This rise was driven by the strong performance at Port Akdeniz, where
a new volume focussed pricing structure helped to deliver an 86% yoy
increase in General & Bulk volumes. With this strong performance
partially offset by a sharp decline in volumes at Port of Adria where
volumes declined by 65%, driven by a decrease in general cargo volumes.
? Commercial EBITDA fell 39% in the period to $6.5m ($6.5m ccy) vs $10.6m
in 2019. Excluding the oil services contract effect at Port Akdeniz in Q1
2019, Commercial EBITDA fell by 16% in the period.
? While management believe year to date Container throughput volumes have
been affected by the Covid-19 crisis, the strong performance from General
& Bulk cargo volumes have largely offset this impact. As a result, year to
date, our Commercial port operations continue to trade in line with our
financial expectations.
? On 11 March 2020 GPH announced that following a competitive sales
process conducted in the second half of 2019, it had entered exclusive
negotiations with a potential buyer of Port Akdeniz. As a result of these
negotiations the board recently received a firm offer for Port Akdeniz.
The board is currently assessing the terms of this offer and expects to
provide an update in due course. There can be no certainty as to the
timing or that the terms of a sale will be agreed. A further announcement
will be made when it is appropriate to do so.
? On the 29th April 2019, the Competition Authority of the Republic of
Turkey notified Global Ports Holding's subsidiary in Turkey, Ortadogu
Antalya Liman Isletmeleri A.S ("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. On 28th May 2019, Port Akdeniz
engaged legal representation and submitted a full defence against all
allegations. Subsequently, the investigation report issued by the
Competition Authority was received by Port Akdeniz on 15th April 2020
notifying that the Competition Authority would be continuing its
investigation. The next stage in the process may take up to an additional
6 to 12 months, excluding any form of appeal. A further announcement will
be made when it is appropriate to do so.
Balance Sheet
At 31st March 2020 net debt was $401.1m (Ex IFRS 16 Net Debt: $337.3m)
compared to year end 2019 net debt of $389.2m (Ex IFRS 16 $324.3m). The
increase in net debt at the end of Q1 vs year end is primarily due to
interest accruals related to the Eurobond and a decrease in cash and cash
equivalents in line with the operating performance in Q1. The group's Net
Debt/EBITDA ratio was 5.4x times as at 31st March 2020, 4.5x Ex IFRS 16.
Capital expenditure during the period was $8.4m, an increase on the $3.5m
incurred in Q1 2019. The yoy increase was driven by planned investment into
the new Caribbean ports of $6.0m. With the exception of the Caribbean ports,
all but essential maintenance capex has been suspended and will remain
suspended until the cruise industry starts to return towards normal.
Gross debt at period end was $457.1m (Ex IFRS16 Gross Debt: $393.4m) vs
$453.0m (Ex IFRS16 Gross Debt: $388.6m) at 31st December 2019. The Leverage
Ratio as per GPH's Eurobond (excluding Unrestricted Subsidiaries) was 5.06x
at 31st March 2020, compared to 4.65x 31st December 2019.
The Group's $250m 2021 Eurobond has a covenant of five times Gross Debt to
EBITDA. As an incurrence covenant and not a maintenance covenant, Gross Debt
to EBITDA above five times means that cash outflow from Global Liman to
other Group subsidiaries or dividend distributions to GPH Plc becomes
restricted until such time as the Gross Debt to EBITDA leverage falls below
five times.
At the end of December 2019, GPH had cash and cash equivalents of $63.8m, as
at the end of March 2020 this figure was $56.0m, including a debt repayment
of $6.5m. At the end of May 2020 cash and cash equivalents, excluding the
funds recently raised by NCP had fallen to $43.1m, with this reduction
primarily driven by c$11m of debt financing costs, including the Eurobond
coupon payment in May 2020.
Covid-19 crisis management and actions
As previously disclosed at the time of GPH full year results on the 14th
April 2020, in light of the exceptional circumstances that are currently
engulfing the cruise industry and with such uncertainty over when cruise
travel might return to normal, the board and management took several
significant actions to protect the balance sheet and long term future of the
business.
The Board believe that the actions taken up to the 14th April 2020 would
have meant that even under a severe downside scenario the Group would have
sufficient cash resources to remain in operation at the end of April 2021.
Under this scenario, as well as no cruise calls for the remainder of 2020,
marble container throughput volumes were assumed to fall by 75% compared to
management expectations between April and September 2020, and a 25% drop vs
management expectations thereafter. Current volumes in Q2 are significantly
better than those implied by the severe downside scenario. In order for this
outcome to be realised marble volumes between June and September 2020 would
need to fall by 85% compared to management expectations at the time of full
year results.
Revenue generation
While under a no cruise environment, there is clearly no revenue from normal
cruise activity, a number of ports will continue to generate revenue from
other activities. For example, a number of our cruise ports currently have
cruise ships laid up at their berths until cruise activity resumes, while
others have been involved in the safe offloading and repatriation of
passengers and crew. Other ship focussed activities will include the
handling of military vessels and mega-yachts. In addition, a number of the
ports have commercial activities that are normally open to the public as
well as cruise passengers, such as retail areas and restaurants. While in
most cases these are operated by concessionaires, with lockdown restrictions
easing, many of these areas have now reopened and are trading.
Despite the Covid-19 crisis, our commercial ports continue to trade in line
with management expectations, generating strong levels of EBITDA and cash.
Cost reductions
Looking into Q3 2020 there are tentative signs of cruise ships setting sail,
however, this is clearly open to further delay and when ships do set sail,
the number of ships, their occupancy rates and the itineraries that will be
implemented remain uncertain. As a result, management and the board have
taken further action to manage the business for a no cruise environment for
the foreseeable future, reducing costs and conserving cash.
The inherent flexibility in GPH's business model, including the extensive
use of outsourced service providers, means that many costs expand and
contract in line with cruise traffic or cargo volumes. Clearly in the
current circumstances such costs in our Cruise operations have dropped to
almost zero.
In terms of the costs that are more fixed in nature, measures that have now
been taken include a significant reduction in employee costs through the
implementation of a reduced working week for some employees, salary
deferrals, and suspension of board members' salaries and fees until 2021.
While marketing costs, new port project costs and consultancy fees have been
significantly reduced. In addition, at a number of ports minimum concession
fees have either been discounted or deferred, while all but essential
maintenance capital expenditure has been suspended, yielding a significant
saving.
These actions have resulted in cash costs in a no cruise environment being
reduced to such an extent that management believe GPH can remain in
operation even under a scenario of no cruise ships calling at its cruise
ports until 2022. While on a port by port basis, individual ports
representing c95% of Cruise EBITDA, based on full year 2019 figures, can
survive until 2022 with no cruise ships and no requirement for financial
support from the group.
Cruise Port Operations in a no cruise Survivability in months*
environment
Creuers 36
Ege 29
Valletta 20
Other Cruise 16
Cruise 20
*Assumes loans at operating company level are repaid, survivability could be
significantly extended if loans are rolled over
Outlook & current trading
Before the outbreak of Covid-19, 2020 was going to be the year when the
strategy we have been delivering on since IPO really started to deliver
operational and financial results, with our successful expansion into the
Caribbean driving a step change in our Cruise operations.
However, while 2020 began well and operational results were in line with
management expectations at both the Cruise and Commercial divisions, the
outbreak of the Covid-19 virus has had a significant impact on our cruise
operations. With travel restrictions implemented across the world, cruise
itineraries that were cancelled for a number of weeks or months have been
pushed out even further and in some cases until 2021.
Against the backdrop of the Covid-19 outbreak, the underlying performance of
our Commercial operations has been positive year to date, delivering in line
with our financial expectations, despite the crisis. While it remains
unclear when cruise activity will recover to previous levels, the major
cruise lines have made plans to commence sailings in Q3 2020 and they have
reported very strong booking patterns for 2021.
As a result of the crisis, the board and management have implemented a wide
ranging cost saving and cash preservation program to protect the balance
sheet and preserve the Group's liquidity position. As a result of these
measures the board believes that GPH has sufficient liquidity to meet all
its financial liabilities and to continue to operate even in a no cruise
activity until 2022 environment.
While it is encouraging to see that there are tentative signs of some cruise
activity resuming in Q3 2020, what the near term outlook will be for
multi-destination and multi-country cruise itineraries and indeed cruise
ship occupancy rates remains uncertain. It therefore, remains impossible in
the current environment to forecast what the path to recovery and a new
normal may look like. However, we are working with all the relevant
authorities and the cruise lines to welcome the return of passengers to our
ports as and when it is appropriate to do so.
The inherent flexibility in GPH's business model, including the extensive
use of outsourced service providers, and the significant cost savings
implemented by management means that GPH remains in a strong position to
weather the current storm and when the time is right to be in a position to
welcome the return of cruise passengers.
While there is a high level of uncertainty over the trading outlook for
2020, the Board and Senior Management remain confident in GPH's long-term
strategy and its ability to navigate through this crisis.
CONTACT
For investor, analyst and For trade media enquiries:
financial media enquiries:
Global Ports Holding, Investor Global Ports Holding
Relations
Martin Brown, Investor Ceylan Erzi
Relations Director
Telephone: +44 (0) 7947 163 687 Telephone: +90 212 244 44 40
Email: Email:
martinb@globalportsholding.com ceylane@globalportsholding.com
APPENDIX
Consolidated statement of comprehensive income Q1 2020 Q1 2019
data ($m)
Revenue 21.4 20.7
Operating Expenses (25.9) (17.7)
Depreciation and Amortization (13.6) 11.7
Other Operating Income 0.6 0.9
Other Operating Expense (2.4) (6.9)
Operating profit (6.3) (3.0)
Finance Income 12.9 4.7
Finance Expenses (25.7) (12.6)
Profit/ (loss) before income tax (18.8) (12.6)
Income tax expense 2.3 (1.2)
Profit/ (loss) for the period (16.5) (13.8)
Underlying profit/(loss) for the period (1.3) (1.6)
Other financial data (USD millions actual)
EBITDA 10.3 12.4
EBITDA margin 48.1% 59.9%
Q1 2020 Q1 2019
Cash flow (USD Million)
Adjusted EBITDA 10.3 12.4
Working Capital (0.1) (1.3)
Other (2.9) (5.0)
Operating Cash flow 7.3 6.1
Net interest expense (3.1) (0.9)
Tax 0.1 (1.7)
Net Capital Expenditure (8.6) (3.7)
Free cash flow (4.3) (0.2)
Investments (1.6) (0.2)
Exceptionals -- --
Dividends -- 2.9
Other -- --
Net Cash flow (5.9) 2.5
Net Debt start of period 389.1 267.1
Net Cash flow (5.9) 2.5
FX (7.1) (7.9)
Net Debt End of Period 337.3 272.6
IFRS 16 impact 63.7 63.3
Net debt incl. IFRS 16 401.1 335.9
Consolidated statement of financial Q1 2020 Q1 2019
position data ($m)
Cash and cash equivalents 56.0 78.9
Total current assets 94.1 106.7
Total assets 777.3 736.0
Total debt (including obligations 457.1 414.8
under leases)
Net debt (including obligations under 401.1 308.1
leases)
Total equity 138.5 200.1
of which retained earnings 61.1 97.9
ISIN: GB00BD2ZT390
Category Code: QRF
TIDM: GPH
Sequence No.: 68786
EQS News ID: 1066649
End of Announcement EQS News Service
(END) Dow Jones Newswires
June 10, 2020 02:00 ET (06:00 GMT)
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