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Preliminary results for the twelve months ended 31 March 2023
Global Ports Holding PLC (GPH) Global Ports Holding Plc Preliminary results for the twelve months ended 31 March 2023 Global Ports Holding Plc (“GPH” or “Group”), the world’s largest independent cruise port operator, today announces its unaudited results for the year ended 31 March 2023 (‘Reporting Period’).
Mehmet Kutman, Co-Founder, Chief Executive Office and Chairman, said: “Our cruise operations have returned to, and have in fact now exceeded, pre-pandemic activity levels. We are delighted with the performance in the Reporting Period and are very pleased with our strong start to the 2023 cruise season. The outlook for the cruise industry is strong and GPH is well positioned to be a key enabler and beneficiary of its continued growth and success in the years ahead.”
Key Highlights
Balance Sheet At 31 March 2023 IFRS Gross Debt was USD 672.4 million (Ex IFRS-16 Leases Gross Debt: USD 612.3 million), compared to Gross Debt at 31 March 2022 of USD 598.6 million (Ex IFRS-16 Leases Gross Debt: USD 534.7 million). The main drivers for the increase in Gross Debt were the partial drawdown (USD 38.9 million) of the USD 75 million growth facility under the Sixth Street loan to finance the Ege Port concession extension, additional loans and bonds to finance the expected CAPEX for recent European acquisitions (Malta bond, and bank loans at Tarragona Cruise Port and Canary Island Cruise Ports, combined USD 25.4 million), in addition to accrued (PIK) interest under the Sixth Street loan, partially offset by scheduled loan amortizations. Net debt Ex IFRS-16 Leases was USD 494.0 million at the end of the Reporting Period compared to USD 435.0 million as at 31 March 2022. At 31 March 2023, GPH had cash and cash equivalents of USD 118.2 million, compared to USD 99.7 million at 31 March 2022. The additional Gross Debt incurred by way of additional loans and bonds described above had no material impact to Net Debt in the Reporting Period as the funds remained on balance sheet as cash as at 31 March 2023 and have been invested shortly after the end of the Reporting Period (Ege Extension) or will be invested (debt raised for European expansion). The main driver of the increase in Net Debt during the Reporting Period was cash capital expenditure of USD 78.5 million, the majority of which was for the ongoing investment into Nassau Cruise Port, partially offset by operating cash flows of USD 61.3 million, reflecting the growth in Adjusted EBITDA. Nassau Cruise Port Re-financing Shortly after the end of the Reporting Period, Nassau Cruise Port successfully refinanced its local bond issued in June 2020. The refinancing resulted in an increase in the nominal outstanding amount to USD 145 million (from USD 134.4 million) and a reduction in the fixed coupon to 6.0% (from 8.0%), reducing the annual interest payment by USD 2.0 million. The maturity date of 2040 remains unchanged as does the principal repayment schedule which is ten equal annual payments from June 2031. The bond remains non-recourse to GPH or any other Group entity. Ege Port, Kusadasi Concession Extension Shortly after the end of the Reporting Period, GPH reached an agreement to extend its concession agreement for Ege Port, Kusadasi. The original concession agreement was due to expire in July 2033, and following this extension agreement the concession will now expire in July 2052. In exchange for the extension of the existing concession agreement, Ege Port has paid an upfront concession fee of TRY 725.4 million (USD 38 million). In addition, Ege Port has committed to invest an amount equivalent to 10% of the upfront concession fee within the next 5 years to improve and enhance the cruise port and retail facilities at the port, and will pay a variable concession fee equal to 5% of its gross revenues during the extension period starting after July 2033. The up-front concession fee payment and related expenses have been financed by partial utilisation, shortly before the end of the Reporting Period, of the USD 75 million growth facility provided by Sixth Street, previously announced on 24 May 2021 and approved by shareholders on 9 June 2021. As part of this additional USD 38.9 million draw down, GPH has issued further warrants to Sixth Street representing an additional 2.0% of GPH’s fully diluted share capital (in addition to the warrants issued at financial closing in July 2021 equivalent to 9.0% of GPH’s fully diluted share capital). The upfront concession fee has been funded by a capital increase at Ege Port. This capital increase was provided by GPH only. As a result, GPH’s equity stake in Ege Port has increased to 90.5% (from 72.5%). Malta bond issuance Shortly before the end of the Reporting Period, GPH, through a 100% owned SPV in Malta, issued EUR 18.1 million of unsecured bonds due 2030 with a fixed coupon of 6.25% per annum. These bonds are guaranteed by GPH, and the proceeds will be used to partially finance GPH’s investment plans for recent cruise port acquisitions in Europe. Subordinated shareholder loans During the last two years GPH has received additional, long-term funding support from its largest shareholder Global Investment Holding AS (“GIH”) in the form of subordinated shareholder loans to finance project expenses for expansion projects, debt service and general corporate purposes. As of the end of the Reporting Period, the total amount of subordinated shareholder loans received from GIH is USD 24.9 million, an increase of USD 21.9 million during the Reporting Period. These funds have helped support the continued expansion of the Group while cruise operations were significantly impacted by Covid. Strategic review and financing In May 2021, GPH entered into a five-year, senior secured loan agreement for up to USD 261.3 million with Sixth Street. This financing provided for two term loan facilities, consisting of an initial five-year facility of USD 186.3 million and an additional five-year growth facility of up to USD 75 million (of which USD 38.9 million has been drawn down as of 30 June 2023). As part of this financing, GPH has issued warrants to Sixth Street representing a total of 11.0% of GPH’s fully-diluted share capital. The warrants will become exercisable by Sixth Street upon certain specific events, including the acceleration, repayment in full or termination of the loan, de-listing of GPH or a change of control. In January 2023, GPH announced that it was undertaking a strategic review of the Group’s current capital and financing structure including considering a range of potential corporate activity including strategic investments, joint ventures and new partnerships, for the purpose of exploring ways to maximise value for all stakeholders. As part of this review, GPH has engaged advisors and is in advanced discussions with rating agencies regarding a private rating assessment for the prospective issuance of further debt instruments by the Group, targeting an investment grade rating. The main purpose of the prospective financing would be to prepay the Sixth Street financing in order to reduce financing costs and extend the maturity of this debt, as well as provide capital for further growth. There can be no certainty what final credit rating will be achieved, and with respect to the terms, timing or implementation of any refinancing. Further details will be provided when it is appropriate to do so. Outlook The scheduled launch of new cruise ships in the year ahead means the number of available berths across the global cruise fleet will reach all-time highs in 2024 and, when combined with industry occupancy rates reaching pre-Covid-19 levels, the industry will be propelled to exciting new highs. Industry booking patterns have been rebuilt to market norms over the last 12 months, and all major cruise lines have reported record booking trends for 2023. Looking further into the future, long-established demand and supply trends in the cruise industry have re-established themselves as key drivers of cruise industry growth. According to Cruise Industry News, by the end of 2027, passenger capacity in the cruise industry is forecast to grow to over 40 million, a growth rate of 45% from pre-Covid levels. The medium to long-term demand trends have been largely unaffected by Covid-19. The growing appetite for leisure travel, if anything, has perhaps increased. Cruise ports have to invest significantly in their infrastructure to meet the needs of the growing number of cruise ships and the growing size of cruise ships as well as the increased demand from passengers for an improved cruise port experience. Those requirements have re-emerged even stronger, as the anticipated growth in the industry brings exciting prospects and potential risks for those involved in the cruise port industry. Cruise ports will face some substantial obstacles due to the growing size of cruise ships and the continued growth and segmentation of the passenger base. GPH’s significant experience and know-how in port and destination development and global cruise port operations, honed from our experiences worldwide, means we are well-positioned to play a primary role in both this investment and industry growth in the years ahead. Our inorganic growth aspirations continue and we expect to add San Juan Cruise Port and St Lucia Cruise Port to the network in the 2024 Reporting Period with additional opportunities under review. For the Reporting Period to 31 March 2024 and for the current portfolio of cruise ports, we currently expect, based on confirmed booking requests made by our cruise line partners, that we will welcome 11.8 million passengers to our consolidated and managed cruise port portfolio. Current trading for the 2024 Reporting Period (12 months to 31 March 2024) is broadly in line with current market expectations forecasts.
Notes - For full definitions and explanations of each Alternative Performance measure in this statement please refer to the section at the end of this document
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