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Global Ports: 2021 interim results

Global Ports Investments PLC (“Global Ports” or the “Company”, together with its subsidiaries and joint ventures, the “Group” or the “Global Ports Group”; LSE ticker: GLPR) today publishes its interim condensed consolidated financial information (unaudited) for the six month period ended 30 June 2021.

Information (including non-IFRS financial measures) requiring additional explanation or terms which begin with capital letters and the explanations or definitions thereto are provided at the end of this announcement. Certain financial information is derived from the management accounts.

2021 INTERIM RESULTS SUMMARY

• Revenue increased by 24.6% to USD 229.8 million (+6.9% like-for-like)

• Adjusted EBITDA grew 8.5% to USD 113.8 million, delivering like-for-like Adjusted EBITDA Margin increase of 92 basis points to 64.8%, reflecting ongoing strong cost control and focus on efficiency

• Operating profit growth of 11.0% to USD 87.4 million

• Profit for the period more than doubled to USD 53.9 million

• Free Cash Flow generation growth of 34.8% to USD 93.6 million

• Further deleveraging success with Net Debt down USD 58.2 million and Net Debt to LTM Adjusted EBITDA reduced to 2.5x (-0.4x compared to 31 December 2020)

• Consolidated Marine Container Throughput up 1.9% y-o-y to 789 thousand TEU with strong market position successfully protected in all key basins of presence

• Consolidated Marine Bulk Throughput of 2.6 million tonnes (+19.4% y-o-y)

• Strong recovery in Cars and High and Heavy Ro-Ro handling (+62.3% y-o-y and +45.6% y-o-y respectively)

• Improved credit profile confirmed by rating agencies: RA Expert upgraded rating of the Group and its financial instruments by 2 notches to ruAA, Fitch Ratings affirmed at BB+ and Moody’s at Ba2.

Albert Likholet, CEO of Global Ports, commented:

“I believe that over the last six months, the Group has achieved a very strong set of results – both in the container and non-container segments of our business. In addition, we have successfully protected our terminals’ container market share in both the Group’s key basins of presence and taken the required steps to capitalise on the recovery in container and non-container cargo handling as the world begins to emerge from the impacts of the pandemic.

“In an increasingly competitive market, we have successfully converted volume growth into Revenue generation and due to our commitment to efficiency, we have demonstrated both Adjusted EBITDA growth and Adjusted EBITDA Margin improvement.

“Our cash generation from operations remains strong and this half of the year we saw further growth in Free Cash Flow of almost 35% enabling clear progress towards our deleveraging target with Net Debt to LTM Adjusted EBITDA ratio reduced to 2.5x.

“Given the acceleration in growth momentum that we saw in 2Q21 in both full container import and full container exports, combined with the thriving growth in transit volumes, we take a cautiously optimistic view on the rest of the year. Nonetheless, our priorities remain unchanged – we will continue to focus on providing high standards of service, reliability and predictability for our clients and ensuring that we strive to achieve constant improvement in our offering. This strategic approach has served us well and enabled the Group to achieve consistently strong results over the last several years, despite all the challenges the industry has faced.”

Group financial and operational highlights for the six months ended 30 June 2021

Unless otherwise stated, all comparisons below are for the first half of 2021 in comparison to the first half of 2020.

Financial Highlights

• Consolidated revenue increased by 24.6% to USD 229.8 million; excluding the impact of VSC transportation services, like-for-like revenue increased by 6.9% driven by an increase in both Consolidated Container and Non-Container Revenue

• Like-for-like Revenue per TEU increased by 5.3% to USD 169.1 mainly as a result of positive cargo and basin mix changes

• Operating profit increased by 11.0% to USD 87.4 million

• The 4.2% — growth of like-for-like Total Operating Cash Costs to USD 62.3 million was successfully kept under control as a result of ongoing efficiency measures and economies of scale from the healthy growth in both container and non-container throughput

• Adjusted EBITDA increased by 8.5% to USD 113.8 million as a result of volume growth, Revenue per TEU increase and ongoing cost control measures. Profitability improved with like-for-like Adjusted EBITDA Margin to 64.8% posting an increase of 92 basis points

• The Group achieved significant Free Cash Flow growth of 34.8% by generating USD 93.6 million

• The Group reduced Net Debt by USD 58.2 million over the first six months of the year and continues to prioritise deleveraging over dividend distribution

• In line with the Group’s focus on deleveraging, Net Debt to LTM Adjusted EBITDA decreased from 2.9x as of 31 December 2020 to 2.5x as at the end of the reporting period, achieving the Group’s lowest leverage ratio since 2012

Operational Highlights

• Strong market growth seen in the first half of 2021 as the overall Russian container market grew by 7.6% to 2.67 million TEU, driven by both the accelerating growth of full containerised import (+16.0% y-o-y) and the continued growth of containerised export (+2.2 y-o-y)

• As a result of the sharp increase in freight rates in the global container shipping market in the second half of 2020 and a deficit of empty containers globally, during the first half of 2021 market players preferred faster container import and export supply chains with the shortest sea leg. As a result, in the first half of 2021 market growth was concentrated in the Far Eastern basin (+14.7% y-o-y) and the Southern basin (+9.1% y-o-y). Despite these market dynamics, combined throughput of terminals located in Saint Petersburg and the surrounding area demonstrated signs of recovery in Q2 2021 with volumes in the first half of 2021 down by 4.2% y-o-y

• Successfully protecting market share in both basins of presence, the Group’s Consolidated Marine Container Throughput increased by 1.9% y-o-y to 789 thousand TEU in the first half of 2021 with principal terminal growth in the Far East of 17.8% y-o-y and a decline of container throughput at terminals located in Saint Petersburg and the surrounding area of 4.1% y-o-y

• The Group’s Consolidated Marine Bulk Throughput increased by 19.4% y-o-y to 2.6 million tonnes in the first half of 2021, driven by the solid recovery in global coal demand and high growth of fertilisers and scrap metal handling at PLP

• High and Heavy Ro-Ro handling demonstrated a continued recovery in the first half of 2021 with a 45.6% growth to 13 thousand units. Car handling was also strong in reporting period with a 62.3% growth to 54.6 thousand units

• On the back of the strong prolonged container market growth in the Far East, the decision has been made to discontinue coal handling at VSC in 3Q 2021 and concentrate on the Group’s core strategic operations of driving container volumes. This decision will enable the Group to decrease its environmental impact from the third quarter of 2021 and capture the growth opportunity presented by the increased sustained demand for container import and export flows as well as steadily growing transit volumes — at VSC

Outlook

The Russian container market proved its resilience during a challenging 2020 and demonstrated strong performance in the first half of 2021 driven by the recovery in full import, booming transit volumes and continuing growth on containerised export. We see solid market fundamentals suggesting that these trends might continue for the rest of 2021, with demand being exceptionally strong in the Far Eastern basin. The improvement of supply-demand balance in the market is expected to continue.

Bulk cargo handling volumes are expected to be impacted in the second half of 2021 by the decision of the company to gradually cease coal handling at VSC concentrating on the Group’s core strategic container operations.

Disciplined CAPEX approach to be maintained although strong market growth and growing utilisation will require the full year 2021 CAPEX increase by around 40% compared to the full year 2020.

Full Report

Source: Global Ports Investments PLC

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