Global Ports Holding Plc Annual Report 2013

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FY2013 Annual Report · Global Ports Holding Plc

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A YEAR OF
TRANSFORMATION

ANNUAL REPORT 2013

GLOBAL PORTS INVESTMENTS PLC

www.globalports.com

1. ABOUT US

APPENDIX 4:
SHAREHOLDER INFORMATION AND KEY CONTACTS

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A TRANSFORMATIONAL YEAR

 see page 10 for more detail


GLOBAL PORTS IS THE
LEADING CONTAINER
TERMINAL OPERATOR
IN EASTERN EUROPE BY
CONTAINER THROUGHPUT1

2013 WAS A TRANSFORMATIONAL YEAR FOR GLOBAL PORTS WITH THE
ACQUISITION OF NCC GROUP, WHICH SECURED THE GROUP’S LEADERSHIP
POSITION IN THE RUSSIAN CONTAINER-HANDLING MARKET AND CREATED
THE LEADING CONTAINER TERMINAL OPERATOR IN EASTERN EUROPE1
BY THROUGHPUT


OWNERSHIP STRUCTURE2

TIHL

FREE-FLOAT (LSE LISTING)

APM TERMINALS

POLOZIO ENTERPRIZES LTD3

30.75%

20.5%

30.75%

ILIBRINIO ESTABLISHMENT LTD3

Transportation Investments Holding Limited (TIHL) is one of the
largest privately owned transportation groups in Russia, the CIS
and the Baltic Region with strategic interests in rail transportation
and port operations. TIHL carries on business under the brand
name N-Trans. Nikita Mishin, Konstantin Nikolaev and Andrey
Filatov jointly control TIHL.

1. Sou rce: Drewry, based on 2013 data, some 2013 numbers are estimated
2. As at 29 April 2014
3. Former owners of NCC Group Limited
4. Russian Ports and Finnish Ports segments on an Illustrative Combined basis, as of 31 December 2013
5. Russian Ports segment of the Enlarged Group
6. Global Ports Group (excluding NCC Group)

APM Terminals B.V. (a member of A.P. Moller-Maersk Group,
a leading oil and transportation conglomerate) is a Global Terminal
Network of 65 port and terminal facilities and more than 160 Inland
Services operations, giving APM Terminals a global presence in
68 countries.

DEPOSITARY
J.P. Morgan
1 Chase Manhattan Plaza, Floor 58
New York, NY 10005
+1 (866) JPM-ADRS
adr@jpmorgan.com

STOCK EXCHANGE
London Stock Exchange PLC
10 Paternoster Square, London EC4M 7LS, UK
Phone: +44 20 7797 1000
Website: www.londonstockexchange.com

INDEPENDENT AUDITORS
PricewaterhouseCoopers Limited
City House, 6 Karaiskakis Street
CY-3032, Limassol, Cyprus
Phone: +357 25 555 000
Fax: +357 25 555 001

GLOBAL PORTS INVESTMENTS PLC

LEGAL ADDRESS
Omirou 20
Agios Nikolaos
CY-3095
Limassol, Cyprus

POSTAL ADDRESS
Kanika International Business Center,
Office 201,Profiti Ilia Street, 4, Germasogeia
Limassol P.C. 4046, Cyprus

INVESTOR RELATIONS
Michael Grigoriev
Head of Investor Relations
Phone: +357 25 503 163
GSM: +7 (916) 991 73 96
Tatyana Stepanova
Investor Relations Analyst
E-mail: irteam@globalports.com

MEDIA RELATIONS
Russian Media
Anna Vostrukhova
Head of Media Relations
Phone: +357 25 503 163
E-mail: media@globalports.com

International Media
Holloway & Associates
Laura Gilbert, Zoe Watt
Phone: +44 20 7240 2486
E-mail: globalports@rholloway.com

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Global Ports

Annual Report 2013

Created by Wardour
www.wardour.co.uk
Printed by Newnorth

KEY DATA

Illustrative Combined basis**

CONTENTS

NO.1container terminal
4.1M

operator in
Eastern Europe1

10terminals including two inland

facilities in Russia and oil
products terminal in Estonia

7marine container
2.8M

total container throughput in 20134

terminals in Russia
and Finland

TEU

the combined annual container
handling capacity 4

9.1M

TEU

the potential container handling capacity5
of terminals at the existing footprint

FINANCIAL HIGHLIGHTS

Illustrative Combined basis**

$737M

2013 Revenue on an illustrative combined basis

$420M

2013 Adjusted EBITDA*** on an illustrative
combined basis

+4.3%

Basic and diluted earnings per share
increased 4.3% to $0.24 in 20136

51%

2013 dividend payout ratio6

01 ABOUT US

02 Our performance

04 Our terminals

06 Key strengths

07 STRATEGIC REVIEW

08 Growth of Global Ports

10 NCC Group acquisition

12 Key milestones

14 Chairman’s statement

18 CEO’s review

21 BUSINESS REVIEW

22 Executive management team

24 Market review

26 Group performance

36 Russian Ports segment

39 Oil Products segment

40 Finnish Ports segment

41 CORPORATE GOVERNANCE

42 Board of Directors

53 Risk Management

56 Corporate Responsibility

58 Definitions

60 Presentation of information

APPENDICES

1 Directors’ report and consolidated

financial statements

2 Directors’ report and parent

company financial statements

3 Unaudited Selected Illustrative

Combined Financial Metrics

4 Shareholder information

and key contacts

** Assuming the acquisition of NCC Group took place on 1 January 2013
*** Adjusted EBITDA (a non-IFRS financial measure) is defined as profit for the period before
income tax expense, finance income/(costs), net, depreciation of property, plant and
equipment, amortisation of intangible assets, other gains/(losses)-net, impairment charge
of property, plant and equipment and impairment charge of goodwill

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 20131. ABOUT US

OUR PERFORMANCE

 see page 26 for more detail


A YEAR OF SOLID RESULTS AND
STRONG CASH-FLOW GENERATION

On an Illustrative Combined basis the key business of the Enlarged Group, the
container business7, showed solid results, generating more than 90% of
combined Adjusted EBITDA. Strong cash-flow generation and a healthy balance
sheet enable the Group to pay respectable dividends to its shareholders.

SEGMENTS’ CONTRIBUTION
TO ADJUSTED EBITDA9

Enlarged Russian Ports segment
Adjusted EBITDA Margin8

Enlarged Russian Ports segment
Adjusted EBITDA

64.4%

High margin level maintained

$404M

Remained broadly flat compared to 2012

Earnings per share

Capital Expenditure (CAPEX)

+4.3%

Basic and diluted earnings per share increased
4.3% to USD 0.2410

-44%

Decrease in 2013 cash CAPEX compared to initial
plan driven by NCC Acquisition (-10% versus 2012
consolidated CAPEX on cash basis).10

Dividends

$58.5M

The total dividend declared on 2013 profits brings payout ratio
to 51% on Net Profit attributable to Owners of the Company10

7. Russian Ports segment of the Enlarged Group including Russian Ports segment of Global Ports and the entire NCC Group
8. Adjusted EBITDA Margin (a non-IFRS financial measure) is calculated as Adjusted EBITDA divided by revenue, expressed as a percentage
9. Shares of segment’s Adjusted EBITDA in the total Adjusted EBITDA of operating segments of the Enlarged Group, excluding Holdings
10. Global Ports Group (excluding NCC Group)

2013

RUSSIAN PORTS SEGMENT
 90%

OIL PRODUCTS TERMINAL SEGMENT
 10%

FINNISH PORTS SEGMENT
 < 1%

Global PortsCONSOLIDATED FINANCIAL AND OPERATING DATA

USDm

SELECTED IFRS FINANCIAL INFORMATION
Income statement
Revenue
Illustrative Combined Financial Metrics (unaudited)
Global Ports Group (excluding NCC Group)
NCC Group
Balance sheet11
Total assets
Net Debt
SELECTED NON-IFRS FINANCIAL INFORMATION (UNAUDITED)
Illustrative Combined Financial Metrics
Adjusted EBITDA
Adjusted EBITDA Margin, %
Global Ports Group (excluding NCC Group)
Adjusted EBITDA
Adjusted EBITDA Margin, %
NCC Group
Adjusted EBITDA
Adjusted EBITDA Margin, %

GLOBAL PORTS SEGMENTS DATA (UNAUDITED)

USD m

GLOBAL PORTS GROUP (EXCLUDING NCC GROUP)
Russian Ports segment
Gross container throughput, 000s TEU
Revenue (audited)
Adjusted EBITDA
Adjusted EBITDA Margin, %
Oil Products Terminal segment
Average annual storage capacity, 000s m3
Oil Products Gross Throughput, million tonnes
Revenue, USDm (audited)
Adjusted EBITDA, USDm
Adjusted EBITDA Margin, %
Finnish Ports segment
Gross container throughput, 000s TEU
Revenue (audited)
Adjusted EBITDA
Adjusted EBITDA Margin, %

NCC GROUP
Gross container throughput, 000s TEU
Revenue (audited)
Adjusted EBITDA
Adjusted EBITDA Margin, %
Illustrative Combined

ILLUSTRATIVE COMBINED
Russian Ports segment
Gross container throughput, 000s TEU
Revenue
Adjusted EBITDA
Adjusted EBITDA Margin, %

11. Includes the balance sheet of NCC Group as at 31 December 2013

2012

2013

Change %

755.1
501.8
253.3

736.8
480.0
256.9

1,308.9
229.6

3,413.8
1,418.9

451.9
59.8%

287.9
57.4%

164.0
64.7%

420.0
57.0%

256.8
53.5%

163.2
63.5%

(2%)
(4%)
1%

161%
518%

(7%)

(11%)

(0%)

2012

2013

Change %

1,450
377.5
242.0
64.1%

1,026
10.4
233.2
113.8
48.8%

178
23.5
2.8
12.0%

1,069
253.3
164.0
64.7%

1,405
370.7
241.3
65.1%

1,026
9.7
202.4
86.7
42.9%

224
23.6
3.4
14.3%

1,145
256.9
163.2
63.5%

2,519
630.8
406.0
64.4%

2,551
627.6
404.4
64.4%

(3%)
(2%)
(0%)

0%
(7%)
(13%)
(24%)

25%
0%
21%

7%
1%
(0%)

1%
(1%)
(0%)

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

1. ABOUT US

OUR TERMINALS


AN UNPARALLELED NETWORK
OF CONTAINER TERMINALS

FROM ST PETERSBURG TO THE FAR EAST, OUR TERMINALS GIVE US A
STRONG POSITION IN THE RUSSIAN CONTAINER HANDLING MARKET

56%

share of Baltic Basin
terminals in the overall
container throughput of
Russian terminals12

BALTIC
BASIN

MOSCOW

CARGO FLOW FROM
THE AMERICAS

FAR EAST BASIN

CARGO FLOW FROM
THE AMERICAS

27%

share of Far East Basin
terminals in the overall
container throughput of
Russian terminals12

3.49M TEU

Global Ports terminal capacity13

BALTIC BASIN

550,000 TEU

Global Ports terminal capacity

FAR EAST BASIN

FINLAND

GULF OF FINLAND

1
6 7

ESTONIA

RUSSIA

BALTIC SEA

RUSSIA

OKHOTSK SEA

CHINA

3
6

SEA OF JAPAN

 The Group’s container terminals in the Baltic Sea
Basin offer direct access to the most populous
and economically developed regions of the European
part of Russia, including Moscow and St Petersburg.

 The Group’s container terminal in the Far East Basin
is in an ice-free harbour with deep-water access
and a direct link to the Trans-Siberian Railway.

12. Source: ASOP. Container throughput in Baltic Sea Basin (56%), Far East Basin (26.8%), Black Sea Basin (14.7%), and North Russian Ports (2.5%) total container throughput of Russian terminals in 2013
13. Includes Russian Ports segment of Global Ports and the entire NCC Group

Global Ports
TERMINAL OWNERSHIP

100%

80%

75%

50%

VSC

PLP

FCT

ULCT

MOBY DIK

YANINO

FINNISH PORTS

VOPAK E.O.S.

RUSSIAN PORTS SEGMENT

20%

25%

50%

FIRST CONTAINER TERMINAL (FCT)
Location: St Petersburg
Cargo handled: Containers
Container throughput capacity:
1.25 million TEU per year

PETROLESPORT (PLP)
Location: St Petersburg
Cargo handled: Containers, Ro-Ro,
bulk and general cargo
Container throughput capacity:
1 million TEU per year

VOSTOCHNAYA STEVEDORING
COMPANY (VSC)
Location: Nakhodka
Cargo handled: Containers, Ro-Ro,
bulk cargo (coal)
Container throughput capacity:
550,000 TEU per year

UST-LUGA CONTAINER TERMINAL (ULCT)
Location: Ust-Luga port cluster
(North-West of Russia)
Cargo handled: Containers, bulk cargo
Container throughput capacity:
440,000 TEU per year

MOBY DIK
Location: Kronstadt (St Petersburg)
Cargo handled: Containers, Ro-Ro,
bulk and general cargo
Container throughput capacity:
400,000 TEU per year

YANINO
Location: Inland, near St Petersburg
Cargo handled: Containers,
bulk cargo
Container throughput capacity:
200,000 TEU per year

LOGISTIKA TERMINAL (LT)
Location: Inland, near St Petersburg
Cargo handled: Containers, bulk cargo
Container throughput capacity:
200,000 TEU per year

MLT KOTKA & MLT HELSINKI
Locations: Helsinki and Kotka, Finland
Cargo handled: Containers, Ro-Ro,
bulk cargo
Container throughput capacity:
420,000 TEU per year

VOPAK E.O.S.
Location: Tallinn, Estonia
Cargo handled: Oil products
Storage capacity: 1,026,000 cbm

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
KEY STRENGTHS

MARKET LEADER
IN CONTAINERS

NO.1

container terminal operator in Russia14 by
container throughput

7 MARINE

CONTAINER
TERMINALS

with a total capacity of 4,060 thousand
TEU (including five terminals in Russia
with a capacity of 3,640 thousand TEU
and two terminals in Finland with total
capacity of 420 thousand TEU) as at
31 December 2013

INLAND
CONTAINER
TERMINALS

near St Petersburg with a total capacity
of 400 thousand TEU as at
31 December 2013

SECURED ASSET BASE,
LOW CAPEX REQUIREMENTS

MARKET DEMAND-BASED
EXPANSION

STRATEGIC PARTNERSHIP
WITH MARKET LEADERS

 Not a concession-based operation,
direct ownership of 66% of land plots
under terminals.

 1,089 thousand TEU of unutilised

container capacity15, or 39% of 2013
container throughput, resulting in
relatively limited CAPEX requirements.

 Potential for a 2.6x increase in the

container capacity of the Russian Ports16.

BEST IN CLASS CORPORATE
GOVERNANCE

 Board of Directors with a strong track
record and a deep understanding of
the industry; two independent NEDs.

 Clear system of internal controls and

risk management procedures in place.

 Global Ports has consistently invested in
its facilities. As a result, the Group’s
terminals have spare operating capacity.
This available capacity should enable
Global Ports to accommodate additional
volumes as container traffic increases.

 Significant scope for further expansion:
potential to increase container-handling
capacity to approximately 6,900 thousand
TEU (2.2 times) in the Russian part of the
Baltic Sea Basin (including to 2,600
thousand TEU at ULCT (5.9 times) and
to 2,200 thousand TEU (4 times) in the
Far East Basin.

 Proven track record of successful

development of terminal facilities: the
Group’s assets are well-invested and
require only limited capital expenditure
for maintenance.

HIGH PROFITABILITY, STRONG
CASH-FLOW GENERATION17

 Adjusted EBITDA18 of USD 420 million,
with 90% generated by Russian Ports
segment (mainly container operations).

 Russian Ports segment’s Adjusted

EBITDA Margin19 is 64.4%.

 Operating cash flow of USD 375 million.

 EUROGATE GmbH & Co. KGaA,

KG (owns 20% of Ust-Luga Container
Terminal) is Europe’s leading shipping
line-independent container terminal
operator.

 Royal Vopak (owns 50% in Vopak E.O.S.)
is a global market leader in independent
storage and handling of liquid, oil products,
chemicals, vegetable oils and liquefied
gases, operating 77 terminals with a
combined storage capacity of more than
30 million cubic metres in 29 countries
worldwide as of December 2013.

 Container Finance Ltd Oy (owns 25%
of Moby Dik, MLT, CD and Yanino) is a
Finnish group of companies that also
operates a leading inter-European
shipping line in the Baltic Sea Basin.

14. Source: ASOP
15. Based on 2013 data. Calculated as total annual throughput capacity of maritime terminals of the Enlarged Group’s Russian Ports Segment less 2013 container throughput of these terminals
16. Russian Ports segment of the Enlarged Group including Russian Ports segment of Global Ports and the entire NCC Group
17. Based on the illustrative Combined Financial Metrics of the Enlarged Group for 2013
18. Adjusted EBITDA is defined as profit for the period before income tax expense, finance income/(costs) net, depreciation of property, plant and equipment, amortisation of intangible assets, other gains/(losses) net, impairment charge

of property, plant and equipment and impairment charge of goodwill

19. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Revenue

1. ABOUT USGlobal Ports2

STRATEGIC REVIEW

GLOBAL PORTS ACHIEVED
A NUMBER OF SIGNIFICANT
MILESTONES IN 2013.

WITH NCC ACQUIRED, THE
GROUP IS WELL PLACED TO
ACHIEVE FURTHER SUCCESS
IN THE YEARS AHEAD.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT US

A DECADE OF GROWTH, BUILT
ON FIRM FOUNDATIONS, HAS
ENABLED GLOBAL PORTS TO
ACHIEVE A LANDMARK DEAL

HERE IS A HISTORY OF GLOBAL PORTS, ITS DEVELOPMENT AND ITS TRACK RECORD
OF MAKING THE RIGHT BUSINESS MOVES. A STRATEGY INVOLVING ACQUISITION
HAS ENABLED THE COMPANY TO PROGRESS IN JUST 10 YEARS FROM A SMALL
REGIONAL PLAYER TO BECOME THE NUMBER ONE CONTAINER OPERATOR IN
EASTERN EUROPE

In 2004 Global Ports
had a share in
just one container terminal:
VSC

273

THOUSAND TEU
Total container
throughput

550

THOUSAND TEU
Total container handling
capacity

2004 SMALL REGIONAL PLAYER

 Share in one terminal in 2004 (VSC).

 One terminal in Russia, Far East basin.

 273 thousand TEU of total container

throughput.

 550 thousand TEU of total container

handling capacity.

 2.2 million TEU of total potential container
handling capacity at existing footprint.

2. STRATEGIC REVIEWGlobal Ports
NO.1

in Eastern Europe:
10 terminals in three
countries and two key basins
in 2013

2013 AN ESSENTIAL PART OF THE GLOBAL CONTAINER CHAIN

2.8MILLION TEU

Total container
throughput20

4.1MILLION TEU

Total container
handling capacity20

Container throughput
increase in 2013
compared to 2004

9.1MILLION TEU

Potential container handling
capacity at existing footprint21

 Number one container operator in Eastern Europe22.

 Public company with more than USD 2 billion market

capitalisation23, and that is an essential part of the global
container chain.

 10 terminals in three countries and two key basins.

 2,774 thousand TEU of total container throughput.

 4.1 million TEU of total capacity.

 9.1 million TEU of total potential capacity.

 Further improvements in safety, operations,

procurement and insurance coverage in cooperation
with APM Terminals.

THE NCC TRANSACTION WAS IN LINE WITH OUR
PREVIOUSLY ANNOUNCED STRATEGY AND THE NEXT
LOGICAL STEP IN THE GLOBAL PORTS DEVELOPMENT

2005-2012

 Targeted and timely investments:
the right investments at the right time
and the right locations (VSC, MD);
converting old Soviet bulk terminals
into modern container facilities (PLP).

 Portfolio optimisation: sell-off

of non-growth assets, while keeping
growth assets.

 Prudent financial policy: moderate
leverage, financial flexibility, prudent
capital allocation; focus on returns of
invested capital and efficiency.

 Strategic partnerships: cooperation
with blue-chip partners (Vopak, DP
World, Containerships).

 Investing in the best managers

20. Russian Ports and Finnish Ports segments on an Illustrative Combined basis
21. Russian Ports segment of the Enlarged Group
22. Source: Drewry, based on 2013 data, some 2013 numbers are estimated
23. As of 10 April 2014

 Best corporate governance

practices implemented in very early
stages of development.

 IPO, June 2011.

 APM Terminals Transaction has

strengthened the Global Ports Group’s
leading position by providing it with
access to APM Terminals’ unrivalled
global expertise in terminal development
and operation.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

NCC GROUP IS A GREAT ASSET THAT COMPLEMENTS OUR PORTFOLIO

Well-invested terminals at right locations:

 First Container Terminal

 Ust-Luga Container Terminal

 Logistika Terminal

The largest incumbent container
terminal in Russia

A newly developed modern container
terminal in active ramp-up phase

Inland container terminal offering
logistical support to maritime operations

1.25

MILLION TEU
Annual container
throughput capacity

440

THOUSAND TEU
Annual container
throughput capacity

200

THOUSAND TEU
Annual container
throughput capacity

HOW THE NCC ACQUISITION
TRANSFORMS GLOBAL PORTS

IN DECEMBER 2013 GLOBAL PORTS ACQUIRED NCC GROUP, CEMENTING
THE GROUP’S LEADING POSITION IN THE RUSSIAN CONTAINER MARKET.
NCC IS A HIGH-QUALITY ASSET WITH GREAT GROWTH PROSPECTS

NCC Group demonstrated solid
performance in 2013:

+7%

growth in total marine
container throughput

$257M

revenue of NCC in 2013

Adjusted EBITDA of NCC in 2013

$163M
64%

High Adjusted EBITDA
Margin in 2013

growth in container
throughput at FCT

+2.5%
5.5X

increase in throughput of
ULCT which is in active
ramp-up stage

The acquisition brings Global
Ports tangible benefits:

 Increased exposure on growing
Russian container market, with
approximately 90% of the Enlarged
Group’s Adjusted EBITDA in 2013
generated by containers.

 Available capacity of 1.1 million TEU
of Combined Group enables substantial
CAPEX reduction.

 Win-win, creating potential to

increase efficiency for both clients
and Global Ports.

 Tangible synergies in operations,

commercial and other areas.

to 2013 Global Ports standalone
marine container throughput

to Global Ports standalone
consolidated revenue for 2013

+70%
+54%
+71%
+64%

to Global Ports standalone
container-handling capacity

to Global Ports standalone
Adjusted EBITDA for 2013

2. STRATEGIC REVIEWGlobal Ports
KEY MANAGEMENT OF ACQUIRED TERMINALS RETAINED
Global Ports has retained the key management of the acquired NCC terminals. All the managers have many years
of experience in the container handling business and possess a vast amount of industry knowledge:

ALIONA ASHURKOVA
Deputy Chief Executive
Officer of Global Ports
Ms. Ashurkova was appointed
as Deputy Chief Executive Officer
in 2014. From 2006 to 2013 she
served as the President of NCC.
Prior to that, from 2002 to 2006,
Ms. Ashurkova held the positions
of Chief Financial Officer (CFO)
in First Quantum and
Vice-President of
Development and
Investments
in NCC.

ALEXANDER TIKHOV
General Manager,
First Container Terminal
Mr. Tikhov was appointed as
the General Manager of First
Container Terminal in 2007
whilst part of NCC and has more
than 30 years of experience in
the industry.

ANDREY BOGDANOV
General Manager,
Ust-Luga Container
Terminal
Mr. Bogdanov, who has 30 years
of experience in the industry, was
appointed as the General Manager
of the Ust-Luga Container Terminal
in 2012 whilst part of NCC.

VITALY MISHIN
General Manager of
Logistika-Terminal
Mr. Mishin was appointed as
the General Manager of
Logistika-Terminal in 2010.
He began his career in 1980
at Leningrad Sea Commercial
Port (since 1992 – Sea Port
of St Petersburg). He has 34 years
of experience
in the industry.


INTEGRATION OF NCC IS FIRMLY ON TRACK
Rapid integration…

…with further synergies to be
released in the medium term:

 Rationalisation of headquarters

 Safety

 Operations

complete, key personnel retained
• One office, unnecessary leases of

premises terminated.

• All terminal Managing Directors and
key NCC head office staff retained.
• Duplicate holding functions eliminated.

 Clear governance principles
established from day one
• Full financial control.
• Single line of command, clear reporting

lines along key functions.

• Safety reviews of all new facilities
complete, action plans being
developed.

• Implement Global Ports’ KPIs on

productivity, performance
management.

• Implement global requirements in

• Transfer of knowledge, process

all Global Ports terminals by the end
of 2014.

optimisation between terminals in
St Petersburg.

 Information Technology

 Commercial

• Strong team of in-house IT developers
of NCC (more than 50 people) joining
the Group.

• Optimisation of IT security and

• Already working seamlessly across

the portfolio.

• Create network benefits, focus
on ability to undertake capacity
commitments.

• Clear risk management and budgeting;

functionality.

principles adopted at new facilities.

... delivering tangible results:

 Reduced CAPEX

2014E of USD 66 million versus
USD 79 million in 2013.

 Run rate:

of around USD 7 million annual
costs savings secured.

 Debt portfolio:

partially refinanced, more
being negotiated.

 Optimisation of head office:
number of employees, leases.

 Equipment and Portfolio

• Centralized procurement of equipment

• Work with customers to explore vessel

calls optimisation opportunities.

and major spare parts, resulting in
scale efficiencies and better
specifications.

• Repair and maintenance optimisation

and transfer of knowledge.

• Centralised view on asset utilisation,
equipment sharing where efficient.

• Outsource support functions and

optimise capital allocation.

$7M

annual cost
savings secured

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

KEY MILESTONES OF 2013

JUNE

$37.6M

Additional dividend payment of
USD 37.6 million or USD 0.24 per GDR
distributed to shareholders.

JANUARY

New Board of Directors elected
Appointment of APM Terminals nominated
directors to the Board, aligning
governance best practice to
reflect the shareholders’
interests.

Kim Fejfer, CEO of
APM Terminals, became
Vice Chairman of the Board.

JULY

World’s largest container ship at VSC

Maersk Mc-Kinney Møller, the world’s
largest container ship, docks at
VSC terminal during its maiden voyage.

Maersk Mc-Kinney Møller

OCTOBER

$32.9M

Interim dividend payment of
USD 32.9 million or USD 0.21 per GDR.

2. STRATEGIC REVIEWGlobal PortsJUNE

JULY

Appointment of Chief Operating Officer

Executive management team strengthened
by the appointment of Anders Kjeldsen as
Chief Operating Officer of
Global Ports Group.

Mr Kjeldsen joined from
APM Terminals and has
a strong track record
in the industry.

Ust-Luga Container Terminal

150,000 TEUs

MLT Kotka, one of the Group’s two Finnish
container terminals, adds an additional yard,
increasing the port’s total capacity from
90,000 TEUs to 150,000 TEUs.

SEPTEMBER

Announcement of NCC acquisition

Global Ports enters into binding
arrangements to acquire 100% of the
share capital of NCC Group Limited.

DECEMBER

Acquisition of NCC completed

Global Ports acquires NCC Group Limited,
cementing the Group’s leading position in
the growing Russian container market.

DECEMBER

$14.1M

Board declares payment of additional dividend
(paid in February 2014) of USD 14.1 million
or USD 0.09 per GDR, which together with an
additional dividend payment of USD 11.5 million
or USD 0.06 per GDR (to be paid by June
2014) brings the total dividend payment for
2013 to USD 58.5 million or 51% on Net Profit.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013CHAIRMAN’S STATEMENT


GLOBAL PORTS IS NOW ONE OF
THE MOST PROMINENT PLAYERS
IN THE MARKET

THE ACQUISITION OF NCC HAS CREATED THE LARGEST CONTAINER
PORTS GROUP IN EASTERN EUROPE

L ast year was one of strategic

transformation for Global Ports as,
following the acquisition of the NCC
Group, Russia’s second largest container
terminal operator 24, it became the largest
container terminal operator in Eastern
Europe25. The combined Group now has a
network of seven marine container handling
terminals in Russia and Finland with ample
available capacity to accommodate growth
in container volumes for years to come.

planned actions over the last decade that
have allowed us to cement the Group’s
sector leadership. These included our
decision to list on the London Stock
Exchange in 2011, which improved our
access to international capital markets, and
the introduction of APM Terminals, one of
the largest global container ports operators,
as a co-controlling shareholder in Global
Ports. These actions were key to us being
able to complete this transformational deal.

It was also a challenging year as the
Russian economy steadily lost momentum,
which was reflected in slowing growth in
consumer spending and imports. Against
this background, our core combined
container business26 produced a solid
operational performance with container
throughput increasing by 2.9%, with
revenue and Adjusted EBITDA broadly in
line with the previous year. Our cash flow
and financial position was strong, enabling
us to return more than half our attributable
net profits, a total of USD 58.5 million, as
dividends to our shareholders.

NCC
The acquisition of NCC marked a watershed
moment in the evolution of the Group. The
fact that we were able to seize this unique
opportunity was due to a series of carefully

The purchase of NCC was a logical next
step towards meeting our strategic
objectives. It enabled us to secure our
leadership position for the future in the
Russian container handling market, while
allowing us to capture sizeable synergies
and secure capacity for further long-term
growth. The Board felt that a combination
with NCC offered shareholders the
prospect of far greater value creation than
could be achieved by Global Ports alone.
I am pleased to say that our shareholders
shared this view and voted overwhelmingly
in favour of the transaction. Our efforts are
now focused on successfully integrating the
two companies. The process has started
well and we expect full integration will take
at least 12 months to complete. In the
meantime, we are already seeing benefits
starting to emerge in the form of cost

“FOLLOWING THE
ACQUISITION OF THE
NCC GROUP, GLOBAL
PORTS BECAME THE
LARGEST CONTAINER
TERMINAL OPERATOR
IN EASTERN EUROPE”

Nikita Mishin,
Chairman

24. Source: ASOP, based on 2013 data
25. Source: Drewry, based on 2013 data, some 2013 numbers are estimated
26. Russian Ports segment on a combined basis including NCC Group and Finnish Ports segment

2. STRATEGIC REVIEWGlobal Ports
1.1M

Global Ports available
capacity in TEUs, enabling
the Company to
accommodate growth
in container volumes for
years to come


KEY DATA

REVENUE 2013
USD MILLION

480

s
t
r
o
P

a
b
o
G

257

C
C
N

EBITDA 2013
USD MILLION

257

s
t
r
o
P

a
b
o
G

163

C
C
N

737

e
v
i
t
a
r
t
s
u

l
l
I

d
e
n
b
m
o
c

420

e
v
i
t
a
r
t
s
u

l
l
I

d
e
n
b
m
o
c

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

2. STRATEGIC REVIEW

$58.5M

The dividend declared for
2013 by the Board

Global Ports

“I AM CONFIDENT
THAT THE ‘NEW’
GLOBAL PORTS, WITH
ITS STRONG ASSET
BASE AND EXCELLENT
MANAGEMENT TEAM,
OFFERS A GOOD
PLATFORM TO DELIVER
VALUE TO OUR
SHAREHOLDERS”

Our people
In less than 20 years, Global Ports has
grown to become the largest container
terminal operator in Eastern Europe. This is
a remarkable achievement that would not
have been possible without the valuable
contribution of all our colleagues over this
period. On behalf of the Board, I would
like to thank them for their substantial
contributions to our performance in 2013.
I would also like to take this opportunity to
welcome our new colleagues from NCC;
we look forward to their involvement in the
business in 2014.

Conclusion
The acquisition of NCC makes the Group
the leading container terminal operator in
Eastern Europe. It increases the quality of
our earnings, while providing additional
capacity requirements for years to come,
thereby removing the need for substantial
additional capital expenditure.

Operationally, 2013 was a challenging year,
with a slowdown in growth rates in Russia
reflected in slowing consumption and
imports. Against this backdrop, our
container business26 demonstrated solid
results with container throughput
increasing 2.9%.

In the short term, Russia faces a testing year
ahead as the economy continues to slow,
which may cause further volatility in our
sector. In this context I am confident that the
‘new’ Global Ports, with its strong asset
base and excellent management team
with extensive experience from previous
economic cycles, offers a good platform to
deliver value to our shareholders.

Nikita Mishin
Chairman

savings from the optimisation of head office,
lower financing costs and a reduction
in capital expenditure allocations. We
anticipate capturing further operational
synergies over the medium term as we
begin to optimise productivity across all
parts of the business.

Governance
The Board has long recognised that
effective governance is central to the
long-term success of Global Ports. As
a Board we have consistently adopted
high standards of corporate governance,
financial reporting and control mechanisms
to meet expectations of international
investors. Over time, as the Group has
grown and new stakeholders have been
introduced, we have refined our governance
model to ensure it continues to meet best
practice standards and supports the
Group’s business strategy.

A governance framework is, of course, only
as effective as the Board that oversees it.
We have assembled a high-quality Board
of Directors with significant relevant skills
and experience across a number of sectors
in Russia and internationally. As a result,
I believe we have a Board with the right
balance of skills and experience to
contribute effectively to the management
of the business and also, where required,
challenge decision making.

Dividend
The Board recognises that dividends are
a key component of shareholder returns
and is committed to a transparent dividend
policy that supports a minimum target
payout ratio of 30% of Net Profit attributable
to shareholders in any financial year.

On the basis of our solid financial results,
healthy balance sheet and strong cash
flows, the Board is recommending an
additional dividend payment of USD
11.5 million, or USD 0.06 per GDR. This
brings the total dividend for the year to
USD 0.36 per GDR, which equates to a
payout ratio of 51% of Net Profit attributable
to shareholders.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
CHIEF EXECUTIVE OFFICER’S REVIEW


THE GROUP’S GROWTH
REINFORCES OUR LEADERSHIP
POSITION IN THE REGION

A STRONGER PRESENCE AND SYNERGY POTENTIAL ARE AMONG
THE BENEFITS THAT GLOBAL PORTS WILL ENJOY AFTER BUYING NCC,
ONE OF THE BEST CONTAINER TERMINAL OPERATORS IN RUSSIA
AND EASTERN EUROPE

I n 2013 Global Ports achieved another

important milestone in its development
with the acquisition of the NCC group.

This was a transformational deal that
deepens our presence in the container
terminal sector in Russia and reinforces the
Group’s leadership position in the region. It
represents another logical step in a journey
that has seen Global Ports grow from its
roots as a small privately-owned, local
operator into a major public company
operating at the heart of the global shipping
and logistics chain across Russia and
Eastern Europe.

“THE ACQUISITION OF
NCC IS AN IMPORTANT
MILESTONE FOR THE
FUTURE DEVELOPMENT
OF THE GROUP”

Dr. Alexander Nazarchuk,
Chief Executive Officer

NCC
In acquiring NCC we have bought one of
the best container terminal operators in
the region, at what we consider to be an
attractive valuation for a well-established
business. NCC represents a great fit with
our business both strategically and
operationally, for a number of reasons:

First, it is a profitable business that produces
substantial cash flows and a consistently
high EBITDA margin. In 2013 its EBITDA
margin amounted to 63.5%.

Second, it is worth highlighting the
complementary nature and high quality
of the asset base we have acquired. NCC
has two marine terminals in the Baltic Basin,
the main gateway for Russian container
cargo, where Global Ports already has a
well-established presence. The NCC

portfolio includes First Container Terminal
in St Petersburg, the largest container
terminal in Russia, which handles over
1 million TEUs per annum, and ULCT,
a recently launched purpose-built container
terminal at Ust-Luga, Russia’s largest port
infrastructure development. FCT, due to its
long operating history, has an established
client base of blue-chip customers and
a favourable cargo mix. Meanwhile
ULCT, which is currently in ramp-up
mode, is ideally placed to compete for
Baltic transit cargo.

Third, the enlarged Group has the potential
to generate significant cost savings and
operational efficiencies. Our integration
work has already delivered some early
gains. Rationalisation of the head office has
been completed, key personnel retained
and clear governance principles
established. Furthermore, we have
already secured an annualised run rate
of USD 7 million of cost savings from the
reduction in administrative costs together
with lower financing costs.

Looking ahead, there is considerable scope
to enhance our operational performance,
through sharing best practice and
improving our operating efficiency further.
For instance, minimising the number of
double vessel calls our customers make to
FCT and Petrolesport, Global Ports’s main
Baltic Sea terminals, will improve vessel
turnaround times and increase terminal
productivity and berth utilisation.

2. STRATEGIC REVIEWGlobal Ports64.4%

The impressive level at which
the enlarged Russian Ports
segment’s Adjusted EBITDA
Margin held steady

The enlarged Group has approximately
1.1 million TEUs of available capacity, giving
us ample room to meet future demand.
Importantly, this additional capacity will have
a positive impact on our future CAPEX
needs as we will no longer need to earmark
significant capital expenditure to increase
container capacity. Since the year end, we
have already announced a reduction to our
capital expenditure plan and now expect it
to be of the order of USD 66 million, down
from our previous USD 79 million level in
2013. The final point is about organisational
culture – a key factor in determining whether
acquisitions create long-term value. We
have retained all of NCC’s key management
team who, I am pleased to say, share a
similar set of values to those we have at
Global Ports, and so far the integration
process is running smoothly.

Financial performance
On a combined basis, including NCC,
Adjusted EBITDA for the enlarged Russian
Ports segment was broadly flat at USD
404 million in 2013. Despite industry-wide
pressure on storage time, the Adjusted
EBITDA Margin held steady at an impressive
64.4%.

Global Ports’ container operations delivered
a resilient performance in a slowing market.
The Russian Ports segment reported
revenues of USD 371 million which were
broadly on a par with the performance in
2012. Adjusted EBITDA of the segment for

Annual Report 2013

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT US
the period was largely unchanged at
USD 241 million, resulting in a 97 basis
point increase in Adjusted EBITDA Margin
to 65.1%. This improvement in profit margin
resulted from the combination of better
pricing and continued good cost discipline.
Elsewhere our Finnish Ports segment
produced a good performance with
a 21% increase in EBITDA on the back
of a 25% increase in container throughput,
supported by volumes from new
customers. Overall, though, reported
Group revenues fell by 4.4% to USD
480 million and adjusted EBITDA declined
10.8% to USD 257 million, mainly driven
by weak performance of the Oil Products
Terminal segment as well as transaction
costs and increased headquarter costs.

Global Ports was again highly cash
generative in 2013, producing a healthy USD
220 million from operating activities. Capital
expenditure fell by 10% to USD 71.8 million,
which was actually some 44% lower than
our initial 2013 CAPEX budget. Capital
expenditure fell in 2013 as investments were
postponed primarily in anticipation of the
potential acquisition of NCC.

NCC’s standalone results in 2013 were
also solid. Revenues increased by 1% to
USD 257 million, while Adjusted EBITDA
of USD 163 million and an Adjusted EBITDA
Margin at 63.5% were both broadly
unchanged on the previous year. These
figures illustrate the fact that NCC is a stable,
high-quality business and we acquired
a profitable, high margin business at a
reasonable valuation.

As mentioned earlier, the addition of NCC’s
capacity has changed the calculus around
the Group’s future capital expenditure
requirements, which should enable us to
reallocate funds to other priorities. One key
priority is to reduce our post-acquisition
level of leverage. As a result of the NCC
transaction, we closed the year with Net
Debt of USD 1,419 million, and a Net Debt
to Adjusted EBITDA27 ratio of 3.4 times.
The servicing of such a level of debt is
comfortable as the business generates
strong cash flows, its capital expenditure
requirements are low and the debt
repayment schedule is undemanding.

Operational review
Container volumes at Global Ports were
broadly flat at 1.63 million TEU. Average
revenue per TEU in Russian Ports segment
increased by 2%, largely due to an increase
in headline tariffs that came into effect at
the start of the year – however, this was
partly offset by an industry-wide decline
in container dwell time.

In the Baltic Basin, Petrolesport (PLP) saw
a reduction in container throughput mainly
due to weak growth in the St Petersburg
Port area, as some volumes were
redistributed to FCT but also due to the
fact that a few of our key shipping clients
lost market share. In the Far East, VSC,
Global Port’s second largest container
facility, situated on Russia’s Pacific coast,
had an outstanding year in 2013. VSC
has a very strong competitive position in
the Far East, and it benefited from strong
intra-regional trade flows, supported by its
access to the Trans-Siberian Railway.

At NCC, container throughput volumes
increased by 7% to 1.15 million TEU,
driven by the active ramp-up of ULCT,
and supported by a strong performance
at FCT, where container volumes increased
by 2.5%.

Outlook
In the longer term, we remain positive about
the structural growth potential of the
container market in Russia. Global Ports,
with its unrivalled combination of modern
up-to-date port facilities in key locations and
exposure to the container market, is well
positioned to capitalise on the growth of
containerisation in Russia.

In the current uneasy market environment
the Group is in a good shape to deal with
macroeconomic challenges. We have
a healthy balance sheet, our debt levels
are manageable and our debt repayment
schedule is undemanding. Our main priority
over the coming year will be the integration
of NCC and the delivery of the associated
synergies we have identified. Other key
objectives include: expanding capacity at
VSC, our container terminal in the Pacific
Basin, where buoyant trade flows are driving
strong growth in container volumes; and

27. Illustrative Combined basis

“GLOBAL PORTS,
WITH ITS UNRIVALLED
COMBINATION OF
MODERN, UP-TO-DATE
PORT FACILITIES IN
KEY LOCATIONS AND
EXPOSURE TO THE
CONTAINER MARKET,
IS WELL POSITIONED
TO CAPITALISE ON
THE GROWTH OF
CONTAINERISATION
IN RUSSIA”

improving the Group’s overall operating
efficiency. With regard to NCC, we have
established an integration taskforce to
manage the process and as I have already
mentioned, since the transaction closed in
December we have already delivered some
important cost synergies. We remain
confident that the Group will make
continued progress in 2014.

Dr. Alexander Nazarchuk
Chief Executive Officer

2. STRATEGIC REVIEWGlobal Ports
3

BUSINESS REVIEW

RUSSIAN CONTAINER MARKET
GROWTH IN 2013 CONTINUED
TO EXCEED THAT OF THE
GLOBAL CONTAINER MARKET.

GLOBAL PORTS GROUP
TRANSFORMED ITS BUSINESS
IN 2013 WITH THE
ACQUISITION OF NCC.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT US
EXECUTIVE MANAGEMENT


EXECUTIVE MANAGEMENT TEAM

FROM RUNNING TERMINALS TO HANDLING CROSS-BORDER TRANSACTIONS,
THE TEAM IS HUGELY EXPERIENCED IN OPERATING PORTS AROUND THE WORLD

ALEXANDER NAZARCHUK
Member of the Board of Directors,
Chief Executive Officer

ALIONA ASHURKOVA
Deputy Chief Executive Officer

MIKHAIL LOGANOV
Member of the Board of Directors,
Chief Financial Officer

Dr. Nazarchuk was appointed as an executive
member of the Board of Directors in 2008 and
has been the Chief Executive Officer of the
Company since 2008. Dr. Nazarchuk has also
held the positions of Chairman of the council
of Vopak E.O.S. (earlier E.O.S.) since December
2004, member of the Board of Directors of
Petrolesport since December 2007 and
member of the Board of Directors of VSC
since October 2005. Dr. Nazarchuk served
as a member of the Board of New Forwarding
Company OAO from June 2003 until August
2008, a member of the Board of Directors of
Sevtekhnotrans OOO from September 2007
until August 2008, a member of the Board of
Directors of AS Spacecom from April 2003 until
June 2008 and a senior scientist in International
Centre of Scientific and Technical Information
of Moscow from December 1996 until
December 1998.

He graduated from Lomonosov Moscow State
University with a Doctorate in Philosophy.
Dr. Nazarchuk has been a Professor of the
Faculty of Philosophy at Lomonosov Moscow
State University since September 2002. He is
the author of four books and numerous articles.

Ms. Ashurkova was appointed as Deputy
Chief Executive Officer in 2014. From 2006
to 2013, she served as the President of NCC.
Prior to that, from 2002 to 2006, she held the
positions of Chief Financial Officer (CFO)
in First Quantum and Vice-President of
Development and Investments in NCC.
She was Director of Development and
Investments in Seaport St Petersburg PLC
from 1998 to 2002.

Ms. Ashurkova started her career in major
financial and investment companies including
Sovlink, Alliance-MENATEP and Deloitte &
Touche, having graduated from Lomonosov
Moscow State University as a specialist in
foreign economic affairs, finance and enterprise
analysis, and holds a PhD.

Mr. Loganov was appointed as the Chief
Financial Officer of the Company in October
2013. He has served as a member of the Board
of Directors of the Company and was a member
of its Audit and Risk and Remuneration
Committees between December 2008 and
October 2013. He has extensive experience
in corporate finance, risk management and
business administration acquired during a
career primarily across the transportation and
logistics industry in Russia.

Mr. Loganov served as a Managing Director
and Executive member of the Board of Directors
of Globaltrans Investment PLC between April
2008 and October 2013. In that role, he was
responsible for financial and reporting activities
of Globaltrans as well as having oversight of
capital markets and M&A transactions in
addition to other responsibilities. Prior to that
he held other senior finance positions within the
Globaltrans Group. Mr. Loganov started his
career with American Express (Europe) Ltd in
the UK as a financial analyst in 2001. He
graduated with honours from the University of
Brighton in the UK with a degree in Business
Studies with Finance.

3. BUSINESS REVIEWGlobal Ports Executive team members
who manage specific
terminals are featured in
this section on page 36

EVGENY ZALTSMAN
Head of Business Development

ROY CUMMINS
Chief Commercial Officer

ANDERS KJELDSEN
Chief Operating Officer

Mr. Zaltsman has served as the Business
Development Director of the Company since
2008. Prior to joining the Company, he worked
for four years in Deutsche Bank in the
Corporate Finance department in Moscow.
He has extensive experience in all aspects
of M&A and capital markets transactions
execution. He participated in a number of
landmark domestic and cross-border
transactions in the financial institutions,
industrials and transportation industry.

Mr. Cummins has served as the Chief
Commercial Officer of the Company since
September 2009. He has over 20 years of
experience in the ports and shipping industry,
having worked in Europe, Asia, the Middle East
and Australia. Prior to joining the Group,
Mr. Cummins worked for DP World for three
years as Chief Executive Officer and was
a member of the board of directors of Saigon
Premier Container Terminal, a ‘greenfield’ port
development project in Vietnam.

Mr. Zaltsman graduated from the Finance
Academy with a degree in International
Economic Relations. He also attended the
MSc in Management programme at EMLYON
business school.

Prior to that, Mr. Cummins held various
positions in the P&O Group in both the liner
shipping division (P&O Nedlloyd) and the ports
division (P&O Ports), where, in the latter case,
he held the positions of General Manager of
the Port Botany Terminal in Sydney, Australia,
and the West Swanson Terminal in Melbourne,
Australia, respectively, during the period
between 2000 and 2006. Mr. Cummins
graduated from the University of Durham (UK),
where he obtained a bachelor’s degree in
French and German in 1990. He also holds
an MBA degree from the University of Warwick
(UK) which he obtained in 2006.

Mr. Kjeldsen has served as the Chief Operating
Officer of the Company since July 2013. Prior to
that Mr. Kjeldsen headed APM Terminals in the
Western Mediterranean (covering terminals in
Spain and Morocco with a total capacity of five
million TEU). He joined the A.P. Moller-Maersk
group in 1991 and during the last 23 years has
worked in most disciplines of the container
terminal industry. Prior to his role of managing
the Western Mediterranean region, he was
Managing Director of APM Terminals Algeciras,
a 3.6 million TEUs container terminal in
Southern Spain. Throughout his career he has
worked in Denmark, Germany, the Netherlands
and Spain. Through corporate positions and
several board memberships Mr. Kjeldsen has
been involved in terminal operations in most
parts of the world.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
5.3%

Growth in the container market
in Russia in 2013, during which
total container throughput
reached 5.2 million TEU

MARKET REVIEW


THE RUSSIAN CONTAINER
MARKET REMAINED ONE OF THE
FASTEST GROWING IN THE WORLD

IN 2013, THE RUSSIAN CONTAINER MARKET CONTINUED TO GROW AT A FASTER RATE THAN
THE GLOBAL CONTAINER MARKET, YET IT REMAINS BEHIND OTHER COUNTRIES IN TERMS OF
CONTAINERISATION LEVELS, OFFERING LONG-TERM GROWTH POTENTIAL

L ast year saw a continuation

of the long-term growth trends
exhibited by the Russian container

industry in recent years, although the pace
of development was impacted by the
slowdown in growth of the
Russian economy.

In 2013, the total container throughput of
Russian marine container terminals grew
by a further 5.3%28 and total container
throughput reached 5.2 million TEU28
compared to 4.9 million TEU28 in 2012. In line
with the previous decade’s performance,
the container market growth rate remained
higher than that of Russian GDP growth
of 1.3%29, driven by growth in imports
(+5.9%29) and household consumption
(+4.7%29), as well as the ongoing
containerisation of the Russian economy.

Furthermore, Russian container market
growth in 2013 continued to exceed that of
the global container market, which grew at
3%30 year on year, remaining one of the
most rapidly growing markets in the world.

The containerisation of Russian cargo flows
continued to grow steadily, particularly
in non-ferrous metals, automobiles,
machinery, and the food industry. Despite
achieving growth that consistently outstrips
that of the global market, Russia still remains
far behind other countries in terms of
containerisation levels, thereby retaining its
long-term growth potential. In 2013, the level
of Russian containerisation amounted to
42 TEU30 per capita, less than half the global
average (90 TEU30). Russia lags behind not
only European developed economies
(135 TEU30) and North America (134 TEU30),

“RUSSIAN CONTAINER
MARKET GROWTH IN 2013
CONTINUED TO EXCEED
THAT OF THE GLOBAL
CONTAINER MARKET”

28. Source: ASOP
29. Source: Rosstat
30. Source: Drewry, some 2013 numbers are estimated
31. Source: Drewry (some 2013 number are estimated), ASOP, Company data,

open sources

32. Including Baltic, 56% of Russian container flow in 2013

RUSSIAN CONTAINER FLOW
RUSSIAN CONTAINER FLOW
IN 2013¤
IN 2013
%
%

CONTAINER MARKET VS.
GDP GROWTH IN 2013*¤
CONTAINER MARKET VS.
%
GDP GROWTH IN 2013
%

2013 GLOBAL CONTAINER
2013 GLOBAL
MARKET GROWTH RATE
CONTAINER MARKET
BY REGION*¤
GROWTH RATE
%
BY REGION

5.3

$5.2m

5.3

4.1x

3.0

1.9

2.1

NORTH-WEST
BASIN32
 58.5%

BLACK SEA
BASIN
 14.7%

FAR EAST
BASIN
 26.8%

1.3

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3. BUSINESS REVIEWGlobal Ports

but also many emerging markets such as
Turkey, which had a containerisation level
of 95 TEU30 per capita in 2013.

For the Russian container market, 2013
proved to be an interesting year with some
varied growth dynamics. The Far East
Basin, for example, delivered growth of 18%
or 213,000 TEU year on year driven by
relatively buoyant intra-Asian trade and
increasing support for rail services to central
Russia, Moscow and the CIS, and the
Black Sea Basin grew by 10% or 72,000
TEU year on year, predominantly due to

the positive effect of the Sochi Winter
Olympics. The Baltic Basin, Russia’s main
container gateway, which handles almost
60% of total Russian container terminal
throughput, saw flat growth over the period.
However, it remains Russia’s key container
hub due to its close proximity to high
population density areas generating a
significant share of the country’s
consumption demand.

Minor capacity additions by existing
players increased total industry capacity
to 6.9 million TEU31 as at the end of 2013.

Consequently, capacity utilisation levels
remained above 70%, a comfortable level
both for terminals and their clients. Looking
ahead to 2014, there will be no significant
capacity added to the market, except for
that planned by Global Ports.

All in all, the Russian container market
produced a fundamentally healthy
performance against a slowing economic
backdrop and still retains significant
long-term growth potential due to the key
fundamentals of low containerisation levels
and growing household consumption.

CONTAINER MARKET HIGHLIGHTS

CONTAINER
PENETRATION IN 2013
CONTAINER PENETRATION
TEU’000 CAPITA
IN 2013*
TEU PER ’000 CAPITA

CONTAINER
PENETRATION IN 2013 –
CONTAINER PENETRATION IN 2013*,
CERTAIN EMERGING MARKETS
EMERGING MARKETS
TEU’000 CAPITA
TEU PER ’000 CAPITA

135

132

3.2x

3.1x

2
4

2.1x

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RUSSIAN CONTAINER
RUSSIAN CONTAINER
MARKET BY BASIN
MARKET BY BASIN
MILLION TEU
MILLION TEU
 2012
 2012
 2013
 2013

+5.3%
5.18

4.92

-0.7%
3.05
3.03

+18.1%
1.39

1.18

+10.4%
0.76

0.69

128

3.1x

2.3x

2.1x

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CAPACITY UTILIZATION
CAPACITY UTILISATION
DYNAMICS
DYNAMICS*¤∆
MILLION TEU
 Container throughput
 Container throughput
 Container capacity
 Container capacity

73%33
6.8

4.9

74%33
7.0

5.2

2013 EMERGING
2013 EMERGING MARKETS
MARKETS CONTAINER
CONTAINER MARKET
MARKET GROWTH
GROWTH*¤
%

6.9

6.4

5.3

4.6

2.7

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* Source: Drewry, some 2013 numbers are estimated
¤ Source: ASOP
∆ Source: Company estimate

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33. Utilisation rate: calculated as container throughput divided by container capacity

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

GLOBAL PORTS GROUP


SECURING OUR POSITION AS MARKET
LEADER AND BUILDING A FIRM
FOUNDATION FOR FUTURE GROWTH

WITH THE ACQUISITION OF NCC, GLOBAL PORTS HAS UNDERLINED ITS STATUS AS THE
NUMBER ONE OPERATOR IN THE RUSSIAN CONTAINER HANDLING MARKET

THE DEAL HAS ALREADY DELIVERED SYNERGIES, WITH MORE EXPECTED IN THE
YEARS AHEAD

T he year was a transformational one for

Global Ports with the acquisition of
NCC, which secured the Group’s
leadership position in the Russian container
handling market and set a foundation for
growth going forward.

On an Illustrative Combined basis the key
business of the Enlarged Group, the
container business34, showed solid results
with gross container throughput up 2.9%.
The combined broadly flat Adjusted EBITDA
of the Russian Ports container business
was offset by a decrease in revenue in the
Oil Products Terminal segment, which
continued to operate in a difficult market
environment, as well as by the Transaction
costs and headquarter costs.

The integration of NCC Group has been
successful with an annual run rate of
USD 7 million* of cost synergies secured
already. Further synergies in operations,
equipment, commercial and IT are to be
realised over the mid-term.

KEY HIGHLIGHTS (ILLUSTRATIVE COMBINED BASIS)

2.9%

Gross container throughput
of the Global Ports Group
and NCC Group for 2013
on an Illustrative Combined
basis rose 2.9%* to
2,774 thousand TEU

USD

404.4

MILLION

USD

420

MILLION

The Group’s Adjusted
EBITDA on an Illustrative
Combined basis was
USD 420 million* for 2013

USD

7MILLION

Container business34 Adjusted
EBITDA was broadly flat at
USD 404.4 million* for 2013

The integration of NCC Group
has been successful with an
annual run rate of USD 7 million*
of cost synergies secured already

34. Russian Ports segment of the Enlarged Group including Russian Ports segment of Global Ports and the entire NCC Group and Finnish Ports segment

3. BUSINESS REVIEWGlobal PortsDIVIDENDS
On the basis of the solid financial results and healthy
balance sheet of the Global Ports Group, the Board
of Directors declared an additional dividend payment
of USD 11.5 million*, or USD 0.06* per GDR. This together
with interim dividend payments of USD 32.9 million*
or USD 0.21* per GDR in September 2013 and
USD 14.1 million* or USD 0.09* per GDR in December 2013
brings the total dividend for the year 2013 to USD 0.36* per
GDR (USD 58.5 million* or 51%* of 2013 Net Profit
attributable to Owners of the Company).

USD58.5MILLION

The total dividend for
the year 2013

51%

2013 dividend payout ratio

GLOBAL PORTS GROUP (EXCLUDING NCC GROUP)

1,629THOUSAND TEU

Global Ports gross container
throughput remained
broadly flat at 1,629
thousand TEU* in 2013,
compared to 1,628
thousand TEU* in 2012

USD256.8MILLION

Global Ports Group’s
Adjusted EBITDA in 2013
was USD 256.8 million*

65.1%

Russian Ports segment’s
Adjusted EBITDA Margin in
2013 increased 97 bp to
65.1%* from 64.1%* in 2012,
while Adjusted EBITDA
remained broadly flat at
USD 241.3 million*

5.8%

Profit attributable to the
Owners of the Company in
2013 increased 5.8% to
USD 114.1 million from
USD 107.8 million in 2012

4.3%*

Basic and diluted earnings
per share increased 4.3%
in 2013 to USD 0.24 from
USD 0.23 in 2012

44%

Capital expenditures for the
Global Ports Group on a
cash basis in 2013 decreased
by 10% to USD 71.8 million
(44% lower than initially
planned for 2013)

Annual Report 2013

Certain financial and operational information which is derived from the management accounts is
marked in this Annual Report with an asterisk {*}

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT US3. BUSINESS REVIEW

GROUP FINANCIAL PERFORMANCE

RESULTS OF OPERATIONS FOR THE GLOBAL PORTS GROUP (EXCLUDING NCC GROUP)
FOR THE 12 MONTHS ENDED 31 DECEMBER 2012 AND 2013
The following table sets out the principal components of the Global Ports Group’s consolidated income statement.

Selected consolidated IFRS financial information

Revenue

Cost of sales, administrative, selling and marketing expenses

Operating profit

Profit for the period

Basic and diluted earnings per share for profit attributable
to the owners of the Company during the period

Non-IFRS financial information35*

Cost of Sales, Adjusted for Impairment

Total Operating Cash Costs

Adjusted EBITDA

Adjusted EBITDA Margin

2012
USD mln

2013
USD mln

Change

USD mln

501.8

(343.2)

157.3

123.5

0.23

241.8*

213.9*

287.9*

57.4%*

480.0

(293.7)

189.5

114.1

(21.9)

49.5

32.3

(9.4)

(4.4%)

(14.4%)

20.5%

(7.6%)

0.24

0.01

4.3%

238.2*

223.2*

256.8*

53.5%*

(3.6)

9.2

(31.1)

(1.5%)

4.3%

(10.8%)

35. Cost of Sales, Adjusted for Impairment, Total Operating Cash Costs, Adjusted EBITDA and Adjusted EBITDA Margin (the Supplemental Non-IFRS Measures) are
additional non-IFRS financial measures. The Supplemental Non-IFRS Financial Measures are presented as supplemental measures of the Global Ports Group’s
operating performance, some of which the Global Ports Group believes are frequently used by securities analysts, investors and other interested parties in the evaluation
of companies in the Russian market and global ports sector. The Supplemental Non-IFRS Measures have limitations as analytical tools, and should not be considered in
isolation, or as a combination, as a substitute for analysis of the Global Ports Group’s operating results as reported under IFRS.
Other companies in the port containers industry may calculate the Supplemental Non-IFRS Measures differently or may use each of them for different purposes than the
Global Ports Group, limiting their usefulness as comparative measures.
The Global Ports Group relies primarily on its IFRS operating results and uses the Supplemental Non-IFRS Measures only supplementally. The Supplemental Non-IFRS
Measures are not defined by, or presented in accordance with, IFRS. The Supplemental Non-IFRS Measures are not measurements of the Global Ports Group’s
operating performance under IFRS and should not be considered as alternatives to revenues, profit, operating profit, net cash provided by operating activities or any
other measures of performance under IFRS or as alternatives to cash flow from operating activities or as measures of the Global Ports Group’s liquidity. In particular,
Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as measures of discretionary cash available to the Global Ports Group to invest in the growth of
its business.

Global Ports

“The integration process of NCC Group is going well. We have quickly rationalized the
headquarters and established GPI’s governance principles in all of the newly acquired entities.
This together with partial refinancing of debt portfolio secured an annualised cost-savings run
rate of USD 7 million and we expect to extract more synergies from optimising the Group's
operating processes and commercial activities in the medium-term”
Evgeny Zaltsman, Head of Business Development

EARNINGS PER SHARE
EARNINGS PER SHARE
USD
USD

0.23

0.24

2012

2013

RESULTS OF OPERATIONS FOR
THE GLOBAL PORTS GROUP
(EXCLUDING NCC GROUP)

Revenue
Revenue decreased by USD 21.9 million,
or 4.4%, from USD 501.8 million in 2012 to
USD 480.0 million in 2013. This decrease
was primarily due to a USD 15.4 million or
13.2% decrease in the revenue of the
Oil Products Terminal segment and
a USD 6.7 million* or 1.8%* decrease
in the revenue of the Russian Ports
segment, which was partially offset by
a USD 0.2 million* or 1.44%* increase in
the revenue of the Finnish Ports segment.
Revenue is discussed in greater detail in the
discussion of the financial results for each of
Global Ports Group’s segments later or in
this section of the Annual Report.

In 2013 the Russian Ports segment
contributed 75.2% of the Global Ports
Group’s revenue. The revenue contribution
of the Oil Products Terminal segment
decreased from 23.2% in 2012 to 21.1%
in 2013. The Finnish Ports segment’s
contribution accounted for 3.7% of the
Group’s revenue in 2013.

Cost of sales
Cost of sales decreased by USD 61.6
million, or 20.6%, from USD 299.8 million
in 2012 to USD 238.2 million in 2013. This

decrease was primarily due to costs related
to the impairment charge of Yanino Logistic
Park in 2012 in the total amount of
USD 58.0 million which were not repeated
in 2013. The impairment charge was
recognised as follows: impairment charge
of property, plant and equipment of
USD 51.5 million and impairment charge
of goodwill of USD 6.5 million.

Cost of Sales Adjusted for Impairment
decreased by USD 3.6 million*, or 1.5%,
from USD 241.8 million* in 2012 to
USD 238.2* million in 2013.

Cost of sales is discussed in greater detail
in the discussion of the financial results for
each of the Global Ports Group’s segments
later in this section.

Administrative, selling and
marketing expenses
Administrative, selling and marketing
expenses increased by USD 12.1 million,
or 28.0%, from USD 43.4 million in 2012 to
USD 55.5 million in 2013 primarily due to
transaction costs and headquarter costs
(mainly staff costs).

Other gains/(losses) — net
Other gains/(losses) – net changed from a
loss of USD 1.4 million in 2012 to a gain of
USD 3.2 million in 2013. This change was
primarily due to USD 2.3 million in currency

REVENUE

Russian Ports segment

Oil Products Terminal segment

Finnish Ports segment

Total revenue

2012

2013

USD mln % of total

367.8*

116.6*

17.4*

73.3%

23.2%

3.5%

361.1*

101.2*

17.7*

75.2%

21.1%

3.7%

501.8

100.0%

480.0

100.0%

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
GLOBAL PORTS GROUP CONTINUED

“The combination of a healthy balance
sheet, strong cash flows, and reduced
capital expenditure needs, means the
Group is well positioned to swiftly
optimise its leverage”
Mikhail Loganov, Chief Financial Officer

GLOBAL PORTS GROUP’S ADJUSTED EBITDA

The following table sets out the adjustments made to Global Ports Group’s profit for the year to calculate
the Group’s Adjusted EBITDA for the years ended 31 December 2012 and 2013.

Profit for the period

Plus (minus)

Income tax expense

Finance costs, net

Amortisation of intangible assets

Depreciation of property, plant and equipment

Impairment of PPE and Goodwill

Other losses/(gains)

Adjusted EBITDA

2012
USD mln

2013
USD mln

Change

USD mln

123.5

114.1

(9.4)

(7.6%)

30.1

3.7

7.3

63.9

58.0

1.4

36.9

38.5

7.3

63.3

–

(3.2)

22.6%

952.4%

(1.2%)

(1.0%)

6.8

34.9

(0.1)

(0.6)

(58.0)

(4.6)

(334.2%)

287.9*

256.8*

(31.1)

(10.8%)

Global Ports Group’s effective tax rate,
calculated as income tax expense divided
by profit before income tax, was 24.5% in
2013 and 19.6% in 2012.

Profit for the year
Profit for the year decreased by
USD 9.4 million, or 7.6%, from USD 123.5
million in 2012 to USD 114.1 million in 2013
due to the factors discussed above.

Profit attributable to the owners
of the Company
Profit attributable to the owners of the
Company increased by USD 6.3 million, or
5.8%, from USD 107.8 million in 2012 to
USD 114.1 million in 2013 due to the factors
discussed above.

Basic and diluted earnings per share
for profit attributable to the owners
of the Company during the year
Basic and diluted earnings per share for
profit attributable to the owners of the
Company during the year increased by
USD 0.01, or 4.3%, from USD 0.23 in
2012 to USD 0.24 million in 2013 due to
the factors discussed above and the

OPERATING CASH FLOW AND
OPERATING CASH FLOW
CAPEX, 2013
AND CAPEX, 2013
USD MILLION
USD MILLION
OPERATING CASH FLOW
 Net cash ﬂows
AND CAPEX, 2013
from operating
USD MILLION
activities 2013
 Total cash
 Net cash ﬂows
CAPEX 2013
from operating
activities 2013

375

 Total cash
CAPEX 2013

220

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exchange gains on non-financing activities
in 2013 compared to USD 0.3 million in
currency exchange loss on non-financing
activities in 2012.

Operating profit
Operating profit increased by USD 32.3
million, or 20.5%, from USD 157.3 million
2012 to USD 189.5 million 2013 due to the
factors already discussed.

Finance costs — net
Finance costs – net increased by USD 34.9
million, or 10.5 times, from USD 3.7 million
in 2012 to USD 38.5 million in 2013. This
increase was primarily due to net foreign
exchange losses on borrowings and other
financial items of USD 21.5 million in 2013
compared to foreign exchange gains on
borrowings and other financial items of
USD 12.0 million in 2012 and was mainly
driven by the depreciation of the Russian
rouble against the US dollar (at the 2013
period end the exchange rate weakened by
7.8% compared to the end of 2012) and the
Russian rouble against the euro (the 2013
period end exchange rate weakened by
11.8% compared to the end of 2012).

Profit before income tax
Profit before income tax decreased by
USD 2.6 million, or 1.7%, from USD 153.6
million in 2012 to USD 151.0 million in 2013
due to the factors already discussed.

Income tax expense
Income tax expense increased by
USD 6.8 million or 22.6%, from USD 30.1
million in 2012 to USD 36.9 million in 2013.
This increase was mainly driven by
decreased expenses not deductible for
tax purposes and a decrease of income
not subject to tax in the Oil Products
Terminal segment.

3. BUSINESS REVIEWGlobal Ports

ENLARGED GROUP’S
ENLARGED GROUP’S
ADJUSTED EBITDA
ADJUSTED EBITDA36
USD MILLION
USD MILLION

452

420

2012

2013

CAPITAL EXPENDITURE37
CAPITAL EXPENDITURE 14
BREAKDOWN, 2013
BREAKDOWN, 2013
USD MILLION
USD MILLION

64.6

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“Gross container throughput
for the Enlarged Group
grew by 2.9%* in 2013”
Roy Cummins, Chief Commercial Officer

issuance of new shares in the course of
the transaction.

Non-IFRS measures:
Adjusted EBITDA and Adjusted
EBITDA Margin
Global Ports Group’s Adjusted EBITDA
decreased by USD 31.1 million*, or 10.8%*,
from USD 287.9 million* in 2012 to
USD 256.8 million* in 2013, mainly impacted
by the decrease in revenues from the
Oil Products Terminal segment as well as
by an increase in administrative, selling and
marketing expenses due to the transaction
costs and headquarter costs. Adjusted
EBITDA of the Russian Ports segment
(representing mainly container business)
remained relatively flat at USD 241.3 million*.

The Group’s Adjusted EBITDA Margin
decreased to 53.5%* in 2013 compared to
57.4%* in 2012 due to the factors already
discussed. The Adjusted EBITDA Margin of
the Russian Ports segment (representing
mainly the container business) increased by
97 bp to 65.1%.

Liquidity and capital resources
As at 31 December 2013, the Global
Ports Group (including NCC Group)
had USD 132.5 million in cash and
cash equivalents38.

Global Ports Group’s liquidity needs arise
primarily in connection with the capital
investment programmes of each of its
operating segments as well as their
operating costs. In the period under review,
Global Ports Group’s liquidity needs were
met primarily by revenues generated from
operating activities as well as through
borrowings. The management of Global
Ports Group expects to fund its liquidity
requirements in both the short and medium
term with cash generated from operating
activities and borrowings.

“GLOBAL PORTS
GROUP’S CAPITAL
EXPENDITURES
ON A CASH BASIS
IN 2012 AND 2013
WERE USD
79.8 MILLION
AND USD
71.8 MILLION,
RESPECTIVELY”

As a result of the shareholding or joint
venture agreements at Moby Dik, the
Finnish Ports, Yanino, ULCT and Vopak
E.O.S., cash generated from the operating
activities of the entities constituting the
respective business is not freely available
to fund the other operations and capital
expenditures of Global Ports Group, or any
other businesses within Global Ports Group,
and can only be lent to an entity or
distributed as a dividend with the consent
of the other shareholders who are parties
to those arrangements. PLP, FCT, and
VSC are not subject to such agreements.
Accordingly, each of Global Ports Group’s
businesses is dependent on the cash
generated by it and its own borrowings,
whether external or from its shareholders,
to fund its cash and capital requirements.

As at 31 December 2013, the Global Ports
Group had USD 1,551.4 million of total
borrowings, of which USD 1,321.1 million
comprised non-current borrowings and
USD 230.3 million comprised current
borrowings (see also Capital Resources
table on p32).

36. On an Illustrative Combined basis
37. On a cash basis
38. Including bank deposits with maturity over 90 days totalling USD 10.9 million

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

GLOBAL PORTS GROUP CONTINUED

CASH FLOWS FOR 2012 AND 201339

The following table sets out the principal components of the Global Ports Group’s consolidated cash flow
statement for 2012 and 2013.

2012
USD mln

2013
USD mln

Change

USD mln

Cash generated from operations

Tax paid

Net cash from operating activities

293.1

(41.3)

251.8

276.8

(57.2)

219.6

Net cash used in investing activities

(303.8)

(247.7)

(16.3)

(16.0)

(32.2)

56.1

(5.5%)

(38.7%)

(12.8%)

18.5%

Purchase of shareholdings from non-controlling
entities/acquisition of subsidiaries – net of cash
acquired

Purchases of intangible assets

Purchases of property, plant and equipment

Net cash from bank deposits with maturity over
90 days

Loans granted to related parties

Loan repayments received from related parties

Other

Net cash from financing activities

Net cash inflows from borrowings and financial
leases

Interest paid

Dividends paid to the owners of the Company

Dividends paid to non-controlling interests

CAPITAL RESOURCES42

USD

RUB

EUR

TOTAL

(230.0)

(177.6)

52.4

22.8%

(0.2)

(79.8)

(10.0)

(2.8)

14.1

4.9

1.0

(0.3)

(71.8)

4.3

(5.1)

0.6

2.3

(0.1)

8.0

14.3

(2.3)

(13.5)

(2.6)

(34.7%)

10.0%

(84.9%)

(96.0%)

(53.7%)

64.1

63.1

6,607.2%

108.1

237.4

129.3

119.6%

(12.3)

(79.9)

(14.9)

(21.5)

(150.4)

–

(9.2)

(70.5)

14.9

(74.5%)

(88.2%)

100.0%

31 December 2012
USD mln % of total

31 December 2013
USD mln % of total

279.7

84.0%

1,251.9

27.0

26.4

8.1%

7.9%

222.240

77.2

80.7%

14.3%

5.0%

333.1

100.0%

1,551.4

100.0%

39. Global Ports Group (excluding NCC Group)
40. Includes USD 197 million RUB loan which is hedged with cross-currency interest swap at holding level making it effectively a USD loan
41. As at 31 January 2014
42. Illustrative Combined Financial Metrics

$375M

Cash flow from
operating activity of the
combined group

ENLARGED GROUP’S
STRONG CASH FLOW AND COMFORTABLE
ADJUSTED EBITDA
MATURITY PROFILE41
USD MILLION
USD MILLION

375

Debt maturity proﬁle

179

191

133

139

4
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5
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2

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3. BUSINESS REVIEWGlobal Ports

MATURITY PROFILE OF
MATURITY PROFILE OF THE GROUP’S BORROWINGS
THE GROUP’S BORROWINGS
AS AT 31 DECEMBER 2013
AS AT 31 DECEMBER 2013
USD MILLION
USD MILLION

1,551.4m

1ST QUARTER 2014
 47.7

2016
 191

2ND QUARTER 2014
 43.5

2017
 283.3

3RD QUARTER 2014
 44

2018
 235.2

4TH QUARTER 2014
 95

2019 AND LATER
 472.6

2015
 139

MATURITY PROFILE OF
MATURITY PROFILE OF THE GROUP’S BORROWINGS*
THE GROUP’S BORROWINGS
(FOLLOWING POST NCC ACQUISITION REFINANCING)
AS AT 31 JANUARY 2014
AS AT 31 JANUARY 2014
USD MILLION
USD MILLION

1,555.8m

2014
 178.7

2015
 139

2016
 191

2017
 271.8

2018
 270.2

2019 AND LATER
 505.1

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013GLOBAL PORTS GROUP CONTINUED

“In response to the rapid growth of the
market, Global Ports plans to increase
VSC’s capacity by 100,000 TEU in 2014”
Anders Kjeldsen, Chief Operating Officer

20%

Increase of container throughput
at VSC in 2013

Capital expenditures
Global Ports Group’s capital expenditures
on a cash basis in 2012 and 2013 were
USD 79.8 million and USD 71.8 million,
respectively, and were used to finance
the expansion of its terminals’ capacity
and for the purchase and replacement
of equipment.

The Russian Ports segment’s capital
expenditures on a cash and 100% basis for
2012 and 2013 were USD 66.0 million and
USD 64.6 million, respectively.

The Oil Products Terminal segment’s capital
expenditures on a cash and 100% basis for
2012 and 2013 were USD 27.8 million and
USD 12.7 million, respectively.

The Finnish Ports segment’s capital
expenditures on a cash and 100% basis for
2012 and 2013 were USD 0.5 million and
USD 1.7 million, respectively.

Cash flows for 2012 and 2013
Net cash from operating activities
Net cash from operating activities
decreased by USD 32.2 million, or 12.8%,
from USD 251.8 million in 2012 to
USD 219.6 million in 2013. This decrease
was primarily due to a USD 16.0 million,
or 38.7%, increase in tax paid, from
USD 41.3 million in 2012 to USD 57.2 million
in 2013. This increase in tax paid was mainly
due to the tax paid by Vopak E.O.S on profit
distributions to its shareholders in 2013.
In addition, a USD 16.3 million, or 5.5%,
decrease in cash generated from
operations contributed to the decrease
mentioned above.

Net cash used in investing activities
Net cash used in investing activities
decreased by USD 56.1 million, or 18.5%,
from USD 303.8 million in 2012 to
USD 247.7 million in 2013. This change
was primarily due to a 22.8%, or USD
52.4 million, decrease in cash outflow as
a result of the acquisition of subsidiaries.
This transaction-related cash outflow for
acquisitions of subsidiaries, net of cash
acquired, amounted to USD 177.6 million

in 2013, compared to cash outflow for
the purchase of shareholdings from
non-controlling interests related to
the acquisition of 25% of VSC for
USD 230 million in 2012.

Net cash (used in)/from
financing activities
Net cash from financing activities in 2012
was USD 1.0 million. This consisted
primarily of net cash inflow from borrowings
and financial leases (USD 108.1 million),
interest paid (USD 12.3 million) and
dividends paid (USD 79.9 million).

Net cash from financing activities in 2013
was USD 64.1 million. This consisted
primarily of net cash inflows from
borrowings and financial leases
(USD 237.4 million, including a bank facility
of USD 238.4 million to finance the
transaction), interest paid (USD 21.5 million)
and dividends paid (USD 150.4 million). The
increase for the 12-month period ended
31 December 2013 compared to the
12-month period ended 31 December 2012
was mainly due to dividend payments and
transaction-related borrowings.

Capital resources
The Global Ports Group’s financial
indebtedness consists of bank borrowings,
loans from related and third parties, and
finance leases liabilities in an aggregate
principal amount of USD 333.1 million as at
31 December 2012 and USD 1,551.4 million
as at 31 December 2013. The increase in
financial indebtedness from 2012 was
mainly driven by additional borrowings
related to the acquisition of NCC.

The Group’s weighted average effective
interest rate as at 31 December 2013
was 6.22%*.

As at 31 December 2012 and 31 December
2013, the carrying amounts of Global Ports
Group’s borrowings were denominated in
three currencies.

3. BUSINESS REVIEWGlobal PortsGLOBAL PORTS GROUP’S KEY OPERATIONAL INFORMATION

The following table sets forth the maturity profile of the Group’s borrowings (including finance leases) as
at 31 December 201343.

2012

2013

Change

Gross throughput

Russian Ports segment

Containerised cargo (thousand TEUs)

PLP

VSC

Moby Dik

Total

Non-containerised cargo

Ro-ro (thousand units)

Cars (thousand units)

Other bulk cargo (thousand tonnes)

Yanino (inland container terminal)

Containerised cargo – inland container depot
(thousand TEUs)

Bulk cargo throughput (thousand tonnes)

Finnish Ports segment

827*

397*

226*

711*

475*

219*

1,450*

1,405*

24*

105*

1,217*

63*

279*

24*

108*

895*

63*

304*

(116)

(7)

(45)

(14%)

20%

(3%)

(0%)

(322)

(26%)

51% OF NET PROFIT DISTRIBUTED
51% OF NET PROFIT
DISTRIBUTED AS DIVIDENDS
AS DIVIDENDS
USD, DIVIDEND PER GDR
USD, DIVIDEND PER GDR

0.36

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Containerised cargo (thousand TEUs)

178*

224*

25%

Gross Container Throughput
(excl. Yanino) (TEUs)

Oil Products Terminal segment

1,628*

1,629*

Oil Products Gross Throughput (million tonnes)

10.4*

9.7*

(0.7)

(7%)

GROUP’S TOTAL DEBT
GROUP’S TOTAL DEBT BREAKDOWN
BREAKDOWN
BY CURRENCIES
BY CURRENCIES, 2013
AS AT DECEMBER 2013

US DOLLAR
 80.7%

EURO
 14.3%

RUSSIAN ROUBLE44
 5%

$1,551.4m

43. Gross Throughput is shown on a 100% basis for each terminal, including proportionally consolidated terminals held through joint ventures
44. Includes USD 197 million RUB loan which is hedged with cross-currency interest swap at holding level making it effectively a USD loan

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

RUSSIAN PORTS SEGMENT


RUSSIAN PORTS SEGMENT
DEMONSTRATED
A SOLID PERFORMANCE

EDUARD CHOVUSHYAN
Managing Director of Petrolesport
Mr. Chovushyan has served as
Managing Director of Petrolesport
since March 2007. He has more
than 15 years’ experience in
various port managerial positions
in the N-Trans group of
companies.

VALERY MESTULOV
Managing Director of Vostochnaya
Stevedoring Company

Mr. Mestulov was appointed
General Manager of VSC in March
2012. Before that he served as
a General Manager of Moby Dik
since July 2010 and as a General
Manager of Yanino since January
2011 until October 2013. His
experience in the port industry
over a 10-year period includes
roles as Deputy General Manager
of Vostochny Port OAO, General
Manager of VSC, and General
Manager of Vladivostok Container
Terminal OOO.

VICTORIA
SCHERBAKOVA-
SLUSARENKO
General Manager of Yanino
Ms. Scherbakova-Slusarenko
has been working with the Group
since 2009. In 2013 she was
appointed as General Director
of Yanino Logistics Park LLC.

ALEXANDER DUDKO
General Manager of Moby Dik
Mr. Dudko was appointed General
Manager of Moby Dik in March
2012. Before that Mr. Dudko
served as Operations Director
of VSC since early 2011 when
he joined the company from
DP World Southampton (UK),
where he spent three years in
various positions.

T he throughput of Russian container

terminals grew 5.3%45 in 2013, nearly
double the pace of the global
container market, 3%46, in the same year.
Container throughput in the Russian
Federation Ports in 2013 was 5.18 million
TEU45. Overall industry capacity utilisation
levels47 remained at a healthy 74% during
2013 compared to 73% in 2012.

The gross container throughput in the
Russian Ports segment (excluding Yanino)
declined 3% to 1,405 thousand TEU* in
2013 compared to 1,450 thousand* TEU*
in 2012. Container throughput at VSC
increased 20% (or 78 thousand TEU*) in
2013 compared to 2012. However, this
increase was offset by a 14% decrease
(or 116 thousand TEU*) in container
throughput at PLP and a 3% decrease
(or 7 thousand TEU*) at Moby Dik.

45. Source: ASOP
46. Source: Drewry; some 2013 numbers are estimated
47. Capacity utilisation rate is defined as container throughput in the corresponding period divided by

container handling capacity for the period; Source: Drewry (some 2013 numbers are estimated), ASOP,
Company data, open sources

3. BUSINESS REVIEWGlobal PortsCOMPONENTS OF THE RUSSIAN PORTS SEGMENT’S REVENUE

The following table sets forth the components of the Russian Ports segment’s revenue for 2012
and 2013.

Revenue

Container handling

Other

2012
USD mln

2013
USD mln

Change

USD mln

377.5

370.7

283.0*

279.0*

94.5*

91.7*

(6.8)

(4.0)

(2.8)

(1.8%)

(1.4%)

(2.9%)

GLOBAL PORTS GROUP’S REVENUE

The following table sets out Global Ports Group’s revenue from cargo handling and storage services,
the Group’s total marine container throughput and the revenue per TEU for the 12 months ended
31 December 2012 and 2013.

Container handling

USD million

Total marine container throughput

thousand TEUs

Revenue per TEU

USD per TEU

12 months
ended 31 December
2013

2012

283.0*

1,450*

195.2*

279.0*

1,405*

198.5*

Change

(Abs)

(4.0)

(44.5)

3.3

(1.4%)

(3.1%)

1.7%

The 20%* increase in container throughput
at VSC was underpinned by its exposure to
the relatively buoyant intra-Asian trades and
improved rail services arranged by Global
Ports from VSC.

The container throughput at PLP and
Moby Dik was impacted by the broadly
flat container volumes in the St Petersburg
basin as well as a reduction in market share
of some of the terminals’ key customers.
Some of the Group’s customers also
switched to the terminals of NCC. The
latter was largely neutral for the Group
result as according to the ‘locked box’
principle of the NCC acquisition, cash
generated by NCC in 2013 belonged
to Global Ports.

Cars handling volumes increased 3%*
in 2013 compared to the previous year.

Traditional Ro-Ro handling was flat in 2013
compared to 2012.

Financial performance
Revenue
The Russian Ports segment primarily
generates revenue from container
handling, which accounted for 75.0%*
of the segment’s revenue in 2012 and
75.3%* in 2013. The Russian Ports
segment also generates revenue from
handling bulk cargo, container storage
and ancillary services. Revenue from
these activities accounted for 25.0%* and
24.8%* of the segment’s revenue in 2012
and 2013, respectively.

The segment’s revenue decreased by
USD 6.8 million, or 1.8%, from USD 377.5
million in 2012 to USD 370.7 million in
2013. This decrease was due to a USD

4.0 million or 1.4% decrease in revenue,
related to container handling, and a
USD 2.8 million or 2.9% decrease in other
revenue. This decline in revenue from
container handling was primarily due to
the lower container throughput in the
Russian Ports segment.

Other revenue decreased primarily due
to a 26.5% decrease in other bulk cargo
handling in 2013, which was caused by
cessation of refrigerated bulk cargo
handling at PLP as well as a decrease in
other bulk cargo handled by terminals of the
Russian Ports segment.

Revenue per TEU in 2013 increased by
USD 3.3*, or 1.7%*, compared to 2012,
mainly driven by increases in tariffs as well
as by other factors, which was partially
offset by the continuing industry-wide

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
RUSSIAN PORTS SEGMENT CONTINUED

“THE ADJUSTED
EBITDA MARGIN
OF THE RUSSIAN
PORTS SEGMENT
INCREASED
BY 97 BASIS
POINTS,
FROM 64.1% IN
2012 TO 65.1%
IN 2013”

decrease in dwell time for containers
negatively affecting storage revenues.

USD 0.7 million, or 4.6%, primarily due to
the lower level of cargo handling during
the reporting period.

Adjusted EBITDA (Non-IFRS
financial measure)
The Russian Ports segment’s Adjusted
EBITDA remained broadly flat at
USD 241.3* million.

The Adjusted EBITDA Margin of the
Russian Ports segment increased by 97
basis points, from 64.1%* in 2012 to
65.1%* in 2013, due to the reasons already
discussed.

Cost of sales, administrative, selling
and marketing expenses
The Russian Ports segment’s cost of sales,
administrative, selling and marketing
expenses decreased by USD 84.5 million,
or 31.1%, from USD 271.9 million in 2012
to USD 187.4 million in 2013. This decrease
was primarily due to a USD 75.2 million
one-off PPE and goodwill impairment
charge recognised in respect of Yanino
Logistic Park in 2012.

The segments’ Operating Cash Costs
decreased by USD 6.0* million, or 4.4%*,
outpacing the decline in the segment’s
revenue of USD 6.8 million, or 1.8%.

The decline in the Russian Ports
segment’s Operating Cash Costs was
driven by a decrease in other operating
expenses by USD 4.0 million, or 10.4%,
decreases in fuel, electricity and gas
by USD 1.3 million, or 12.2%, and a
decline in Transportation expenses by

COST OF SALES, ADMINISTRATIVE, SELLING AND MARKETING EXPENSES

The following table sets out a breakdown, by expense, of the cost of sales, administrative, selling and
marketing expenses for the Russian Ports segment for 2012 and 2013.

Staff costs

Depreciation of property, plant and equipment
and amortisation of intangible assets

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant
and equipment

PPE and goodwill impairment

Total

Other operating expenses

Total cost of sale, administrative, selling
and marketing expenses

Operating Cash Costs of Russian Ports
segment

2012
USD mln

2013
USD mln

Change

USD mln

58.6

57.9

14.7

9.6

11.8

0.3

(3.3)

(0.7)

(1.3)

(0.2)

0.5%

(5.4%)

(4.6%)

(12.2%)

(1.8%)

–

(75.2)

(100.0%)

152.6

34.8

(80.5)

(34.5%)

(4.0)

(10.4%)

187.4

(84.5)

(31.1%)

58.3

61.2

15.4

11.0

12.0

75.2

233.1

38.8

271.9

135.5*

129.5*

(6.0)

(4.4%)

3. BUSINESS REVIEWGlobal PortsOIL PRODUCTS TERMINAL SEGMENT

“Vopak E.O.S. continued to operate
in a difficult environment”
Arnout Dirk Lugtmeijer,
General Manager of Vopak E.O.S.

The Oil Products Terminal segment consists
of the Global Ports Group’s ownership
interest in Vopak E.O.S (in which Royal
Vopak currently has a 50% effective
ownership interest). The results of the
Oil Products Terminal segment are
proportionally consolidated in the Global
Ports Group’s financial information but are
included in the figures and discussion below
on a 100% basis.

The table, right, sets out the results of
operations for the Oil Products Terminal
segment for 2012 and 2013.

Revenue
The Oil Products Terminal segment’s
revenue decreased by USD 30.8 million,
or 13.2%, from USD 233.2 million in 2012
to USD 202.4 million 2013. This decrease
was primarily due to a 7.1% decrease in
throughput at the terminal due to the difficult
market environment, including the
increased competition from Russian Ports,
combined with a 6.5% decrease in Revenue
per Tonne of Throughput, from USD 22.4* in
2012 to USD 21.0* in 2013, due to changes
in the service and cargo mix.

Cost of sales, administrative, selling
and marketing expenses
The table, right, sets out a breakdown, by
expense, of the cost of sales, administrative,
selling and marketing expenses for the
Oil Products Terminal segment for 2012
and 2013.

The Oil Products Terminal segment’s cost of
sales, administrative, selling and marketing
expenses increased by USD 1 million, or
0.7%, from USD 140.8 million in 2012 to
USD 141.9 million in 2013. This increase was
primarily due to a USD 4.8 million, or 22.4%,
increase in depreciation of property, plant
and equipment and amortisation of
intangible assets following the completion of
the construction of additional rail unloading
facilities at the terminal in the third quarter
of 2012. That increase was offset by a
decrease in Transportation expenses by
USD 3.2 million, or 6.4%, as a result of the
decline in throughput volumes.

RESULTS OF OPERATIONS FOR THE OIL PRODUCTS TERMINAL SEGMENT

Revenue

Operating Cash Costs of the Oil Products
Terminal segment, USD million

Adjusted EBITDA, USD million

Adjusted EBITDA Margin, %

2012
USD mln

2013
USD mln

Change

USD mln

233.2

202.4

(30.8)

(13.2%)

119.4*

115.7*

(3.8)

(3.1%)

113.8*

48.8%*

86.7*

42.9%*

(27.0)

(23.8%)

COST OF SALES, ADMINISTRATIVE, SELLING AND MARKETING EXPENSES

Staff costs

Depreciation of property, plant and equipment
and amortisation of intangible assets

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant
and equipment

Total

Other Operating Expenses (non-IFRS measure)

Total cost of sale, administrative, selling
and marketing expenses

Operating Cash Costs of the Oil Products
Terminal segment

2012
USD mln

2013
USD mln

Change

USD mln

25.1

21.4

50.0

29.1

4.5

130.1

10.7

140.8

25.2

26.2

46.8

28.7

4.5

131.3

10.5

141.9

0.1

4.8

(3.2)

(0.4)

(0.1)

1.2

(0.2)

1.0

0.3%

22.4%

(6.4%)

(1.4%)

(1.3%)

0.9%

(1.8%)

0.7%

119.4*

115.7*

(3.8)

(3.1%)

driven by the decline in transportation
expenses of USD 3.2 million, or 6.4%, as a
result of the decline in throughput volumes.

Adjusted EBITDA (Non-IFRS
financial measure)
The Oil Products Terminal segment’s
Adjusted EBITDA decreased by USD
27.0* million or 23.8%* from USD 113.8*
million in 2012 to USD 86.7* million in 2013
due to the factors described above.

Operating Cash Costs of the Oil Products
Terminal segment declined by USD 3.8*
million, or 3.1%*, from USD 119.4* million in
2012 to USD 115.7* million in 2013, primarily

The Adjusted EBITDA Margin of the
Oil Products Terminal segment decreased
from 48.8%* in 2012 to 42.9%* in 2013
due to the factors already described.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013FINNISH PORTS SEGMENT

“Gross container throughput
of the Finnish Ports segment
increased by 25% in 2013”
Dirk van Assendelft,
General Manager of Multi-Link Terminals

The Finnish Ports segment consists of the
Global Ports Group’s ownership interests in
MLT Kotka, MLT Helsinki (in each of which
Container Finance currently has a 25%
effective ownership interest). The results of
the Finnish Ports segment are proportionally
consolidated in the Global Ports Group’s
financial information but are included in
the figures and discussion here on a
100% basis.

Operational performance
The Gross Container Throughput of the
Finnish Ports segment increased by 25%
year on year to 224 thousand* TEU from
178 thousand* TEU driven by acquisition
of new clients.

Financial performance
Revenue
The Finnish Ports segment’s revenue
increased by USD 0.1 million, or 0.4%, from
USD 23.5 million in 2012 to USD 23.6 million
in 2013. The increase was primarily due
to increased container throughput in
the segment.

Cost of sales, administrative, selling
and marketing expenses
The table, below, sets out a breakdown, by
expense, of the cost of sales, administrative,
selling and marketing expenses for the
Finnish Ports segment for 2012 and 2013.

The Finnish Ports segment’s cost of sales,
administrative, selling and marketing

expenses decreased by USD 0.6 million,
or 2.6%, from USD 23.5 million in 2012 to
USD 22.9 million in 2013.

Adjusted EBITDA (Non-IFRS
financial measure)
The Finnish Ports segment’s Adjusted
EBITDA increased by USD 0.6 million*, or
21.1%*, from USD 2.8 million* in 2012 to
USD 3.4 million* in 2013 due to the factors
already described.

The Adjusted EBITDA Margin of the Finnish
Ports segment increased from 12.0%* in
2012 to 14.3%* in 2013 due to the factors
already described.

COST OF SALES, ADMINISTRATIVE, SELLING AND MARKETING EXPENSES

Staff costs

Depreciation of property, plant and equipment
and amortisation of intangible assets

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant
and equipment

Total

Other Operating Expenses (non-IFRS measure)

Total cost of sale, administrative, selling
and marketing expenses

Operating Cash Costs of Finnish Ports
segment

2012
USD mln

2013
USD mln

9.2

2.7

2.4

1.1

1.3

16.8

6.7

23.5

8.4

2.6

3.2

1.0

1.3

16.4

6.5

22.9

Change

USD mln

(0.8)

(0.1)

0.7

(0.1)

0.0

(0.3)

(8.9%)

(4.6%)

30.1%

(12.3%)

0.7%

(2.1%)

(4.0%)

(0.6)

(2.6%)

20.8*

20.3*

(0.5)

(2.3%)

Global Ports

3. BUSINESS REVIEW4

CORPORATE GOVERNANCE

EFFECTIVE GOVERNANCE IS
CENTRAL TO GLOBAL PORTS’
LONG-TERM SUCCESS.

THE GROUP HAS ASSEMBLED
A SKILLED, DIVERSE BOARD
OF DIRECTORS TO HELP
DELIVER HIGH STANDARDS.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT US
5

The number of members of
the Global Ports Group’s
Board of Directors with over
15 years’ experience in ports
and shipping industry

BOARD OF DIRECTORS


OUR BOARD HAS A
UNIQUE MIX OF SKILLS
AND EXPERIENCE

GLOBAL PORTS VALUES TALENT, EXPERIENCE AND DIVERSITY,
WHICH CAN BE SEEN IN OUR DIRECTORS. BETWEEN THEM, THEY
POSSESS A WIDE RANGE OF INDUSTRY KNOWLEDGE GAINED OVER
MANY YEARS WORKING WITHIN RUSSIA AND AROUND THE GLOBE

2013 was a transformational year for
Global Ports as we completed the takeover
of NCC, making Global Ports the largest
container terminal operator in Eastern
Europe48. The Board is committed to building
on this achievement to create long-term,
sustainable value for our shareholders.

Global Ports has put in place a strong and
effective governance system within which the
Board plays a central role. We have a broad
range of Non-Executive Directors with the
requisite skills, knowledge and experience to
match the Company’s strategic requirements.
All the Board members are actively involved in
the stewardship of the Company: all major
strategic and commercial decisions are
delegated to them for review and approval,
including all major financial expenditure items.
Full details of the skills and experience of the
Board members are provided on pages 44-45.

In 2013, the Board was reinforced by
the appointment, as Non-Executive Directors,
of two senior executives from APM Terminals,
a co-controlling investor in Global Ports.
APM Terminals is one of the world’s leading
international port operators and
the appointment of Kim Fejfer, CEO
of APM Terminals, and Tiemen Meester,
APM Terminals’ Head of Business
Implementation, has increased the weight
of industry expertise and experience on the
Board of Directors. Mr. Fejfer, who has led
APM Terminals since 2004, is widely
recognised as one of the leading figures
in the global ports industry. Both he and


GLOBAL PORTS GOVERNANCE STRUCTURE

General meeting of shareholders

Remuneration Committee

Appointment of the
members of terminals’
Board of Directors and
General Managers

Board of Directors

Nomination Committee

ALEXANDER NAZARCHUK,
Chief Executive Officer

Audit and Risk Committee

Internal Auditor

TERMINALS

KEY EXECUTIVE MANAGEMENT

EDUARD CHOVUSHYAN,
Managing Director of PLP

ALEXANDER TIKHOV,
Managing Director of FCT

ALIONA ASHURKOVA,
Deputy Chief Executive Officer

VALERY MESTULOV,
Managing Director of VSC

ARNOUT DIRK LUGTMEIJER,
General Manager of VEOS

MIKHAIL LOGANOV,
Chief Financial Officer

ALEXANDER DUDKO,
General Manager of Moby Dik

ANDREY BOGDANOV,
General Manager of ULCT

EVGENY ZALTSMAN,
Head of Business Development

DIRK VAN ASSENDELFT,
General Manager of Multi-Link Terminals

VICTORIA SCHERBAKOVA-SLUSARENKO,
General Manager of Yanino

ROY CUMMINS,
Chief Commercial Officer

VITALY MISHIN,
General Manager of Logistika Terminal

ANDERS KJELDSEN,
Chief Operating Officer

Coordination of respective activities and policies

Mr. Meester have extensive international
experience, having worked in a variety of
different international management roles for
APM Terminals over the last 20 years.

In 2013 the Group made further progress in
aligning its programme for employee
motivation with its corporate goals, assisted by
the global experience of APM Terminals.

The Board Committees, all of which
are chaired by Independent
Non-Executive Directors, continued
to function well in 2013, exercising
strong controls over the Company’s
operations and demonstrating
the Group’s ongoing commitment
to openness and transparency.

48. Source: Drewry; based on 2013 data, some 2013 numbers are estimated

4. CORPORATE GOVERNANCEGlobal PortsSEE PAGE 44

FOR DIRECTORS’
BIOGRAPHIES,

NIKITA MISHIN
Chairman

KIM FEJFER
Vice Chairman

“The Board of Global Ports is fully
committed to strong governance
and I believe that at Global Ports
our governance principles and
practices are on a par with best
international practice.”

“One of the hallmarks of
success is strong governance.
Consequently, it is something
I, and the rest of the Board, take
extremely seriously.”

SIOBHAN WALKER
Independent
Non-Executive Director

capt. BRYAN SMITH
Senior Independent
Non-Executive Director

“As a Board, we play very close attention
to the integrity of the Group’s financial
reporting and how we go about managing
risk. The work of our Committee deeply
focuses on the Group’s financial reporting
process, risk management systems and
internal financial control systems.
Our purpose is to ensure that we
maintain a strong risk and control
culture at Global Ports.”

“I chair the Nominations and
Remuneration Committees.
Respectively, these committees ensure
that the composition of our Board
matches shareholder representation
and the ongoing needs of our business,
and that our remuneration policies are
competitive so that our executive
compensation is properly aligned to
our strategy of delivering long-term
value to shareholders.”

1. Alexander
Nazarchuk

2. Tiemen
Meester

3. Mikhail
Loganov

4. Alexander
Iodchin

5. Konstantin
Shirokov

6. Michael

Thomaides

7. Constantinos
Economides

8. Chrystalla
Stylianou

9. Laura Michael

10. George

Sofocleous

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

BOARD OF DIRECTORS’ BIOGRAPHIES49

NIKITA MISHIN
Chairman of the Board of Directors,
Member of Remuneration and Nomination
Committees

Mr. Mishin was appointed as a non-executive
member of the Board of Directors of Global
Ports and elected as its Chairman in 2008.
In addition, Mr. Mishin has served as the
Chairman of the Board of Directors of
Petrolesport since 2007, the Chairman of
the Board of Directors of VSC since October
2005, a member of the Board of Directors of
FCT since December 2013 and a member
of the Board of Directors of ULCT since
December 2013.

He graduated from the Lomonosov
Moscow State University where he studied
philosophy.

Mr. Mishin is one of the controlling
shareholders of TIHL.

KIM FEJFER50
Vice Chairman of the Board of Directors

Mr. Fejfer was appointed CEO of APM
Terminals in June 2004 and is based in
The Hague, Netherlands company
headquarters. He has been a member of
the Maersk Group’s Executive Board since
January 2011. Mr. Fejfer first joined the
A.P. Moller-Maersk Group in 1992 and has
held a number of roles within the company
including positions based in Denmark,
Jakarta and Tokyo and became Senior Vice
President and Chief Financial Officer of
Maersk Inc based in New Jersey, USA in
2000. Mr. Fejfer graduated from the
University of Aarhus, Denmark with a
Master’s in Finance and Economics. He
served as an officer in the Danish Army, and
has attended management programmes
at IMD, Switzerland, Cranfield School of
Management in England and Harvard
Business School in Cambridge,
Massachusetts.

Non-executive Director and Chairman of
the Audit and Risk Committee. Ms. Walker
has over 20 years of banking experience
across multiple disciplines and
geographies. She is currently Managing
Director with the UK Corporate Coverage
Division of ING Bank N.V., London.

Prior to this, Ms. Walker held a number of
senior managerial positions in the Moscow
office of ING Bank Eurasia over a period of
13 years. She graduated with Honours from
the University of Sussex in England with a
B.A. in International Relations.

CAPT. BRYAN SMITH
Member of the Board of Directors, Senior
Independent Non-Executive Director,
Chairman of Nominations Committee,
Chairman of Remuneration Committee

Capt. Smith was appointed as a member
of the Board of Directors of the Company
in 2008 and is the Senior Independent
Non-Executive Director. He has also held
the positions of Chairman of the Board of
Directors of Asian Terminals Incorporated
from 2005 to 2009. Capt. Smith served as
Vice President and Managing Director
for South East Asia at DP World until his
retirement from this position in July 2008.
He also served as Deputy Chairman of the
Board of Directors of LCIT (Laem Chabang,
Thailand) from 1999 until 2008 and as
Chairman of the Board of Directors of SPCT
(Saigon, Vietnam) from 2006 until 2008.
Capt. Smith was a Director and Chairman
of Sydney Ports Corporation from 2009
to 2013. He received his Master Mariner
qualification at the University of Technology,
Sydney, Australia and is a graduate of
the Advanced Management Program,
Macquarie Graduate School of
Management, Macquarie University,
Sydney, Australia.

TIEMEN MEESTER50
Member of the Board of Directors

SIOBHAN WALKER
Member of the Board of Directors,
Independent Non-Executive Director,
Chairman of Audit and Risk Committee

Ms. Walker was appointed as a member
of the Board of Directors of the Company
in May 2011 and is an independent

Mr. Meester was appointed Head of
Business Implementation of APM Terminals
and Vice President in July 2011. He has held
various management positions within
APM Terminals across Europe, the Middle
East and CEE, including Country Manager
for Russia and Area Manager for Eastern
Europe for Maersk Line, and CEO of the

Port of Salalah, Oman and Regional
Manager for West and Central Asia region
for APM Terminals. On APM Terminals
Group level, he was appointed as CCO in
2007 and Head of Human Resources and
Labour Relations in 2008. He began his
industry career in 1992 at Sea-land Service
Inc. and held operational managerial
positions in Latvia, Russia and Pakistan
before the company was acquired by
AP Moller in 1999.

After graduation from the Dutch Naval
College as an engineer and Merchant
Marine Officer, Mr. Meester served as a
Mariner, spending five years at sea with the
merchant fleet, rising to the rank of First
Officer before joining Sea-Land Service in
1992. His postgraduate education includes
advanced Management and Business
course work at the University of Groningen
in the Netherlands, Columbia University in
New York City, and Harvard Business
School in Massachusetts.

ALEXANDER IODCHIN
Member of the Board of Directors

Mr. Iodchin was appointed as an executive
member of the Board of Directors of
the Company with the functions of the
Secretary of the Board of Directors and
the internal auditor of Global Ports in 2008.
He resigned from the position of internal
auditor in 2011. Mr. Iodchin currently also
serves as a member of the Board of NCC
Group Limited, Railfleet Holdings Limited
and some other companies of the Group.
Mr. Iodchin has held a position as a
member of the Supervisory Board of
Forstok Invest OÜ and Baleani Invest OÜ
since February 2008.

Mr. Iodchin graduated from the Lomonosov
Moscow State University where he obtained
a Master’s Dgree in Economics. He also
completed a post-graduate programme at
the Moscow Institute for Economics and
Linguistics and the Lomonosov Moscow
State University, where he obtained a Ph.D.
in Economics. Mr. Iodchin was a teaching
assistant in the Economics Faculty of the
Lomonosov Moscow State University from
2004 until June 2008. He has a Diploma in
International Finance, Reporting Standards
and Corporate Finance.

49. The biographies of Alexander Nazarchuk, Member of the Board of Directors and CEO, and Mikhail Loganov, Member of the Board of Directors and CFO, are presented on page 22
50. Appointed in January 2013. The members of Audit and Risk Committee, Nomination Committee, Remuneration Committee

4. CORPORATE GOVERNANCEGlobal PortsMICHAEL THOMAIDES
Member of the Board of Directors,
Member of Nomination Committee

LAURA MICHAEL
Member of the Board of Directors

Mr. Thomaides was appointed as an
executive member of the Board of Directors
in February 2008. He has also been a
Director at Leverret Holding Ltd (Cyprus)
since 2007. He previously served as a
director at Globaltrans Investment Plc from
2004 until 2008. Mr. Thomaides graduated
with Honours from the London Southbank
University, and has a Bachelor of Science
Degree in Consumer Product Management.
He is a member of the Cyprus Chamber of
Commerce.

GEORGE SOFOCLEOUS
Member of the Board of Directors

Mr. Sofocleous is a part-qualified Chartered
Certified Accountant currently employed at
Orangefield Fidelico Limited, the Cyprus
office of Orangefield Group. Prior to joining
Orangefield in 2012, he worked at Consulco
Ltd, Intertax Audit Ltd, Moore Stephens
(Limassol) Ltd, and Savvides Audit Ltd
based in Cyprus. Mr. Sofocleous studied
Accounting at the Cyprus College
(European University Cyprus) and is a
student/member of the Association of
Chartered Certified Accountants of UK
(ACCA) and the Institute of Certified Public
Accountants of Cyprus (ICPAC).

Ms. Michael is a member of the Institute of
Chartered Accountants of Scotland (ICAS)
and the Certified Public Accountants of
Cyprus (ICPAC). Ms. Michael is the Finance
Manager of Orangefield Fidelico Limited,
the Cyprus Office of Orangefield Group.
Before joining Orangefield Fidelico in 2011,
she was employed at Deloitte Ltd (Cyprus)
between 2009 to 2011 and started her
career at Ernst & Young (London), where
she worked from 2006 until 2009.
Ms. Michael has a BSc Accounting and
Management degree from the University of
Bristol, England.

CHRYSTALLA STYLIANOU
Member of the Board of Directors

Ms. Stylianou is a part-qualified Chartered
Certified Accountant currently working at
Orangefield Fidelico Limited, the Cyprus
office of Orangefield Group. Prior to joining
Orangefield, she worked at IronFX Financial
Services Ltd, Baker Tilly Klitou and DJC
Certified Public Accountants based in
Cyprus. Ms. Stylianou studied Accounting
at the University of Northumbria at
Newcastle, England and is a student
member of the Association of Chartered
Certified Accountants (ACCA) in the UK.

KONSTANTIN SHIROKOV
Member of Audit and Risk Committee

Mr. Shirokov was appointed as a
non-executive member of the Board of
Directors of the Company in 2008.
Mr. Shirokov is currently Financial Manager
and a member of revision committees of
a number of companies of TIHL’s group;
positions he has held since 2005 and 2007,
respectively. Mr. Shirokov has served as a
member of the Board of Directors and an
internal auditor for Globaltrans since 2008.
He has more than 10 years of experience in
the areas of financial planning, budgeting,
and auditing.

Mr. Shirokov graduated from the Finance
Academy of the Russian Federation where
he studied International Economic
Relations. Mr. Shirokov has also completed
a course in Business Management at the
Business School of Oxford Brookes
University, UK.

CONSTANTINOS ECONOMIDES
Member of the Board of Directors

Mr. Economides is the Managing Director of
Orangefield Fidelico Limited. He is a Fellow
Chartered Accountant, a member of the
Certified Public Accounts of Cyprus (ICPAC)
and a member of the Institute of Chartered
Accountants in England & Wales (ICAEW)
from where he holds a practicing certificate
to engage in public service in areas of
Taxation, Management Consultancy and
Corporate Finance. He is a member of the
Society of Trust and Estate Practitioners,
the Institute of Financial Accountants, the
International Tax Planning Association
and a member of the Board of Directors
of the Cyprus Fiduciary Association.
Mr. Economides is ACA qualified and
holds an MSc in Management Sciences
from Warwick Business School. Prior to
setting up his own firm, Fidelico, in 2006
he worked at Ernst & Young (London) and
Deloitte (Cyprus).

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
10

The number of non-executive
Board members, which
includes the Chairman

The Board of Global Ports believes that
implementing and maintaining high
governance standards are vital to
underpinning its business objectives and
helping to drive shareholder value.

In order to safeguard the rights of Global
Ports Investments’ (GPI) shareholders,
the Group is determined to match best
international corporate governance
practices. As such, the Group seeks to
ensure its corporate governance framework
is in line with the expectations of investors
and other stakeholders.

Policies
To improve its corporate governance
framework in accordance with
internationally recognised best practices,
GPI adopted a number of key policies and
procedures in 2008.

These policies and practices are designed
to ensure the Group is focused on
upholding its responsibilities to
shareholders. They include:

• Appointment policy;

• Terms of reference of the Board of

Directors;

• Terms of reference of the Audit and

Risk Committee;

• Terms of reference of the Nomination

Committee;

GPI’s Code of Ethics and Conduct outlines
the general business ethics and acceptable
standards of professional behaviour we
expect of all our Directors, employees and
contractors. This Code, which is given
to all new staff as part of their induction,
means that everyone at GPI is accountable
for their own decisions and conduct.
The Code covers general behaviour
expectations, fraud and corruption
responsibilities, including approaches on
acceptance of gifts and benefits and ethics
and conflicts of interest requirements.
As such, employees are encouraged to
report any suspected breaches.

The Code is available to all staff on GPI’s
website (under the Corporate Governance
section) and also at the HR department at
each of the Group’s operating facilities. The
Code also interacts with other more detailed
policies concerning Anti-fraud policy and
Policy on reporting and investigating
allegations of suspected improper activities
(‘Whistleblowing’ policy).

The Board receives a summary of any
breaches and resulting actions on a
quarterly basis. However any significant
breaches must be immediately reported
to the Board Members.

In addition to the policies itemised above,
and in order to further strengthen the
corporate governance framework, the
Board of Directors approved the following
policies in 2012:

• Terms of reference of the Remuneration

• Anti-Corruption Policy; and

Committee;

• Anti fraud policy;

• Policy on reporting and investigating
allegations of suspected improper
activities (‘Whistleblowing’ policy);

• Code of Ethics and Conduct.

• Foreign Trade Controls Policy.

The latest version of the Terms of Reference
of the Board of Directors was approved by
the shareholders on 16 October 2012 and
came into force on 28 November 2012.
It is available for review on the Global
Ports website.

Board of Directors
The role of the Board of Directors
GPI is governed by its Board of Directors
(‘the Board’) which is collectively responsible
to the shareholders for the successful
performance of the Group.

The primary role of the Board is to provide
leadership to the Group, to set the Group’s
long-term strategic objectives, to monitor
management and financial performance
against those objectives, and to develop
robust corporate governance and risk
management practices.

Election of Directors
The Board of Directors leads the process in
making new Board member appointments
and makes recommendations on
appointments to shareholders. In
accordance with the Terms of Reference
of the Board, all Directors are subject to
election by shareholders at the first Annual
General Meeting after their appointment,
and to re-election at intervals of no more
than three years. Any term beyond six years
for a Non-Executive Director is subject to
rigorous review, and takes into account the
need for a progressive system of refreshing
of the Board.

Board composition
There are currently 14 Directors on
the Board. The Board comprises
10 Non-Executive Directors, including the
Chairman, and four Executive Directors.

Mr. Kim Fejfer was appointed as a Non-
Executive Director, Vice Chairman of the
Board and a member of the Remuneration,
Nomination, and Audit and Risk
Committees on 23 January 2013.
Mr. Tiemen Meester was appointed as a
Non-Executive Director and a member of
the Remuneration, Nomination, and Audit
and Risk Committees on 23 January 2013.
Mr. Robert Dirk Korbijn, Ms. Laura Michael,
Mr. Georgios Sofocleous and Ms. Chrystalla
Stylianou were appointed as Non-Executive
Directors on 23 January 2013.

4. CORPORATE GOVERNANCEGlobal Ports
“THE BOARD REVIEWS
THE SIZE OF THE BOARD
ON AN ANNUAL BASIS
AND CONSIDERS THE
PRESENT BOARD SIZE AS
APPROPRIATE FOR THE
CURRENT SCOPE AND
NATURE OF THE GROUP’S
OPERATIONS”

Mr. Constantinos Economides was
appointed as Non-Executive Director on
27 September 2013. Ms. Elia Nicolaou and
Mr. Marios Tofaros resigned as Directors on
23 January 2013, Mr. Robert Dirk Korbijn
resigned on 27 September 2013. All other
Directors were members of the Board
throughout the year ended 31 December
2013. Information regarding the Directors
serving at the date of this Report is set out
on page 42.

Chairman and Chief
Executive Officer
There is a clear division of responsibilities
between the Chairman and the Chief
Executive Office (CEO) of the Company.
The Chairman is responsible for the overall
operation, leadership and governance of
the Board. The CEO is responsible for the
day-to-day management of the Group’s
business, consistent with the strategy and
commercial objectives agreed by the Board.

Mr. Nikita Mishin is Chairman of the Board
and is responsible for the overall operation
and governance of the Board. His
responsibilities include:

• Ensuring that the Board as a whole is fully

engaged in the development and
resolution of the Group’s strategy and
business objectives;

• Reviewing and approving the agenda
of Board meetings in consultation with
the CEO;

• Ensuring that Board members receive

accurate, timely and clear information on
all matters that affect the Group;

• Promoting high standards of integrity, and
corporate governance at Board level and
across the Group;

• Monitoring communications and

encouraging dialogue between the
Company and its shareholders including
between the Board and executive

management with a view to facilitating
constructive relations.

The CEO, Alexander Nazarchuk, is
responsible for the executive management
of Global Ports’ business, consistent with
the strategy and commercial objectives laid
by the Board. His responsibilities include:

• Developing the Group’s strategy and
implementing the strategy agreed by
the Board;

• Managing the business day-to-day
and making and implementing
operational decisions.

Non-Executive Directors
There are 10 Non-Executive Directors of the
Group, including the Chairman. The Board
reviews the size of the Board on an annual
basis and considers the present Board size
as appropriate for the current scope and
nature of the Group’s operations.

The role of the Non-Executive Directors
is to monitor executive management
performance against the Group’s agreed
strategy and provide constructive input into
the discussions and, where required,
challenge management to ensure that
the Group’s objectives are met. The
Independent Non-Executive Directors play
a particularly important role because they
are independent of management and have
no relationship with the Company, its related
companies or their officers. Therefore
they are judged capable of exercising
independent objective judgement on
corporate matters. There are two
Independent Non-Executive Directors
on the Board, Captain Bryan Smith and
Ms. Siobhan Walker.

Captain Smith is the Senior Independent
Director (SID), and in this role he provides a
sounding board for the Chairman and is
available to meet with other Directors and
shareholders who have concerns that
cannot be addressed through the Chairman
or CEO.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
“THE NON-EXECUTIVE
DIRECTORS, LED BY THE
SENIOR INDEPENDENT
DIRECTOR, ARE RESPONSIBLE
FOR THE PERFORMANCE
EVALUATION OF THE
CHAIRMAN OF THE BOARD”

The number
of times
the Board
met in 2013

Election of Directors
The Company`s Articles of Association do
not provide for the retirement of Directors
by rotation. In accordance with the Terms of
Reference of the Board of Directors and the
resolutions adopted by the Shareholders
at the Annual General Meeting on
29 April 2013 all current Directors except
Mr. Constantinos Economides continue in
office. Mr. Constantinos Economides was
re-elected at the Annual General Meeting
of the Shareholders of the Company which
was held on 29 April 2014.

The Board nominated Mr. Alexander
Iodchin to the position of Managing Director
and granted him the powers to carry out all
business related to the business of the
Company up to a total value per transaction
of USD500 thousand. It also granted him
powers to discharge other managerial
duties related to the ordinary course of
business of the Company, including
representing the Company before any
government or government-backed
authority.

The decisions for all other matters are
reserved for the Board. The Terms of
Reference of the Board of Directors
contains the list of such reserved matters.

Team Nominees Limited has been acting
as the Company Secretary since the
Company’s incorporation in February 2008,
while Mr. Iodchin has been acting as the
Board Secretary since December 2008.

There were no significant changes in the
responsibilities of the Directors during 2013,
except Mikhail Loganov, who resigned from

the Audit and Risk Committee and
Nomination Committee following his
appointment of CFO.

Directors’ interests
The interests in the share capital of Global
Ports Investments PLC and its Group
companies, both direct and indirect,
of those who were Directors as at
31 December 2013 and 31 December
2012 are shown below:

Total number of issued shares of the
Company as at 31 December 2013 was
422,713,415 ordinary shares and
150,457,316 ordinary non-voting shares
(as at 31 December 2012: 293,750,001
ordinary shares and 176,250,000 ordinary
non-voting shares).

Board evaluation
The effectiveness of the Board, its
Committees and individual Directors is
subject to regular review. The evaluation
of the Board and individual Directors’
performance is facilitated internally or by
an external third party. The Non-Executive
Directors, led by the Senior Independent
Director, are responsible for the
performance evaluation of the Chairman
of the Board.

Board meetings
The Board meets at least four times during
the year and on an ad-hoc basis to consider
specific matters as required. In 2013 the
Board met 18 times (2012: 16) and the
matters considered included:

• the acquisition of NCC;

INTERESTS OF DIRECTORS

Name

Nikita Mishin

Type of holding

Through shareholding
in Transportation
Investments Holding
Limited and other
related entities

Shares held at
31 December 2013

Shares held at
31 December 2012

39,731,086 ordinary
shares

27,609,738 ordinary
shares

15,488,390 ordinary
non-voting shares

27,609,738 ordinary
non-voting shares

4. CORPORATE GOVERNANCEGlobal Ports
“THE AUDIT AND RISK
COMMITTEE MET
10 TIMES IN 2013,
INCLUDING FOUR
MEETINGS ATTENDED
BY THE COMPANY’S
EXTERNAL AUDITORS”

• review of the 2013 financial statements;

• approval of the 2014 budget;

• approval of capital expenditure

programmes;

• changes to the management of

the Group.

The details of Board and Committee
attendance during 2013 are set out in
the table below.

Board Committees
Since December 2008, the Board has
operated with three principal committees,
the Audit and Risk Committee, the
Nomination Committee and the
Remuneration Committee. These
committees operate within defined terms
of reference which cover the authority
delegated to them by the Board.

members are Mr. Konstantin Shirokov,
Mr. Kim Fejfer (appointed on 23 January
2013) and Mr. Tiemen Meester (appointed
on 23 January 2013). Mr. Mikhail Loganov
resigned from the Committee following his
appointment as the Chief Financial Officer
of the Company. The Committee meets at
least four times a year.

The Committee’s primary functions include
monitoring the integrity of the Company’s
financial statements and financial results
announcements; reviewing and monitoring
the effectiveness of the Company’s internal
controls and risk management systems;
overseeing the relationship with the
external auditor including reviewing the
independence, objectivity and effectiveness
of the audit process and the auditors.

The Audit and Risk Committee met 10 times
in 2013, including four meetings attended
by the Company’s external auditors. The
principal issues that were considered were:

Audit and Risk Committee
The Audit and Risk Committee comprises
of four Non-Executive Directors. It is chaired
by Ms. Siobhan Walker (an Independent
Non-Executive Director) and the other

• Review of the parent financial statements

of Global Ports Investments Plc and
consolidated financial statements of the
Group for 2012;

BOARD AND COMMITEE ATTENDANCE

Board of Directors

Nomination Committee

Remuneration Committee

Audit and Risk Committee

Michalis Thomaides

Alexander Iodchin

Bryan Smith

Nikita Mishin

Alexander Nazarchuk

Mikhail Loganov

Konstantin Shirokov

Siobhan Walker

Kim Fejfer

Tiemen Meester

Robert Korbijn

Laura Michael

Georgios Sofocleous

Chrystalla Stylianou

Constantinos Economides

–

A: Number of meetings eligible to attend during the year
B: Number of meetings attended

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
4. CORPORATE GOVERNANCE

“THE NOMINATION COMMITTEE
ENSURES THAT THE BOARD IS
COMPRISED OF INDIVIDUALS
WITH THE NECESSARY
KNOWLEDGE, SKILLS
AND EXPERIENCE”

• Review of the interim condensed

• Material financial, management and

consolidated financial statements for the
six-month period ended 30 June 2013;

operating information is accurate, reliable
and up-to-date;

• Review of press releases containing

• Actions of employees and management

financial information;

• Review of reports prepared by external
auditors on significant matters arising
from their audit and review procedures;

• Review of the fees and terms of

engagement of external auditors and
recommendation for their approval;

bodies are in compliance with the
Group’s internal policies, standards and
procedures and the applicable laws;

• Resources are procured reasonably,

used efficiently and their safe-keeping is
fully guaranteed;

• Group companies conduct their business

in compliance with applicable laws.

• Consideration and approval of non-audit
services provided by the external auditors
and their fees;

The Internal Audit function is headed by
Mr. Oleg Saprykin.

• Consideration of the independence of the
external auditors and performance and
recommendation to the Board to
recommend to shareholders to reappoint
the external auditor for the next year.

Internal Audit
The Internal Audit Function is carried out
internally by the Group’s Internal Audit
Service (‘IAS’). IAS is responsible for
analysing the systems of risk management,
internal control procedures and the
corporate governance process for the
Group with a view to obtaining a reasonable
assurance that:

• The risk management system functions

efficiently;

Nomination Committee
The Nomination Committee comprises
five Directors. It is chaired by Captain Bryan
Smith (an Independent Non-Executive
Director) and the other members are
Mr. Nikita Mishin, Mr. Alexander Iodchin,
Mr. Kim Fejfer (appointed on 23 January
2013) and Mr. Tiemen Meester (appointed
on 23 January 2013). The Committee meets
at least once each year.

The Committee is responsible for reviewing
the composition of the Board (and Board
Committees) to ensure it is comprised of
individuals with the necessary knowledge,
skills and experience to ensure it is effective
in discharging its responsibilities.

Global Ports“THE BOARD IS COMMITTED TO
EFFECTIVE COMMUNICATION
BETWEEN THE GROUP AND ITS
SHAREHOLDERS AND IT MAKES
EVERY EFFORT TO ENSURE
THAT SHAREHOLDERS ARE
KEPT INFORMED OF
SIGNIFICANT COMPANY
DEVELOPMENTS”

The Committee regularly reviews the
structure of the Board and makes
recommendations to the Board as to any
changes. The Committee also manages
the process for identifying and making
recommendations regarding future
appointments to the Board of Directors.

It is also makes recommendations to the
Board on the composition of the Audit
and Risk Committee and Remuneration
Committees.

In 2013 the Nomination Committee met
once to consider and recommend to
the Board a candidate for the position of
Chief Financial Officer of the Company.

Remuneration Committee
The Remuneration Committee comprises
of four Directors. It is chaired by
Captain Bryan Smith (an Independent
Non-Executive Director), and the other
members are Mr. Nikita Mishin, Mr. Kim
Fejfer (appointed on 23 January 2013)
and Mr. Tiemen Meester (appointed on
23 January 2013). Mr. Mikhail Loganov
resigned from the Remuneration
Committee after his appointment as the
Chief Financial Officer of the Company. The
Committee meets at least once each year.

The Committee is responsible for reviewing
and recommending the Company’s
remuneration policies. It is also responsible
for determining, on behalf of the Board, the
individual remuneration packages of the
Chairman, the Executive Directors and
senior managers of the Company.

The remuneration of Independent Directors
is a matter for the Chairman and the
Executive Directors. No Director can be
involved in any decisions relating to his or
her own remuneration.

In 2013 the Committee met three times.

Board remuneration
Directors serve on the Board pursuant
to the letters of appointment. Such letters
of appointment specify the terms of
appointment and the remuneration
of Directors. Levels of remuneration for
Non-Executive Directors reflect the time
commitment, responsibilities of the role and
membership of the respective committees
of the Board. Directors are also reimbursed

for expenses associated with discharge of
their duties. Non-Executive Directors are not
eligible for bonuses, retirement benefits or to
participate in any incentive plans operated
by the Company.

The Company’s shareholders approved the
remuneration of the Board on 29 April 2013.

The total remuneration of the Board of
Directors in 2013 amounted to USD
859,000 (2012: USD 928,000).

Investor relations
The Board is committed to effective
communication between the Group and its
shareholders and it makes every effort to
ensure that shareholders are kept informed
of significant Company developments.

The Company’s shares are listed on the
London Stock Exchange in the form of
Global Depositary Receipts (GDRs), and
Global Ports aims to comply with the
information disclosure standards required
by the London Stock Exchange.

The Group’s approach to external relations
is guided by its information policy which
aims to meet international best practice
standards in Investor relations. The main
principles of the Company’s information
policy are regularity, efficiency, availability,

The number of times
the Remuneration
Committee
met in 2013

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
reliability, completeness, balance, equality
and safety of information resources

operations first-hand and meet with
senior management.

The Company Secretary is responsible for
safeguarding the rights and interests of
shareholders, including the establishment
of effective and transparent arrangements
for securing the rights of shareholders.

External auditors
At the Annual General Meeting of GPI an
external auditor is appointed on an annual
basis to review the financial and operating
performance of the Group.

This follows proposals drafted by the Audit
and Risk Committee for the Board of
Directors regarding the nomination of the
external auditor of the Group, selected from
a list of recognised independent auditors of
high professional repute. While drafting its
proposals, the Audit and Risk Committee
is guided by the following principles:

• Qualifications of the external auditor and

its professional reputation;

• Quality of services; and

• Compliance with requirements for
external auditor independence.

In 2013 the Shareholders of GPI
re-appointed PricewaterhouseCoopers
Limited as the external auditor for the
purposes of auditing the Group’s IFRS
financial statements for the year 2013.
PricewaterhouseCoopers Limited was
re-elected as the auditor for the year 2014
at the Annual General Meeting held on
29 April 2014.

The Company Secretary’s responsibilities
include ensuring compliance with the law
and the Company’s Charter and internal
documents. The Company Secretary
organizes the communication process
between the parties to corporate relations,
including the preparation and holding of
General Meetings; storage, maintenance
and dissemination of information about the
Company and reviewing communications
from shareholders.

There is an ongoing programme of
meetings and dialogue between Board
members, the executive team, institutional
investors and analysts. These meetings
provide the opportunity to discuss
developments at the Group and for
shareholders and analysts to voice their
opinions and give valuable feedback to the
Group’s representatives.

The IR Department interacts with the
investor community on a regular basis,
reporting on the most important matters to
the Group’s senior management. The IR
team maintains a continuous dialogue with
the investor community by arranging
teleconferences to discuss the Group’s
financial performance, one-on-one
meetings and participation in international
conferences. The Group also organises
regular site visits for investors so that they
can see the Group’s facilities and

“THERE IS AN ONGOING
PROGRAMME OF MEETINGS
AND DIALOGUE BETWEEN
BOARD MEMBERS,
THE EXECUTIVE TEAM,
INSTITUTIONAL INVESTORS
AND ANALYSTS”

4. CORPORATE GOVERNANCEGlobal Ports
RISK MANAGEMENT


WELL-DEFINED RISK MANAGEMENT
PRINCIPLES, DERIVED FROM
EXPERIENCE, BEST PRACTICE
AND GOOD GOVERNANCE

BY IDENTIFYING AND MITIGATING RISK, WE SEEK TO ACHIEVE LONG-TERM GROWTH
FOR OUR SHAREHOLDERS. RISKS ARE THOSE THINGS THAT COULD PREVENT US FROM
ACHIEVING OUR CORPORATE GOALS

“GLOBAL PORTS HAS
COMPREHENSIVE RISK
CONTROL AND
MANAGEMENT SYSTEMS
IN PLACE TO PREVENT
POTENTIAL ADVERSE
EFFECTS OF CHANGES IN
ITS ENVIRONMENT OR
SITUATION”

Risk management process,
principal risks and uncertainties
The Company’s risk management efforts
are focused on mitigating the potential
negative impact on its business from
changes in the external and internal
environment. That is despite the Group
ensuring it has as well-balanced a structure
as possible in which sites are owned in
partnership with world industry leaders and
having managers who have been in place
since its foundation over 15 years ago.

We believe that identifying and managing
risk is central to achieving the corporate
objective of delivering long-term value
to shareholders.

The Group’s key risks are being regularly
discussed with the members of the Group’s
Board of Directors. Risks are defined as
the possibility that an action, or inaction,
would adversely affect the achievement of
corporate goals. The Board has delegated
the oversight of risk management to the
Audit and Risk Committee. In addition, it
delegated to the Chief Executive Officer
responsibility for the effective and efficient
implementation and maintenance of the risk
management system. The Board members,

through the Audit and Risk Committee,
review the effectiveness of systems that
have been established for this purpose. The
Board has adopted a Risk Management
Policy and a Risk Management Standard
that provide a consistent framework for
the identification, assessment and
management of the risks. The Group’s
risk management system is subject to
a continual improvement process.

The Group bases its risk management
activity on a series of well-defined risk
management principles, derived from
experience, best practice and corporate
governance principles.

Effective risk management is critical to
achieving the Group’s strategic objectives.
Global Ports has comprehensive risk
control and management systems in place
to prevent the potential adverse effects of
changes in its environment or situation.

In order to manage risks, the Board of
Directors has established a risk
management process comprising the
necessary organisational rules and
procedures for identifying risks at an early
stage, and is taking proactive steps to

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013manage the risks inherent to any
commercial activity. The Board of Directors
systematically monitors and undertakes an
assessment of risks critical to the Group’s
performance and strategic delivery. After
identifying and assessing the risk, the
Company then defines control measures
aimed at reducing the likelihood of its
occurrence and the potential impact. The
Group’s business involves a certain number
of risks, the most notable of which are
presented here.

The order in which the following risks are
presented is not intended to be an indication
of the probability of their occurrence or
the magnitude of their potential effects.
Additional risks that are not known to the
Group at this time, or that it currently
believes are immaterial, could also have
a material adverse effect on the Group’s
business, financial position, results of
operations or future prospects and the
trading price of the GDRs.

For more detail on some of the risks
set forth here, see the prospectus dated
20 December 2013 (‘Risk Factors’,
pages 22-58), available for viewing on
the corporate website of Global Ports at
www.globalports.com/globalports/
investors/reporting-transactions/
corporate-transactions.

Strategic risks
• The Group is dependent on the growth
of trade volumes and, accordingly, on
economic growth and the liberalisation
of trade;

• The Group may be subject to increasing
competition from other container and oil
products terminals, and consolidation
between container terminal operators
and container shipping companies
may enable the Group’s competitors
to compete more effectively. The
introduction of significant new capacity

planned by the Group’s competitors
could result in surplus capacity and
subject the Group to intensified price
competition and lower utilisation;

• The Group’s growth on certain terminals

depends on substantial capital
investment and it may not have sufficient
capital to make, or may be restricted by
covenants in financing agreements from
making, future capital expenditures and
other investments as it deems necessary
or desirable;

• The NCC acquisition and other possible
expansions through acquisition entail
certain risks, and the Group may be
exposed to unexpected risks and
experience problems realising the
intended benefits of the NCC acquisition
or other potential acquisitions;

• The Group’s current operations and
future expansion may depend on the
construction of new quays, dredging
of existing quays and canals, and
maintenance of quay drafts, which
are governed by ports and other
governmental authorities and are
outside of the Group’s control;

• The political instability in Ukraine, tension
between Russia and Ukraine and the
sanctions imposed by the United States,
the European Union and other countries
and potential imposition of further
sanctions, asset freezes, travel limitations
and certain other measures could
adversely affect our ability to deal with
certain persons and entities in Russia,
trade volumes, the Russian economy or
demand for commodities.

Operational risks
• The Group is dependent on a limited

number of shipping lines and customers
for a significant portion of its business;

• The Group is subject to a wide variety of
regulations and standards requirements
and may face substantial liability if it fails to
comply with existing or future regulations
applicable to its businesses;

• The Group leases a significant amount of
the land and quays required to operate its
terminals from government agencies and
any revision or alteration of the terms of
these leases or the termination of these
leases could adversely affect the Group’s
business;

• The Group’s ability to substantially

• The Group’s Oil Products business could

increase throughput volumes depends
on the ongoing improvement and
development of railway and road
infrastructure;

• The Group’s ability to discover, evaluate

and select among alternatives to
allocate financial and human resources
for effective development and execution
of a strategic plan to achieve the strategic
objectives of the Group;

• Exposure to social and political factors
within a market environment that affect
the ability to sell products and services;

be affected by changes in Russia’s
exports of oil products and handling of
such exports at its oil products terminal in
Estonia, a decline in global demand for oil
products or in Russian oil product export
volumes or any change in trade
relationships with Estonia;

• Tariffs for certain services at some of the
GPI Group’s terminals have been, in the
past, regulated by the Russian federal
government and, as a result, the tariffs
charged for such services are subject to a
maximum tariff rate unless the Group
obtains permission to increase the
maximum tariff rate;

4. CORPORATE GOVERNANCEGlobal Ports
• The Group’s insurance policies may be

insufficient to cover certain losses;

• The Group’s competitive position and

prospects depend on the expertise and
experience of its key managers and its
ability to continue to attract, retain and
motivate qualified personnel;

• Failure of the operational information and

technology systems at the Group’s
terminals could result in disruptions to
the services it provides;

• Accidents involving the handling of

• Adverse determination of pending and
potential legal actions involving the
Company’s subsidiaries could have
an adverse effect on the Group’s
business, revenues, cash flows and
the price of the GDRs;

• The lack of independence of certain

members of the judiciary, the difficulty
of enforcing court decisions and
governmental discretion in instigating,
joining and enforcing claims could
prevent the Group from obtaining
effective redress in court proceedings.

hazardous materials and oil products at
the Group’s terminals could disrupt its
business and operations and/or subject
the Group to environmental and other
liabilities;

Financial risks
• The Company is a holding company

and its ability to pay dividends or meet
costs depends on the receipt of funds
from its subsidiaries;

• The risk of safety incidents is inherent

• The Group is subject to foreign exchange

in the Group’s businesses.

Compliance and shareholder risks
• The Group’s controlling beneficial

shareholders may have interests that
conflict with those of the holders of
the GDRs;

• The Group is exposed to risks in

connection with its interests in joint
venture and strategic partnership
businesses;

risk arising from various currency
exposures primarily with respect to
the Euro, the Russian rouble and the
US dollar. Foreign exchange risk is the
risk to profits and cash flows of the
Group arising from movement of foreign
exchange rates due to inability to
appropriately plan for and react to
fluctuations in foreign exchange rates.
Risk arises from revaluation of assets and
liabilities denominated in foreign currency
(mainly debt);

• The Group is subject to interest rate risk
due to floating rate liabilities in relation to
its leases and long-term borrowings.
Increases in interest rates may adversely
affect the Group’s financial condition;

• The Group may be subject to credit risk

due to its dependence on key customers
and suppliers;

• The Group’s indebtedness or the

enforcement of certain provisions of its
financing arrangements could affect its
business or growth prospects;

• The Group’s borrowings are subject to
certain covenants and restrictions, and
no assurance can be provided that the
Group or the terminals can promptly
monitor and forecast compliance with
such conditions through adequate
controls and monitoring processes.

General business risks
• The Group’s inability to maintain and
monitor labour relations with labour
unions;

• Failure of information systems to

adequately protect the critical data and
infrastructure from theft, corruption and
unauthorised usage.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013CORPORATE RESPONSIBILITY


WE WORK HARD TO SUPPORT
THE COMMUNITIES IN WHICH
WE OPERATE

GLOBAL PORTS PLAYS A SIGNIFICANT ROLE IN THE DEVELOPMENT
OF THE REGIONS IN WHICH IT OPERATES. THE GROUP IS EQUALLY
COMMITTED TO SAFE WORKING AND HELPING THE ENVIRONMENT

All the companies of Global Ports Group
adhere to the principle of corporate social
responsibility, taking into account the
interests of all stakeholders including their
employees, customers, local authorities
and communities. Programmes are being
implemented in every region in which the
Group’s terminals operate and these
activities are aimed at supporting the social,
cultural and economic development of
these regions.

The Group’s main activities in the field of
corporate social responsibility are as
follows: environment, health and safety,
charity and local community sponsorship,
and people.

We consider honest, constructive
collaboration with all our stakeholders to
be an important part of our dynamic
development in the international business
community and our contribution to
sustainable social development.

We recognise that community issues are
key issues for our business both now and
in the future, and that we cannot operate
independently of them.

We encourage all parts of our business
to take a proactive and business-driven
approach to donations and community
investments.

Environment
A responsible attitude towards the
environment is one of the key components
of our corporate social responsibility
approach and an important factor in
the stable, long-term development of
Global Ports. The Group seeks to comply
strictly with all applicable requirements
of environmental law in the regions where
we operate.

Health and Safety
With the activity level, in both bulk and
container operations, at Global Ports
continuously increasing, Health and Safety
remains a main priority and an ongoing
challenge for the Group. Global Ports
continues to work on installing a safety
culture in all aspects of our company and
ensures that all incidents and accidents are
evaluated with the highest priority.

Responsibility towards the environment is
at the forefront of the Group’s investment
programmes. Investments in key projects
which help to protect the environment are
mainly represented by the construction of
new local cleaning facilities at terminals’
locations and the modernisation of currently
operational cleaning equipment.

All the companies of the Group adhere to
three major Health and Safety principles:
providing safe labour conditions, involving
employees in safety rules and policies, and
training in safe behaviour. Each of these
principles includes special tools or detailed
procedures, such as:

• Regular monitoring of Occupational

Vopak E.O.S. partners with the Estonian
Nature Society, rendering financial support
to the Society’s programmes;

Health and Safety (OHS) measures at the
Company divisions for compliance with
statutory federal and local requirements;

In 2013 Vopak E.O.S. supported the
Estonian Scuba-diving Club, sponsoring an
event through the global AWARE initiative
related to cleaning ponds.

• Conduct of proper medical examinations
and regular reviews of employee health to
improve their wellbeing;

• Preventative medical action to reduce the
occurrence of occupational diseases;

• Regular workplace reviews for

compliance with working environment
standards;

4. CORPORATE GOVERNANCEGlobal Ports• VSC currently supports Nakhodka

Hospital and an orphanage house for
orphans with disabilities in Nakhodka city;

The Group companies rely on the following
fundamental principles to look after their
employees adequately in the long-term:

• Training and skills improvement for

• In 2013 VSC continued to donate to

OHS specialists, training of workers in
employing safe methods of operation,
Group-wide OHS briefings and
information circulation;

their chosen charity, the Lifeline Charity
Fund – financial support for complex
medical treatment of children with
cardiac diseases;

• Measures to increase personnel

• In 2013 Vopak E.O.S. donated to the

motivation to uphold strict compliance
with OHS requirements and promote
stronger labour discipline.

In 2013 the following main initiatives
were exercised:

• Sharing of incidents and accidents from
the global port industry with follow-up
and implementation of preventive
measures in the Group’s terminals;

• Implementation and training of
internationally recognised root
cause investigation methodologies;

• Internal and external safety reviews of all

Global Ports container terminals;

• Improved reporting structures of all

incidents within the Group.

Charity and local community
sponsorship
The Group’s cooperation with regions in
the social sphere is based on strategic
programmes in areas such as employment
and occupational guidance, health care and
the support of culture and sport, as well as
socially or physically vulnerable people.

Each Group company plays an important
role in the socio-economic status of their
respective towns and regions. The
companies invest in the development of
social infrastructure and cooperate with the
local authorities and social institutions of
their regions.

Russian Orthodox Church in Narva city.

• In 2013 VSC donated to the Serafim

Sarovsky Fund.

It is an important objective of Global Ports
to maintain and support local sport and
cultural events in the regions in which it
operates. The Group’s sponsorship
programmes are also aimed at preserving
local historical heritage, and supporting
schools, hospitals and orphanages:

• In 2013 Vopak E.O.S. sponsored the
renovation of a football stadium in
Maardu city;

• In 2013 Vopak E.O.S. sponsored the
Estonian Olympic Committee and
Football Union;

• Moby Dik supported sport activity events
for those with special needs and in 2013,
continued to support a disabled local
sportsman;

• In 2013 Vopak E.O.S. continued to donate
to the local initiative which maintains a
food bank for poor families;

• In 2013 Vopak E.O.S. continued its

sponsorship of the Maardu city youth
centre, focusing on various educational,
cultural and sports programmes;

Global Ports is committed to charitable
support and conducts the following:

• VSC sponsored a Little Crane Folk

Ensemble of Vrangel village;

• Petrolesport and VSC both support
the development and restoration
of churches;

• Moby Dik currently supports a

rehabilitation center for disabled people
in St Petersburg.

People
Global Ports employs over 4,000 people
and we consider our employees to be one
of the Group’s greatest assets. The Group
strives to create the conditions to stimulate
and realise the creative potential of its
employees and shape a corporate culture
based on professionalism, personal initiative
and responsibility.

Key areas of CSR activity in the employment
sphere include employee basic training,
support for working mothers and their
children, catering and recreation activities
for workers, employee development and
professional training, incentives for
employee improvement, social support for
retirees and veterans, insurance and many
other kinds of benefits.

• Providing adequate wage levels and

social environment for our employees
(i.e. sponsorships of various celebration
parties for employees and their children);

• Offering improved procedures for

employee recruitment, adaptation and
skill development through professional
training programmes, training to acquire
additional skills, and skill improvement
across all areas of professional expertise;

• Creating a safe and comfortable

operating environment;

• Offering health improvement

programmes for employees and their
families, providing preventive treatment
for those employees who need it;

• Providing financial assistance, medical

and special-purpose charitable support
for its retirees.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

DEFINITIONS

Terms that require definitions are marked
with capital letters in this Annual Report
and definitions of which are provided below
in alphabetical order:

Adjusted EBITDA (a non-IFRS financial
measure) for Global Ports Group is defined
as profit for the period before income tax
expense, finance income/(costs) – net,
depreciation of property, plant and
equipment, amortisation of intangible
assets, other gains/(losses)-net, impairment
charge of property, plant and equipment
and impairment charge of goodwill; for
NCC Group is defined as profit for the
period before income tax expense, foreign
exchange gains/(loss), net, finance costs,
finance income and depreciation and
amortisation expenses adjusted further
certain non-cash or one-off nonrecurring
gains and losses included within other
income/(expenses), net in Note 8 of the
NCC Group Financial Information; and for
the Global Ports Group and NCC Group
on an Illustrative Combined basis.

There are certain differences in the format
and the presentation layout of the GPI
Financial Information and the NCC Financial
Information, which are relevant to the
calculation of Adjusted EBITDA. In particular,
included within other income/(expenses),
net, in Note 8 to the NCC Audited Annual
Financial Statements, are certain non-cash
or one-off items which would be excluded
from Adjusted EBITDA calculation had the
NCC Financial Information been prepared in
accordance with the format and layout of the
GPI Financial Information.

Adjusted EBITDA Margin (a non-IFRS financial
measure) is calculated as the applicable
Adjusted EBITDA divided by the applicable
revenue, expressed as a percentage.

Average Storage Capacity is a storage capacity
available at Vopak E.O.S. oil products
terminals, averaged for the beginning and
end of the period.

Baltic Sea Basin: the geographic region of
northwest Russia, Estonia and Finland
surrounding the Gulf of Finland on the eastern
Baltic Sea, including St Petersburg, Tallinn,
Helsinki and Kotka.

Container Throughput in the Russian Federation
Ports is defined as total container throughput
of the ports located in the Russian Federation
excluding half of cabotage cargo volumes.
Respective information is sourced from
ASOP (“Association of Sea Commercial
Ports”, www.morport.com).

Cash Costs of Sales of Russian Ports segment
is defined as Cost of Sales, Adjusted for
depreciation and amortisation of intangible
assets, a non-IFRS measure.

Cash Costs of Sales of Oil Products Terminal
segment is defined as Cost of Sales, Adjusted
for depreciation and amortisation of
intangible assets, a non-IFRS measure.

Cash Cost of Sales is defined as Cost of Sales,
Adjusted for Impairment less depreciation
and amortisation of intangible assets,
a non -IFRS measure.

Cost of Sales, Adjusted for Impairment is
defined as cost of sales less impairment
charge of property, plant and equipment
and impairment charge of goodwill,
a non-IFRS measure.

Far East Basin is defined as the geographic
region of southeast Russia, surrounding the
Peter the Great Gulf, including Vladivostok
and the Nakhodka Gulf, including Nakhodka
on the Sea of Japan.

FCT includes First Container Terminal ZAO
that owns and manages a container terminal
in St Petersburg port, North-West Russia.
The Global Ports Group owns a 100%
effective ownership interest in FCT. The
results of FCT have been fully consolidated in
the consolidated financial statements of the
NCC for the year ended 31 December 2013.

Finnish Ports segment consists of two
terminals in Finland, MLT Kotka and MLT

Helsinki (in the port of Vuosaari), in each of
which Container Finance currently has a 25%
effective ownership interest. The financial
results of the Finnish Ports segment have
been proportionally consolidated in
the Global Ports Group’s report and
consolidated financial information for the
year ended 31 December 2013.

Functional Currency is defined as the currency
of the primary economic environment in
which the entity operates. The functional
currency of the Company and certain
other entities in the Global Ports Group is
US dollars. The functional currency of the
Global Ports Group’s operating companies
for the years under review was (a) for the
Russian Ports segment, the Russian rouble,
(b) for Oil Products Terminal segment, and
(c) or the Finnish Ports segment, the Euro.

The functional currency for Russian subsidiaries
of the NCC Group is the Russian Ruble, and for
Cypriot and British Virgin Islands subsidiaries,
it is the United States Dollar (“USD”). For
purposes of the consolidated financial
statements, the results and financial position
of each NCC Group’s entity are expressed
in USD, which is the functional currency of
the Parent and the presentation currency for
the consolidated financial statements.

Gross Container Throughput represents total
container throughput of a Global Ports
Group’s terminal or a Global Ports Group’s
operating segment shown on a 100% basis.
For the Russian Ports segment it excludes
the container throughput of the Global Ports
Group’s inland container terminal, Yanino.

The Gross Container Throughput of NCC Group
represents total container throughput of the
NCC Group’s terminals shown on a 100%
basis, it excludes the container throughput
of the NCC Group’s inland container terminal,
Logistika Terminal.

Gross Throughput is throughput shown on
a 100% basis for each terminal, including
terminals held through joint ventures and
proportionally consolidated.

Logistika Terminal (LT) includes NCC
Logistika OOO that owns and manages
a container terminal, located to the side
of the St. Petersburg – Moscow road,
approximately 17 kilometres from FCT and
operates in the Shushary industrial cluster.
The Global Ports Group owns a 100%

4. CORPORATE GOVERNANCEGlobal Ports
effective ownership interest in FCT. The
results of LT have been fully consolidated in
the consolidated financial statements of the
NCC for the year ended 31 December 2013.

Net Debt (a non-IFRS financial measure) is
defined as a sum of current borrowings and
non-current borrowings, less cash and cash
equivalents and bank deposits with the initial
maturity over 90 days.

Oil Products Terminal segment consists of
the Global Ports Group’s 50% ownership
interest in Vopak E.O.S. (in which Royal
Vopak currently has a 50% effective
ownership interest). The financial results
of the Oil Products Terminal segment are
proportionally consolidated and are referred
to as “VEOS segment” in the consolidated
financial statements of the Group.

Operating Cash Costs of Oil Products Terminal
Segment is defined as total Oil Products
Terminal segment’s cost of sales and
administrative, selling and marketing
expenses, less segment’s depreciation
and amortisation of intangible assets,
less impairment charge of property, plant
and equipment and impairment charge
of goodwill, a non-IFRS measure.

Operating Cash Costs of Russian Ports Segment
is defined as total Russian Ports segment’s
cost of sales and administrative, selling
and marketing expenses, less segment’s
depreciation and amortisation of intangible
assets, less impairment charge of property,
plant and equipment and impairment
charge of goodwill, a non-IFRS measure.

Operating Cash Costs of Finnish Ports Segment
is defined as total Finnish Ports segment’s
cost of sales and administrative, selling
and marketing expenses, less segment’s
depreciation and amortisation of intangible
assets, less impairment charge of property,
plant and equipment and impairment charge
of goodwill, a non-IFRS measure.

Operating Profit Adjusted for Impairment
is defined as revenue less Cost of Sales,
Adjusted for Impairment less administrative,
selling and marketing expenses, less other
gains/(losses) – net, a non- IFRS measure.

PLP includes Petrolesport OAO, OOO
Farwater and various other entities (including
some intermediate holdings) that own
and manage a container terminal in

St Petersburg port, North-West Russia. The
Global Ports Group owns a 100% effective
ownership interest in PLP. The results of
PLP have been fully consolidated in the
consolidated financial statements of the
Group for the year ended 31 December 2013.

Profit Before Income Tax Adjusted for
Impairment is defined as Operating Profit
Adjusted for Impairment less finance costs
– net, a non-IFRS measure.

Profit for the Period Adjusted for Impairment
is defined as Profit Before Income tax
Adjusted for Impairment plus deferred
tax credit related to the impairment,
a non-IFRS measure.

Revenue per CBM of Storage is defined as
the total revenue of Oil Products Terminal
segment for a respective period divided by
Average Storage Capacity during that period.

Revenue per Tonne of Throughput is defined
as the total revenue of Oil Products Terminal
segment for a respective period divided
by Oil Products Terminal segment’s Gross
Throughput in tonnes.

Russian Ports segment consists of the
Global Ports Group’s 100% interest in PLP,
100% interest in VSC (with DP World having
25% interest till October 2012), and 75%
interest in Moby Dik and Yanino (in each of
which Container Finance currently has
a 25% effective ownership interest). The
financial results of Moby Dik and Yanino are
proportionally consolidated and the financial
results of PLP and VSC are fully consolidated.

Russian Ports segment of the Enlarged Global
Ports Group consists of the Group’s 100%
interest in PLP, FCT and VSC and Logistika
Terminal, 80% interest in ULCT (in which
Eurogate currently has a 20% effective
ownership interest), 75% interest in Moby Dik
and Yanino (in each of which Container
Finance currently has a 25% effective
ownership interest). The financial results
of ULCT, Moby Dik and Yanino are
proportionally consolidated.

Ro-Ro, roll on-roll off means cargo that can
be driven into the belly of a ship rather than
lifted aboard. Includes cars, buses, trucks
and other vehicles.

TEU is defined as twenty-foot equivalent
unit, which is the standard container used

worldwide as the uniform measure of
container capacity; a TEU is 20 feet
(6.06 metres) long and eight feet
(2.44 metres) wide and tall.

Total Operating Cash Costs is defined as Global
Ports Group’s cost of sales, administrative,
selling and marketing expenses, less
depreciation and amortisation of intangible
assets less impairment charge of property,
plant and equipment and impairment charge
of goodwill, a non-IFRS measure.

ULCT includes Ust-Luga Container Terminal
OAO that owns and manages a container
terminal in in the large multi-purpose
Ust-Luga port cluster on the Baltic Sea,
Russia. The Global Ports Group owns an
80% effective ownership interest in ULCT,
Eurogate currently has a 20% effective
ownership interest. The results of ULCT
have been proportionally consolidated in
the consolidated financial statements of
the NCC Group for the year ended
31 December 2013.

Vopak E.O.S. includes AS Vopak E.O.S.
and various other entities (including an
intermediate holding) that own and manage
an oil products terminal in Muuga port near
Tallinn, Estonia. The Global Ports Group
owns a 50% effective ownership interest
in Vopak E.O.S. The remaining 50%
ownership interest is held by Royal Vopak.
The results of Vopak E.O.S. have been
proportionally consolidated in the
consolidated financial statements of the
Group for the year ended 31 December 2013.

VSC includes Vostochnaya Stevedoring
Company OOO and various other entities
(including some intermediate holdings) that
own and manage a container terminal in
Vostochny port near Nakhodka, Far-East
Russia. The Global Ports Group owns a
100% effective ownership interest in VSC.
The results of VSC have been fully
consolidated in the consolidated financial
statements of the Group for the year ended
31 December 2013.

Weighted average effective interest rate is the
average of interest rates weighted by the
share of each loan in the total debt portfolio.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

PRESENTATION
OF INFORMATION

Unless stated otherwise, financial
information presented in this Annual Report
is derived from the audited consolidated
financial information of Global Ports
Investments PLC (‘the Company’ and,
together with its subsidiaries and joint
ventures, ‘Global Ports’ or ‘the Global Ports
Group’) for the year ended 31 December
2013 prepared in accordance with
International Financial Reporting Standards
(‘IFRS’), as adopted by the European Union
and the requirements of Cyprus Companies
Law, Cap. 113 and from the consolidated
financial information of NCC (together with
its subsidiaries and joint ventures, ‘NCC’
or ‘the NCC Group’) for 2013 and prepared
in accordance with International Financial
Reporting Standards adopted by the
European Union (“IFRS”). The Global Ports
Group’s and NCC Group’s audited
consolidated financial statements for the
year ended 31 December 2013 are available
at the Global Ports Group’s corporate
website (www.globalports.com).

The financial information is presented in
US dollars, which is also the functional
currency of the Company and certain other
entities in the Global Ports Group. The
functional currency of the Global Ports
Group’s operating companies for the
periods under review was (a) for the Russian
Ports segment, the Russian Ruble, and
(b) for Oil Products Terminal segment and
for the Finnish Ports segment, the Euro.

The functional currency for Russian
subsidiaries of the NCC Group is the
Russian Ruble, and for Cypriot and British
Virgin Islands subsidiaries, it is the United

States Dollar (‘USD’). For purposes of the
consolidated financial statements, the
results and financial position of each
NCC Group’s entity are expressed in USD,
which is the functional currency of the
Parent and the presentation currency for
the consolidated financial statements.

Certain financial information which is
derived from management accounts
is marked in this Annual Report with
an asterisk {*}.

In this Annual Report, the Global Ports
Group has used certain non-IFRS financial
information as supplemental measures of
the Global Ports Group’s and NCC Group’s
operating performance.

Information (including non-IFRS financial
measures) requiring additional explanation
or defining is marked with initial capital
letters and the explanations or definitions
are provided in Definitions on page 58 of
this Annual Report.

Rounding adjustments have been made
in calculating some of the financial and
operational information included in this
Annual Report. As a result, numerical
figures shown as totals in some tables
may not be exact arithmetic aggregations
of the figures that precede them.

Market share data has been calculated
using the information published by the
Association of Sea Commercial Ports
(‘ASOP’), www.morport.com.

4. CORPORATE GOVERNANCEGlobal Ports
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APPENDICES

A DETAILED EXPLANATION
OF GLOBAL PORTS GROUP’S
FINANCIAL PERFORMANCE
IN 2013.

INCLUDES DIRECTORS’
REPORT AND INDEPENDENT
AUDITOR’S REPORT.

5
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APPENDIX 1:
DIRECTORS’ REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2013

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Board of Directors and other officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Report of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Directors’ Responsibility Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Consolidated income statement for the year ended 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Consolidated statement of comprehensive income for the year ended 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Consolidated balance sheet as at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Consolidated statement of changes in equity for the year ended 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Consolidated cash flow statement for the year ended 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2 Basis of preparation and summary of significant accounting policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3 Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

4 Critical accounting estimates and judgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

5 Segmental information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

6 Expenses by nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

7 Other gains/(losses)– net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

8 Employee benefit expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

9 Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

11 Net foreign exchange (losses)/ gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

12 Basic and diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

13 Dividend distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

14 Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

16 Financial instruments by category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

17 Credit quality of financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

19 Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

20 Bank deposits with maturity over 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

21 Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

22 Share capital and share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

23 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

24 Derrivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

25 Deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

26 Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

27 Joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

28 Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

29 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

30 Business combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

31 Transactions with non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

32 Related party transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

33 Events after the balance sheet date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports

BOARD OF DIRECTORS AND OTHER OFFICERS

BOARD OF DIRECTORS
Mr. Nikita Mishin (appointed 15 December 2008)
(Mr. Mikhail Loganov is the alternate to Mr. Nikita Mishin)
Chairman of the Board of Directors
Non-Executive Director
Member of Remuneration and Nomination Committees

Mr. Kim Fejfer (appointed 23 January 2013)
(Mrs. Iana Boyd Penkova and Mr. Christian Moller Laursen are the alternates to Mr. Kim Fejfer)
Vice Chairman of the Board of Directors
Non-Executive Director
Member of Remuneration, Nomination and Audit and Risk Committees

Capt. Bryan Smith (appointed 19 August 2008)
Senior Independent Non-Executive Director
Chairman of Remuneration and Nomination Committees

Mrs. Siobhan Walker (appointed 30 May 2011)
Independent Non-Executive Director
Chairman of Audit and Risk Committee

Dr. Alexander Nazarchuk (appointed 15 December 2008)
(Mr. Alexander Iodchin is the alternate to Dr. Alexander Nazarchuk)
Executive Director
Chief Executive Officer

Mr. Michalis Thomaides (appointed 29 February 2008)
Executive Director

Mr. Alexander Iodchin (appointed 18 August 2008)
Executive Director
Member of Nomination Committee

Mr. Mikhail Loganov (appointed 15 December 2008)
Non-executive Director up to 11 October 2013, Executive Director as from 11 October 2013
Chief Financial Officer as from 11 October 2013
Member of Remuneration and Audit and Risk Committees up to 11 October 2013

Mr. Konstantin Shirokov (appointed 15 December 2008)
Non-Executive Director
Member of Audit and Risk Committee

Ms. Elia Nicolaou (appointed 22 June 2009, resigned on 23 January 2013)
Non-Executive Director

Mr. Marios Tofaros (appointed 26 October 2009, resigned on 23 January 2013)
Non-Executive Director

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013BOARD OF DIRECTORS AND OTHER OFFICERS (CONTINUED)

BOARD OF DIRECTORS (CONTINUED)

Mr. Robert Dirk Korbijn (appointed 23 January 2013, resigned on 27 September 2013)
(Mr. Constantinos Economides is the alternate to Mr. Robert Dirk Korbijn)
Non-Executive Director

Mr. Tiemen Meester (appointed 23 January 2013)
(Mrs. Iana Boyd Penkova is the alternate to Mr. Tiemen Meester)
Non-Executive Director
Member of Remuneration, Nomination and Audit and Risk Committees

Ms. Laura Michael (appointed 23 January 2013)
Non-Executive Director

Mr. Georgios Sofocleous (appointed 23 January 2013)
Non-Executive Director

Ms. Chrystalla Stylianou (appointed 23 January 2013)
Non-Executive Director

Mr. Constantinos Economides (appointed 27 September 2013)
Non-Executive Director

Board support
The Company Secretary is available to advise all Directors to ensure compliance with the Board procedures. Also a procedure is in place to enable
Directors, if they so wish, to seek independent professional advice at the Company’s expense.

Company Secretary

Team Nominees Limited
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus

Registered office
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsREPORT OF THE BOARD OF DIRECTORS

The Board of Directors presents its report together with the audited consolidated financial statements of Global Ports Investments Plc (hereafter also
referred to as “GPI” or the “Company”) and its subsidiaries and joint-ventures (hereinafter collectively referred to as the “Group”) for the year ended 31
December 2013. The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (hereafter also
referred as “IFRS”) as adopted by the European Union (“EU”) and the requirements of Cyprus Companies Law, Cap. 113.

Principal activities
The principal activities of the Group, which are unchanged from the previous year, are the operation of container and oil products terminals in Russia
and the Baltics. The Group offers its customers a wide range of services for their import and export logistics operations.

Review of Developments, Position and Performance of the Group's Business
The net profit of the Group for the year ended 31 December 2013 was US$114,067 thousand (2012: US$123,474 thousand). On 31 December
2013 the total assets of the Group were US$3,413,779 thousand (2012: US$1,308,915 thousand) and the net assets were US$1,192,677 thousand
(2012: US$819,286 thousand). The financial position, development and performance of the Group as presented in these consolidated financial
statements are considered satisfactory.

On 27 December 2013 GPI completed the acquisition of 100% of the share capital of NCC Group Limited, (together with its subsidiaries, “NCC
Group”), the second largest container terminals operator in Russia (the “NCC Acquisition”). See Note 30 for further details.

Principal Risks and Uncertainties
The Group’s financial risk management and critical accounting estimates and judgments are disclosed in Notes 3 and 4 to the consolidated
financial statements.

The Group’s contingencies are disclosed in Note 28 to the consolidated financial statements.

The Board has adopted a formal process to identify, evaluate and manage significant risks faced by the Group.

Future Developments of the Company
The Board of Directors does not expect any significant changes in the activities of the Group in the foreseeable future.

Results
The Group’s results for the year are set out on pages 14 and 15. The Board of Directors recommends the payment of a dividend as detailed below
and the remaining profit for the year is retained.

Dividends
Pursuant to the Articles of Association the Company may pay dividends out of its profits. To the extent that the Company declares and pays
dividends, owners of Global Depositary Receipts (hereafter also referred as “GDRs”) on the relevant record date will be entitled to receive dividends
payable in respect of Ordinary Shares underlying the GDRs, subject to the terms of the Deposit Agreement. The Company expects to pay dividends
in US Dollars. If dividends are not paid in US Dollars, they will be converted into US Dollars by the Depositary and paid to holders of GDRs net of
currency conversion expenses.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

Dividends (continued)
The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries and joint-ventures to pay dividends
to the Company in accordance with the relevant legislation and contractual restrictions. The payment of such dividends by its subsidiaries and joint-
ventures is contingent upon the sufficiency of their earnings, cash flows and distributable reserves. The maximum dividend payable by the Company’s
subsidiaries and joint-ventures is restricted to the total accumulated retained earnings of the relevant subsidiary or joint-venture, determined
according to the law applicable to each entity.

During the year 2013 the Company has declared dividends in the total amount of US$164.5 million (US$0.35 per share). Dividends amounting to
US$150.4 million were paid during 2013 and remaining balance amounting to US$14.1 million was payable at 31 December 2013.

The Board of Directors of the Company recommends the payment of a dividend for the year 2013 amounting to US$11.463 million (US$0.02 per share).
The dividend is subject to approval by the shareholders at the Annual General Meeting. These financial statements do not reflect the dividend payable.

During 2012 the Company declared and paid dividends in the total amount of US$79.9 million (US$0.17 per share).

Share Capital
Authorised share capital
On 16 October 2012 the Company converted 176,250,000 of its ordinary authorised ordinary shares into ordinary non-voting shares. As a result
of this conversion, the authorised share capital of the Company amounted to US$53,000 thousand divided into 353,750,000 ordinary shares and
176,250,000 ordinary non-voting shares with a par value of US$0.10 each.

On 27 September 2013 the Company increased its authorised share capital from US$53,000 thousand to US$58,159 thousand divided into
353,750,000 ordinary shares and 227,835,364 ordinary non-voting shares with a par value of US$0.10 each.

On 27 December 2013 the Company converted 77,378,048 of its authorised ordinary non-voting shares into ordinary shares. After this conversion
of the share capital, the authorised share capital of the Company is divided into 431,128,048 ordinary shares with par value of US$0.10 each and
150,457,316 ordinary non-voting shares with a par value of US$0.10 each.

Issued share capital
On 16 October 2012 the Company converted 176,250,000 of its issued ordinary issued shares into ordinary non-voting shares. As a result of this
conversion, the issued share capital of the Company consisted of 293,750,001 ordinary shares and of 176,250,000 ordinary non-voting shares with
a par value of US$0.10 each.

On 27 December 2013 in the course of NCC Acquisition the Company issued as part of consideration payable 51,585,366 ordinary voting shares
with a par value of US$0.10 each at a price of US$4.66 per share (the share premium was US$4.56 per share) and 51,585,364 ordinary non-voting
shares with a par value of US$0.10 each at a price of US$4.66 per share (the share premium was US$4.56 per share). An amount of US$1.461
thousand out of the total expenses directly attributable to the new shares issued was written off against the share premium.

On 27 December 2013 the Company converted 77,378,048 of its issued ordinary non-voting shares into ordinary shares. After the conversion of the
share capital, the issued share capital of the Company amounts to US$57,317,073.10 divided into 422,713,415 ordinary shares and 150,457,316
ordinary non-voting shares with a par value of US$0.10 each.

The ordinary shares and the ordinary non-voting shares rank pari passu in all respects save that, the ordinary non-voting shares do not have the right to
receive notice, attend or vote at any general meeting, nor to be taken into account for the purpose of determining the quorum of any general meeting.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsREPORT OF THE BOARD OF DIRECTORS (CONTINUED)

The Role of the Board of Directors
GPI is governed by its Board of Directors (hereafter also referred as “the Board”) which is collectively responsible to the shareholders for the short-
and long-term successful performance of the Group.

The Board of Directors’ role is to provide entrepreneurial leadership to the Group through setting the corporate strategic objectives, ensuring that
the necessary financial and human resources are in place for the Group to meet its objectives and reviewing management performance. The Board
sets the Group’s values and standards and ensures all obligations to shareholders are understood and met. The Board maintains a sound system of
internal control and enterprise risk management to safeguard the Group’s assets and shareholders’ investments in the Group.

Members of the Board of Directors
The Board of Directors leads the process in making new Board member appointments and makes recommendations on appointments to
shareholders. In accordance with the Terms of Reference of the Board, all Directors are subject to election by shareholders at the first Annual General
Meeting after their appointment, and to re-election at intervals of no more than three years. Any term beyond six years for a Non-Executive Director is
subject to particularly rigorous review, and takes into account the need for progressive system of refreshing of the Board.

The members of the Board of Directors at 31 December 2013 and at the date of this report are shown on pages 2 and 3. Mr. Kim Fejfer was
appointed as a Non-Executive Director, Vice Chairman of the Board of Directors and a member of Remuneration, Nomination and Audit and Risk
Committees on 23 January 2013. Mr. Tiemen Meester was appointed as a Non-Executive Director and a member of Remuneration, Nomination and
Audit and Risk Committees on 23 January 2013. Mr. Robert Dirk Korbijn, Ms. Laura Michael, Mr. Georgios Sofocleous and Ms. Chrystalla Stylianou
were appointed as Non-Executive Directors on 23 January 2013. Mr. Constantinos Economides was appointed as Non-Executive Director on 27
September 2013. Ms. Elia Nicolaou and Mr. Marios Tofaros resigned on 23 January 2013. Mr. Robert Dirk Korbijn resigned on 27 September 2013.
All other Directors were members of the Board throughout the year ended 31 December 2013.

The Board currently has 14 members and they were appointed as shown on pages 2 and 3.

There is no provision in the Company’s Articles of Association for retirement of Directors by rotation. However in accordance with the Terms of
Reference of the Board of Directors and the resolutions adopted by the Shareholders at the Annual General Meeting on 29 April 2013 and at
the Extraordinary General Meeting on 27 September 2013 all current Directors (except Mr. Constantinos Economides) remain in office and Mr.
Constantinos Economides will be offered for re-election at the next Annual General Meeting of the Shareholders of the Company.

Team Nominees Limited has been acting as the Company Secretary since its incorporation in February 2008. Mr. Alexander Iodchin has been acting
as the Board Secretary since December 2008.

There were no significant changes in the responsibilities of the Directors during 2013 except in the case of Mr Mikhail Loganov who was a non-
Executive director until 11 October 2013 and was appointed as a Chief Financial Officer and became Executive Director as from this date onwards.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

Directors’ Interests
The interests in the share capital of Global Ports Investments Plc, both direct and indirect, of those who were Directors as at 31 December 2013 and
31 December 2012 are shown below:

Name

Nikita Mishin

Type of holding

Through shareholding in Transportation Investments Holding
Limited and other related entities

Shares held at
31 December 2013

Shares held at
31 December 2012

39,731,086 ordinary shares

27,609,738 ordinary shares

15,488,390 ordinary non–voting shares

27,609,738 ordinary non–voting shares

Total number of issued shares of the Company as at 31 December 2013 was 422,713,415 ordinary shares and 150,457,316 ordinary non-voting shares
(as at 31 December 2012 was 293,750,001 ordinary shares and 176,250,000 ordinary non-voting shares). Each share is issued at par value of $0.10.

Board Performance
The Board meets at least four times a year. Fixed meetings are scheduled at the start of each year. Ad hoc meetings are called when there are
pressing matters requiring the Board’s consideration and decision in between the scheduled meetings.

In 2013 the Board met formally 18 (2012: 16) times to review current performance and to discuss and approve important business decisions.

In 2013 the Board met to discuss and approve important business decisions:

a. NCC Acquisition;

b. Financial statements and budgets;

c. Credit facilities;

d. Changes in the management of the Group and its subsidiaries and their remuneration;

e. Dividends;

Investment opportunities;

g. Major CAPEX and OPEX spending;

h. Transactions within the Group;

i. Various other resolutions related to the activity of the Company and Group members.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports

REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

Board Performance (continued)
The number of Board and Board Committee meetings held in the year 2013 and the attendance of directors during these meetings is as follows:

Board of Directors

Nomination Committee

Remuneration Committee

Audit and Risk Committee

Michalis Thomaides

Alexander Iodchin

Bryan Smith

Nikita Mishin

Alexander Nazarchuk

Mikhail Loganov

Konstantin Shirokov

Siobhan Walker

Kim Fejfer

Tiemen Meester

Robert Korbijn

Laura Michael

Georgios Sofocleous

Chrystalla Stylianou

Constantinos Economides

–

A = Number of meetings eligible to attend during the year
B = Number of meetings attended

The operation of the Board, its Committees and individual Directors is subject to regular evaluation. The evaluation of the Board and individual
Directors’ performance is conducted through self-assessment, cross-assessment or by an external third party. The Non-Executive Directors, led by
the Senior Independent Director, are responsible for the performance evaluation of the Chairman of the Board.

The Board Committees
Since December 2008 the Board of Directors established the operation of three committees: an Audit and Risk committee, a Nomination Committee
and a Remuneration Committee.

The Audit and Risk Committee as of the date of this report comprises four Non-Executive Directors, and meets at least four times a year. The
Audit and Risk Committee is currently chaired by Mrs. Siobhan Walker (an Independent Non-Executive Director) and the other members are Mr.
Konstantin Shirokov, Mr. Kim Fejfer (appointed on 23 January 2013) and Mr. Tiemen Meester (appointed on 23 January 2013). Mr. Mikhail Loganov
resigned from the Audit and Risk Committee after his appointment as the Chief Financial Officer of the Company. The Committee is responsible for
considering, among other matters: (i) the integrity of the Company’s financial information, including its annual and interim condensed consolidated
financial information, and the effectiveness of the Company’s internal controls, risk management systems and the work of the Internal Auditor;
(ii) auditors’ reports; and (iii) the terms of appointment and remuneration of the auditor. The Committee supervises and monitors, and advises the
Board of Directors on risk management and control systems and the implementation of codes of conduct. In addition, the Committee supervises the
submission of financial information by the Company. The Committee recommends the Board on appointment, re-appointment and removal of the
external auditor, reviews its independence, objectivity and effectiveness of the audit process. In addition the Committee implements the policy on the
engagement of the external auditors to perform non-audit services.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

The Board Committees (continued)
In the year 2013 the Audit and Risk Committee met 10 times to review and discuss inter alia:

a. entity and consolidated financial statements for the year ended 31 December 2012 and interim condensed consolidated financial information

for six months ended 30 June 2013;

b. the press releases containing financial information;

c. reports prepared by external auditors on significant matters arising from their audit and review procedures;

d. evaluation of external auditors` independence and performance and recommendation to the Board to recommend to shareholders to reappoint

the external auditor for the next year;

e. drafts of engagement and fees letters between the external auditors and the Company or its subsidiaries, as applicable in respect of their audit

and non-audit services;

f. consideration of several reports from the management and external consultants.

The Nomination Committee as of the date of this report comprises five Directors, one of whom is independent. The Committee meets at least once
each year. Currently the Nomination Committee is chaired by Capt. Bryan Smith (an Independent Non-Executive Director) and the other members
are Mr. Nikita Mishin, Mr. Alexander Iodchin, Mr. Kim Fejfer (appointed on 23 January 2013) and Mr. Tiemen Meester (appointed on 23 January
2013). The Committee’s role is to prepare selection criteria and appointment procedures for members of the Board of Directors and to review on a
regular basis the structure, size, diversity and composition of the Board. In undertaking this role, the Committee refers to the skills, knowledge and
experience required of the Board given the Company’s stage of development and makes recommendations to directors as to any changes. The
Committee also considers future appointments in respect to the composition of the Board of Directors as well as making recommendations regarding
the membership of the Audit and Risk Committee and the Remuneration Committee. In addition to it the Committee advises the Board on the
appointment of the senior management of the Company.

In 2013 the Nomination Committee met one time to discuss and recommend to the Board a candidate for the appointment to the position of the
Chief Financial Officer of the Company.

The Remuneration Committee as of the date of this report comprises four Directors, one of whom is independent. The Committee meets at least
once each year. Currently the Remuneration Committee is chaired by Capt. Bryan Smith (an Independent Non-Executive Director), and the other
members are Mr. Nikita Mishin, Mr. Kim Fejfer (appointed on 23 January 2013) and Mr. Tiemen Meester (appointed on 23 January 2013). Mr.
Mikhail Loganov resigned from the Remuneration Committee after his appointment as the Chief Financial Officer of the Company. The Committee
is responsible for determining and reviewing, among other matters, the remuneration of the executive directors, Chairman and the executive
management and the Company’s remuneration policies. The remuneration of independent Directors is a matter for the chairman of the Board of
Directors and the executive directors. No director or manager may be involved in any decisions as to his or her own remuneration.

In 2013 the Remuneration Committee met three times to discuss and recommend to the Board the remuneration for the executive management of
the Group.

Corporate Governance
Improving its corporate governance structure in accordance with the internationally recognised best practices the Company adopted in 2008 and
2012 important policies and procedures.

The Company’s corporate governance policies and practices are designed to ensure that the Company is focused on upholding its responsibilities to
the shareholders. They include, inter alia:

• Appointment policy;

• Terms of reference of the Board of Directors;

• Terms of reference of the Audit and Risk Committee;

• Terms of reference of the Nomination Committee;

• Terms of reference of the Remuneration Committee;

• Code of Ethics and Conduct;

• Antifraud policy;

• Anti-Corruption Policy; and

• Foreign Trade Controls Policy.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports

REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

Board and Management Remuneration
Non-Executive Directors serve on the Board pursuant to the letters of appointment. Such letters of appointment specify the terms of appointment
and the remuneration of Non-Executive Directors.

Levels of remuneration for the Non-Executive Directors reflect the time commitment, responsibilities of the role and membership of the respective
committees of the Board. Directors are also reimbursed for expenses associated with discharge of their duties.

The shareholders of the Company approved the remuneration of the members of the Board for the year 2013 on 29 April 2013.

Refer to Note 32(h) to the consolidated financial statements for details of the remuneration paid to the members of the Board and key management.

Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 33 to the consolidated financial statements.

Branches
The Group did not have or operate through any branches during the year.

Treasury shares
The Company did not acquire either directly or through a person in his own name but on behalf of the Company any of its own shares.

Going Concern
Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going concern basis in preparing the
consolidated financial statements based on the fact that, after making enquiries and following a review of the Group’s budget for 2014, including cash
flows and borrowing facilities, the Directors consider that the Group has adequate resources to continue in operation for the foreseeable future.

Auditors
The Independent Auditors, PricewaterhouseCoopers Limited, have expressed their willingness to continue in office. A resolution approving their
reappointment and giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting.

By Order of the Board

Nikita Mishin
Chairman of the Board of Directors

Limassol
14 March 2014

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013DIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors of Global Ports Investments Plc (“Company”) is responsible for preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and the
requirements of the Cyprus Companies Law, Cap. 113.

This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.

Each of the Directors confirms to the best of his or her knowledge that the consolidated financial statements which are presented on pages 14 to 75
have been prepared in accordance with IFRS as adopted by the EU and the requirements of the Cyprus Companies Law, Cap. 113, and give a true
and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as whole.

By Order of the Board

Michalis Thomaides
Director

Limassol
14 March 2014

Alexander Iodchin
Director

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsINDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF GLOBAL PORTS INVESTMENTS PLC

Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Global Ports Investments Plc (the “Company”) and its subsidiaries (together
with the Company, the “Group”), which comprise the consolidated balance sheet as at 31 December 2013, and the consolidated statements of
income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and
other explanatory information.

Board of Directors’ responsibility for the consolidated financial statements
The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with
International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap 113, and
for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall
presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013INDEPENDENT AUDITOR’S REPORT CONTINUED

Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2013, and of
its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the
European Union and the requirements of the Cyprus Companies Law, Cap 113.

Report on other legal and regulatory requirements
Pursuant to the additional requirements of the Auditors and Statutory Audits of Annual and Consolidated Accounts Laws of 2009 and 2013, we
report the following:

• We have obtained all the information and explanations we considered necessary for the purposes of our audit.

•

In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of these books.

• The consolidated financial statements are in agreement with the books of account.

•

In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give the
information required by the Cyprus Companies Law, Cap. 113, in the manner so required.

•

In our opinion, the information given in the report of the Board of Directors is consistent with the consolidated financial statements.

Other matter
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 34 of the
Auditors and Statutory Audits of Annual and Consolidated Accounts Laws of 2009 and 2013 and for no other purpose. We do not, in giving this
opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

Yiangos Kaponides
Certified Public Accountant and Registered Auditor
for and on behalf of

PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors
Limassol, 14 March 2014

The notes on pages 19 to 75 are an integral part of these consolidated financial statements.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsCONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2013

(in thousands of US dollars)

Revenue

Cost of sales

Including impairment of goodwill and property, plant and equipment

Gross profit

Administrative, selling and marketing expenses

Other gains/(losses) – net

Operating profit

Finance costs – net

Profit before income tax

Income tax expense

Profit for the year

Attributable to:

Owners of the Company

Non-controlling interest

For the year ended
31 December

Note

2013

2012

479,953

501,829

(238,172)

(299,807)

4(a)(ii)

–

(58,025)

241,781

202,022

(55,507)

3,248

(43,377)

(1,387)

189,522

157,258

(38,518)

(3,660)

151,004

(36,937)

153,598

(30,124)

114,067

123,474

114,120

107,822

(53)

15,652

114,067

123,474

Basic and diluted earnings per share for profit attributable to the owners of the parent of the Company during the year
(expressed in US$ per share)

0.24

0.23

The notes on pages 19 to 75 are an integral part of these consolidated financial statements.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2013

(in thousands of US dollars)

Profit for the year

Other comprehensive income/(loss)

Items that may be subsequently reclassified to profit or loss

Currency translation differences

Other comprehensive (loss)/income for the year, net of tax

Total comprehensive income for the year

Total comprehensive income attributable to:

Owners of the Company

Non-controlling interest

Total comprehensive income for the year

For the year ended
31 December

2013

2012

114,067

123,474

(37,858)

45,416

76,209

168,890

76,441

152,946

(232)

15,944

76,209

168,890

Items in the statement above are disclosed net of tax. There is no income tax relating to the components of other comprehensive income above.

The notes on pages 19 to 75 are an integral part of these consolidated financial statements.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports
CONSOLIDATED BALANCE SHEET

as at 31 December 2013

(in thousands of US dollars)

ASSETS

Non-current assets

Property, plant and equipment

Intangible assets

Prepayments for property, plant and equipment

Trade and other receivables

Current assets

Inventories

Trade and other receivables

Income tax receivable

Bank deposits with maturity over 90 days

Cash and cash equivalents

TOTAL ASSETS

EQUITY AND LIABILITIES

Total equity

Equity attributable to the owners of the Company

Share capital

Share premium

Capital contribution

Translation reserve

Transactions with non-controlling interest

Retained earnings

Non-controlling interest

Total liabilities

Non-current liabilities

Borrowings

Derivative financial instruments

Deferred tax liabilities

Trade and other payables

Current liabilities

Borrowings

Trade and other payables

Current income tax liabilities

TOTAL EQUITY AND LIABILITIES

As at 31 December

Note

2013

2012

3,130,860

1,141,618

1,544,519

1,555,239

11,158

19,944

928,043

170,325

30,574

12,676

282,919

167,297

9,302

137,472

3,622

10,940

121,583

5,985

57,412

402

13,854

89,644

3,413,779

1,308,915

1,192,677

819,286

1,208,030

816,774

57,317

923,511

101,300

(155,802)

(210,376)

47,000

454,513

101,300

(118,123)

(210,376)

492,080

542,460

(15,353)

2,512

2,221,102

489,629

1,772,713

1,321,090

26,069

423,566

1,988

448,389

230,293

213,979

4,117

356,686

263,295

–

91,392

1,999

132,943

69,814

47,567

15,562

3,413,779

1,308,915

On 14 March 2014 the Board of Directors of Global Ports Investments Plc authorised these consolidated financial statements for issue.

Michalis Thomaides
Director

Alexander Iodchin
Director

The notes on pages 19 to 75 are an integral part of these consolidated financial statements.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2013

(in thousands of US dollars)

Attributable to the owners of the Company

Balance at 1 January 2012

47,000

454,513

101,300

(163,247)

–

514,538

954,104

21,117

975,221

Note

Share
capital

Share
premium

Capital
contribution

Translation
reserve

Transactions
with non-
controlling
interest

Retained
earnings*

Total

Non-
controlling
interest

Total

Currency translation differences

Total other comprehensive income

Profit for the year

Total comprehensive income for the year ended 31
December 2012

Transactions with non-controlling interest

Distributions to shareholders

Total transactions with owners for the year ended 31
December 2012

–

45,124

–

45,124

292

45,416

107,822

15,652

123,474

107,822

152,946

15,944

168,890

(210,376)

–

(210,376)

(19,624)

(230,000)

–

(79,900)

(14,925)

(94,825)

(210,376)

(79,900)

(290,276)

(34,549)

(324,825)

Balance at 31 December 2012

47,000

454,513

101,300

(118,123)

(210,376)

542,460

816,774

2,512

819,286

Currency translation differences

Total other comprehensive loss

Profit for the year

Total comprehensive income for the year ended 31
December 2013

Non-controlling interest in acquired subsidiaries

–

Issue of shares related to business combination – net
of incremental expenses

22, 30

10,317

468,998

Distributions to shareholders

–

Total transactions with owners for the year ended 31
December 2013

10,317

468,998

–

(37,679)

–

(37,679)

(179)

(37,858)

114,120

(53)

114,067

114,120

76,441

(232)

76,209

–

479,315

(164,500)

–

(17,633)

–

479,315

(164,500)

–

(164,500)

314,815

(17,633)

297,182

Balance at 31 December 2013

57,317

923,511

101,300

(155,802)

(210,376)

492,080 1,208,030

(15,353) 1,192,677

* Retained earnings in the separate financial statements of the Company is the only reserve that is available for distribution in the form of dividends.

The notes on pages 19 to 75 are an integral part of these consolidated financial statements.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports
CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2013

(in thousands of US dollars)

Cash flows from operating activities

Profit before income tax

Adjustments for:

Depreciation of property, plant and equipment

Gain on sale of property, plant and equipment

Impairment charge of property, plant and equipment

Impairment of goodwill

Amortisation of intangible assets

Interest income

Interest expense

Foreign exchange losses/(gains) on non-operating activities

Other non-cash items

Operating cash flows before working capital changes

Changes in working capital

Inventories

Trade and other receivables

Trade and other payables

Cash generated from operations

Income tax paid

Net cash from operating activities

Cash flows from investing activities

Cash outflow for acquisitions of subsidiaries – net of cash acquired

Purchase of shareholdings from non-controlling interests

Purchases of intangible assets

Purchases of property, plant and equipment

Proceeds from sale of property, plant and equipment

Loans granted to related parties

Loans granted to third parties

Loan repayments received from related parties

Loan repayments received from third parties

Interest received

Investment in bank deposits with maturity over 90 days

Cash from bank deposits with maturity over 90 days

Net cash used in investing activities

Cash flows from financing activities

Proceeds from borrowings

Repayments of borrowings

Interest paid

Finance lease principal payments (third parties)

Expenses in relation to issued shares

Dividends paid to the owners of the Company

Dividends paid to non-controlling interests

Net cash from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Exchange (losses)/gains on cash and cash equivalents

Cash and cash equivalents at end of the year

The notes on pages 19 to 75 are an integral part of these consolidated financial statements.

For the year ended
31 December

Note

2013

2012

4(a)(ii)

32(i)

151,004

153,598

63,256

(395)

–

7,257

(1,987)

21,586

20,181

594

63,893

(741)

51,541

6,484

7,343

(2,801)

15,026

(11,229)

2,813

261,496

285,927

(841)

(1,321)

17,491

592

5,269

1,291

276,825

293,079

(57,248)

(41,272)

219,577

251,807

(177,648)

–

(230,000)

(272)

(202)

(71,772)

(79,765)

1,066

(5,099)

(77)

562

1,197

(9,949)

14,223

2,651

(2,758)

(112)

14,106

–

2,351

(13,920)

3,893

(247,689)

(303,756)

336,557

(79,737)

(21,526)

(19,379)

(1,461)

(150,400)

–

330,126

(214,943)

(12,335)

(7,068)

–

(79,900)

(14,925)

64,054

955

35,942

(50,994)

89,644

137,068

(4,003)

3,570

121,583

89,644

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 GENERAL INFORMATION

Country of incorporation
Global Ports Investments Plc (hereafter the “Company” or “GPI”) was incorporated on 29 February 2008 as a private limited liability company and
is domiciled in Cyprus in accordance with the provisions of the Companies Law, Cap. 113. The address of the Company’s registered office is 20
Omirou Avenue, Limassol, Cyprus.

On 18 August 2008, following a special resolution passed by the shareholder, the name of the Company was changed from “Global Ports
Investments Ltd” to “Global Ports Investments Plc” and the Company was converted into a public limited liability company in accordance with the
provisions of the Companies Law, Cap. 113.

During the first half of 2011 the Company has successfully completed an initial public offering (“IPO”) of its shares in the form of global depositary
receipts (“GDRs”). The Company’s GDRs (one GDR representing 3 ordinary shares) are listed on the Main Market of the London Stock Exchange
under the symbol “GLPR”. For further details please refer to Note 22.

On 27 December 2013 GPI completed the acquisition of 100% of the share capital of NCC Group Limited, (together with its subsidiaries, “NCC
Group”). See Note 30 for further details about this acquisition. NCC Group’s principal subsidiaries are included in Russian ports segment as shown in
Note 5.

Approval of the consolidated financial statements
These consolidated financial statements were authorised for issue by the Board of Directors on 14 March 2014.

Principal activities
The principal activities of the Company, its subsidiaries and joint ventures (hereinafter collectively referred to as the “Group”) are the operation of
container and oil products terminals in Russia and the Baltics. The Group offers its customers a wide range of services for their import and export
logistics operations.

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been
consistently applied to all years presented in these consolidated financial statements, unless otherwise stated.

Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as
adopted by the European Union (“EU”) and the requirements of the Cyprus Companies Law, Cap. 113.

As of the date of the authorisation of these consolidated financial statements all International Financial Reporting Standards issued by International
Accounting Standards Board (IASB) and effective as at 1 January 2013 have been adopted by the EU through the endorsement procedure
established by the European Commission with the exception of certain provisions of IAS 39 “Financial Instruments: Recognition and Measurement”
relating to portfolio hedge accounting.

The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of derivatives.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates and requires
management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New and amended standards adopted by the Group
During the current year the Group adopted all the new and revised IFRS as adopted by the EU that are relevant to its operations and are effective
for accounting periods beginning on 1 January 2013. This adoption did not have a material effect on the accounting policies of the Group with the
exception of the following:

• Amendment to IAS 1 “Financial Statements Presentation” on Presentation of Items of Other Comprehensive Income”. As a result of the adoption
of this amendment, the Company groups items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially
reclassifiable to profit or loss subsequently (reclassification adjustments). This affected the presentation of ‘currency translation differences’ in the
consolidated statement of comprehensive income.

•

IFRS 13, “Fair Value Measurement” aims to improve consistency and reduce complexity by providing a precise definition of fair value and a
single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value
accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The Standard
resulted in additional disclosures in these financial statements. Refer to notes 19, 23 and 24.

The Group has also decided to early adopt the following amendment as of 1 January 2013:

• Amendments to IAS 36 – Recoverable amount disclosures for non-financial assets (issued on 29 May 2013 and effective for annual periods

beginning 1 January 2014; EU effective date for 1 January 2014). The amendments remove the requirement to disclose the recoverable amount
when a CGU contains goodwill or indefinite lived intangible assets but there has been no impairment. As a result the Group has not disclosed this
information in these financial statements.

New standards and interpretations not yet adopted by the Group
At the date of approval of these financial statements a number of new standards and amendments to standards and interpretations are effective for
annual periods beginning after 1 January 2013, and have not been applied in preparing these consolidated financial statements. None of these is
expected to have a significant effect on these consolidated financial statements, except the following set out below:

(a) Adopted by the European Union
•

IAS 27 (revised 2011), ‘Separate financial statements’ (effective for annual periods beginning on or after 1 January 2013; EU effective date for
1 January 2014). IAS 27 was changed and its objective is now to prescribe the accounting and disclosure requirements for investments in
subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated
financial statements was replaced by IFRS 10, Consolidated Financial Statements.

•

IAS 28 (revised 2011), ‘Associates and joint ventures’ (effective for annual periods beginning on or after 1 January 2013; EU effective date for 1
January 2014). IAS 28 (revised 2011) includes the requirements for joint ventures, as well as associates, to be equity accounted following the
issue of IFRS 11. IFRS 10, “consolidated financial statements” (effective for annual periods beginning on or after 1 January 2014) was issued in
May 2011 and provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 10 builds on existing
principles by identifying the concept of control as the determining factor in whether an entity shall be included within the consolidated financial
statements of the parent company.

IFRS 10, “Consolidated Financial Statements” (effective for annual periods beginning on or after 1 January 2013; EU effective date for 1
January 2014), replaces all of the guidance on control and consolidation in IAS 27 “Consolidated and separate financial statements” and SIC-
12 “Consolidation – special purpose entities”. IFRS 10 changes the definition of control so that the same criteria are applied to all entities to
determine control. This definition is supported by extensive application guidance. The Group is currently assessing the impact of the new standard
on its consolidated financial statements.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New standards and interpretations not yet adopted by the Group (continued)
(a) Adopted by the European Union (continued)
•

IFRS 11, ‘Joint Arrangements’ (effective for annual periods beginning on or after 1 January 2013; EU effective date for 1 January 2014). The
adoption of IFRS 11 will affect the accounting policy followed by the Group for accounting for its joint arrangements. A joint venture gives the
Group rights to the net assets or profit of the joint arrangement. A joint operation gives the Group direct rights to the assets and obligations for the
liabilities of the joint arrangement. Investments that meet the definition of a joint operation will be accounted for by recognising assets, liabilities,
revenues and expenses according to the entity’s shares in the assets, liabilities, revenues and expenses of the joint operation as determined and
specified in the contractual arrangement. For investments that meet the new definition of a joint venture proportionate consolidation will no longer
be applicable. Under IFRS 11 joint ventures will be accounted for using the equity method of accounting. This change will impact the presentation
of joint ventures with the effect that revenues and costs in the consolidated income statement and assets and liabilities in the consolidated
balance sheet will be reflected in a single line through the application of the equity method. The adoption of IFRS 11 will not affect the layout
and presentation of the segment reporting (see Note 5, Segmental information) where assets, liabilities, revenues and costs of joint ventures are
currently presented on a 100% basis and then adjusted on line-by-line basis to reflect the share held by the Group.

•

IFRS 12, ‘Disclosures of interests in other entities’ (effective for annual periods beginning on or after 1 January 2013; EU effective date for 1
January 2014). IFRS 12 includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates,
special purpose vehicles and other off balance sheet vehicles. The Group yet to assess the full impact of IFRS 12.

• Amendments to IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting (issued on 27 June 2013 and effective for annual periods
beginning 1 January 2014; EU effective date for 1 January 2014). The amendments will allow hedge accounting to continue in a situation where
a derivative, which has been designated as a hedging instrument, is novated (i.e parties have agreed to replace their original counterparty with a
new one) to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met.

• Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32 (issued in December 2011 and effective for annual periods

beginning on or after 1 January 2014; EU effective date for 1 January 2014). The amendment added application guidance to IAS 32 to address
inconsistencies identified in applying some of the offsetting criteria. This includes clarifying the meaning of ‘currently has a legally enforceable right
of set-off’ and that some gross settlement systems may be considered equivalent to net settlement.

• Transition Guidance Amendments to IFRS 10, IFRS 11 and IFRS 12 (issued on 28 June 2012 and effective for annual periods beginning 1 January

2013; EU effective date for 1 January 2014). The amendments clarify the transition guidance in IFRS 10 Consolidated Financial Statements.
Entities adopting IFRS 10 should assess control at the first day of the annual period in which IFRS 10 is adopted, and if the consolidation
conclusion under IFRS 10 differs from IAS 27 and SIC 12, the immediately preceding comparative period (that is, year 2012 for a calendar year-
end entity that adopts IFRS 10 in 2013) is restated, unless impracticable. The amendments also provide additional transition relief in IFRS 10,
IFRS 11, Joint Arrangements, and IFRS 12, Disclosure of Interests in Other Entities, by limiting the requirement to provide adjusted comparative
information only for the immediately preceding comparative period. Further, the amendments will remove the requirement to present comparative
information for disclosures related to unconsolidated structured entities for periods before IFRS 12 is first applied.

• Amendments to IFRS 10, IFRS 12 and IAS 27 – Investment entities (issued on 31 October 2012 and effective for annual periods beginning 1

January 2014; EU effective date for 1 January 2014). The amendment introduced a definition of an investment entity as an entity that (i) obtains
funds from investors for the purpose of providing them with investment management services, (ii) commits to its investors that its business
purpose is to invest funds solely for capital appreciation or investment income and (iii) measures and evaluates its investments on a fair value
basis. An investment entity will be required to account for its subsidiaries at fair value through profit or loss, and to consolidate only those
subsidiaries that provide services that are related to the entity's investment activities. IFRS 12 was amended to introduce new disclosures,
including any significant judgements made in determining whether an entity is an investment entity and information about financial or other support
to an unconsolidated subsidiary, whether intended or already provided to the subsidiary.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New standards and interpretations not yet adopted (continued)
(b) Not yet adopted and not yet endorsed by the European Union
•

IFRIC 21 – Levies (issued on 20 May 2013 and effective for annual periods beginning on 1 January 2014). The interpretation clarifies the
accounting for an obligation to pay a levy that is not income tax. The obligating event that gives rise to a liability is the event identified by the
legislation that triggers the obligation to pay the levy. The fact that an entity is economically compelled to continue operating in a future period, or
prepares its financial statements under the going concern assumption, does not create an obligation. The same recognition principles apply in
interim and annual financial statements. The application of the interpretation to liabilities arising from emissions trading schemes is optional.

•

IFRS 9, ‘Financial Instruments: Classification and Measurement’. Key features of the standard issued in November 2009 and amended in October
2010, December 2011 and November 2013 are:

• Financial assets are required to be classified into two measurement categories: those to be measured subsequently at fair value, and those
to be measured subsequently at amortised cost. The decision is to be made at initial recognition. The classification depends on the entity’s
business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

• An instrument is subsequently measured at amortised cost only if it is a debt instrument and both (i) the objective of the entity’s business

model is to hold the asset to collect the contractual cash flows, and (ii) the asset’s contractual cash flows represent payments of principal and
interest only (that is, it has only “basic loan features”). All other debt instruments are to be measured at fair value through profit or loss.

• All equity instruments are to be measured subsequently at fair value. Equity instruments that are held for trading will be measured at fair value
through profit or loss. For all other equity investments, an irrevocable election can be made at initial recognition, to recognise unrealised and
realised fair value gains and losses through other comprehensive income rather than profit or loss. There is to be no recycling of fair value gains
and losses to profit or loss. This election may be made on an instrument-by-instrument basis. Dividends are to be presented in profit or loss,
as long as they represent a return on investment.

• Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The key
change is that an entity will be required to present the effects of changes in own credit risk of financial liabilities designated at fair value through
profit or loss in other comprehensive income.

• Hedge accounting requirements were amended to align accounting more closely with risk management. The standard provides entities with an
accounting policy choice between applying the hedge accounting requirements of IFRS 9 and continuing to apply IAS 39 to all hedges because
the standard currently does not address accounting for macro hedging. The amendments made to IFRS 9 in November 2013 removed its
mandatory effective date, thus making application of the standard voluntary. The Group does not intend to adopt the existing version of IFRS 9
until this is enclosed by the European Union. The Group has not yet assessed the impact of the adoption of IFRS9 in its financial statements.

• Annual Improvements to IFRSs 2013 (issued in December 2013 and effective for annual periods beginning on or after 1 July 2014) The

improvements consist of changes to four standards. The basis for conclusions on IFRS 1 is amended to clarify that, where a new version of
a standard is not yet mandatory but is available for early adoption; a first-time adopter can use either the old or the new version, provided the
same standard is applied in all periods presented. IFRS 3 was amended to clarify that it does not apply to the accounting for the formation of
any joint arrangement under IFRS 11. The amendment also clarifies that the scope exemption only applies in the financial statements of the joint
arrangement itself. The amendment of IFRS 13 clarifies that the portfolio exception in IFRS 13, which allows an entity to measure the fair value of
a group of financial assets and financial liabilities on a net basis, applies to all contracts (including contracts to buy or sell non-financial items) that
are within the scope of IAS 39 or IFRS 9. IAS 40 was amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive. The guidance in IAS
40 assists preparers to distinguish between investment property and owner-occupied property. Preparers also need to refer to the guidance in
IFRS 3 to determine whether the acquisition of an investment property is a business combination.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New standards and interpretations not yet adopted (continued)
(b) Not yet adopted and not yet endorsed by the European Union (continued)
• Annual Improvements to IFRSs 2012 (issued in December 2013 and effective for annual periods beginning on or after 1 July 2014, unless

otherwise stated below). The improvements consist of changes to seven standards. IFRS 2 was amended to clarify the definition of a ‘vesting
condition’ and to define separately ‘performance condition’ and ‘service condition’; The amendment is effective for share-based payment
transactions for which the grant date is on or after 1 July 2014. IFRS 3 was amended to clarify that (1) an obligation to pay contingent
consideration which meets the definition of a financial instrument is classified as a financial liability or as equity, on the basis of the definitions in
IAS 32, and (2) all non-equity contingent consideration, both financial and non-financial, is measured at fair value at each reporting date, with
changes in fair value recognised in profit and loss. Amendments to IFRS 3 are effective for business combinations where the acquisition date is on
or after 1 July 2014. IFRS 8 was amended to require (1) disclosure of the judgements made by management in aggregating operating segments,
including a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that
the aggregated segments share similar economic characteristics, and (2) a reconciliation of segment assets to the entity’s assets when segment
assets are reported. The basis for conclusions on IFRS 13 was amended to clarify that deletion of certain paragraphs in IAS 39 upon publishing of
IFRS 13 was not made with an intention to remove the ability to measure short-term receivables and payables at invoice amount where the impact
of discounting is immaterial. IAS 16 and IAS 38 were amended to clarify how the gross carrying amount and the accumulated depreciation are
treated where an entity uses the revaluation model. IAS 24 was amended to include, as a related party, an entity that provides key management
personnel services to the reporting entity or to the parent of the reporting entity (‘the management entity’), and to require to disclose the amounts
charged to the reporting entity by the management entity for services provided.

The Board of Directors assesses the impact of new standards and interpretations at the point when these are endorsed by the European Union. As a
result the impact of the above new standards and interpretations that have not been endorsed by the European Union has not been assessed.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of consolidation
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully included in the
consolidated financial statements from the date on which control was transferred to the Group or to the extent that the subsidiaries were obtained
through a transaction between entities under common control from the date which control was transferred to its shareholders. They are derecognised
from the financial statements from the date that control ceases.

Business combinations involving entities under common control (ultimately controlled by the same party, before and after the business combination,
and that control is not transitory) are accounted using the predecessor basis of accounting. Under this method, the financial statements of the
acquiree are included in the consolidated financial statements using pre-acquisition IFRS carrying amounts using uniform accounting policies, on the
assumption that the Group was in existence from the date where common control was established. For these transactions, the excess of the cost of
acquisition over the carrying amount of the Group’s share of identifiable net assets acquired, including goodwill, arising at the date of acquisition by
the shareholders, is recorded in equity in retained earnings at the date of the legal restructuring.

The purchase method of accounting is used for acquisitions of subsidiaries that do not involve entities or businesses under common control with
the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling
interest in the acquiree on an acquisition-by-acquisition basis at the non-controlling interest’s proportionate share of the recognised amounts of
acquiree’s identifiable net assets. Goodwill is initially measured as the excess of the aggregate of the consideration transferred over the net identifiable
assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is
recognised in the consolidated income statement.

All intra-company transactions, balances, income, expenses and unrealised gains and losses are eliminated on consolidation. Unrealised losses
are also eliminated but considered as an impairment indicator of the asset transferred. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into compliance with those used by the Group.

(b) Transactions with non-controlling interests
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with
the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying
value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(c) Joint ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Each venturer
usually contributes cash or other resources to the jointly controlled entity.

The Group’s interests in jointly controlled entities are accounted for by proportionate consolidation. The Group combines its share of the joint
ventures’ individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group’s financial
statements. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other
venturers. The excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired joint venture,
at the date of acquisition is recognised as goodwill. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to
the entity sold.

Where the participation in a joint venture was effected as a result of transactions involving entities under common control, the income and expenses,
assets and liabilities and cash flows of the joint venture are proportionately included in the consolidated financial statements using pre-acquisition
IFRS carrying amounts using uniform accounting policies (predecessor basis of accounting), on the assumption that the Group was a venturer from
the date where common control was established.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of consolidation (continued)
(c) Joint ventures (continued)
Upon formation of a joint venture, the income and expenses, assets and liabilities and cash flows of the joint venture are proportionately included
in the consolidated financial statements using pre-acquisition IFRS carrying amounts using uniform accounting policies (predessessor basis of
accounting).

The Group recognises the portion of a gain or loss attributable to other venturer on transfer of non-monetary assets to the joint venture, in exchange
for an equity interest in the joint venture.

Unrealised gains on transactions between the Group and its joint venturers are eliminated to the extent of the Group’s interest in the joint venture.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The accounting policies of joint ventures have been changed where necessary to ensure consistency with the accounting policies adopted by the
Company.

Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as
the Board of Directors that makes strategic decisions.

Transactions with equity holders
The Group enters into transactions with its shareholders. When consistent with the nature of the transaction (i.e. when these transactions are not at
arm’s length prices), the Group’s accounting policy is to recognise any gains or losses with equity holders, directly through equity and consider these
transactions as the receipt of additional capital contribution or the distribution of dividends. Similar transactions with non-equity holders, or parties
which are not under the control of the parent company, are recognised through the income statement.

Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s
activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the
entity and when specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to
be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenues earned by the Group are recognised on the following bases:

(a) Sales of services
The Group provides oil products handling, container handling, general cargoes handling, ro-ro cargoes handling, reefer cargoes handling and other
related stevedoring services. Revenue from rendering of services is recognised based on the stage of completion determined by reference to services
performed to date as a percentage of total services to be provided. If the income from rendering of services cannot be reliably measured, only the
income up to the level of the expenses to be claimed is recognised.

(b) Sales of goods
The Group sells unused materials and goods. These sales are ex works from the sales of the terminals and with usual payment terms. Revenue
from the sale of goods is recognised when the customer takes the goods out of the territory of the terminal (i.e. risks and rewards of ownership are
transferred to the buyer).

(d) Interest income
Interest income is recognised on a time-proportion basis using the effective interest method and is included within finance income.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue recognition (continued)
(e) Dividend income
Dividend income is recognised when the right to receive payment is established.

Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in
which the entity operates (‘the functional currency’). The consolidated financial statements are presented in United States dollars (US$), which is the
Company’s functional and presentation currency.

(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses that relate to loans receivable and cash and cash equivalents are presented in the income statement within
‘finance income’. Foreign exchange gains and losses that relate to borrowings are presented in the income statement within ‘finance costs. All other
foreign exchange gains and losses are presented in the income statement within ‘other gains/(losses) – net’.

(c) Group companies
The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional
currency different from the presentation currency are translated into the presentation currency as follows:

• Assets and liabilities are translated at the closing rate existing at the date of the balance sheet presented;

•

Income and expense items at the average monthly rate, which approximates the exchange rate existing at the date of transactions;

• Share capital, share premium and all other reserves are translated using the historic rate; and

• All exchange differences resulting from the above translation are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. On
disposal of a foreign operation (including partial disposals which result in loss of control, significant influence or joint control of a subsidiary, associate
or joint venture respectively, that include a foreign operation), the cumulative amount of the exchange differences relating to that foreign operation,
recognised in other comprehensive income and accumulated in the separate component of equity is reclassified from equity to profit or loss (as a
reclassification adjustment) when the gain or loss is recognised. In these cases, the cumulative amount of exchange differences relating to the foreign
operation sold that have been attributed to the non-controlling interests are derecognised but are not reclassified to profit or loss.

On partial disposal of a subsidiary that includes a foreign operation, the Group re-attributes the proportionate share of the cumulative amount of the
exchange differences recognised in other comprehensive income to the non-controlling interests in that foreign operation. In any other partial disposal
of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of the exchange differences
recognised in other comprehensive income.

Property, plant and equipment (“PPE”)
Property, plant and equipment are recorded at purchase or construction cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition or construction of the items.

Land is not depreciated.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost, less residual value, over their
estimated useful lives, as follows:

Buildings and facilities

Loading equipment and machinery

Other production equipment

Office equipment

Number of years

5 to 50

3 to 25

1 to 10

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, plant and equipment (“PPE”) (continued)
Assets under construction are not depreciated until they are completed and brought into use, at which time they are reclassified in the relevant class
of property, plant and equipment and depreciated accordingly.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.

Expenditure for repairs and maintenance of property, plant and equipment is charged to the income statement of the year in which they are incurred.
The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to
get ready for intended use or sale are capitalised and amortised over the useful life of the asset. Other borrowing costs are recognised as an expense
in the reporting period incurred. Interest is capitalised at a rate based on the Group’s weighted average cost of borrowing or at the rate on project
specific debt, where applicable.

Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds with carrying amount and these are
included within operating income.

Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired
subsidiary/joint venture/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries and joint ventures is included in ‘intangible
assets’. Separately recognised goodwill is tested for impairment annually and whenever there is indication that goodwill may be impaired. Goodwill
is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold. Goodwill related to the partial disposal of an entity is not derecognised unless there
is loss of control.

If the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of the business
combination, the Group reassesses the identification and measurement of the acquiree's identifiable assets, liabilities and contingent liabilities and the
measurement of the cost of the combination and recognises immediately in profit or loss any excess remaining after that reassessment.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups
of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The Group allocates goodwill to
each CGU (Note 5).

(b) Computer software
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.
Subsequently computer software is carried at cost less any accumulated amortisation and any accumulated impairment losses. These costs are
amortised using straight line method over their estimated useful lives (3 to 5 years).

Costs associated with maintaining computer software programmes are recognised as an expense as incurred.

(c) Client base
Client base (mainly customer relationships) acquired as a result of business combinations is at the cost of acquisition. Client base have a finite useful
life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of client base
over their estimated useful lives (5 to 11 years).

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Intangible assets (continued)
(d) Contractual rights
Contractual rights acquired as a result of business combinations are shown at the cost of acquisition. Contractual rights relate primarily to quay and
land lease agreements. These contractual rights are renewable. Contractual rights have a finite useful life and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line method to allocate the cost of contractual rights over their estimated useful lives (being
3 to 59 years as of 31 December 2013) which are in accordance with the underlying agreements, including renewal periods whenever renewal is at
no significant cost and the Group has evidence, based on past experience that the contract will be renewed.

Impairment of non-financial assets
Non-financial assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-generating units). Non-
financial assets other than goodwill that suffered impairment are reviewed for possible reversal of impairment at each reporting date.

Leases
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments, the right to use an asset for an
agreed period of time.

The Group is the lessee
(a) Finance leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased assets and the present value of the minimum
lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance
outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance cost is
charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.

Property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.

(b) Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments
made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the
period of the lease.

The Group is the lessor
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rental income
(net of any incentives given to lessees) is recognised on a straight-line basis over the lease term. Assets leased out under operating leases include
insignificant portions of some properties which are not used by the Group which cannot be sold or leased out separately under a finance lease.
These properties are included in property, plant and equipment in the balance sheet based on the nature of the asset.

Loans and receivables
The Group classifies its financial assets as loans and receivables.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and for which
there is no intention of trading the receivable. They are included in current assets, except for maturities greater than twelve months after the balance
sheet date.

These are classified as non-current assets. The Group’s loans and receivables comprise cash and cash equivalents, bank deposits with maturity over
90 days, trade and other receivables and loans to related and third parties.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Loans and receivables (continued)
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision
for impairment.

Loans and receivables are initially recognised at fair value plus transaction costs. Loans and receivables are derecognised when the rights to receive
cash flows from the loans and receivables have expired or have been transferred and the Group has transferred substantially all risks and rewards of
ownership. Loans and receivables are carried at amortised cost using the effective interest method.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.
A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables. Significant financial difficulties of the debtor/borrower, probability that the debtor/borrower will enter
bankruptcy or financial difficulty, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of
the provision is the difference between the carrying amount and the recoverable amount, being the present value of estimated future cash flows,
discounted at the original effective interest rate. The amount of the provision is recognised in the income statement against ‘administrative, selling and
marketing expenses’.

Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature
of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with a recognised asset or a liability or
highly probable forecast transaction (cash flow hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk
management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair
values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes are disclosed in note 24. Movements on the hedging reserve are shown
in the statement of other comprehensive income. The full fair value of hedging derivatives is classified as a non-current asset or liability when the
maturity of the hedging relationship is more than 12 months and as a current asset or liability when the remaining maturity of the hedging relationship
is less than 12 months.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within “other gains/
(losses) – net”.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the
forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is
recognised in the income statement within ‘finance income/cost’.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the
income statement within ‘other gains/losses – net’.

Prepayments
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the
prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current
upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of
the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Other prepayments are written off to profit
or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a
prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised
in profit or loss for the year.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. It excludes
borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses.

Cash and cash equivalents
In the cash flow statement cash and cash equivalents include cash in hand and deposits held at call with original maturity up to 90 days with banks.
Cash and cash equivalents are carried at amortised cost using the effective interest method. Deposits with original maturity over 90 days are included
in the cash flow from investing activities.

Cash flow statement
The cash flow statement is prepared under the indirect method. Purchases of property, plant and equipment (including prepayments for PPE) are
presented within cash flows from investing activities and finance lease repayments within cash flows from financing activities are shown net of VAT.
Related input VAT is included in movement in changes of working capital, within trade and other receivables.

Share capital, share premium and capital contribution
Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Any excess of the fair value of consideration received over the par value of shares issued is recognised as share premium. Share premium is subject
to the provision of the Cyprus Companies Law on reduction of share capital.

Capital contribution represents contributions by the shareholders directly in the reserves of the Company. The Company does not have any
contractual obligation to repay these amounts. However, these are distributable to the Company's shareholders at the discretion of the Board of
Directors subject to the shareholders' approval.

Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Provisions and contingent liabilities
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an
outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future
operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class
of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time
is recognised as interest expense.

Provisions are only used to cover those expenses which they had been set up for. Other possible or present obligations that arise from past events
but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the
obligation cannot be measured with sufficient reliability, are disclosed in the notes to the financial statements as contingent liabilities.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months
after the balance sheet date.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale are capitalised and amortised over the useful life of the asset. Other borrowing costs are recognised as an
expense in the reporting period incurred. Interest is capitalised at a rate based on the Group’s weighted average cost of borrowing or at the rate on
project specific debt, where applicable.

Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends
are approved, appropriately authorised and are no longer at the discretion of the Company.

More specifically, interim dividends are recognised as liability in the period in which these are approved by the Board of Directors and in the case of
final dividends, they are recognised in the period in which these are approved by the Company’s shareholders.

Financial guarantee contracts
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a
specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.

Financial guarantees are initially recognised in the financial statements at fair value on the date the guarantee was given. Subsequent to initial
recognition, the Group’s liabilities under such guarantees are measured at the higher of the initial measurement, less amortisation calculated to
recognise in the income statement the fee income earned on a straight line basis over the life of the guarantee and the probability of realising the
expenditure required to settle any financial obligation arising at the balance sheet date. These estimates are determined based on experience of
similar transactions and history of past losses, supplemented by the judgment of management. Any increase in the liability relating to guarantees is
taken to the income statement in ‘other gains/(losses) – net’.

Income taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised on profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity respectively.

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to or recovered from the taxation
authorities using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the country where the entity
operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to
the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial statements. In accordance with the initial recognition exemption, deferred taxes are not recorded
for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when
initially recorded, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and laws that have been
enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the
foreseeable future.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Value Added Tax (“VAT”)
In the Russian Federation, output value added tax related to sales is payable to tax authorities on the earlier of (a) collection of the receivables from
customers or (b) delivery of the goods or services to customers. Input VAT is generally recoverable against output VAT upon receipt of the VAT invoice
except for export sales related input VAT which is reclaimable upon confirmation of export. The tax authorities permit the settlement of VAT on a net
basis. Where provision has been made for impairment of receivables, impairment loss is recognised for the gross amount of the debtor, including VAT.
The lease liabilities are disclosed net of VAT. While the leasing payment includes VAT, the amount of VAT from the lease payment made is reclaimable
against sales VAT. VAT related to sales and purchases is recognised in the balance sheet on a gross basis and disclosed separately as an asset and
liability.

Employee benefits
Wages, salaries, contributions to state pension and social insurance funds, paid annual leave and sick leave, bonuses and other benefits (such as
health services) are accrued in the year in which the associated services are rendered by the employees of the Group. These are included in staff
costs and the Group has no further obligations once the contributions have been paid.

The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a
constructive obligation.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

3 FINANCIAL RISK MANAGEMENT

Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk),
credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial results.

(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in the currency different from
the functional currency of each of the entities of the Group.

Usually the Group does not hedge the foreign exchange risk. In the course of NCC Acquisition (note 30) the Group has inherited a cross-currency
and interest rate swap. Upon the NCC Acquisition the Group has designated the cross-currency interest rate swap as a cash flow hedge of the
variability of interest rates of on the underlying external borrowings and as a cash flow hedge of the changes in the expected cash flows arising from
the highly probable forecasted revenues in USD due to USD/RUR exchange rate (Note 24).

Currently the long-term debt of the Group is denominated in US dollars, Euros and Russian Roubles. The US dollar and Euro interest rates are
relatively more attractive compared to the Russian Rouble interest rate.

The Group will continue to review its borrowing policy in order to maintain a balance between term and interest rate of available financing and its
currency.

For foreign exchange risk analysis purposes the Group may be divided into companies operating in Russia, where their functional currency is Russian
Rouble (being Russian ports segment), and into those operating in Euro zone, where their functional currency is Euro (segments VEOS and Finnish
ports). For more details please refer to Note 5.

Limitations of sensitivity analysis the below tables demonstrates the effect of a change in a key assumption while other assumptions remain
unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear,
and larger or smaller impacts should not be interpolated or extrapolated from these results. The sensitivity analyses do not take into consideration
that the Group’s assets and liabilities are actively managed. Additionally, the financial position of the Group may vary at the time that any actual
market movement occurs. Other limitations in the above sensitivity analyses include the use of hypothetical market movements to demonstrate
potential risk that only represent the Group’s view of possible near-term market changes that cannot be predicted with any certainty; and the
assumption that all interest rates move in an identical fashion.

Russian operations
Currently Russian operations attract a substantial amount of long-term borrowings and lease liabilities denominated in US dollars, Euros and Russian
Roubles. Their revenues are mainly denominated in Russian Roubles and US Dollars, whereas most of expenses are denominated and settled in
Russian Roubles.

The carrying amount of monetary assets and liabilities in Russian operations denominated in US dollars are as follows:

(in thousands of US dollars)

Assets

Liabilities

Capital commitments

As at 31 December

2013

2012

82,340

1,199,592

62,080

276,945

–

Had US dollar exchange rate strengthened/weakened by 15% against the Russian Rouble and all other variables remained unchanged, the post-tax
profit of the Group for the year ended 31 December 2013, would have (decreased)/increased by US$134,070 thousand (2012: 15% change, effect
US$25,784 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of lease liabilities, loans, borrowings, cash
and cash equivalents and accounts receivable denominated in US dollars.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

Financial risk factors (continued)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
The carrying amount of monetary assets and liabilities in Russian operations denominated in Euros as at 31 December 2013 and 31 December 2012
are as follows:

(in thousands of US dollars)

Assets

Liabilities

Capital commitments

As at 31 December

2013

1,160

17,769

12,290

2012

2,748

11,422

12,185

Had Euro exchange rate strengthened/weakened by 15% against the Russian Rouble and all other variables remained unchanged, the post-tax profit
of the Group for the year ended 31 December 2013, would have (decreased)/increased by US$1,993 thousand (2012: 15% change, effect US$1,041
thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of lease liabilities, loans, borrowings, cash and cash
equivalents and accounts receivable denominated in Euros.

Euro zone operations
Euro zone operations’ revenues are mainly denominated in Euros and US Dollars, whereas most of expenses are denominated and settled in Euros.
Their long-term borrowings and lease liabilities are denominated in US dollars and Euros.

The carrying amount of monetary assets and liabilities in Euro zone operations denominated in US dollars are as follows:

(in thousands of US dollars)

Assets

Liabilities

Capital commitments

As at 31 December

2013

7,417

2,931

–

2012

3,033

2,747

Had US dollar exchange rate strengthened/weakened by 15% against the Euro and all other variables remained unchanged, the post-tax profit of the
Group for the year ended 31 December 2013, would have (decreased)/increased by US$538 thousand (2012: 15% change, effect US$34 thousand).
This is mainly due to foreign exchange gains and losses arising upon retranslation of lease liabilities, borrowings, cash and cash equivalents and
accounts receivable denominated in US dollars.

(ii) Cash flow and fair value interest rate risk
The Group’s income and operating cash flows are exposed to changes in market interest rates arising mainly from floating rate cash and cash
equivalents and borrowings. In addition the Group is exposed to fair value interest rate risk through market value fluctuations of loans receivable,
borrowings and lease liabilities with fixed rates.

Lease and long-term borrowing contracts of the Group are concluded to finance the purchase of property, plant and equipment. While analysing
new investment projects and concluding credit facility agreements, loan agreements and lease contracts, various scenarios are developed taking
into account terms of refinancing and alternative financing sources. Based on these scenarios the Group measures the impact of a definite change in
interest rate on profit or loss and selects the financing model that allows maximizing the estimated future profit.

Had market interest rates on US dollars, Euro and Russian Rouble denominated floating interest bearing financial assets and liabilities shift by 100
basis points and all other variables remained unchanged, the post tax profit of the Group would have decreased by US$11,716 thousand for the year
ended 31 December 2013 (2012: US$2,131 thousand).

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

Financial risk factors (continued)
(a) Market risk (continued)
(ii) Cash flow and fair value interest rate risk (continued)
The Group obtains borrowings at current market interest rates and usually does not hedge the interest rate risk. In the course of NCC Acquisition
(note 30) the Group has inherited a cross-currency and interest rate swap. Upon the NCC Acquisition the Group has designated the cross-currency
interest rate swap as a cash flow hedge of the variability of interest rates of on the underlying external borrowings and as a cash flow hedge of
the changes in the expected cash flows arising from the highly probable forecasted revenues in USD due to USD/RUR exchange rate (Note 24).
Management monitors changes in interest rates and takes steps to mitigate these risks as far as practicable by ensuring the Group has financial
liabilities with both floating and fixed interest rates.

(b) Credit risk
Financial assets, which potentially subject the Group to credit risk, consist principally of trade receivables and loans receivable (Note 19), bank
deposits with maturity over 90 days (Note 20) and cash and cash equivalents (Note 21).

The Group has policies in place to ensure that sales of goods and services are made to customers with an appropriate credit history. These
policies enable the Group to reduce its credit risk significantly. However, the Group’s business is heavily dependent on several large key customers
accounting for 45% and 43% of the Group’s revenue for the year ended 31 December 2013 and 2012, respectively. The Group has policies in place
to ensure that loans are granted to counterparties which it has long-standing trading relationships with and that cash balances are deposited with
high credit quality financial institutions.

The table below summarises the analysis of trade and accounts receivables under contractual terms of settlement at the balance sheet date.

(in thousands of US dollars)

As at 31 December 2013

Trade receivables

Loans receivable

Other receivables

Bank deposits with maturity over 90 days

Total

As at 31 December 2012

Trade receivables

Loans receivable

Other receivables

Bank deposits with maturity over 90 days

Total

Fully performing

Past due

Impaired

Impairment
provision

Total

38,792

17,653

70,447

10,940

4,796

–

137,832

4,866

23,563

12,074

2,945

13,854

52,436

7,027

120

–

7,150

–

43,588

17,653

70,517

10,940

142,698

30,590

12,194

2,948

13,854

59,586

(c) Liquidity risk
The Group has successful credit and refinancing history and maintains enough flexibility ensuring the ability to attract necessary funds either through
committed credit facilities or shareholders’ loans. Due to availability of cash and cash equivalents amounting to US$121,583 thousand (31 December
2012: US$89,644 thousand) (Note 21), bank deposits over 90 days amounting to US$10,940 thousand (31 December 2012: US$13,854 thousand)
(Note 20), committed credit lines amounting to US$401,247 thousand at 31 December 2013 (US$83,045 thousand at 31 December 2012) together
with long-term borrowings (Note 23) the Group has the ability to meet its liabilities as they fall due and mitigate risks of adverse changes in the
financial markets environment.

Management controls current liquidity based on expected cash flows and expected revenue receipts. In the long term perspective the liquidity risk
is determined by forecasting future cash flows at the moment of signing new credit, loan or lease agreements and by budgeting procedures. The
management of the Group believes that is successfully managing the exposure of the Group to liquidity risk.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

Financial risk factors (continued)
(c) Liquidity risk (continued)
The table below summarises the analysis of financial liabilities of the Group by maturity as of 31 December 2013 and 2012. The amounts in the table
are contractual undiscounted cash flows. Trade and other payables balances due within 12 months equal their carrying balances as the impact of
discounting is not significant.

(in thousands of US dollars)

As at 31 December 2013

Borrowings

Trade and other payables

Total

As at 31 December 2012

Borrowings

Trade and other payables

Total

Less than
1 month

17,232

73,012

90,244

1-3 months

3-6 months

6 months -
1 year

1-2 years

2-5 years

Over 5 years

Total

51,877

47,202

99,079

67,562

185,686

223,803

883,721

593,710

2,023,591

64,333

1,663

–

186,261

67,613

250,019

225,466

883,721

593,710

2,209,852

5,982

10,221

16,203

8,844

14,294

23,138

24,253

43,730

143,283

119,577

122,287

467,956

336

1,532

–

26,401

24,266

44,066

144,815

119,582

122,287

494,357

(d) Capital risk management
The Group’s main objective when managing capital is to maintain the ability to continue as a going concern in order to ensure the profitability of the
Group, maintain optimum equity structure and reduce its cost of capital.

Defining capital, the Group uses the amount of equity and the Group’s borrowings.

The Group manages the capital based on borrowings to total capitalisation ratio. Borrowings include lease liabilities and loan liabilities.

Total capitalisation is calculated as the sum of the total Group borrowings and net assets at the date of calculation. The management does not
currently have any specific target for the rate of borrowings to total capitalisation.

The rate of borrowings to total capitalisation is as follows:

(in thousands of US dollars)

Total borrowings

Total capitalisation

Total borrowings to total capitalisation ratio (percentage)

As at 31 December

2013

2012

1,551,383

333,109

2,745,388

1,152,395

57%

29%

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

Financial risk factors (continued)
(e) Fair value estimation
Fair value is the amount at which a financial asset could be exchanged or a liability settled in a transaction between knowledgeable willing parties in
an arm’s length transaction, other than in a forced sale or liquidation, and is best evidenced by an active quoted market price.

The estimated fair values of financial instruments have been determined by the Group, using available market information, where it exists, and
appropriate valuation methodologies and assistance of experts. However, judgment is necessarily required to interpret market data to determine the
estimated fair value. The Russian Federation continues to display some characteristics of an emerging market and economic conditions continue
to limit the volume of activity in the financial markets. Market quotations may be outdated or reflect distress sale transactions and therefore do not
always represent the fair values of financial instruments. The Group has used all available market information in estimating the fair value of financial
instruments.

The fair value of floating rate instruments is normally their carrying amount. The estimated fair value of fixed interest rate instruments is based on
estimated future cash flows expected to be received, discounted at current interest rates for instruments with similar credit risk and remaining
maturity. Discount rates used depend on credit risk of the counterparty. Carrying amounts of trade receivables approximate their fair values.

The estimated fair value of fixed interest rate instruments with stated maturity, for which a quoted market price is not available, was estimated based
on expected cash flows, discounted at current interest rates for new instruments with similar credit risk and remaining maturity. Carrying amounts of
trade and other payables which are due within twelve months approximate their fair values.

Financial instruments carried at fair value are valued by the following valuation methods:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation

techniques maximise the use of observable market data where it is available and rely as little as possible on Group’s specific estimates.

Level 3 – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The Group’s only financial instrument carried at fair value that is disclosed in note 24. It is valued using Level 2 from the table above. See note 4(a)(iii).

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgments are continually evaluated and they are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:

(i) Determination of useful lives and residual value of property, plant and equipment
The estimation of the useful lives and residual values of items of property, plant and equipment is a matter of judgement based on experience
with similar assets. However, other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of
the economic benefits embodied in the assets. Management assesses the remaining useful lives and residual values in accordance with the
current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group. The following
primary factors are considered: (a) expected usage of the assets; (b) expected physical wear and tear, which depends on operational factors and
maintenance programme; and (c) technical or commercial obsolescence arising from changes in market conditions. Reviews at each balance sheet
date indicate whether there is a need for changes in estimations and assumptions as a result of which the useful lives and residual values need to
be adjusted accordingly. The carrying amount of property, plant and equipment of the Group was US$1,544,519 thousand (31 December 2012:
US$928,043 thousand). If depreciation rates were increased by 10%, the carrying amount of property, plant and equipment would decrease by
around US$6,326 thousand (2012: US$6,389 thousand).

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

(a) Critical accounting estimates and assumptions (continued)
(ii) Estimated impairment of goodwill and property, plant and equipment
The Group tests annually whether goodwill has suffered an impairment. In addition the Group reviews long-lived assets or groups of assets for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Also the Group assessed
whether there are any circumstances giving grounds to the reversal of the impairment recognised in previous periods on non-financial assets other
than goodwill. When the carrying amount of an asset does not yet include all the cash outflows to be incurred before it is ready for use or sale, the
estimate of future cash outflows includes an estimate of any further cash outflow that is expected to be incurred before the asset is ready for use
or sale. If the total of the discounted future cash flows is less than the carrying amount of the asset or group of assets, the asset is not recoverable
and the Group recognizes an impairment loss for the difference between the estimated recoverable amount (based on value in use) and the carrying
value of the asset or group of assets. The Group assesses long-lived assets for possible impairment upon the occurrence of a triggering event.
Events that can trigger assessments for possible impairments include, but are not limited to (a) significant decreases in the market value of an
asset, (b) significant changes in the extent or manner of use of an asset, and (c) a physical change in the asset. Estimating discounted future cash
flows requires making judgments about long-term forecasts of future revenues and costs related to the assets subject to review. These forecasts
are uncertain as they require assumptions about volumes, prices for the products and services, future market conditions and future technological
developments. Significant and unanticipated changes in these assumptions could require a provision for impairment in a future period. Based on the
current world-wide economic circumstances, the Group performed a test of the estimated recoverable amount of the cash-generating units (CGUs),
compared to their carrying value.

Goodwill has been allocated for impairment testing purposes to six individual CGUs – VEOS segment, Finnish ports segment and five CGUs in
Russian ports segment (VSC, PLP, MD and YLP, see Note 5). The Group prepared value in use calculation models for identification of potential
impairment for each CGU.

Models are prepared based on the Group’s best estimates and the latest budgets available as at the year end. Best estimates are based on historic
experience and data of growth of each CGU and statistical data of similar entities. They are consistent with external sources of information. However,
in the light of recent developments in the world economy and Russian Federation reasonable corrections of historic data have been made to arrive at
best estimates of key assumptions used in value in use calculations.

For all CGUs cash flow projections cover a period of five years. Cash flows beyond that five-year period have been extrapolated using a steady
terminal growth rate. The terminal growth rate used does not exceed the long-term average growth rate for the market in which entities operate. For
projections prepared for CGUs in Russian ports and Finnish ports segments terminal growth rate of 3% has been applied (2012: 3%). For projections
prepared for VEOS segment as at 31 December 2013 a terminal growth rate of 2% was applied (2012: 2%). The discount rate applied for Russian
ports CGUs in projections prepared as at 31 December 2013 is 11.6% (2012: 11.7%), for VEOS the discount rate is 10.2% (2012: 10.1%) and for
Finnish ports the discount rate is 10.8% (2012: 10.8%).

Key assumptions for all CGUs are throughput volume and price per unit. The projected volumes reflect past experience adjusted by the management
view on the prospective market developments. The growth rates for Finnish ports and VEOS revenues are conservatively estimated to be very
moderate in view of the competition nature in the Finnish Ports and VEOS. For PLP, VSC and MD CGUs volume growth is estimated to be in line with
the long-term market development, position of each terminal on the market and its pricing power. As supported by historical market performance
and in view of relatively low containerisation level in Russia, long-term average throughput growth rate for the Russian container market is higher than
in developed markets. For YLP long-term forecast takes into account the fact that it is a greenfield development, which started operations in the
second half of 2010.

Based on the impairment results of the impairment testing carried out in 2013, the Board of Directors believes that there is no requirement for further
impairments or indications for reversal of impairments recognised in previous periods for non-financial assets other than goodwill.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

(a) Critical accounting estimates and assumptions (continued)
(iii) Determination of fair values in business combinations
In accordance with the acquisition method of accounting for business combinations, the Group allocates the purchase price of acquired businesses
to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The Group engages third-party valuation
experts to assist management in determining the fair values of certain assets acquired and liabilities assumed while for other assets the Group uses
internal management estimates. Such valuations require significant estimates and assumptions to be made.

Fair values are estimated based upon assumptions believed to be reasonable. These estimates are based on historical experience and information
obtained from the management of the acquired companies and are inherently uncertain. Critical estimates include but are not limited to future
throughput volume, prices and discount rate.

In relation to NCC acquisition (see Note 30):

- The fair values of property, plant and equipment were determined by independent valuators by reference to market data.

- The fair value of lease contractual rights was determined by management to relate to the main asset of NCC Group, CJSC First Container Terminal
(FCT). The fair value was estimated using the multi-period excess earnings method within the income approach. The projected cash flows were
estimated by the management for a period which the Group expects to have benefits from these contractual rights. The cash flows attributed to the
lease contractual rights were discounted using a discount rate of 11,6%. Key assumptions are throughput volume and price per unit. The projected
volumes reflect past experience adjusted by the management view on the prospective market developments. Volume growth is estimated to be
in line with the long-term market development, position of each terminal on the market and its pricing power. As supported by historical market
performance and in view of relatively low containerisation level in Russia, long-term average throughput growth rate for the Russian container
market is higher than in developed markets.

- The estimation of useful lives of lease contractual rights is also a matter of judgement based on experience with similar assets. In determining

the useful lives management takes into account several factors such as applicable laws and regulations, the ability and cost of renewal of such
contractual rights and the date of expiration of the contractual agreements.

- The management considers that both land and the quays adjacent are necessary for conducting the operations of a terminal and as such the fair

value of the quay lease rights and adjacent land lease rights cannot be reliably estimated separately.

- The Board of Directors assessed the estimated useful economic life for the acquired lease contractual rights as 59 years taking into account one

expected lease renewal on the major quay leases of FCT.

- For details regarding the assessment of the fair value of CTI option and the contingent consideration related to NCC Acquisition please refer to Note 30.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

(iv) Tax legislation
Russian tax, currency and customs legislation is subject to varying interpretations (Note 28).

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION

The chief operating decision-maker (CODM) has been identified as the Board of Directors. They review the Group’s internal reporting in order to
assess performance and allocate resources. The operating segments were determined based on these reports.

Group operations consist of several major business units which are usually and mainly organised as separate legal entities. Segment profit is obtained
directly from the accounting records of each business unit and adjustments are made to bring their accounting records in line with IFRS as adopted
by the EU; the accounting records are all prepared using the same accounting policies as those used for the preparation of these consolidated
financial statements therefore there are no arbitrary allocations between segments. Certain business units are operating with one major operating
company and some supporting companies.

The Board of Directors considers the business from both a geographic (which is represented by different port locations managed by separate legal
entities) and services perspective regularly monitoring the performance of each major business unit.

The Board of Directors assesses the performance of the operating segments based on revenue (both in monetary and quantity terms) major costs
items and net profit after the accounting records of business units are converted to be in line with IFRS as adopted by the EU. For the purposes of
the internal reporting, joint ventures are assessed on a 100% ownership basis. There are no changes in the basis of measurement of segment profit
or loss compared to prior years.

The amounts provided to the Board of Directors with respect to total assets are measured in a manner consistent with that of the financial
statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

Other information provided to the CODM except as noted below is measured in a manner consistent with that in the financial statements.

The brief description of segments is as follows:

Russian ports
The segment consists of the following operating units:

• Petrolesport OAO, Farwater ZAO (PLP) and various other entities (including some intermediate holdings) that own and manage a container

terminal in St. Petersburg port, North-West Russia. PLP is engaged in handling of containers, ro-ro, general cargo and scrap metal.

• Vostochnaya Stevedoring Company OOO (VSC) and various other entities (including some intermediate holdings) that own and manage a

container terminal in Vostochnyi port near Nahodka, Far-East Russia.

• Moby Dik OOO (MD) and various other entities (including some intermediate holdings) that own and manage a container terminal in Kronstadt

near St. Petersburg, North-West Russia.

• Yanino Logistic Park OOO (YLP) being an in-land container terminal in Yanino near St. Petersburg, North-West Russia.

• Entities of acquired NCC Group (Note 30). The major acquired operating facilities are: CJSC First Container Terminal (FCT), CJSC Logistika-

Terminal (LT), OJSC Ust-Luga Contaner Terminal (ULCT). FCT is the biggest container terminal in Russia, located in St. Petersburg port, North-
West Russia. LT is an in-land container terminal in Shushary near St. Petersburg, North-West Russia. ULCT is a container terminal in Ust-Luga,
near St. Petersburg, North-West Russia.

Finnish ports
The segment consists of container terminals in the ports of Vuosaari (Helsinki) and Kotka, Finland.

VEOS
The segment consists of AS V.E.O.S., various other entities and the intermediate holding company that own and manage an oil products terminal in
Muuga port near Tallinn, Estonia.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The following items do not represent operating segments, however are provided to the CODM together with segment information:

Holding companies (all other)
The segment consists of Global Ports Investments Plc (GPI) and some intermediate holding and service companies.

Reconciliation adjustments
Reconciliation adjustments consist of two major components:

• Effect of proportionate consolidation – demonstrates the effect of proportionate consolidation of MD, YLP, Finnish ports and VEOS. In the financial
statements the financial position and financial results of these segments are incorporated using the proportionate consolidation method (using
respectively 75%, 75%, 75% and 50% proportion). In the current segment reporting the information is presented on the 100% basis and then the
portion which is not consolidated is deducted as a ‘Reconciliation Adjustment’.

• Other adjustments – all other consolidation adjustments including but not limited to:

• elimination of intragroup transactions (mainly intragroup sales and dividends) and balances (mainly intragroup loans and investments in

subsidiaries and joint ventures);

• consolidation adjustments of results of sale or purchase of shares of subsidiaries;

• other consolidation adjustments.

The Group does not have any regular transactions between segments except for transactions between MD, Finnish ports and YLP. In addition there
are several one-off transactions between other segments which mainly relate to financing activities.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The segment results for the year ended 31 December 2013 are as follows:

(in thousands of USD)

Sales to third parties

Inter-segment revenue

Total revenue

Cost of sales

Russian
ports

VEOS

Finnish
ports

Total operating
segments

Holdings

370,712

202,402

23,544

596,658

–

102

126

370,736

202,402

23,646

596,784

(164,479)

(128,713)

(21,750)

(314,942)

–

Administrative, selling and marketing expenses

(22,874)

(13,140)

(1,125)

(37,139)

(26,017)

Reconciliation adjustments

Effect of
proportionate
consolidation

(116,705)

(40)

(116,745)

76,696

7,637

Other
adjustments

–

(86)

Group

479,953

–

479,953

(238,172)

(55,507)

3,248

Other losses – net

Operating profit

Finance costs

incl. interest income

incl. interest expenses

Profit before income tax

Income tax expense

Profit after tax

CAPEX* on cash basis

CAPEX* on accrual basis

1,318

782

383

2,483

141,297

(423)

(140,109)

184,701

61,331

1,154

247,186

115,280

(32,835)

(140,109)

189,522

(44,452)

6,143

(28,579)

140,249

(40,156)

(2,946)

57,758

1,329

(3,573)

(2,650)

(50,675)

(1,922)

(1,496)

6,219

(33,447)

4,713

4,360

(696)

7,418

(93)

4,058

(38,518)

(8,499)

8,499

1,987

(21,586)

196,511

119,993

(25,417)

(140,083)

151,004

(192)

(39,019)

2,018

–

(36,937)

100,093

59,087

(1,688)

157,492

122,011

(25,353)

(140,083)

114,067

64,584

12,706

1,676

78,966

118,749

13,523

1,922

134,194

(7,232)

(8,487)

–

71,772

125,745

* CAPEX is purchases of property, plant and equipment

Included within ‘Other adjustments’ on the line ‘Other losses – net’ is the elimination of intragroup dividends.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The segment items operating expenses for the year ended 31 December 2013 are as follows:

Reconciliation adjustments

Effect of
proportionate
consolidation

Other
adjustments

Group

63,256

7,257

95,164

39,965

24,201

14,342

244,185

49,494

293,679

–

(86)

(in thousands of USD)

Depreciation of property, plant and equipment

Amortisation of intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Total

Other operating expenses

Russian
ports

51,786

6,107

58,550

14,703

9,636

11,815

VEOS

23,702

2,494

25,177

46,801

28,663

4,477

Finnish
ports

Total operating
segments

2,600

–

8,387

3,153

983

1,298

78,088

8,601

92,114

64,657

39,282

17,590

Holdings

–

19,992

–

(14,860)

(1,344)

(16,942)

(24,692)

(15,091)

(3,252)

152,597

131,314

16,421

300,332

20,034

(76,181)

34,756

10,539

6,454

51,749

5,983

(8,152)

Total cost of sales, administrative, selling and marketing expenses

187,353

141,853

22,875

352,081

26,017

(84,333)

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The segment assets and liabilities as at 31 December 2013 are as follows:

(in thousands of USD)

Russian
ports

VEOS

Finnish
ports

Total operating
segments

Holdings

Reconciliation adjustments

Effect of
proportionate
consolidation

Other
adjustments

Group

Property, plant and equipment (including prepayments for PPE)

1,442,506

256,040

15,191

1,713,737

1,492,026

72,884

4,716

1,569,626

–

(158,135)

(14,387)

–

1,555,677

1,555,239

Intangible assets

Other non-current assets

Inventories

Trade and other receivables (including income tax prepayment and
cash deposits over 90 days)

Cash and cash equivalents

Total assets

Long-term borrowings

Other long-term liabilities

Trade and other payables

Short-term borrowings

Other short-term liabilities

Total liabilities

Non-controlling interest

87,302

8,151

–

33,739

121,041

2,113,131

(12,091)

(2,202,137)

2,586

–

10,737

–

(1,435)

–

19,944

9,302

893,573

103,185

42,938

3,115

4,510

1,434

941,021

107,734

76,945

17,669

(21,511)

(844,421)

152,034

(3,820)

–

121,583

4,026,743

377,563

59,590

4,463,896

2,207,820

(211,379)

(3,046,558)

3,413,779

1,440,039

71,424

31,386

1,542,849

603,619

(76,930)

(748,448)

1,321,090

456,751

50,568

221,498

1,500

–

40,951

22,130

5,253

2,463

3,079

2,612

459,214

(1,881)

(2,278)

(3,432)

451,623

94,598

149,516

(19,458)

(10,677)

213,979

246,240

232,706

(15,477)

(233,176)

230,293

6,754

(2,639)

–

4,117

2,170,356

139,758

39,541

2,349,655

983,962

(116,782)

(995,733)

2,221,102

(15,353)

–

(15,353)

–

(15,353)

Included within ‘Russian ports’, ‘Finnish ports’ and ‘Holdings’ segments ‘Other non-current assets’ are investments in subsidiaries and joint ventures
in the total amount of US$8,066 thousand, US$9,763 thousand and US$2,038,410 thousand respectively (fully eliminated on consolidation).

Included within ‘Russian ports’ and ‘Holdings’ segments there are intragroup ‘trade and other receivables’ and ‘borrowings’ in the total amount of
US$833,291 thousand which are fully eliminated on consolidation.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The segment results for the year ended 31 December 2012 are as follows:

(in thousands of USD)

Sales to third parties

Inter-segment revenue

Total revenue

Cost of sales

Russian
ports

VEOS

Finnish
ports

Total operating
segments

Holdings

377,511

233,212

23,221

633,944

–

325

377,511

233,212

23,546

634,269

(244,575)

(126,085)

(22,196)

(392,856)

–

Administrative, selling and marketing expenses

(27,290)

(14,742)

(1,292)

(43,324)

(8,526)

Reconciliation adjustments

Effect of
proportionate
consolidation

(132,115)

(85)

(132,200)

92,809

8,473

Other
adjustments

Group

–

501,829

(240)

240

–

501,829

(299,807)

(43,377)

(1,387)

Other losses – net

Operating profit

Finance costs

incl. interest income

incl. interest expenses

Profit before income tax

Income tax expense

Profit after tax

CAPEX* on cash basis

CAPEX* on accrual basis

(2,262)

430

103,384

92,815

235

293

(1,597)

132,719

(191)

(132,318)

196,492

124,193

(31,109)

(132,318)

157,258

(6,377)

4,736

(20,036)

97,007

(28,675)

(1,467)

(1,355)

91,348

1,866

(1,190)

133

(9,034)

4,942

(2,199)

(23,590)

3,822

3,256

–

1,491

(109)

3,276

(5,288)

5,288

(3,660)

2,801

(15,026)

(897)

(217)

187,458

128,015

(29,618)

(132,257)

153,598

(27,026)

(42)

(3,056)

–

(30,124)

68,332

93,214

(1,114)

160,432

127,973

(32,674)

(132,257)

123,474

65,994

97,963

27,780

26,781

485

399

94,259

125,143

(14,570)

(14,300)

–

79,765

110,919

*CAPEX is purchases of property, plant and equipment

Included within ‘Other adjustments’ on the line ‘Other losses – net’ is the elimination of intragroup dividends.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The segment items operating expenses for the year ended 31 December 2012 are as follows:

(in thousands of USD)

Depreciation of property, plant and equipment

Amortisation of intangible assets

Impairment of property, plant and equipment

Impairment of goodwill

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Total

Other operating expenses

Finnish
ports

Total operating
segments

Holdings

Reconciliation adjustments

Effect of
proportionate
consolidation

Other
adjustments

Russian
ports

54,914

6,266

68,722

6,484

58,259

15,419

10,972

12,036

VEOS

19,148

2,261

–

25,109

49,980

29,057

4,535

2,664

–

9,209

2,423

1,120

1,289

76,726

8,587

68,722

6,484

92,577

67,822

41,149

17,860

233,072

130,090

16,765

379,927

38,793

10,737

6,723

56,253

–

3,744

–

3,779

4,747

(12,857)

(1,244)

(17,181)

–

(16,992)

(26,154)

(15,396)

(3,157)

(92,981)

(8,301)

–

(240)

Total cost of sales, administrative, selling and marketing expenses

271,865

140,827

23,488

436,180

8,526

(101,282)

Group

63,893

7,343

51,541

6,484

79,329

41,668

25,761

14,706

290,725

52,459

343,184

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The segment assets and liabilities as at 31 December 2012 are as follows:

(in thousands of USD)

Russian
ports

VEOS

Finnish
ports

Total operating
segments

Holdings

Reconciliation adjustments

Effect of
proportionate
consolidation

Other
adjustments

Property, plant and equipment (including prepayments for PPE)

849,053

255,053

15,208

1,119,314

109,159

128,960

72,157

4,512

185,828

–

33,866

162,826

706,627

(10,986)

(845,791)

4,825

2,423

7,320

–

(1,335)

–

(160,764)

(15,503)

–

Group

958,617

170,325

12,676

5,985

Intangible assets

Other non-current assets

Inventories

Trade and other receivables (including income tax prepayment and
cash deposits over 90 days)

46,089

46,536

7,285

99,910

56,366

(26,738)

(57,870)

71,668

Cash and cash equivalents

77,458

6,802

274

84,534

11,254

(6,144)

–

89,644

Total assets

Long-term borrowings

Other long-term liabilities

Trade and other payables

Short-term borrowings

Other short-term liabilities

Total liabilities

Non-controlling interest

1,215,544

382,971

61,217

1,659,732

774,314

(221,470)

(903,661)

1,308,915

441,435

85,325

37,336

75,662

3,863

13,880

17,588

153

30,819

476,117

2,373

3,124

3,620

101,578

58,048

79,435

1,703

131,993

133,697

(41,802)

(171,020)

263,295

–

(8,168)

677

(10,342)

(19)

(816)

–

(5,233)

(4,388)

(66,042)

(52,115)

93,391

47,567

69,814

15,562

641,461

167,477

39,937

848,875

699

(131,587)

(228,358)

489,629

2,512

–

2,512

–

2,512

Included within ‘Russian ports’, ‘Finnish ports’ and ‘Holdings’ segments ‘Other non-current assets’ are investments in subsidiaries and joint ventures
in the total amount of US$8,066 thousand, US$9,763 thousand and US$663,188 thousand respectively (fully eliminated on consolidation).

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5 SEGMENTAL INFORMATION (CONTINUED)

The revenue of the Group mainly comprises of stevedoring services, storage and ancillary port services for container, bulk cargoes (Russian ports and
Finnish ports segments) and oil products (VEOS segment). The entities of the Group also provide services which are of support nature in relation to
the core services mentioned above.

(in thousands of US dollars)

Revenues related to container, bulk and other cargoes

Revenues related to oil products

Total consolidated revenue

For the year ended
31 December

2013

2012

378,752

101,201

385,223

116,606

479,953

501,829

Revenue attributable to domestic and foreign customers for the year ended 31 December 2013 is disclosed below in accordance with their
registered address. Major clients of the Group are internationally operating companies. Their registered addresses are usually not relevant to the
location of their operations.

(in thousands of US dollars)

Revenue from domestic customers – Cyprus

Revenue from foreign customers by countries:

Russia

Finland

Korea

Other

Revenue from foreign customers total

Total revenue

For the year ended
31 December

2013

2012

20,948

10,127

318,637

315,041

31,121

27,633

20,783

60,831

44,379

26,664

18,899

83,163

459,005

491,702

479,953

501,829

In 2013 there was one customer representing more than 10% of consolidated revenue. This customer originated from Russian ports segment and
was domiciled in Russia. In 2012 there was one customer whose contribution to the consolidated revenue was 10%. This customer originated from
VEOS segment and was domiciled in Russia.

6 EXPENSES BY NATURE

(in thousands of US dollars)

Staff costs (Note 8)

Depreciation of property, plant and equipment (Note 14)

Amortisation of intangible assets (Note 15)

Impairment charge of property, plant and equipment (Note 4(a)(ii))

Impairment charge of goodwill (Note 4(a)(ii))

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Taxes other than on income

Legal, consulting and other professional services

Auditors' remuneration

Operating lease rentals

Purchased services

Insurance

Other expenses

For the year ended
31 December

2013

2012

95,164

63,256

7,257

–

39,965

24,201

14,342

7,732

4,602

1,778

5,981

11,564

2,114

15,723

79,329

63,893

7,343

51,541

6,484

41,668

25,761

14,706

7,869

3,386

1,774

7,114

9,449

2,144

20,723

Total cost of sales, administrative, selling and marketing expenses

293,679

343,184

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

6 EXPENSES BY NATURE (CONTINUED)

The auditors’ remuneration stated above includes fee of US$469 thousand (2012: US$414 thousand) for audit services charged by the Company’s
statutory audit firm.

The legal, consulting and other professional services stated above include fees of US$19 thousand (2012: US$24 thousand) for tax consultancy
services charged by the Company’s statutory audit firm.

For the year ended
31 December

2013

2012

60,554

62,475

7,081

–

39,965

23,842

13,606

6,790

3,307

11,564

1,883

7,105

59,265

62,855

7,180

51,541

6,484

41,668

25,369

12,832

6,893

4,638

9,449

1,834

9,799

238,172

299,807

For the year ended
31 December

2013

2012

34,610

781

176

359

736

942

4,602

1,778

2,674

231

8,618

55,507

20,064

1,038

163

392

1,874

976

3,386

1,774

2,476

310

10,924

43,377

The above expenses are analysed by function as follows:

Cost of sales

(in thousands of US dollars)

Staff costs

Depreciation of property, plant and equipment

Amortisation of intangible assets

Impairment charge of property, plant and equipment (Note 4(a)(ii))

Impairment charge of goodwill (Note 4(a)(ii))

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Taxes other than on income

Operating lease rentals

Purchased services

Insurance

Other expenses

Total cost of sales

Administrative, selling and marketing expenses

(in thousands of US dollars)

Staff costs

Depreciation of property, plant and equipment

Amortisation of intangible assets

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Taxes other than on income

Legal, consulting and other professional services

Auditors' remuneration

Operating lease rentals

Insurance

Other expenses

Total administrative, selling and marketing expenses

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

7 OTHER GAINS/(LOSSES) – NET

(in thousands of US dollars)

Foreign exchange gains/(losses) on non-financing activities – net (Note 11)

Non-recurring donation to a charity which is a related party (Note 32(d), within “other related parties”)

Other gains/(losses) – net

Total

8 EMPLOYEE BENEFIT EXPENSE

(in thousands of US dollars)

Wages and salaries

Social insurance costs

Other staff costs

Total

For the year ended
31 December

2013

2,254

–

994

2012

(274)

(965)

(148)

3,248

(1,387)

For the year ended
31 December

2013

76,924

16,023

2,217

95,164

2012

61,521

15,395

2,413

79,329

Included within ‘Social insurance costs’ for 2013 are contributions made to the state pension funds in the total amount of US$10,884 thousand
(2012: US$10,202 thousand).

9 FINANCE COSTS – NET

(in thousands of US dollars)

Included in finance income:

Interest income on bank balances

Interest income on short-term bank deposits

Interest income on loans to related parties (Note 32(i))

Interest income on loans to third parties and bank deposits with the maturity over 90 days

Interest income

Net foreign exchange gains/(losses) on cash, cash equivalents and loans receivable

Finance income total

Included in finance costs:

Interest expenses on bank borrowings

Interest expenses on finance lease

Interest expenses on loans from related parties (Note 32(j))

Interest expenses on loans from third parties

Interest expense

Net foreign exchange gains/(losses) on borrowings and other financial items

Finance costs total

Finance costs – net

For the year ended
31 December

2013

2012

806

319

858

1,987

2,613

4,600

(15,219)

(4,277)

–

(2,090)

(21,586)

(21,532)

(43,118)

(38,518)

481

1,392

923

2,801

(3,442)

(641)

(9,245)

(3,399)

(212)

(2,170)

(15,026)

12,007

(3,019)

(3,660)

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

10 INCOME TAX EXPENSE

(in thousands of US dollars)

Current tax

Deferred tax credit – origination and reversal of temporary differences (Note 25)

Total

For the year ended
31 December

2013

2012

41,929

(4,992)

36,937

55,092

(24,968)

30,124

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the applicable tax rate as follows:

(in thousands of US dollars)

Profit before tax

Tax calculated at the applicable tax rates – 20%(1)

Income not subject to tax – VEOS segment(2)

Tax effect of expenses not deductible for tax purposes

Withholding tax on undistributed profits

Tax effect of reduced tax rates of entity in Russian ports segment(3)

Tax charge

For the year ended
31 December

2013

2012

151,004

153,598

30,201

(5,783)

8,300

6,501

(2,282)

36,937

30,720

(9,140)

5,220

6,669

(3,345)

30,124

(1) The applicable tax rate used for 2013 and 2012 is 20% as this is the income statutory tax rate applicable to the Russian ports segment, where a substantial part of the taxable income arises.
(2) For subsidiaries incorporated in Estonia the profits earned by enterprises are not subject to income tax. The effect on the profit before tax is included within ‘Income not subject to tax – VEOS segment’ in the tax

(3)

reconciliation note. The withholding tax rate for dividend distribution is 21% and the effect is included within ‘Withholding tax on undistributed profits’.
The statutory tax rate for OAO Petrolesport (hereinafter “Petrolesport”, included in Russian ports segment) is 15.5% (2012: 15.5%) because of tax benefits granted by the authorities of St. Petersburg. Effective from
31 December 2009 the tax rate for Petrolesport is 15.5% for the three years that the benefit is granted and 20% thereafter. Due to the changes in the local tax legislation this entity applied the normal tax rate of 20%
starting from 1 January 2012. In September 2012 the authorities of St. Petersburg clarified their position in relation the new legislation. Based on clarifications received Petrolesport is eligible to utilise the tax benefit
of 4.5% for the period from effective from 1 January 2012 till 31 December 2013. The effect of this benefit is shown in the tax reconciliation note above as ‘Tax effect of reduced tax rates of entity in Russian ports
segment’.

The statutory tax rate for the Finnish entities is 24.5% up to 31 December 2013 and 20.0% as from 1 January 2014.

Deferred tax is provided on the undistributed profits of subsidiaries and joint ventures, except when it is probable that the Group will not distribute
dividends from the specific investment in the foreseeable future and the Group can control the payment of dividends.

The Company and its Cypriot subsidiaries are subject to income tax on taxable profits at the rate of 10% up to 31 December 2012, and at the
rate of 12,5% as from 1 January 2013. As from tax year 2012 brought forward losses of only five years may be utilised. Up to 31 December 2008,
under certain conditions interest may be subject to special contribution for defence at the rate of 10%. In such cases 50% of the same interest will
be exempt from income tax thus having an effective tax rate burden of approximately 15%. In certain cases dividends received from abroad may
be subject to special contribution for defence at the rate of 15%; increased to 17% as from 31 August 2011; increased to 20% as from 1 January
2012; reduced to 17% as from 1 January 2014. In certain cases dividends received from 1 January 2012 onwards from other Cyprus tax resident
companies may also be subject to special contribution for defence.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

11 NET FOREIGN EXCHANGE (LOSSES)/GAINS

The exchange differences (charged)/credited to the income statement are as follows:

(in thousands of US dollars)

Included in ‘finance costs’ (Note 9)

Included in ‘other gains/(losses) – net’ (Note 7)

Total

For the year ended
31 December

2013

(18,919)

2,254

(16,665)

2012

8,565

(274)

8,291

12 BASIC AND DILUTED EARNINGS PER SHARE

Basic and diluted earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number in issue during the respective period.

Profit attributable to the owners of the parent of the Company – in thousands of US dollars

Weighted average of ordinary shares in issue (thousands)

Basic and diluted earnings per share for profit attributable to the owners of the parent (expressed in US$ per share)

For the year ended
31 December

2013

2012

114,120

471,131

107,822

470,000

0.24

0.23

13 DIVIDEND DISTRIBUTION

During 2013 the Company has declared dividends to the equity holders of the Company amounting to US$164,500 (US$0.35 per share) thousand
and paid out of this dividends in the amount of US$150,400 thousand.

During 2013 there were no dividend payments from Group companies to non-controlling interests.

The Board of Directors of the Company recommends the payment of a dividend for the year 2013 amounting to US$11,463 thousand (US$0.02
per share). The dividend is subject to approval by the shareholders at the Annual General Meeting. These financial statements do not reflect the
dividend payable.

During 2012 the Company has declared and paid dividends to the equity holders of the Company amounting to US$79,900 thousand (US$0.17 per share).

During 2012 dividend payments from Group companies to non-controlling interests amounted to US$14,925 thousand.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

14 PROPERTY, PLANT AND EQUIPMENT

(in thousands of US dollars)

At 1 January 2012

Cost

Accumulated depreciation and impairment

Net book amount

Additions

Transfers

Disposals

Depreciation charge (Note 6)

Impairment charge (Note 4(a)(ii))

Translation reserve

Land

Buildings
and facilities

Assets
under
construction

Loading
equipment and
machinery

Other
production
equipment

Office
equipment

Total

325,520

479,727

52,826

–

(126,085)

–

179,912

(72,818)

93,498

(43,222)

3,144

1,134,627

(2,541)

(244,666)

325,520

353,642

52,826

107,094

50,276

603

889,961

175

–

(1,619)

–

(16,994)

19,411

36,781

15,284

(4,049)

(33,794)

(31,158)

18,054

34,132

(29,513)

(82)

–

(3,389)

2,745

30,816

156

(315)

8,658

14,087

(287)

(19,197)

(10,552)

–

6,237

–

2,494

357

(14)

(22)

(350)

–

110,919

–

(6,374)

(63,893)

(51,541)

48,971

Closing net book amount

326,493

354,760

56,719

124,791

64,676

604

928,043

At 31 December 2012

Cost

Accumulated depreciation and impairment

Net book amount

343,487

536,390

(16,994)

(181,630)

60,108

(3,389)

213,111

(88,320)

110,451

(45,775)

2,994

1,266,541

(2,390)

(338,498)

326,493

354,760

56,719

124,791

64,676

604

928,043

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(in thousands of US dollars)

At 1 January 2013

Cost

Accumulated depreciation and impairment

Net book amount

Additions

Acquisitions of subsidiaries (Note 30)

Transfers

Disposals

Depreciation charge (Note 6)

Translation reserve

Land

Buildings
and facilities

Assets
under
construction

Loading
equipment and
machinery

Other
production
equipment

Office
equipment

Total

343,487

536,390

(16,994)

(181,630)

60,108

(3,389)

213,111

(88,320)

110,451

(45,775)

2,994

1,266,541

(2,390)

(338,498)

326,493

354,760

56,719

124,791

64,676

604

928,043

47,164

50,663

354,499

–

(23,216)

13,256

(116)

(28,321)

(15,685)

11,619

32,382

(17,843)

(529)

–

(3,552)

54,815

155,471

(7)

–

(24,741)

(8,537)

11,965

13,518

4,532

(26)

(9,888)

(1,242)

133

397

–

(306)

(40)

125,745

606,930

–

(671)

(63,256)

(52,272)

Closing net book amount

353,989

725,557

78,796

301,792

83,535

850

1,544,519

At 31 December 2013

Cost

Accumulated depreciation and impairment

Net book amount

369,760

928,716

(15,771)

(203,159)

81,919

(3,123)

416,851

(115,059)

137,497

(53,962)

3,526

1,938,269

(2,676)

(393,750)

353,989

725,557

78,796

301,792

83,535

850

1,544,519

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

In the cash flow statement proceeds from sale of property, plant and equipment comprise of:

(in thousands of US dollars)

Net book amount

Less: Termination of finance leases and write-offs of property, plant and equipment

Profit on sale of property, plant and equipment(1)

Proceeds from sale of property, plant and equipment

(1) Profit on sale of property, plant and equipment is included in ‘Cost of sales’ in the income statement.

Net carrying amount of property, plant and equipment (included above) that are held under finance leases are as follows:

(in thousands of US dollars)

Buildings and constructions

Loading equipment

Other production equipment

Total

As at 31 December

2013

671

–

671

2012

6,374

(4,464)

1,910

395

741

1,066

2,651

As at 31 December

2013

19,261

54,111

3,433

76,805

2012

18,405

29,232

47,656

The total net book value of pledged property, plant and equipment (included above) which are held as collateral for borrowings and loans are as follows:

(in thousands of US dollars)

Land

Buildings and constructions

Construction in progress

Loading equipment and machinery

Other production equipment

Total

As at 31 December

2013

16,684

145,062

3,014

156,771

33,590

2012

32,193

67,902

–

32,962

11,943

355,121

145,000

Depreciation expense amounting to US$62,475 thousand in 2013 (2012: US$62,855 thousand) has been charged to ‘cost of sales’ and US$781
thousand in 2013 (2012: US$1,038 thousand) has been charged to ‘administrative, selling and marketing’ expenses.

The amount of the borrowing costs capitalised during the period was US$528 thousand (2012: US$562 thousand), the average capitalisation rate
was 5.6% (2012: 4.9%).

Lease rentals relating to the lease of machinery and property amounting to US$3,307 thousand in 2013 (2012: US$4,638 thousand) have been charged
to ‘cost of sales’ and US$2,674 thousand in 2013 (2012: US$2,476 thousand) has been charged to ‘administrative, selling and marketing expenses’.

As at 31 December 2013 the amounts prepaid for equipment not delivered and prepayments for construction works not yet carried out were
US$11,158 thousand (2012: US$30,574 thousand).

In 2012 impairment charge related to property, plant and equipment amounting to US$51,541 thousand has been charged to ‘cost of sales’ in the
consolidated income statement in relation to YLP CGU within the Russian ports segment.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

15 INTANGIBLE ASSETS

(in thousands of US dollars)

At 1 January 2012

Cost

Accumulated amortisation and impairment

Net book amount

Additions

Amortisation charge (Note 6)

Impairment charge (Note 4(a)(ii))

Translation reserve

Closing net book amount

At 31 December 2012

Cost

Accumulated amortisation and impairment

Net book amount

Additions

Acquisition of subsidiaries (Note 30)

Amortisation charge (Note 6)

Translation reserve

Closing net book amount

At 31 December 2013

Cost

Accumulated amortisation and impairment

Net book amount

Goodwill

Contractual
rights

Client base

Computer
software

Total

113,222

–

68,178

(19,566)

33,067

(19,021)

9,876

(8,475)

224,343

(47,062)

113,222

48,612

14,046

1,401

177,281

–

(3,634)

(3,248)

(6,484)

4,637

111,375

–

1,221

46,199

–

719

202

(461)

–

202

(7,343)

(6,484)

6,669

11,517

1,234

170,325

111,375

–

70,734

(24,535)

32,688

(21,171)

9,702

(8,468)

224,499

(54,174)

111,375

46,199

11,517

1,234

170,325

–

(1,685)

–

1,395,014

(3,745)

(516)

109,690

1,436,952

–

(3,035)

(880)

7,602

272

(477)

(45)

272

1,395,025

(7,257)

(3,126)

995

1,555,239

109,690

1,461,379

–

(24,427)

32,868

(25,266)

2,260

1,606,197

(1,265)

(50,958)

109,690

1,436,952

7,602

995

1,555,239

As at 31 December 2013 the remaining useful lives for contractual rights and client base were up to 59 years and 4 years respectively (2012: up to
43 years and 3.5 years respectively).

Goodwill is allocated to the Group’s cash generating units (CGUs) identified according to their operating segment. An operating segment-level
summary of the goodwill allocation is presented below:

(in thousands of US dollars)

PLP (Russian ports segment)

VSC (Russian ports segment)

MD (Russian ports segment)

AS V.E.O.S. (VEOS segment)

Finnish ports (Finnish ports segment)

Total

As at 31 December

2013

2012

7,725

10,136

35,116

51,997

4,716

8,324

10,922

37,840

49,777

4,512

109,690

111,375

The recoverable amount of CGU is determined based on value in use calculations. These calculations are based on pre-tax cash flow projections and
all the assumptions in relation to growth rates are determined by reference to management’s past experience and industry forecasts. The discount
rates used reflect the specific risks of each segment. See Note 4(a)(ii) for details of assumptions used.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

16 FINANCIAL INSTRUMENTS BY CATEGORY

The accounting policies for financial instruments have been applied in the line items below:

(in thousands of US dollars)

Loans and receivables

Financial assets as per balance sheet:

Trade and other receivables(1)

Bank deposits with maturity over 90 days

Cash and cash equivalents

Total

Financial liabilities measured at amortised cost

Financial liabilities as per balance sheet:

Borrowings

Trade and other payables(2)

Total

Derivatives used for hedging

Financial liabilities as per balance sheet:

Derivative financial instruments

Total

As at 31 December

2013

2012

131,758

10,940

121,583

45,732

13,854

89,644

264,281

149,230

1,551,383

333,109

186,261

26,401

1,737,644

359,510

26,069

–

(1) Trade and other receivables do not include taxes and prepayments.
(2) Trade and other payables do not include taxes, advances and deferred gains.

17 CREDIT QUALITY OF FINANCIAL ASSETS

The credit quality of financial assets that are neither past due or impaired can be assessed by reference to external and internal sources of
information like business reputation, financial position and performance, prior working history records. Customers with longer history of working with
the Group are regarded by management as having lower risk of default.

The credit quality of financial assets that are neither past due nor impaired classified by reference to the working history of the counterparty with the
Group is as follows:

(in thousands of US dollars)

Trade and other receivables

Core customers – new (less than one year of working history with the Group)

Core customers – existing (more than one year of working history with the Group)

Related party loans

Loans to third parties

Bank deposits with maturity over 90 days

Trade and other receivables from other customers (third parties)

Amount held in escrow for NCC Acquisition (Note 30)

Trade and other receivables from related parties

Total

As at 31 December

2013

2012

967

27,680

17,414

239

10,940

10,466

61,100

9,026

813

18,106

11,844

230

13,854

5,810

–

1,779

137,832

52,436

Loans granted to the third parties, trade and other receivables are related to highly reputable counterparties with no external credit rating. Amount
held in escrow is with a bank with a credit rating A2.

See Note 20 for the ratings of banks holding deposits with maturity over 90 days.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

17 CREDIT QUALITY OF FINANCIAL ASSETS (CONTINUED)

Cash at bank and short-term bank deposits:

(in thousands of US dollars)

Agency

International rating agency Moody’s Investors Service

Fitch Ratings

Standard&Poor's rating services

Russian rating agency Expert RA Rating Agency

* No rating

Total

Rating

A1 – Aa3

Baa1 – Ba3

Caa3

BBB+

BB/B – B-

No rating

* Cash in hand and cash and cash equivalents with banks for which there is no rating. These banks are highly reputable local banks in the country of operation of respective group entities.

18 INVENTORIES

(in thousands of US dollars)

Spare parts

Goods for resale

Total

All inventories are stated at cost.

19 TRADE AND OTHER RECEIVABLES

(in thousands of US dollars)

Trade receivables – third parties

Trade receivables – related parties (Note 32(f))

Trade receivables – net

Other receivables

Other receivables – related parties (Note 32(f))

Amount held in escrow for NCC Acquisition (Note 30)

Prepayments for goods and services

Prepayments for goods and services – related parties (Note 32(f))

Loans to third parties

Loans to related parties (Note 32(i))

VAT and other taxes recoverable

Total trade and other receivables

Less non-current portion:

Loans to related parties

Prepayments for goods and services

Other receivables

Total non-current portion

Current portion

As at 31 December

2013

42,823

63,921

172

10,034

–

333

4,300

2012

55,243

33,627

–

163

217

358

121,583

89,644

As at 31 December

2013

8,244

1,058

9,302

2012

4,919

1,066

5,985

As at 31 December

2013

39,520

4,068

43,588

4,459

4,958

61,100

13,545

378

239

17,414

11,735

157,416

2012

28,839

1,751

30,590

2,920

–

11,387

396

350

11,844

12,573

70,088

(17,282)

(11,083)

(687)

(1,975)

–

(1,593)

(19,944)

(12,676)

137,472

57,412

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

19 TRADE AND OTHER RECEIVABLES (CONTINUED)

According to management estimates the fair values of trade and other receivables do not materially differ from their carrying amounts.

The effective interest rate on loans receivable from third parties and related parties were in the range from 3.8% to 8.1% (2012: from 3.8% to 8.1%).

Trade and other receivables amounting to US$46,948 thousand (31 December 2012: US$26,508 thousand), were fully performing.

Trade and other receivables amounting to US$4,866 thousand (31 December 2012: US$7,030 thousand) were past due but not impaired. These
relate to a number of independent customers for whom there is no history of either non repayment in the past or renegotiation of the repayment
terms due to inability of the customer to repay the balance.

The analyses of past due trade and other receivables is as follows:

(in thousands of US dollars)

Less than 1 month overdue

From 1 to 3 months overdue

From 3 to 6 months overdue

Over 6 months overdue

Total

As at 31 December

2013

3,679

888

159

140

4,866

2012

4,378

2,095

201

356

7,030

During 2013 trade receivables amounting to US$1,611 thousand (2012: US$2,379 thousand) were impaired and written off in full. These are
individually impaired receivables mainly related to customers, which are in a difficult economic situation.

The movement on the Group provision for impairment of trade receivables is as follows:

(in thousands of US dollars)

At the beginning of the year

Provision for receivables impairment

Unused amounts reversed

Receivables written off during the year as uncollectible

Foreign exchange differences

At the end of the year

For the year ended
31 December

2013

–

1,605

(1,611)

–

2012

–

2,413

(34)

(2,379)

–

None of loans to third parties (31 December 2012: US$120 thousand) were past due or impaired.

The other classes within trade and other receivables do not contain impaired assets except as disclosed in Note 3(b).

The creation and release of allowance and write off of impaired receivables have been included in ‘administrative, selling and marketing expenses’ in the
income statement. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.

The fair value of receivables approximates their carrying value as the impact of the discounting is insignificant and is within Level 2 of the fair value
hierarchy. The fair value is based on discounting of cash flows using 8% (2012: 8%) discount rate.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

19 TRADE AND OTHER RECEIVABLES (CONTINUED)

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:

(in thousands of US dollars)

Currency:

US dollar

Russian Rouble

Euro

Total

As at 31 December

2013

2012

97,506

39,703

20,207

157,416

17,499

37,881

14,708

70,088

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group does not
hold any collateral as security for any receivables.

20 BANK DEPOSITS WITH MATURITY OVER 90 DAYS

(in thousands of US dollars)

Bank deposits with original maturity over 90 days

Total

As at 31 December

2013

2012

10,940

13,854

Bank deposits that have a maturity over 90 days are denominated in Euro, US dollars and Russian Roubles (2012: Euro) and the average interest
rate is 0.7% (2012: 5.9%) per annum. From said amounts US$9,943 thousand are placed in the banks with credit rating A1-Aa3 (according to
International rating agency Moody’s Investors Service), and US$997 thousand are placed in the banks with credit rating Baa2-Ba3 (according
to International rating agency Moody’s Investors Service). In 2012 all deposits were placed in the bank with the credit rating Baa2 according to
International rating agency Moody’s Investors Service.

21 CASH AND CASH EQUIVALENTS

(in thousands of US dollars)

Cash at bank and in hand

Short term bank deposits (less than 90 days)

Total

As at 31 December

2013

2012

94,160

27,423

121,583

40,515

49,129

89,644

The effective average interest rate on short-term deposits was 3.7% in 2013 (2012: 1.8%) and these deposits have an average maturity of 20 days in
2013 (2012: 19 days).

Cash and cash equivalents include the following for the purposes of the cash flow statement:

(in thousands of US dollars)

Cash and cash equivalents

Total

As at 31 December

2013

2012

121,583

89,644

The principal of non-cash transactions during the current year were the issue of 103,170,730 new GPI shares (Note 22) and the assignment to
GPI, loans due to NCC Group Ltd from sellers, for the partial settlement of consideration of NCC Acquisition (Note 30) amounting to US$480,776
thousand and US$603,290 thousand respectively (2012: US$ Nil).

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

22 SHARE CAPITAL, SHARE PREMIUM

Authorised share capital
On 16 October 2012 the Company converted 176,250,000 of its ordinary authorised ordinary shares into ordinary non-voting shares. As a result, the
authorised share capital of the Company consists of 353,750,000 ordinary shares and 176,250,000 ordinary non-voting shares with a par value of
US$0.10 each.

On 27 September 2013 the Company increased its authorised share capital from 353,750,000 ordinary shares and 176,250,000 ordinary non-voting
shares into 353,750,000 ordinary shares and 227,835,364 ordinary non-voting shares with a par value of US$0.10 each.

On 27 December 2013 the Company converted 77,378,048 of its authorised ordinary non-voting shares into ordinary shares. After the conversion
of the share capital, the authorised share capital of the company amounts to 431,128,048 ordinary shares with par value of US$0.10 each and
150,457,316 ordinary non-voting shares with a par value of US$0.10 each.

Issued share capital
On 16 October 2012 the Company converted 176,250,000 of its issued ordinary issued shares into ordinary non-voting shares. As a result, the
issued share capital of the Company consists of 293,750,001 ordinary shares and of 176,250,000 ordinary non-voting shares with a par value of
US$0.10 each.

On 27 December 2013 in the course of NCC Acquisition the Company issued as part of consideration payable 51,585,366 ordinary voting shares
with a par value of US$0.10 each at price of US$4.66 per share (the share premium was US$4.56 per share) and 51,585,364 ordinary non-voting
shares with a par value of US$0.10 each of price of US$4.66 per share (the share premium was US$4.56 per share). An amount of US$1,461
thousand out of the total expenses directly attributable to the new shares issued was written off against the share premium.

The ordinary shares and the ordinary non-voting shares rank pari passu in all respects save that, the ordinary non-voting shares do not have the
right to receive notice, attend or vote at any general meeting, nor to be taken into account for the purpose of determining the quorum of any general
meeting.

(in thousands of US dollars)

At 31 December 2011/31 December 2012

Ordinary shares issued net of issue costs (Note 30)

At 31 December 2013

Number of
shares ‘000

470,000

103,171

Share
capital

47,000

10,317

Share
premium

454,513

468,998

Total

501,513

479,315

573,171

57,317

923,511

980,828

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

23 BORROWINGS

(in thousands of US dollars)

Non-current borrowings

Bank loans

Finance lease liabilities

Loans from third parties

Interest payable on loans from third parties

Total non-current borrowings

Current borrowings

Bank loans

Interest payable on bank loans

Finance lease liabilities

Interest payable on finance lease liabilities

Loans from third parties

Interest payable on loans from third parties

Total current borrowings

Total borrowings

The maturity of non-current borrowings (excluding finance lease liabilities) is analysed as follows:

(in thousands of US dollars)

Between 1 and 2 years

Between 2 and 5 years

Over 5 years

Total

As at 31 December

2013

2012

1,211,202

207,482

36,627

62,845

10,416

27,253

25,650

2,910

1,321,090

263,295

203,703

58,171

3,346

11,773

1,117

6,817

3,537

1,558

8,071

1,085

841

230,293

69,814

1,551,383

333,109

As at 31 December

2013

2012

132,296

699,915

452,252

121,990

103,440

10,612

1,284,463

236,042

Bank borrowings mature until 2020 (31 December 2012: 2017) and loans from third parties mature until 2020 (31 December 2012: 2020).

Finance lease liabilities – minimum lease payments:

(in thousands of US dollars)

Under 1 year

Between 1 and 2 years

Between 2 and 5 years

Over 5 years

Total

Future finance charges of finance leases

Present value of finance lease liabilities

The present value of finance lease liabilities is analysed as follows:

Under 1 year

Between 1 and 2 years

Between 2 and 5 years

Over 5 years

Total

As at 31 December

2013

2012

14,895

8,389

16,922

113,549

153,755

10,509

6,882

8,663

109,674

135,728

(104,238)

(99,319)

49,517

36,409

12,889

6,482

9,816

20,330

49,517

9,156

5,078

2,607

19,568

36,409

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

23 BORROWINGS (CONTINUED)

According to the management’s estimates the carrying amount of borrowings do not materially differ from their fair value as the impact of discounting
is not significant. The fair values are based on cash flows discounted using a rate based on the appropriate Libor and Euribor rates and are within
Level 2 of the fair value hierarchy.

The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows (the
table excludes interest payable):

(in thousands of US dollars)

6 months or less

6-12 months

1-5 years

Over 5 years

Total

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

(in thousands of US dollars)

Russian Rouble

US Dollar

Euro

Total

The weighted average effective interest rates are as follows:

(percentage)

Bank borrowings

Loans from third parties

Finance lease liabilities – third parties

The Group has the following undrawn borrowing facilities:

(in thousands of US dollars)

Floating rate:

Expiring after one year

Expiring within one year

Fixed rate:

Expiring within one year

Total

As at 31 December

2013

2012

1,373,577

228,444

–

127,746

30,820

36,063

28,365

34,141

1,532,143

327,013

As at 31 December

2013

2012

222,232

27,018

1,251,915

279,674

77,236

26,417

1,551,383

333,109

As at 31 December

2013

6.04

8.13

8.87

2012

5.25

6.62

9.11

As at 31 December

2013

2012

–

400,000

69,000

12,075

1,247

1,970

401,247

83,045

As of 31 December 2013 the Group had undrawn loan facilities in the total amount of US$400 million which were utilised in 2014 to restructure
existing debt on a more favourable conditions.

The Group is leasing mainly container loading equipment, cars and terminal facilities.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

23 BORROWINGS (CONTINUED)

The bank loans and overdrafts are secured as follows:

• by the pledge of the property, plant and equipment with carrying amount as at 31 December 2013 of US$388,444 thousand (31 December 2012:

US$145,000 thousand) (see Note14).

• some bank loans given to a group entities in Russian ports segment are secured also by the pledge of shares of certain group entities.

The finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

Agreements of the bank loans given to some of the subsidiaries of the Group include certain covenants which set forth certain financial ratios that
have to be complied with. There were no breaches of covenants as at 31 December 2013 and 2012.

24 DERIVATIVE FINANCIAL INSTRUMENTS

The derivative financial instrument included within non-current liabilities represent cross-currency interest rate swap arrangement entered into by
NCC Group in the first half of 2013 which was acquired in the course of NCC Acquisition. On acquisition the Group has designated the derivative as
a cash flow hedge of the variability of interest rates on the external borrowing of an entity within the Group and as a cash flow hedge of the changes
in expected cash flow arising from the highly probable forecasted revenues of this entity denominated in USD due to USD/RUR exchange rate.
According to this arrangement payments under a Rouble-denominated loan are swapped into US dollars and MosPrime based floating interest rate
under this loan is swapped to a fixed rate (7%).

The underlying cash flows are expected to occur in 2013-2017. The notional principal amount of the outstanding cross-currency interest rate swap at
31 December 2013 was US$207,789 thousand.

As of 31 December 2013 the fair value of this swap was negative – US$(26,069) thousand.

The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedging relationship is more than
12 months and, as a current asset or liability, if the maturity of the hedging relationship is less than 12 months.

There was no ineffectiveness to be recorded from cash flow hedges.

25 DEFERRED INCOME TAX LIABILITIES

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when
the deferred taxes relate to the same fiscal authority. The offset amounts are as follows:

(in thousands of US dollars)

Deferred tax liabilities:

Deferred tax liability to be recovered after more than 12 months

Deferred tax liabilities (net)

The gross movement on the deferred income tax account is as follows:

(in thousands of US dollars)

At the beginning of the year

Income statement charge:

Deferred tax credit

Other movements:

Acquisitions of subsidiaries (Note 30)

Currency translation differences

At the end of the year

As at 31 December

2013

2012

(423,566)

(91,392)

For the year ended
31 December

2013

2012

(91,392)

(110,819)

4,992

24,968

(343,513)

–

6,347

(5,541)

(423,566)

(91,392)

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

25 DEFERRED INCOME TAX LIABILITIES (CONTINUED)

The movement on the deferred tax assets (+) and liabilities (-) during the year, without taking into consideration the offsetting of balances within the
same tax jurisdiction, is as follows:

(in thousands of US dollars)

At 1 January 2012

Income statement (Note 10)

Including deferred tax credit on impairment (Note 4(a)(ii))

Translation differences

At 31 December 2012

Income statement (Note 10)

Acquisitions of subsidiaries (Note 30)

Translation differences

At 31 December 2013

Property,
plant and
equipment

Withholding
tax provision

Intangible
assets

(81,226)

(24,014)

9,931

10,308

(4,825)

13,115

–

(156)

(76,120)

(11,055)

(5,526)

7,227

(6,264)

1,197

–

(354)

(5,421)

1,121

Borrowings

Subtotal

(108)

111,612

–

(115)

(174)

(610)

24,292

10,308

(5,450)

(92,770)

2,212

(53,662)

(10,262)

(279,034)

(1,306)

(344,264)

5,670

375

6,158

Other assets
and liabilities

793

676

–

(91)

1,378

2,780

751

189

Grand total

(110,819)

24,968

10,308

(5,541)

(91,392)

4,992

(343,513)

6,347

(129,638)

(13,998)

(282,959)

(2,069)

(428,664)

5,098

(423,566)

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

26 TRADE AND OTHER PAYABLES

(in thousands of US dollars)

Trade payables – third parties

Trade payables – related parties (Note 32(g))

Payables for property, plant and equipment

Other payables – third parties

Other payables – related parties (Note 32(g))

Dividends payable – third parties

Dividends payable – related parties (Note 32(g))

Contingent consideration payable (Note 30)

Payroll payable

Accrued expenses and deferred gains

Advances received

Taxes payable (other than income tax)

Total trade and other payables

Less non-current portion:

Deferred gains

Other payables – third parties

Total non-current portion

Current portion

As at 31 December

2013

7,299

426

5,817

5,528

4,209

8,466

10,575

122,703

5,291

16,437

19,024

10,192

215,967

(387)

(1,601)

(1,988)

2012

7,974

511

5,261

2,324

1,226

–

4,821

4,907

16,474

6,068

49,566

(467)

(1,532)

(1,999)

213,979

47,567

The fair value of trade and other payables approximates their carrying amount at the balance sheet date.

27 JOINT VENTURES

(a) CD Holding Oy (former Container-Depot Limited Oy)/ Multi-Link Terminals Limited
The following amounts represent the Group’s 75% share of the assets and liabilities, sales and results for the joint ventures of CD and MLT groups
(comprising of entities in Finnish ports segment and MD and YLP in Russian ports segment, see Note 5). They are included in the balance sheet and
the income statement:

(in thousands of US dollars)

Assets

Non-current assets

Current assets

Total assets

Liabilities

Non-current liabilities

Current liabilities

Total liabilities

Net assets

Income

Expenses

Loss after income tax

Proportionate interest in joint venture’s commitments

As at 31 December

2013

2012

107,287

114,370

14,360

16,871

121,647

131,241

112,709

105,352

17,154

18,174

129,863

123,526

(8,216)

7,715

46,638

(59,329)

46,453

(88,252)

(12,691)

(41,799)

–

248

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

27 JOINT VENTURES (CONTINUED)

(b) AS V.E.O.S.
The following amounts represent the Group’s 50% share of the assets and liabilities, sales and results for the joint venture. They are included in the
balance sheet and the income statement:

(in thousands of US dollars)

Assets

Non-current assets

Current assets

Total assets

Liabilities

Non-current liabilities

Current liabilities

Total liabilities

Net assets

Income

Expenses

Profit after income tax

Proportionate interest in joint venture’s commitments

28 CONTINGENCIES

As at 31 December

2013

2012

168,303

167,265

21,846

27,862

190,149

195,127

35,712

31,719

67,431

1,931

74,827

76,758

122,718

118,369

101,592

(78,955)

116,821

(85,530)

22,637

31,291

403

764

Operating environment of the Group
The Russian Federation displays certain characteristics of an emerging market. The legal, tax and regulatory framework is subject to varying
interpretations.

The ongoing uncertainty and volatility of the financial markets, in particular in Europe, and other risks could have significant negative effects on
the Russian financial and corporate sectors. The future economic and regulatory situation may differ from management’s current expectations.
Management determined impairment provisions by considering the economic situation and outlook at the end of the reporting period. Provisions
for trade receivables are determined using the ‘incurred loss’ model required by the applicable accounting standards. These standards require
recognition of impairment losses for receivables that arose from past events and prohibit recognition of impairment losses that could arise from future
events, no matter how likely those future events are.

The future economic development of the Russian Federation is dependent upon external factors and internal measures undertaken by the
government to sustain growth, and to change the tax, legal and regulatory environment. Management believes it is taking all necessary measures to
support the sustainability and development of the Group’s business in the current business and economic environment.

Management is unable to predict all developments which could have an impact on the Russian economy and consequently what effect, if any, they
could have on the future financial position of the Group. Management believes it is taking all the necessary measures to support the sustainability and
development of the Group’s business.

Estonia and Finland represent well established market economies with the stable political systems and developed legislation based on EU directives
and regulations.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

28 CONTINGENCIES (CONTINUED)

Tax legislation in Russia
Russian tax and customs legislation which was enacted or substantively enacted at the end of the reporting period, is subject to varying
interpretations when being applied to the transactions and activities of the Group. Consequently, tax positions taken by management and the
formal documentation supporting the tax positions may be successfully challenged by relevant authorities. Russian tax administration is gradually
strengthening, including the fact that there is a higher risk of review of tax transactions without a clear business purpose or with tax incompliant
counterparties. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year of review.
Under certain circumstances reviews may cover longer periods.

The transfer pricing rules that become effective from 1 January 2012 appear to be more technically elaborate and, to a certain extent, better
aligned with the international transfer pricing principles developed by the Organisation for Economic Cooperation and Development (OECD). The
legislation provides the possibility for tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of controllable
transactions. Controllable transactions include transactions with interdependent parties, as determined under the Russian Tax Code, all cross-border
transactions (irrespective of whether performed between related or unrelated parties), transactions where the price applied by a taxpayer differs by
more than 20% from the price applied in similar transactions by the same taxpayer within a short period of time, and barter transactions. Significant
difficulties exist in interpreting and applying transfer pricing legislation in practice. Any prior existing court decisions may provide guidance, but are not
legally binding for decisions by other, or higher level, courts in the future.

Tax liabilities arising from transactions between companies are determined using actual transaction prices. It is possible, with the evolution of
the interpretation of the transfer pricing rules, that such transfer prices could be challenged. The impact of any such challenge cannot be reliably
estimated; however, it may be significant to the financial position and/or the overall operations of the Group.

The transfer pricing legislation that is applicable to transactions on or prior to 31 December 2011, also provided the possibility for tax authorities to
make transfer pricing adjustments and to impose additional tax liabilities in respect of all controllable transactions, provided that the transaction price
differs from the market price by more than 20%. Controllable transactions included transactions with interdependent parties, as determined under
the Russian Tax Code, all cross-border transactions (irrespective of whether performed between related or unrelated parties), transactions where the
price applied by a taxpayer differed by more than 20% from the price applied in similar transactions by the same taxpayer within a short period of
time, and barter transactions. Significant difficulties exist in interpreting and applying that transfer pricing legislation in practice.

The Group includes companies incorporated outside of Russia. The tax liabilities of the Group are determined on the assumption that these
companies are not subject to Russian profits tax, because they do not have a permanent establishment in Russia. This interpretation of relevant
legislation may be challenged but the impact of any such challenge cannot be reliably estimated currently; however, it may be significant to the
financial position and/or the overall operations of the Group

As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of such uncertain
areas that reduce the overall tax rate of the Group. While management currently estimates that the tax positions and interpretations that it has
taken can probably be sustained, there is a possible risk that outflow of resources will be required should such tax positions and interpretations be
challenged by the relevant authorities. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial
position and/or the overall operations of the Group.

The Group’s management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax, currency legislation and
customs positions will be sustained. Accordingly, as of 31 December 2013 and 2012 management believes that no additional tax liability has to be
accrued in the financial statements.

Insurance policies
The Group holds insurance policies in relation to its loading machinery and facilities and in respect of public third party liability. The Group does
not have full insurance for business interruption or third party liability in respect of environmental damage except for AS V.E.O.S., VSC (BI)
and Finnish ports (BI).

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

28 CONTINGENCIES (CONTINUED)

Environmental matters
The Group is subject to laws, regulations and other legal requirements relating to the protection of the environment, including those governing the
discharge of waste water and the clean-up of contaminated sites.

Issues related to protection of water resources in Russia are regulated primarily by Environmental Protection Law, the Water Code and a number of
other federal and regional normative acts.

Pursuant to the Water Code, discharging waste water into the sea is allowed, provided that the volume does not exceed the established standards of
admissible impact on water resources. At the same time, the Environmental Protection Law establishes a “pay-to-pollute” regime, which implies that
companies need to pay for discharging waste waters. However, the payments of such fees do not relieve a company from its responsibility to comply
with environmental protection measures.

If the operations of a company violate environmental requirements or cause harm to the environment or any individual or legal entity, environmental
authorities may suspend these operations or a court action may be brought to limit or ban these operations and require the company to remedy the
effects of the violation. The limitation period for lawsuits for the compensation of damage caused to the environment is twenty years. Courts may also
impose clean-up obligations on offenders in lieu of or in addition to imposing fines.

The enforcement of environmental regulation in the countries in which the Group operates is evolving and the enforcement posture of government
authorities is continually being reconsidered. The Group periodically evaluates its obligations under environmental regulations. As obligations are
determined, they are recognised immediately. Potential liabilities, which might arise as a result of changes in existing regulations, civil litigation or
legislation, cannot be estimated but could be material. In the current enforcement climate under existing legislation, management believes that there
are no significant liabilities for environmental damage.

Legal proceedings
From time to time and in the normal course of business, claims against the Group may be received. On the basis of its own estimates and both
internal and external professional advice, management is of the opinion that no material losses will be incurred in respect of claims in excess of
provisions that have been made in these consolidated financial statements.

Other matters
Refer to Note 30(c) for guarantee to third parties.

29 COMMITMENTS

Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

(in thousands of US dollars)

Property, plant and equipment

Total

Operating lease commitments – Group as lessee
The future minimum lease payments payable under non-cancellable operating leases (mainly port infrastructure) are as follows:

(in thousands of US dollars)

Not later than 1 year

Later than 1 year and not later than 5 years

Later than 5 years

Total

As at 31 December

2013

14,271

2012

23,928

As at 31 December

2013

5,410

19,890

117,327

142,627

2012

682

2,318

13,875

16,875

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

29 COMMITMENTS (CONTINUED)

Operating lease commitments – Group as lessor
The future minimum lease payments receivable under non-cancellable operating leases (mainly port infrastructure) are as follows:

(in thousands of US dollars)

Not later than 1 year

Total

30 BUSINESS COMBINATIONS

As at 31 December

2013

1,475

2012

The NCC Acquisition also includes a call option for GPI to acquire 50% of the Container Terminal Illichevsk (“CTI”) operations located in Ukraine on
the Black Sea for the strike price of US$60 million adjusted for the proportionate amount of the net debt at the time of exercise (but not less than
US$1 million) from NCC Group's former shareholders. The term of the call option is three years following the closing of the NCC Acquisition. The
option is exercisable at any time during this period. The Board of Directors considers that the fair value of this option is insignificant.

The following table summarises the consideration paid for NCC Group, the fair value of assets acquired, liabilities assumed and the non-controlling
interest at the acquisition date:

(in thousands of US dollars)

Share consideration

Cash consideration paid

Less cash deposited on escrow account

Contingent consideration payable

Total consideration transferred, net of loans assigned (Note (e))

Recognised amounts of identifiable assets acquired and liabilities assumed

Cash and cash equivalents

Property, plant and equipment (Note 14)

Contractual rights (included in intangibles, Note 15)

Trade and other receivables

Other assets

Trade and other payables

Borrowings

Liabilities under swap arrangements

Deferred tax liabilities (Note 25)

Total identifiable net assets

Less NCC Group loans receivable due from the Sellers assigned to the Group upon Closing (included in ‘trade and other receivables’ above)

Total adjusted identifiable net assets

Non-controlling interest

Total

Note

(a)

(b)

(c)

(d)

480,776

229,354

(61,100)

122,703

771,733

51,706

606,930

1,395,014

622,719

8,953

(9,184)

(949,166)

(26,069)

(343,513)

1,357,390

(e)

(603,290)

754,100

(f)

17,633

771,733

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

30 BUSINESS COMBINATIONS (CONTINUED)

a) At the closing of the NCC Acquisition, the Sellers have received 17,195,122 GDRs (representing 51,585,366 ordinary voting shares credited as

fully paid of the Company constituting approximately 9% of its entire issued share capital) and 51,585,364 ordinary non-voting shares credited as
fully paid, constituting approximately 9% of the entire issued share capital of the Company following completion of the NCC Acquisition, on a fully
diluted basis.

A total of 103,170,730 new shares have been issued, to give a total share capital of 573,170,731 issued shares. The fair value of US$480,776

thousand of these shares issued as a part of the consideration paid for NCC Group was based on the published share price of GPI’s GDRs traded
on the London Stock Exchange on 27 December 2013. An amount of US$1,461 thousand of expenses directly attributable to the new shares
issued was written off against the share premium.

b) The total cash consideration payable is US$291 million. The part of the cash consideration paid on completion of NCC Acquisition comprised
US$229,354 thousand (of which US$61,100 thousand were placed on escrow as described in (c) below). GPI Group has obtained bank
borrowings in the amount of US$238,400 thousand to finance a part of the cash consideration.

c) From the cash consideration paid to the Sellers on completion of NCC Acquisition mentioned above, US$61,100 thousand has been placed to an
escrow account to cover potential claims on the guarantee below. As of 31 December 2013 there was a guarantee agreement in the total amount
of US$60 million between entities within NCC Group and a bank in relation to the loan obtained by a company related to the previous owners of
NCC Group.

In January 2014 the guarantee agreement was terminated and the amount deposited on the escrow was released to the Sellers.

d) Contingent consideration payable to the Sellers of US$122,703 thousand comprises of funds placed on the escrow account in the amount of

US$61,100 thousand as mentioned in (c) above and the Holdback Amount of US$61,603 thousand as described below.

At closing of the NCC Acquisition, the GPI Group withheld US$61,603 thousand (the Holdback Amount) from the purchase price payable to the

Sellers, and will pay this amount to the Sellers on condition and to the extent that the Sellers fulfill the following conditions.

The GPI Group has agreed, subject to Eurogate’s consent and assistance, to procure that, during the period beginning on the closing of the
NCC Acquisition and ending on 1 January 2015, the shareholder loans payable by ULCT, an indirect 80% subsidiary of NCC Group Limited, to
Eurogate International Gmbh (“Eurogate”), a 20% shareholder in ULCT, will be converted into equity of ULCT. The amount of loans due by ULCT
to Eurogate comprised US$57,523 thousand (incl. US$ 9,949 thousand of short-term part and US$47,574 thousand of long-term part) as of 31
December 2013.

Alternatively, at any time prior to 1 September 2014, the Sellers have the right to waive the requirement that the GPI Group proceeds with the

above conversion, and instead the Sellers may buy out Eurogate’s stake in ULCT. Should the Sellers select this option, the GPI Group will procure
that ULCT issues new shares to the Sellers. In this case GPI will pay to ULCT on behalf of the Sellers the subscription price for these new shares
in cash with the subscription price equaling to the amount of ULCT’s indebtedness under loans from Eurogate but not more than the Holdback
Amount.

The GPI Group’s effective 80% ownership interest in ULCT will not be affected under any of the scenarios described above.

The Board of Directors has assessed that the Holdback Amount forms part of the consideration for the acquisition of NCC Group which is
payable to the Sellers upon fulfillment of certain conditions by the Sellers. The Board of Directors assessment at the acquisition date is that the
probability of payment of this contingent consideration within 2014 is high. Therefore this contingent consideration is shown at fair value based on
the expected date of payment.

e) As per the agreement for the acquisition of the NCC Group, loans due to the NCC Group from the Sellers (US$603,290 thousand as of date
of acquisition) have been assigned to GPI Group by the Sellers on closing of the NCC Acquisition. The total consideration payable and the
net identifiable assets acquired are shown net of this amount. On the acquisition this amount has been fully eliminated on consolidation of the
enlarged GPI group and does not affect the amount of the total consolidated borrowings.

f) Non-controlling interest being 20% share of Eurogate in ULCT equity has been measured at the present ownership instruments’ proportionate

share in the recognised amounts of ULCT identifiable net assets

The fair value of trade and other receivables does not materially differ from their book value.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal Ports

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

30 BUSINESS COMBINATIONS (CONTINUED)

No material amounts of revenues, costs and net profit of the NCC Group since the acquisition date (27 December 2013) are included in the
consolidated income statement and the statement of comprehensive income for the reporting period.

Had NCC Group been consolidated from 1 January 2013, the consolidated statement of income would show pro-forma revenue of US$737 million
and net profit attributable to the owners of the parent of US$110 million. The pro-forma result would differ from combined GPI and NCC Group
results mainly by the effect of additional depreciation of property, plant and equipment, additional amortization of contractual rights, borrowing costs
related to the bank loan taken to finance the NCC Acquisition and the implementation of the hedge accounting on derivatives taken by NCC Group.

This information is not necessarily indicative of the results of the combined Group that would have occurred had the acquisition actually been made
at the beginning of the period presented, or indicative of the future results of the combined Group.

31 TRANSACTIONS WITH NON-CONTROLLING INTEREST

On 22 October 2012, the Group acquired the remaining 25% of Railfleet Holdings Ltd, 100% owner of Vostochnaya Stevedoring Company LLC
(“VSC”), from the non-controlling interest for a purchase consideration of US$230 million.

The effect of this transaction is as follows:

(in thousands of US dollars)

Carrying amount of non-controlling interest acquired

Consideration paid to non-controlling interest

Excess of consideration paid recognised in the Group’s equity

32 RELATED PARTY TRANSACTIONS

For the year ended
31 December

2013

2012

–

19,624

230,000

210,376

The Group is jointly controlled by Transportation Investments Holding Limited (“TIHL”), one of Russia's largest privately owned transportation groups,
and APM Terminals B.V. (“APM Terminals”), a global port, terminal and inland services operator.

For the purposes of these financial statements, parties are considered to be related if one party has the ability to control the other party or
exercise significant influence over the other party in making financial and operational decisions as defined by IAS 24 “Related Party Disclosures”.
In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Related
parties may enter into transactions, which unrelated parties might not, and transactions between related parties may not be effected on the same
terms, conditions and amounts as transactions between unrelated parties.

The following transactions were carried out with related parties:

(a) Sale of services

(in thousands of US dollars)

TIHL

Entities under control of owners of TIHL and APM Terminals

Joint ventures in which GPI is a venturer

Other related parties

Total

For the year ended
31 December

2013

–

58,208

2012

4,646

–

58,316

4,702

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

32 RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Purchase of property, plant and equipment

(in thousands of US dollars)

Entities under control of owners of TIHL and APM Terminals

Other related parties

Total

Net book amount of sold property, plant and equipment(in thousands of US dollars)

(in thousands of US dollars)

Other related parties

Total

Profit on sales of property, plant and equipment(in thousands of US dollars)

Other related parties

Total

(d) Purchases of services and incurred expenses

(in thousands of US dollars)

Entities under control of owners of TIHL and APM Terminals

Joint ventures in which GPI is a venturer

Other related parties

Total

(e) Interest income and expenses

(in thousands of US dollars)

Interest income:

Joint ventures in which GPI is a venturer

Total

Interest expense:

TIHL

Total

For the year ended
31 December

2013

2012

–

For the year ended
31 December

2013

2012

–

For the year ended
31 December

2013

2012

–

For the year ended
31 December

2013

2,043

487

4,889

7,419

2012

2,264

293

4,250

6,807

For the year ended
31 December

2013

2012

860

–

923

212

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

32 RELATED PARTY TRANSACTIONS (CONTINUED)

(f) Trade, other receivables and prepayments

(in thousands of US dollars)

Entities under control of owners of TIHL and APM Terminals

Joint ventures in which GPI is a venturer

Other related parties

Total

(g) Trade and other payables

(in thousands of US dollars)

Entities under control of owners of TIHL and APM Terminals

Joint ventures in which GPI is a venturer

Other related parties

Total

(h) Key management compensation/directors’ remuneration

(in thousands of US dollars)

Key management compensation:

Salaries, payroll taxes and other short term employee benefits

Directors’ remuneration (included also above):

Fees

Emoluments in their executive capacity

Total

(i) Loans to related parties

The details of loans provided to joint ventures in which GPI is a venturer are presented below (see also Note 19):

(in thousands of US dollars)

At the beginning of the year

Loans advanced during the year

Interest charged

Loan and interest repaid during the year

Foreign exchange differences

At the end of the year (Note 19)

The loans are not secured, bear interest at 3.8 – 8.1% (2012: 3.8 – 8.1%) and are repayable between 2015 and 2018.

As at 31 December

2013

4,369

4,945

9,404

2012

2,128

–

2,175

As at 31 December

2013

14,873

–

337

15,210

2012

1,269

462

1,737

For the year ended
31 December

2013

2012

18,274

6,329

393

466

859

512

416

928

For the year ended
31 December

2013

11,844

4,841

860

(376)

245

2012

22,711

2,758

923

(14,585)

17,414

11,844

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

32 RELATED PARTY TRANSACTIONS (CONTINUED)

(i) Loans to related parties (continued)

The details of loans provided to other related parties are presented below:

(in thousands of US dollars)

At the beginning of the year

Loans advanced during the year

Interest charged

Loan and interest repaid during the year

At the end of the year (Note 19)

(j) Loans from related parties

The details of loans received from TIHL by the various Group entities are presented below:

(in thousands of US dollars)

At the beginning of the year

Loans received during the year

Loan and interest repaid during the year

Interest charged

Foreign exchange differences

At the end of the year (Note 23)

The loans were provided at interest rates of 2.32%.

33 EVENTS AFTER THE BALANCE SHEET DATE

For the year ended
31 December

2013

–

258

–

(258)

–

2012

–

For the year ended
31 December

2013

–

2012

–

145,000

(145,212)

212

–

From the beginning of 2014 there has been increased volatility in currency markets and the Russian Rouble has depreciated significantly against
some major currencies. As of the middle of the March 2014 the Russian Rouble has depreciated against the US Dollar from 32.73 as of 31
December 2013 to approximately 36.5 Russian Roubles (11% devaluation) and has depreciated against the Euro from 44.96 as of 31 December
2013 to approximately 50.6 Russian Roubles (13% devaluation). For the period from January 2014 to the middle of March 2014 the lowest values of
Russian Rouble to US Dollar and the Euro were 36.48 and 50.81 respectively.

The guarantee referred to Note 30(c) was terminated in January 2014.

The Board of Directors of the Company recommends the payment of a dividend for the year 2013 amounting to US$11.463 million (US$0.02 per
share). The dividend is subject to approval by the shareholders at the Annual General Meeting. These financial statements do not reflect the dividend
payable.

There were no other material post balance sheet events, which have a bearing on the understanding of the financial statements.

Independent Auditor’s Report is on pages 12-13.

Directors’ report and consolidated financial statements for the year ended 31 December 20135. APPENDICESGlobal PortsAPPENDIX 2:
DIRECTORS’ REPORT AND PARENT COMPANY FINANCIAL STATEMENTS
31 December 2013

Board of Directors and other officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1–2

Report of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3–9

Directors’ Responsibility Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11–12

Statement of comprehensive income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Statement of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Notes to the financial statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17–39

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013
BOARD OF DIRECTORS AND OTHER OFFICERS

BOARD OF DIRECTORS

Mr. Nikita Mishin (appointed 15 December 2008)
(Mr Mikhail Loganov is the alternate to Mr Nikita Mishin)
Chairman of the Board of Directors
Non-Executive Director
Member of Remuneration and Nomination Committees

Mr. Kim Fejfer (appointed 23 January 2013)
(Mrs Iana Boyd Penkova and Mr Christian Moller Laursen are the alternates to Mr Kim Fejfer)
Vice Chairman of the Board of Directors
Non-Executive Director
Member of Remuneration, Nomination and Audit and Risk Committees

Capt. Bryan Smith (appointed 19 August 2008)
Senior Independent Non-Executive Director
Chairman of Remuneration and Nomination Committees

Mrs. Siobhan Walker (appointed 30 May 2011)
Independent Non-Executive Director
Chairman of Audit and Risk Committee

Dr. Alexander Nazarchuk (appointed 15 December 2008)
(Mr. Alexander Iodchin is the alternate to Dr. Alexander Nazarchuk)
Executive Director
Chief Executive Officer

Mr. Michalis Thomaides (appointed 29 February 2008)
Executive Director

Mr. Alexander Iodchin (appointed 15 August 2008)
Executive Director
Member of Nomination Committee

Mr. Mikhail Loganov (appointed 15 December 2008)
Non-Executive Director up to 11 October 2013, Executive Director as from 11 October 2013
Chief Financial Officer as from 11 October 2013
Member of Remuneration and Audit and Risk Committees up to 11 October 2013

Mr. Konstantin Shirokov (appointed 15 December 2008)
Non-Executive Director
Member of Audit and Risk Committee

Ms. Elia Nicolaou (appointed 22 June 2009, resigned on 23 January 2013)
Non-Executive Director

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsBOARD OF DIRECTORS AND OTHER OFFICERS (CONTINUED)

BOARD OF DIRECTORS (CONTINUED)
Mr. Marios Tofaros (appointed 26 October 2009, resigned on 23 January 2013)
Non-Executive Director

Mr. Robert Dirk Korbijn (appointed 23 January 2013, resigned on 27 September 2013)
(Mr Constantinos Economides was the alternate to Mr Robert Dirk Korbijn)
Non-Executive Director

Mr. Tiemen Meester (appointed 23 January 2013)
(Mrs. Iana Boyd Penkova is the alternate to Mr. Tiemen Meester)
Non-Executive Director
Member of Remuneration, Nomination and Audit and Risk Committees

Ms. Laura Michael (appointed 23 January 2013)
Non-Executive Director

Mr. Georgios Sofocleous (appointed 23 January 2013)
Non-Executive Director

Ms. Chrystalla Stylianou (appointed 23 January 2013)
Non-Executive Director

Mr. Constantinos Economides (appointed 27 September 2013)
Non-executive Director

Company Secretary

Team Nominees Limited
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus

Registered office
20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013REPORT OF THE BOARD OF DIRECTORS

The Board of Directors presents its report together with the audited parent company financial statements of Global Ports Investments Plc (hereafter
also referred to as “GPI” or the “Company”) for the year ended 31 December 2013. These parent company financial statements have been prepared
in accordance with International Financial Reporting Standards (hereafter also referred as “IFRS”) as adopted by the European Union (“EU”) and the
requirements of Cyprus Companies Law, Cap. 113.

Principal activities
The principal activities of the Company, which is unchanged from the previous year, is the holding of investments including any interest earning activities.

Review of Developments, Position and Performance of the Company’s Business
The net profit of the Company for the year ended 31 December 2013 was US$141,521 thousand (2012: US$116,361 thousand). On 31 December
2013 the total assets of the Company were US$2,189,483 thousand (2012: US$759,581 thousand) and the net assets were US$1,214,960
thousand (2012: US$758,624 thousand). The financial position, development and performance of the Company as presented in these financial
statements are considered satisfactory.

On 27 December 2013 GPI completed the acquisition of 100% of the share capital of NCC Group Limited (together with its subsidiaries “NCC
Group”), the second largest container terminal operator in Russia (the “NCC Acquisition”). See Note 14 of the parent company financial statements
for further details.

Principal Risks and Uncertainties
The Company’s financial risk management and critical accounting estimates and judgments are disclosed in Notes 3 and 4 to the financial statements.

The Company’s contingencies are disclosed in Note 22 to the financial statements.

The Board has adopted a formal process to identify, evaluate and manage significant risks faced by the Company.

Future Developments of the Company
The Board of Directors does not expect any significant changes in the activities of the Company in the foreseeable future.

Results
The Company’s results for the year are set out on page 13. The Board of Directors recommends the payment of a dividend as detailed below and the
remaining profit for the year is retained.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsREPORT OF THE BOARD OF DIRECTORS (CONTINUED)

During the year 2013 the Company has declared dividends in the total amount of US$164.5 million (US$0.35 per share). Dividends amounting to
US$153.9 million were paid during 2013 and remaining balance amounting to US$14.1 million was payable at 31 December 2013.

The Board of Directors of the Company recommends the payment of a dividend for the year 2013 amounting to US$11.5 million (US$0.02 per share).
The dividend is subject to approval by the shareholders at the Annual General Meeting. These financial statements do not reflect the dividend payable.

During 2012 the Company declared and paid dividends in the total amount of US$79.9 million (US$0,17 per share).

On 27 December 2013 the Company converted 77,378,048 of its authorised ordinary non-voting shares into ordinary shares. After this conversion
of the share capital, the authorised share capital of the Company is divided into 431,128,048 ordinary shares with a par value of US$0.10 each and
150,457,316 ordinary non-voting shares with a par value of US$0.10 each.

On 27 December 2013 in the course of NCC Acquisition the Company issued as part of consideration payable 51,585,366 ordinary voting shares
with a par value of US$0.10 each at a price of US$4.66 per share (the share premium was US$4.56 per share) and 51,585,364 ordinary non-voting
shares with a par value of US$0.10 each at a price of US$4.66 per share (the share premium was US$4.56 per share). An amount of US$1,461
thousand out of the total expenses directly attributable to the new shares issued was written off against the share premium.

On 27 December the Company converted 77,378,048 of its issued ordinary non-voting shares into ordinary shares. After the conversion of the share
capital, the issued share capital of the Company amounts to US$57,317,073.10 divided into 422,713,415 ordinary shares and 150,457,316 ordinary
non-voting shares with a par value of US$0.10 each.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

The Role of the Board of Directors
GPI is governed by its Board of Directors (hereafter also referred as “the Board”) which is collectively responsible to the shareholders for the short and
long-term successful performance of the Company.

The Board of Directors’ role is to provide entrepreneurial leadership to the Company through setting the corporate strategic objectives, ensuring
that the necessary financial and human resources are in place for the Company to meet its objectives and reviewing management performance. The
Board sets the Company’s values and standards and ensures all obligations to shareholders are understood and met. The Board maintains a sound
system of internal control and enterprise risk management to safeguard the Company’s assets and shareholders’ investments in the Company.

The members of the Board of Directors at 31 December 2013 and at the date of this report are shown on pages 1 and 2. Mr. Kim Fejfer was
appointed as a Non-Executive Director, Vice Chairman of the Board of Directors and a member of Remuneration, Nomination and Audit and Risk
Committees on 23 January 2013. Mr. Tiemen Meester was appointed as a Non-Executive Director and a member of Remuneration, Nomination and
Audit and Risk Committees on 23 January 2013. Mr. Robert Dirk Korbijn, Ms. Laura Michael, Mr. Georgios Sofocleous and Ms. Chrystalla Stylianou
were appointed as Non-Executive Directors on 23 January 2013. Mr Constantinos Economides was appointed as Non-Executive Director on 27
September 2013. Ms. Elia Nicolaou and Mr. Marios Tofaros resigned on 23 January 2013. Mr Robert Dirk Korbijn resigned on 27 September 2013.
All other Directors were members of the Board throughout the year ended 31 December 2013.

The Board currently has 14 members and they were appointed as shown on pages 1 and 2.

There is no provision in the Company`s Articles of Association for retirement of Directors by rotation. However in accordance with the Terms of
Reference of the Board of Directors and the resolutions adopted by the Shareholders at the Annual General Meeting on 29 April 2013 and at
the Extraordinary General Meeting on 27 September 2013 all current Directors (except Mr Constantinos Economides) remain in office and Mr
Constantinos Economides will be offered for re-election at the next Annual General Meeting of the Shareholders of the Company.

Team Nominees Limited has been acting as the Company Secretary since its incorporation in February 2008.
Mr. Alexander Iodchin has been acting as the Board Secretary since December 2008.

There were no significant changes in the responsibilities of the Directors during 2013, except in the case of Mr Mikhail Loganov who was a non-
Executive director until 11 October 2013 and was appointed as a Chief Financial Officer and became Executive Director as from this date onwards.

Name

Type of holding

Nikita Mishin

Indirect through shareholding in Transportation Investments
Holding Limited and other related entities

Shares held at
31 December 2013

Shares held at
31 December 2012

39,731,086 ordinary shares

27,609,738 ordinary shares

15,488,390 ordinary non-voting shares 27,609,738 ordinary non-voting shares

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsREPORT OF THE BOARD OF DIRECTORS (CONTINUED)

Directors’ Interests (continued)
Total number of issued shares of the Company as at 31 December 2013 was 422,713,415 ordinary shares and 150,457,316 ordinary non-voting
shares (as at 31 December 2012 was 293,750,001 ordinary shares and 176,250,000 ordinary non-voting shares). Each share is issued at par value
of US$0.10.

In 2013 the Board met formally 18 (2012: 16) times to review current performance and to discuss and approve important business decisions.

In 2013 the Board met to discuss and approve important business decisions:

a. NCC Acquisition;

b. Financial statements and budgets;

c. Credit facilities;

d. Changes in the management of the Company and its subsidiaries and their remunerations;

e. Dividends;

Investment opportunities;

g. Major CAPEX and OPEX spendings;

h. Transactions within the Group;

i. Various other resolutions related to the activity of the Company and Group members.

The number of Board and Board Committee meetings held in the year 2013 and the attendance of directors during these meetings is as follows:

Board of Directors

Nomination Committee

Remuneration Committee

Audit and Risk Committee

Michalis Thomaides

Alexander Iodchin

Bryan Smith

Nikita Mishin

Alexander Nazarchuk

Mikhail Loganov

Konstantin Shirokov

Siobhan Walker

Kim Fejfer

Tiemen Meester

Robert Korbijn

Laura Michael

Georgios Sofocleous

Chrystalla Stylianou

Constantinos Economides

–

A = Number of meetings eligible to attend during the year
B = Number of meetings attended

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

Board Performance (continued)
The operation of the Board, its Committees and individual Directors is subject to regular evaluation. The evaluation of the Board and individual
Directors’ performance is conducted through self-assessment, cross-assessment or by an external third party. The Non-Executive Directors, led by
the Senior Independent Director, are responsible for the performance evaluation of the Chairman of the Board.

The Board Committees
Since December 2008 the Board of Directors established the operation of three committees: an Audit and Risk committee, a Nomination Committee
and a Remuneration Committee.

In the year 2013 the Audit and Risk Committee met 10 times to review and discuss inter alia:

(a) entity and consolidated financial statements for the year ended 31 December 2012 and interim condensed consolidated financial information

for six months ended 30 June 2013;

(b) the press releases containing financial information;

(d) evaluation of external auditors` independence and performance and recommendation to the Board to recommend shareholders to reappoint

the external auditor for the next year;

(e) drafts of engagement and fees letters between the external auditors and the Company or its subsidiaries, as applicable in respect of their audit

and non-audit services;

(f) consideration of several reports from the management and external consultants

In 2013 the Nomination Committee met one time to discuss and recommend to the Board a candidate for the appointment to the position of the
Chief Financial Officer of the Company.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal Ports

REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

The Board Committees (continued)
The Remuneration Committee as of the date of this report comprises four Directors, one of whom is independent. The Committee meets at least
once each year. Currently the Remuneration Committee is chaired by Capt. Bryan Smith (an Independent Non-Executive Director), and the other
members are Mr. Nikita Mishin, Mr. Kim Fejfer (appointed on
23 January 2013) and Mr. Tiemen Meester (appointed on 23 January 2013). Mr. Mikhail Loganov resigned from the Remuneration Committee after
his appointment as the Chief Financial Officer of the Company. The Committee is responsible for determining and reviewing, among other matters,
the remuneration of the executive directors, Chairman and the executive management and the Company’s remuneration policies. The remuneration of
independent Directors is a matter for the chairman of the Board of Directors and the executive directors. No director or manager may be involved in
any decisions as to his or her own remuneration.

In 2013 the Remuneration Committee met three times to discuss and recommend to the Board the remuneration for the executive management of
the Group.

The Company`s corporate governance policies and practices are designed to ensure that the Company is focused on upholding its responsibilities to
the shareholders. They include, inter alia:

- Appointment policy;

- Terms of reference of the Board of Directors;

- Terms of reference of the Audit and Risk Committee;

- Terms of reference of the Nomination Committee;

- Terms of reference of the Remuneration Committee;

- Code of Ethics and Conduct;

- Antifraud policy;

- Anti-Corruption Policy; and

- Foreign Trade Controls Policy.

The shareholders of the Company approved the remuneration of the members of the Board for the year 2013 on 29 April 2013.

Refer to Note 23 (iii) and Note 23 (iv) to the financial statements for details of the remuneration paid to the members of the Board and key management.

Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 24 to the financial statements.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013REPORT OF THE BOARD OF DIRECTORS (CONTINUED)

Branches
The Company did not have or operate through any branches during the year.

Treasury shares
The Company did not acquire either directly or through a person in his own name but on behalf of the Company any of its own shares.

Going Concern
Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going concern basis in preparing the
consolidated financial statements based on the fact that, after making enquiries and following a review of the Company’s budget for 2014, including
cash flows and borrowing facilities, the Directors consider that the Company has adequate resources to continue in operation for the foreseeable
future.

By Order of the Board

Nikita Mishin
Chairman of the Board of Directors

Limassol
14 March 2014

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsDIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors of Global Ports Investments Plc (“Company”) is responsible for preparation and fair presentation of these parent company
financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and the
requirements of the Cyprus Companies Law, Cap. 113.

Each of the Directors confirms to the best of his or her knowledge that these parent company financial statements which are presented on pages 13
to 39 have been prepared in accordance with IFRS as adopted by the EU and the requirements of the Cyprus Companies Law, Cap. 113, and give a
true and fair view of the assets, liabilities, financial position and profit of the Company.

By Order of the Board

Michalis Thomaides
Director

Limassol
14 March 2014

Alexander Iodchin
Director

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF GLOBAL PORTS INVESTMENTS PLC

Report on the financial statements
We have audited the accompanying financial statements of parent company Global Ports Investments Plc (the “Company”), which comprise the
balance sheet as at 31 December 2013, and the statements of comprehensive income, changes in equity and cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory information.

Board of Directors’ responsibility for the financial statements
The Board of Directors is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial
Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control
as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International
Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements
that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsINDEPENDENT AUDITOR’S REPORT (CONTINUED)

Opinion
In our opinion, the financial statements give a true and fair view of the financial position of parent company Global Ports Investments Plc as at 31
December 2013, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting

Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.

Report on other legal requirements
Pursuant to the additional requirements of the Auditors and Statutory Audits of Annual and Consolidated Accounts Laws of 2009 and 2013, we

report the following:

• We have obtained all the information and explanations we considered necessary for the purposes of our audit.

•

In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of these books.

• The Company’s financial statements are in agreement with the books of account.

•

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information
required by the Cyprus Companies Law, Cap. 113, in the manner so required.

•

In our opinion, the information given in the report of the Board of Directors is consistent with the financial statements.

We have reported separately on the consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 2013.
The opinion in that report is not qualified.

Yiangos Kaponides
Certified Public Accountant and Registered Auditor
for and on behalf of

PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors

Limassol, 14 March 2014

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2013

Dividend income

Interest income

Administrative expenses

Other gains/(losses) – net

Impairment of investment in joint ventures

Operating profit

Finance cost

Profit before income tax

Income tax expense

Profit for the year

Other comprehensive income

Total comprehensive income for the year

The notes on pages 17 to 39 are an integral part of these financial statements.

Note

23 (i)

2013
US$000

2012
US$000

139,638

132,363

5,351

(4,599)

1,768

3,764

(5,417)

(29)

–

(14,290)

142,158

116,391

(604)

–

141,554

116,391

(33)

(30)

141,521

116,361

–

141,521

116,361

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsBALANCE SHEET

at 31 December 2013

Assets

Non-current assets

Property, plant and equipment

Investments in subsidiaries

Investments in joint ventures

Loans receivable

Total non-current assets

Current assets

Loans receivable

Trade and other receivables

Cash and bank balances

Total current assets

Total assets

Equity and liabilities

Capital and reserves

Share capital

Share premium

Capital contribution

Retained earnings

Total equity

Non-current liabilities

Trade and other payables

Total non-current liabilities

Current liabilities

Trade and other payables

Current income tax liabilities

Borrowings

Total current liabilities

Total liabilities

Total equity and liabilities

Note

2013
US$000

2012
US$000

1,881,553

143,013

71,341

2,095,959

3,970

75,500

14,054

93,524

507,180

143,003

43,355

693,591

3,881

52,296

9,813

65,990

2,189,483

759,581

57,317

923,511

101,300

132,832

1,214,960

125

141,104

833,291

974,398

974,523

47,000

454,513

101,300

155,811

758,624

270

687

957

2,189,483

759,581

On 14 March 2014 the Board of Directors of Global Ports Investments Plc authorised these financial statements for issue.

Michalis Thomaides
Director

Alexander Iodchin
Director

The notes on pages 17 to 39 are an integral part of these financial statements.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2013

Share
capital
US$000

Share
premium
US$000

Capital
contributions
US$000

Retained
earnings(1)
US$000

Total
US$000

Note

47,000

454,513

101,300

119,350

722,163

–

116,361

(79,900)

47,000

454,513

101,300

155,811

758,624

–

10,317

468,998

–

10,317

57,317

–

468,998

–

141,521

–

479,315

(164,500)

314,815

923,511

101,300

132,832

1,214,960

Balance at 1 January 2012

Comprehensive income

Profit for the year

Transactions with owners

Dividends to shareholders

Total transactions with owners

Balance at 31 December 2012/1 January 2013

Comprehensive income

Profit for the year

Transactions with owners

Issue of shares

Dividends to shareholders

Total transactions with owners

Balance at 31 December 2013

(1) Retained earnings is the only reserve that is available for distribution in the form of dividends.

The notes on pages 17 to 39 are an integral part of these financial statements.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsSTATEMENT OF CASH FLOWS

for the year ended 31 December 2013

Cash flows from operating activities

Profit before tax

Adjustments for:

Depreciation of property, plant and equipment

Impairment of investment in joint ventures

Profit on disposal of subsidiary

Dividend income

Interest income

Interest expense

Fair value (gains)/losses on initial recognition of financial assets and liabilities

Financial guarantees

Amortisation of financial guarantee

Foreign exchange (gain)/loss

Changes in working capital:

Trade and other receivables

Trade and other payables

Cash used in operations

Tax paid

Net cash used in operating activities

Cash flows from investing activities

Purchases of property, plant and equipment

Proceeds from disposal of property, plant and equipment

Additional investments in subsidiaries

Additional investments in joint ventures

Expenses in relation to issue of shares

Loans advanced to related parties

Loan repayments received from related parties

Interest received

Dividends received

Net cash from investing activities

Cash flows from financing activities

Proceeds from loans from related parties

Dividends paid to Company’s shareholders

Net cash used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

The notes on pages 17 to 39 are an integral part of these financial statements.

Note

2013
US$000

2012
US$000

141,554

116,391

14,290

23 (i)

(139,638)

(132,363)

(4,304)

(3,198)

604

(300)

(144)

(590)

175

430

(17)

(28)

(2,795)

(4,303)

(2,035)

375

(4,455)

(30)

(4,485)

(16)

(848)

(5,121)

(413)

(5,534)

(65)

(229,354)

(86,602)

23 (vi)

(10)

(1,461)

(70,285)

46,332

1,053

183,470

(70,271)

23 (v)

229,397

(150,400)

78,997

4,241

9,813

14,054

(10)

(13,170)

28,695

1,529

80,408

10,799

(79,900)

(74,635)

84,448

9,813

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS

1 GENERAL INFORMATION

Country of incorporation
Global Ports Investments Plc (hereafter the “Company” or “GPI”) was incorporated on 29 February 2008 as a private limited liability company and is
domiciled in Cyprus in accordance with the provisions of the Cyprus Companies Law, Cap. 113. The address of the Company’s registered office is
20 Omirou Street, Limassol, Cyprus.

On 18 August 2008, following a special resolution passed by the shareholders, the name of the Company was changed from “Global Ports
Investments Ltd” to “Global Ports Investments Plc” and the Company was converted into a public limited liability company in accordance with the
provisions of the Companies Law, Cap. 113.

On 27 December 2013 GPI completed the acquisition of 100% of the share capital of NCC Group Limited (together with its subsidiaries, “NCC
Group”), the second largest container terminals operator in Russia (the “NCC Acquisition”). See Note 14 for further details.

Approval of the parent company financial statements
These parent company financial statements were authorized for issue by the Board of Directors on 14 March 2014.

Principal activities
The principal activity of the Company, which is unchanged from last year, is the holding of investments, including any interest earning activities.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently
applied to all years presented in these financial statements unless otherwise stated.

Basis of preparation
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by
the European Union (EU), and the requirements of the Cyprus Companies Law, Cap. 113.

The financial statements have been prepared under the historical cost convention.

The Company has prepared these separate financial statements of the parent company for compliance with the requirements of the Cyprus Income
Tax Law and the Disclosure Rules as issued by the Financial Services Authority of the United Kingdom.

As of the date of the authorisation of the financial statements, all International Financial Reporting Standards issued by the International Accounting
Standards Board (IASB) that are effective as of 1 January 2013 have been adopted by the EU through the endorsement procedure established by the
European Commission, with the exception of certain provisions of IAS 39 “Financial Instruments: Recognition and Measurement” relating to portfolio
hedge accounting.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires management to
exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal Ports
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Consolidated financial statements
The Company has also prepared consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the
EU for the Company and its subsidiaries (the “Group”). A copy of the consolidated financial statements is available to the members, at the Company’s
registered office and at the Company’s website at www.globalports.com.

Users of these separate financial statements of the parent company should read them together with the Group’s consolidated financial statements
as at and for the year ended 31 December 2013 in order to obtain a proper understanding of the financial position, the financial performance and the
cash flows of the Company and the Group.

New Standards, interpretations and amendments adopted by the Company
During the current year the Company adopted all the new and revised International Financial Reporting Standards (IFRS) as adopted by the EU that
are relevant to its operations and are effective for accounting periods beginning 1 January 2013. This adoption did not have a material effect on the
accounting policies of the Company.

The Company has decided to early adopt the following amendment as of 1 January 2013:

Amendments to IAS36 – Recoverable amount disclosures for non-financial assets (issued on 29 May 2013 and effective for annual periods beginning
1 January 2014; EU effective date for 1 January 2014). The amendments remove the requirement to disclose the recoverable amount when a CGU
contains goodwill or indefinite lived intangible assets but there has been no impairment.

New standards, interpretations and amendments not yet adopted by the Company
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013, and
have not been applied in preparing these separate financial statements of the parent company. None of these is expected to have a significant effect
on these separate financial statements of the parent company, except the following set out below:

(a) Not yet adopted by the European Union
IFRS 9, ‘Financial Instruments: Classification and Measurement’. The standard was issued in November 2009 and amended in October 2010,
December 2011 and November 2013. The key features of IFRS 9 are:

• An instrument is subsequently measured at amortised cost only if it is a debt instrument and both (i) the objective of the entity’s business model
is to hold the asset to collect the contractual cash flows, and (ii) the asset’s contractual cash flows represent payments of principal and interest
only (that is, it has only “basic loan features”). All other debt instruments are to be measured at fair value through profit or loss.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New standards, interpretations and amendments not yet adopted by the Company (continued)
(a) Not yet adopted by the European Union (continued)
The amendments made to IFRS 9 in November 2013 removed its mandatory effective date, thus making application of the standard voluntary. The
Company does not intend to adopt the existing version of IFRS 9 until this is endorsed by the European Union. The Company has not yet assessed
the impact of the adoption of IFRS 9 in its financial statements.

Revenue recognition
Revenues earned by the Company are recognised on the following bases:

(i) Interest income

Interest income is recognised when it is probable that benefits will flow to the Company and the amount of income can be measured reliably.
Interest income is recognized on a timeproportion basis using the effective interest method. When a loan receivable is impaired, the Company
reduces the carrying amount to its recoverable amount being the estimated future cash flows discounted at the original effective interest rate of
the instrument and continues unwinding the discount as interest income.

(ii) Dividend income

Dividend income is recognised when the right to receive payment is established.

Employee benefits
The Company and the employees contribute to the Cyprus Government Social Insurance Fund based on employees’ salaries. The Company’s
contributions are expensed as incurred and are included in staff costs.

Foreign currency translation
(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which
the entity operates (‘the functional currency’). The financial statements are presented in United States dollars (US$), which is the Company’s
functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings are presented in profit or loss within “finance cost”. Foreign exchange gains and
losses that relate to loans receivable and cash and cash equivalents are presented in profit or loss within “interest income”. All other foreign
exchange gains and losses are presented in profit or loss within “other gains/(losses) – net”.

Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items
recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in
equity, respectively.

The current income tax is calculated in the basis of the tax laws enacted or substantively enacted at the balance sheet date in the country in which
the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. If applicable tax regulation is subject to interpretation, it establishes provision where
appropriate on the basis of amounts expected to be paid to the tax authorities.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Current and deferred income tax (continued)
Deferred income tax is recognized using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the time of transaction affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to
apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on the Company where there is
an intention to settle the balances on a net basis.

Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of property, plant and equipment.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values, over their
estimated useful lives. The annual depreciation rates are as follows:

Motor vehicles

Office equipment

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.

Expenditure for repairs and maintenance of property, plant and equipment is charged to profit or loss of the year in which they were incurred. The
cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably.

Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with carrying amount and are recognised in
“other gains/(losses) – net” in profit or loss.

Investments in subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Company has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting rights. In its parent company financial statements, the Company carries
the investments in subsidiaries at cost less any impairment.

The Company recognises income from investments in subsidiaries to the extent that the Company receives distributions from accumulated profits of
the subsidiaries arising after the date of acquisition.

Investments in joint ventures
Joint ventures are contractual arrangements whereby the Company together with other parties undertake an economic activity that is subject to joint
control. In its parent company financial statements the Company carries its investments in joint ventures at cost less any impairment.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation
or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash generating units). Nonfinancial assets, other than goodwill, that have suffered an
impairment are reviewed for possible reversal of the impairment at each reporting date.

Loans and receivables
The Company classifies its financial assets as loans and receivables.

These are classified as non-current assets. The Company’s loans and receivables comprise cash and cash equivalents, trade and other receivables
and loans to related and third parties.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision
for impairment.

The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.
A provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts
due according to the original terms of receivables. Significant financial difficulties of the debtor/borrower, probability that the debtor/borrower will
enter bankruptcy or financial difficulty, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount
of the provision is the difference between the carrying amount and the recoverable amount, being the present value of estimated future cash flows,
discounted at the effective interest rate. The amount of the provision is recognised in the income statement against ‘administrative expenses’.

Share capital and share premium
Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Any excess of the fair value of consideration received over the par value of shares issued is recognized as share premium. Share premium is subject
to the provisions of the Cyprus Companies Law on reduction of share capital.

Capital contribution represents contributions by the shareholders directly in the reserves of the Company. The Company does not have any
contractual obligation to repay these amounts. However, these are distributable to the Company’s shareholders at the discretion of the Board of
Directors subject to the shareholders’ approval

Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the
dividends are appropriately authorised and are no longer at the discretion of the Company.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made
under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straightline basis over the period of the lease.

Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the grant has been reliably measured. Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings,
using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which
case they are capitalised as part of the cost of that asset.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extend there is no evidence that it is probable that some
or all of the facility will be drawn down, the fee is capitalised as a prepayment and amortised over the period of the facility to which it relates.

Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds, including interest on borrowings,
amortisation of discounts or premium relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of
borrowings, finance lease charges and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an
adjustment to interest costs.

Borrowings are classified as current liabilities, unless the Company has an unconditional right to defer settlement of the liability for at least twelve
months after the balance sheet date.

Financial guarantees are initially recognised in the financial statements at fair value on the date the guarantee was given. For financial guarantees
provided to related parties other than its direct subsidiaries the difference between the fair value of the financial guarantee and the fee received is
treated as an expense. For financial guarantees provided to direct subsidiaries the difference between the fair value of the financial guarantee and the
fee received is included in the cost of the investment. Subsequent to initial recognition, the Company’s liabilities under such guarantees are measured
at the higher of the initial measurement, less amortisation calculated to recognise in profit or loss the fee income earned on a straight line basis over
the life of the guarantee and the best estimate of the expenditure required to settle any financial obligation arising at the balance sheet date. These
estimates are determined based on experience of similar transactions and history of past losses, supplemented by the judgment of management.
Any increase in the liability relating to guarantees is taken to profit or loss in ‘other gains/(losses) – net’.

Derivatives
Derivative financial instruments which comprise mainly options for shares are initially recognised in the balance sheet at fair value (excluding
transaction costs) and are subsequently remeasured at their fair value. They are classified as financial assets at fair value through profit or loss and
are included in current assets. The resulting gain or loss is recorded in the income statement within “other gains – net”. Transaction costs arising on
entering into derivatives are recognised in the income statement as incurred. All derivatives are carried as assets when fair value is positive and as
liabilities when fair value is negative.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts
payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Cash and cash equivalents
In the statement of cash flows, cash and cash equivalents include cash in bank, cash in hand and deposits held at call with banks, with original
maturities of three months or less.

3 FINANCIAL RISK MANAGEMENT

(i) Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, fair value interest rate risk and cash flow
interest rate risk), credit risk and liquidity risk.

The Company’s risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on
the Company’s financial performance.

• Market risk

Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities (mainly loans receivable, trade and other
receivables, cash and cash equivalents and borrowings) that are denominated in a currency that is not the Company’s functional currency.

Had Euro exchange rate strengthened/weakened by 15% (2012:10%) against the US dollar and all other variables remained unchanged,
the posttax profit of the Company for the year ended 31 December 2013, would have (decreased)/increased by US$4,917 thousand (2012:
US$6,166 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of dividends receivable, loans receivable,
cash in bank and payables denominated in Euros.

Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.

Cash flow and fair value interest rate risk
The Company is exposed to cash flow interest rate risk arising from changes in market interest rates of cash and cash equivalents. In addition,
the Company is exposed to fair value interest rate risk as all its loans receivable and borrowings are at fixed rates.

Had market interest rates on Euro and United States dollar denominated floating interest bearing cash and cash equivalents shift by 100 basic
points and all other variables remained unchanged, the post tax profit of the Company would not significantly change for the years ended 31
December 2013 and 31 December 2012. In addition, as all of the Company’s fixed rate loans receivable are carried at amortised cost, any
reasonably possible change in the interest rates as of 31 December 2013 and 31 December 2012 would not have any significant impact on the
Company’s post tax profit. Also, borrowings from related parties were obtained near the end of the year and as a result any reasonably possible
change in the interest rates as of 31 December 2013 would not have any significant impact on the Company’s post tax profit. The Company’s
management monitors the interest rate fluctuations on a continuous basis and acts accordingly.

Credit risk
Financial assets, which potentially subject the Company to credit risk, consist principally of loans receivable, dividends receivable, other
receivable and cash and cash equivalents.

The majority of receivables are with related parties. Management believes that there is no significant risk of loss to the Company. Finally, see Note
12 for credit quality of cash and cash equivalents.

At 31 December 2013 and 2012 none of the loans receivable or cash and cash equivalents were past due or impaired.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

3 FINANCIAL RISK MANAGEMENT (CONTINUED)

(i) Financial risk factors (continued)

• Liquidity risk

The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to
the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant.

At 31 December 2012

Trade and other payables

Financial guarantee *

At 31 December 2013

Trade and other payables

Financial guarantee *

Borrowings

Less than
1 year
US$000

1 to 2
years
US$000

2 to 5
years
US$000

Over 5
years
US$000

544

136,000

136,544

140,960

393,229

833,291

1,367,480

–
–

–
–
–
–

–
–

–
–
–
–

–

Total
US$000

544

136,000

136,544

140,960

393,229

833,291

1,367,480

* Full amount payable if the loans guaranteed are non-performing (Note 23 (ix)).

• Capital risk management

The Company’s main objective when managing capital is to maintain the ability to continue as a going concern in order to ensure the profitability
its operations, maintain optimum equity structure and reduce its cost of capital.

The Company monitors capital based on borrowings to total capitalization ratio. Total capitalization is calculated as the sum of the total
borrowings and equity at the date of calculation.

(ii) Fair value estimation

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of
financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is
available to for similar financial instruments.

The different levels of financial instruments measured at fair value by valuation method have been defined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Specific valuation techniques used to value financial instruments include:

• Quoted market prices or dealer quotes for similar instruments.

• Adjusted comparable price-to-book value multiples

• Other techniques, such as discounted cash flow analysis.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.

(i) Critical accounting estimates and assumptions

• Estimated impairment of investments

The Company reviews investments, long-lived assets or groups of assets for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. If the estimated recoverable amount is less than the carrying amount of the asset
or group of assets, the asset is not recoverable and the Company recognises an impairment loss for the difference between the estimated
recoverable amount (based on value in use) and the carrying value of the asset or group of assets. Events that can trigger assessments for
possible impairments include, but are not limited to (a) significant decreases in the market value of an asset, (b) significant changes in the extent
or manner of use of an asset, and (c) a physical change in the asset. Models are prepared based on the Company’s best estimates and latest
budgets available as at the year end. Estimating discounted future cash flows requires making judgments about long-term forecasts of future
revenues and costs related to the assets subject to review. These forecasts are uncertain as they require assumptions about volumes, prices
for the products and services, future market conditions and future technological developments. Significant and unanticipated changes in these
assumptions could require a provision for impairment in a future period.

Based on the impairment results of the impairment testing carried out in 2013, for all investments management believes that any reasonable
possible change in the key assumptions would not cause the carrying amounts to exceed the recoverable amounts.

For 2012, the Company has performed an impairment test for the investment in the joint venture CD Holding Oy. As a result an impairment
charge amounting to US$14,290 thousand was recognised
(Note 15).

• Contingent consideration

At closing of the NCC Acquisition (refer to Notes 14 and 20), the Company withheld US$61,603 thousand from the purchase price payable to the
Sellers, and will release this amount to the Sellers upon and to the extent of the fulfilment of certain conditions. The Board of Directors estimates
that the fair value of this contingent consideration approximates the carrying amount.

• Valuation of option

The NCC Acquisition described in Note 14 includes a call option for GPI to acquire 50% of the Illichevsk Container Terminal (“CTI”) operations
located in Ukraine on the Black Sea for the strike price of US$ 60 million adjusted for the proportionate amount of the net debt at the time of
exercise (but not less than US$1 million) from NCC Group’s former shareholders. The term of the call option is three years following the closing of
the NCC Acquisition. The option is exercisable at any time during this period. The Board of Directors considers that the fair value of this option is
insignificant.

• Financial guarantees

The Board of Directors has assessed the exposure of the Company in relation to the guarantees provided to related parties for the loan facilities
granted to them (refer to Note 23 (ix)).

(ii) Critical judgments in applying the Company’s accounting policies

There were no critical judgments in applying the Company’s accounting policies.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

INTEREST INCOME

Interest income on bank balances

Interest income on short term deposits

Interest income on loans to related parties (Note 23 (i))

Net foreign exchange gains on cash and cash equivalents and loans receivable

6 OTHER GAINS/(LOSSES) – NET

Profit from partial disposal of subsidiaries (Note 14)

Net foreign exchange transaction gains on non-financing activities

Fair value gains/(losses) on initial recognition of financial assets and liabilities (Note 23 (vi))

Financial guarantee (Note 23 (ix))

Amortisation of financial guarantee

7 EXPENSES BY NATURE

Depreciation of property, plant and equipment (Note 13)

Insurance

Auditors’ remuneration

Staff costs (Note 8)

Advertising and promotion

Travelling expenses

Legal and consulting fees

Taxes other than on income

Office rent

Bank charges

Other expenses

Total administrative expenses

2013
US$000

4,298

1,047

5,351

2013
US$000

1,318

300

–

144

1,768

2012
US$000

205

2,991

566

3,764

2012
US$000

–

559

(175)

(430)

(29)

2013
US$000

2012
US$000

118

642

956

631

1,518

462

112

192

640

1,037

1,309

1,677

304

107

4,599

5,417

The auditors’ remuneration stated above include fees of US$469 thousand (2012: US$414 thousand) for audit services charged by the Company’s
statutory audit firm.

The legal and consulting fees stated above include fees of US$19 thousand (2012: US$24 thousand) for tax consultancy services charged by the
Company’s statutory audit firm.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

8 STAFF COSTS

Wages and salaries

Social insurance costs

Other staff costs

9 FINANCE COST

Interest expense on loans from related parties (Note 23(i))

10 INCOME TAX EXPENSE

Current tax:

Corporation tax

Defence contribution

2013
US$000

913

956

2012
US$000

993

1,037

2013
US$000

604

2012
US$000

–

2013
US$000

2012
US$000

–

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the applicable tax rate as follows:

Profit before tax

Tax calculated at the applicable corporation tax rate of 12,5%/10%

Tax effect of expenses not deductible for tax purposes

Tax effect of allowances and income not subject to tax

Tax effect of utilisation of prior year tax losses

Withholding tax

Group relief

Special contribution for defence

2013
US$000

141,554

17,694

576

2012
US$000

116,391

11,639

2,351

(17,683)

(13,894)

–

(585)

–

(96)

The Company is subject to corporation tax on taxable profits at the rate of 10%, up to 31 December 2012 and at the rate of 12.5% as from 1
January 2013.

From 1 January 2009 onwards, under certain conditions, interest may be exempt from income tax and only subject to defence contribution at the
rate of 10%, increased to 15% as from 31 August 2011 and to 30% as from 29 April 2013.

In certain cases dividends received from abroad may be subject to defence contribution at the rate of 15%; increased to 17% as from 31 August
2011; increased to 20% from 1 January 2012; reduced to 17% as from 1 January 2014. In certain cases dividends received from 1 January 2012
onwards from other Cyprus tax resident Companies may also be subject to special contribution for defence.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

11 FINANCIAL INSTRUMENTS BY CATEGORY

31 December 2012

Assets as per balance sheet

Noncurrent receivables

Current portion of loans receivable

Trade and other receivables

Cash and bank balances

Total

Liabilities as per balance sheet

Trade and other payables

Financial guarantee

Total

31 December 2013

Assets as per balance sheet

Noncurrent receivables

Current portion of loans receivable

Trade and other receivables

Cash and bank balances

Total

Liabilities as per balance sheet

Trade and other payables

Financial guarantee

Borrowings

Total

Loans and
receivables
US$000

43,355

3,881

52,141

9,813

Total
US$000

43,355

3,881

52,141

9,813

109,190

Other financial
liabilities
US$000

544

413

957

Loans and
receivables
US$000

71,341

3,970

75,386

14,054

Total
US$000

544

413

957

Total
US$000

71,341

3,970

75,386

14,054

164,751

Other financial
liabilities
US$000

Total
US$000

140,960

269

833,291

833,269

974,520

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

12 CREDIT QUALITY OF FINANCIAL ASSETS

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to
historical information about counterparty default rates:

Fully performing trade and other receivables

Counterparties without external credit rating

Group 1

Group 2

Group 3

Group 4

Group 5

Cash at bank and shortterm bank deposits (Moody’s rating)

Caa3

Group 1 – Loans receivable from related parties with no defaults in the past.

Group 2 – Dividends receivable from related parties.

Group 3 – Other receivables with no defaults in the past.

Group 4 – Companies within the group, parent entity and common control companies with no defaults in the past.

Group 5 – Amounts held in escrow are with a bank with a Moody’s credit rating A2.

13 PROPERTY, PLANT AND EQUIPMENT

Year ended 31 December 2012

Opening net book amount

Additions

Disposals

Depreciation charge

Closing net book amount

At 31 December 2012

Cost

Accumulated depreciation

Net book amount

Year ended 31 December 2013

Opening net book amount

Additions

Depreciation charge

Closing net book amount

At 31 December 2013

Cost

Accumulated depreciation

Net book amount

2013
US$000

2012
US$000

75,090

9,826

4,674

61,100

47,025

52,116

219

–

150,697

99,377

14,014

–

14,054

8,870

942

–

9,813

Motor vehicles
and other
equipment
US$000

Total
US$000

(14)

(17)

(33)

(17)

102

(50)

(14)

(17)

(33)

(17)

102

(50)

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

In the cash flow statement proceeds from sale of property, plant and equipment comprise of:

Net book amount

Proceeds from sale of property, plant and equipment

14 INVESTMENTS IN SUBSIDIARIES

At beginning of year

Additions

Disposals

At end of year

2013
US$000

2012
US$000

–

2013
US$000

2012
US$000

507,180

420,578

1,374,376

86,602

(3)

–

1,881,553

507,180

During the year ended 31 December 2013, the Company realised a US$6 thousand gain from the disposal of one share in one of its wholly owned
subsidiaries.

On 27 December 2013 GPI completed the acquisition of 100% of the share capital of NCC Group Limited, (together with its subsidiaries, NCC
Group), the second largest container terminals operator in Russia (the NCC Acquisition) for a total consideration of US$1,375,023. The total
consideration included cash consideration amounting to US$229,354 thousand, share consideration amounting to US$480,776 thousand (Note 19),
contingent consideration amounting to US$61,603 thousand (Note 20) and borrowings assigned amounting to US$603,290 thousand (Note 23(v)).

The Company’s direct interests in subsidiaries, all of which are unlisted, were as follows:

Name

Principal activity

Country of incorporation

2013
% holding

2012
% holding

Arytano Holdings Limited

Intercross Investments B.V.

Global Ports Advisory Group AB

NCC Pacific Investments Limited

NCC Group Limited

Railfleet Holdings Limited *

Holding company

Cyprus

Netherlands

Sweden

Cyprus

100

0,05

100

–

* Railfleet Holdings Limited is accounted for as a subsidiary because the Company has indirect control, since its subsidiaries hold the remaining shareholding.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

15 INVESTMENTS IN JOINT VENTURES

At beginning of year

Additions

Impairment charge (Note 4 (i))

At end of year

The Company’s interests in joint ventures, all of which are unlisted, are as follows:

2013
US$000

2012
US$000

143,003

157,283

–

(14,290)

143,013

143,003

Principal activity

Country of incorporation

2013
% holding

2012
% holding

Holding company

Finland

Ireland

Cyprus

Name

CD Holding OY (formerly

Container-Depot Limited Oy)

Multi-Link Terminals Limited

M.L.T Container Logistics Ltd

16 LOANS RECEIVABLE

Non-current

Loans to related parties (Note 23 (vi))

Current

Loans to related parties (Note 23 (vi))

Loans to third parties

Total

2013
US$000

2012
US$000

71,341

43,355

3,749

221

3,970

3,670

211

3,881

75,311

47,236

Fair values

2013
US$000

68,689

2012
US$000

42,270

All non-current loans receivable are due within five years from the balance sheet date.

The fair values of non-current receivables are as follows:

Loans to related parties

The fair values are based on discounted cash flows using a discount rate based upon market interest rates prevailing for similar instruments at the
balance sheet date, amounting to 6% for Euro and US Dollar loans and 10% for Russian Rouble loans (2012: 6% for Euro and US Dollar loans and
10% for Russian Rouble loans). The discount rate equals the weighted average of external bank borrowings obtained by subsidiaries of the Group
plus appropriate margin reflecting the credit rating of the borrower. The fair values are within level 2 of the fair value hierarchy.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

16 LOANS RECEIVABLE (CONTINUED)

The weighted average effective interest rates on loans receivable at the balance sheet date were as follows:

Loans to related parties

The carrying amounts of the Company’s loans receivable are denominated in the following currencies:

Euro

Russian Rouble

US Dollar

2013
%

6.1

2013
US$000

17,287

4,460

53,564

75,311

2012
%

6.6

2012
US$000

15,771

1,164

30,301

47,236

The maximum exposure to credit risk at the balance sheet date is the carrying value of each class of receivable mentioned above. The Company
does not hold any collateral as security. None of the loans receivable is either past due or impaired.

17 TRADE AND OTHER RECEIVABLES

Dividends receivable from related parties (Note 23 (vii))

Prepayments

Other debtors - related parties (Note 23 (vii))

Other debtors

Amount held in escrow account (Note 20)

The fair values of trade and other receivables approximate their carrying amounts.

18 CASH AND BANK BALANCES

Cash at bank

Cash and cash equivalents are denominated in the following currencies:

Euro

US Dollar

2013
US$000

9,826

114

4,453

61,100

75,500

2012
US$000

52,116

155

–

52,296

2013
US$000

14,054

2012
US$000

9,813

2013
US$000

11,031

3,023

14,054

2012
US$000

688

9,125

9,813

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

18 CASH AND BANK BALANCES (CONTINUED)

Non-cash transaction
The principal of non-cash transactions during the current year were the issue of 103,170,730 new GPI shares (Note 19) and the assignment to GPI,
loans due to a wholly owned subsidiary of the acquired NCC Group Limited from sellers, for the partial settlement of consideration of NCC Acquisition
(Note 14) amounting to US$480,776 thousand and US$603,290 thousand respectively (2012: US$Nil).

19 SHARE CAPITAL, SHARE PREMIUM AND DIVIDENDS

At 1 January 2012 / 31 December 2012

Issue of new shares

Balance at 31 December 2013

Share capital
US$000

47.000

10,317

57,317

Share
Premium
US$000

454.513

468,998

Total
US$000

501.513

479,315

923,511

980,828

Authorised share capital
On 16 October 2012 the Company converted 176,250,000 of its ordinary authorised ordinary shares into ordinary non-voting shares. As a result
of this conversion, the authorised share capital of the Company amounted to US$53,000 thousand divided into 353,750,000 ordinary shares and
176,250,000 ordinary non-voting shares with a par value of US$0.10 each.

On 27 September 2013 the Company increased its authorised share capital from US$53,000 thousand to US$58,159 thousands divided into
353,750,000 ordinary shares and 227,835,364 ordinary non-voting shares with a par value of US$0.10 each.

On 27 December 2013 in the course of NCC Acquisition the Company issued as part of consideration payable 51,585,366 ordinary voting shares
with a par value of US$0.10 each at a price of US$4.66 per share (the share premium was US$4.56 per share) and 51,585,364 ordinary non-voting
shares with a par value of US$0.10 each at a price of US$4.66 per share (the share premium was US$4.56 per share). An amount of US$1,461
thousand out of the total expenses directly attributable to the new shares issued was written off against the share premium.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

19 SHARE CAPITAL, SHARE PREMIUM AND DIVIDENDS (CONTINUED)

During the year 2012 the Company has declared and paid dividends amounting to US$79.9 million (US$0.17 per share).

20 TRADE AND OTHER PAYABLES

Other payables

Accrued expenses

Financial guarantee (Note 23 (ix))

Other payables – related parties (Note 23 (viii))

Dividends payables to related parties (Note 23 (viii))

Less: non-current portion:

Financial guarantee (Note 23 (ix))

Current portion

2013
US$000

130,126

237

269

10,575

141,229

(125)

141,104

2012
US$000

204

340

413

–

957

(270)

687

The fair value of trade and other payables which are due within one year approximates their carrying amount at the balance sheet date.

Other payables include the fair value of the contingent consideration amounting to US$61,603 thousand. At closing of the NCC Acquisition, the GPI
Group withheld US$61,603 thousand from the purchase price payable to the Sellers, and will release this amount to the Sellers upon and to the
extent of the fulfilment of certain conditions.

In addition, other payables include an amount of US$61,100 thousand has been placed to an escrow account to cover potential liabilities in relation
to a guarantee agreement in the total amount of US$60 million between entities within the NCC Group and a bank in relation to the loan obtained by
a company related to the previous owners of NCC Group.

In January 2014 the guarantee agreement between the entities above was terminated and the amount deposited on the escrow was released to the Sellers.

21 BORROWINGS

Current

Loans from related parties (Note 23 (v))

2013
US$000

2012
US$000

833,291

–

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

21 BORROWINGS (CONTINUED)

The weighted average effective interest rates at the balance sheet date were as follows:

Loans from subsidiaries (Note 23 (vi))

The carrying amounts of borrowings approximate their fair value as the impact of discounting is not significant.

The carrying amounts of the Company’s borrowing are denominated in US$.

2013
%

6.3

2012
%

–

22 CONTINGENCIES

Operating environment
The Company’s subsidiaries and joint ventures mainly operate in the Russian Federation, Estonia and Finland. The Russian Federation displays
certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The legal, tax and regulatory framework
continue to develop and are subject varying interpretation contributing to the challenges faced by companies operating in the Russian Federation.
The international sovereign debt crisis, stock market volatility and other risks could have a negative effect on the Russian financial and corporate sectors.

The ongoing uncertainty and volatility of the financial markets, in particular in Europe, and other risks could have a significant negative effect on
the Russian financial and corporate sectors. The future economic and regulatory situation may differ from management’s current expectations.
Management determined impairment provisions by considering the economic situation and outlook at the end of the reporting period. Provisions
for trade receivables are determined using the ‘incurred loss’ model required by the applicable accounting standards. These standards require
recognition of impairment losses for receivables that arose from past events and prohibit recognition of impairment losses that could arise from future
events, no matter how likely those future events are.

Management is unable to predict all developments which could have an impact on the Russian economy and consequently what effect, if any, they
could have on the future financial position of the Group. Management believes it is taking all necessary measures to support the sustainability and
development of the Group’s business.

Estonia and Finland represent well established market economies with stable political systems and developed legislation based on EU requirements
and regulations.

Guarantees granted to subsidiaries
Refer to Note 23 (ix) for details of guarantees granted to subsidiaries.

23 RELATED PARTY TRANSACTIONS

The Company is jointly controlled by Transportation Investments Holding Limited (“TIHL”), one of Russia’s largest privately owned transportation
groups, and APM Terminals B.V. (“APM Terminals”), a global port, terminal and inland services operator.

For the purposes of these financial statements, parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over the other party in making financial and operational decisions as defined by IAS 24 “Related Party Disclosures”. In considering
each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter
into transactions, which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and
amounts as transactions between unrelated parties.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23 RELATED PARTY TRANSACTIONS (CONTINUED)

The following transactions were carried out with related parties:

(i) Operating activities

Dividend income:

Subsidiaries

Interest income:

Subsidiaries and joint ventures

Interest expense:

Subsidiaries

Other gains/(losses) – net:

Subsidiaries

Purchase of services:

Subsidiaries

Entities under the control of the parent company

Entities under the control of the owners of TIHL and APM Terminals

(ii) Acquisitions/disposals of subsidiaries/joint ventures

Additions/contributions:

Subsidiaries

Joint ventures

Disposals/distributions of equity:

Subsidiaries

(iii) Key management personnel compensation
The compensation of key management personnel is as follows:

Salaries and other shortterm employee benefits

2013
US$000

2012
US$000

139,638

132,363

4,298

2,991

604

444

413

–

479

–

(588)

395

456

2013
US$000

2012
US$000

261

271

86,602

86,612

–

2013
US$000

859

2012
US$000

928

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23 RELATED PARTY TRANSACTIONS (CONTINUED)

(iv) Directors’ remuneration
The total remuneration of the Directors (included in key management personnel compensation above) was as follows:

Fees

Emoluments in their executive capacity

(v) Borrowings from related parties

Borrowings from subsidiaries:

At beginning of year

Borrowings advanced

Interest charged (Note 9)

Borrowings assigned as part of NCC Acquisition (Note 14)

At end of the year

The borrowings from related parties bear interest at the rate of 5,8% to 6,5%, are unsecured and were repaid in February 2014.

(vi) Loans to related parties

Loans to subsidiaries and joint ventures:

At beginning of year

Assignment of loans

Loans advanced

Loans repaid

Interest charged (Note 5)

Interest repaid

Foreign exchange gain/(loss)

Fair value gain/(loss) on initial recognition

At end of the year (Note 16)

The loans to related parties bear interest at the rate of 0% to 8.75%, are unsecured and are repayable by June 2018.

2013
US$000

2012
US$000

393

466

859

512

416

928

2013
US$000

2012
US$000

–

229,397

604

603,290

833,291

–

2013
US$000

2012
US$000

47,025

61,193

–

70,285

(46,332)

4,298

(1,053)

567

300

–

13,170

(28,695)

2,991

(1,322)

(137)

(175)

75,090

47,025

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsNOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23 RELATED PARTY TRANSACTIONS (CONTINUED)

(vii) Prepayments and other receivables

Other receivables (Note 17):

Entities under the control of the owners of TIHL and APM Terminals B.V.

Dividends receivable (Note 17):

Subsidiaries

(viii) Other payables

Other payables (Note 20):

Subsidiaries

Dividends payable (Note 20):

TIHL and APM Terminals B.V.

2013
US$000

2012
US$000

9,826

52,116

2013
US$000

2012
US$000

10,575

–

(ix) Guarantees granted to subsidiaries
During 2013 the Company granted a corporate guarantee covering the non - performance by an indirect subsidiary of the Company in respect of a
bank loan with a balance of US$238,678 thousand as at 31 December 2013. The guarantee was provided free of charge and is valid for a period of 7
years. The fair value on initial recognition was not recognized as the Board of Directors estimates that the Company’s exposure is not significant due
to other significant securities, made available by the borrower to the lender.

During 2013 the Company granted a corporate guarantee covering the non - performance by an indirect subsidiary of the Company in respect of
bank loan with zero balance as at 31 December 2013. The guarantee was provided free of charge and is valid until March 2018. The fair value on
initial recognition has not yet been recognised since the draw down has not occurred within the year 2013 (drawdown occurred in 2014).

During 2013 the Company granted a corporate guarantee covering the non - performance by an indirect subsidiary of the Company in respect of a
bank loan with a balance of US$41,783 thousand as at 31 December 2013. The guarantee was provided free of charge and is valid for a period of 5
years. The fair value on initial recognition was not recognized as the Board of Directors estimates that the Company’s exposure is not significant due
to other significant securities, made available by the borrower to the lender.

During 2012 the Company granted a corporate guarantee covering the non-performance by an indirect subsidiary of the Company, in respect of
a bank loan with a balance of US$62,545 thousand as at 31 December 2013. The guarantee was provided free of charge and is valid for a period
of three years. The fair value of the guarantee on initial recognition was US$430 thousand. At 31 December 2013 the unamortised balance of the
guarantee was US$269 thousand.

During 2012 the Company granted a corporate guarantee covering the non-performance by an indirect subsidiary of the Company, in respect of a
bank loan with a balance of US$50,223 thousand as at 31 December 2013. The guarantee was provided free of charge and is valid for a period of
two years. The fair value of the guarantee on initial recognition was not recognized as the Board of Directors estimates that the Company’s exposure
is not significant due to other significant securities, made available by the borrower to the lender.

The likelihood of realizing any expenditure to settle any of the above guarantees was considered remote.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

24 EVENTS AFTER THE BALANCE SHEET DATE

In January 2014, as part of the internal restructuring of the Group, NCC Group Limited disposed 75% of the share capital of its wholly owned
subsidiary CJJC First Container Terminal (“FCT”) to OJSC Petrolesport for a consideration of US$997 million, paid interim dividends to the Company
amounting to US$772,000 thousand and made a capital reduction for an amount of US$225,000 thousand. The dividends received and the capital
reduction will be treated as a reduction in the cost of investment in NCC Group Limited.

There were no other material post balance sheet events, which have a bearing on the understanding of the financial statements.

Independent Auditors’ Report is on pages 12 and 13.

Directors’ report and parent company financial statements 31 December 20135. APPENDICESGlobal PortsAPPENDIX 3:
UNAUDITED SELECTED ILLUSTRATIVE COMBINED FINANCIAL METRICS

Global Ports Investments PLC (the Company, together with its subsidiaries and joint ventures, the Global Ports Group) has acquired 100% of the
share capital of NCC Group Limited (together with its subsidiaries, the NCC Group and, together with the Global Ports Group, the Enlarged Group)
on the terms and conditions described below (the Transaction).

The following unaudited selected Illustrative Combined financial performance and cash flows indicators (the “Illustrative Combined Financial Metrics”
or “Illustrative Combined”) as of and for the year ended 31 December 2013 is presented to illustrate the effects of the following transactions:

• acquisition of NCC Group by Global Ports Group;

•

the associated borrowings taken by Global Ports Group to fund the Transaction;

The Illustrative Combined Financial Metrics represents information prepared based on estimates and assumptions deemed appropriate by the
Enlarged Group. The Illustrative Combined Financial Metrics presented are provided for illustrative purposes only. It does not purport to represent
what the actual results of operations and cash flows of the Enlarged Group would have been had the Transaction occurred on the date specified
below, nor is it necessarily indicative of the results of the Enlarged Group for any future periods. Because of its nature, the Illustrative Combined
Financial Metrics are based on a hypothetical situation and, therefore, do not represent the actual results of operations or cash flows of the Enlarged
Group. The actual results of operations and cash flows of the Enlarged Group may differ significantly from the Illustrative Combined amounts reflected
herein.

An Illustrative Combined balance sheet is not presented as it would not be materially different from the balance sheet in the audited Consolidated
Financial Statements of the Global Ports Group for the year ended 31 December 2013.

The Illustrative Combined Financial Metrics as of and for the year ended 31 December 2013 have been prepared based on the Global Ports Group’s
and the NCC Group’s historical financial information, which have been extracted from, and should be read in conjunction with:

•

the Consolidated Financial Statements of the Global Ports Group, prepared in accordance with International Financial Reporting Standards
adopted by the European Union (“IFRS”) and the requirements of Cyprus Companies Law, Cap. 113, as of and for the year ended 31 December
2013; and

•

the Consolidated Financial Statements of NCC Group, prepared in accordance with International Financial Reporting Standards adopted by the
European Union (“IFRS”), as of and for the year ended 31 December 2013.

The unaudited Illustrative Combined consolidated income statement and extract of statement of cash flows for the year ended 31 December 2013
were prepared as if (i) the NCC Group acquisition had occurred on 1 January 2013, and (ii) the associated borrowings related to the Transaction were
received on 1 January 2013.

The Illustrative Combined Financial Metrics have been prepared in a form consistent with the accounting policies adopted in the Consolidated
Financial Statements of Global Ports Group. All illustrative adjustments are directly attributable to the Transaction, factually supportable and are
expected to have a continuing impact on the Enlarged Group.

In order to be consistent with Global Ports Group’s accounting policies, certain adjustments have been made to the NCC Group financial information
included in the Illustrative Combined Financial Metrics. These adjustments are shown under “Adjustments to NCC Group’s historical financial
information” below.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013Unaudited Selected Illustrative Combined Financial Metrics

Unaudited Illustrative Combined Consolidated Income Statement for the Year Ended 31 December 2013

(USD million)

Revenue

Cost of sales

incl. depreciation, amortisation and impairment

Gross profit

Administrative, selling and marketing expenses

incl. depreciation, amortisation and impairment

Other gains/(losses) – net

Operating profit

Finance income/(costs) – net

Profit before income tax

Income tax expense

Profit for the year

Attributable to:

Owners of the parent

Non-controlling interest

Global
Ports
Group

480

(238)

(69)

242

(56)

(1)

190

(39)

151

(37)

114

–

114

257

(116)

(38)

141

(16)

(1)

130

(66)

(26)

(9)

NCC
Group1

Illustrative
adjustments

Notes

Illustrative
Combined

–

(25)

–

(25)

(38)

(63)

(52)

–

(52)

–

737

(379)

(132)

358

(72)

(2)

295

(143)

A, B

152

(52)

100

109

(9)

100

420

Adjusted EBITDA

257

163

1 See accompanying “Reclassifications to NCC Group’s historical financial information”.

5. APPENDICESGlobal Ports
NOTES TO THE UNAUDITED ILLUSTRATIVE COMBINED FINANCIAL METRICS

Illustrative adjustments to the Consolidated Income Statement:
A Additional depreciation and amortisation of property, plant and equipment and identified intangible assets: on acquisition items of

property, plant and equipment and identifiable intangible assets have been remeasured at fair value.

This adjustment is to record the additional amortisation expense in relation to the fair value of the contractual rights in the amount of USD 1.4
billion identified as a result of the purchase price allocation. The estimated useful life of these contractual rights is 59 years. This additional
expense is partly offset by positive deferred tax gain in the amount of USD 5 million. The increase in the carrying values of property, plant and
equipment would cause an additional depreciation charge in the amount of approximately USD 2 million. This additional expense is partly offset by
a positive deferred tax gain in the amount of USD 0.4 million.

B Finance income/(costs) – net: Total adjustments to “Finance income/(costs) – net” are summarised as follows:

(USD million)

Notes

Interest income on loans to related parties

Interest expenses from bank borrowings

Foreign exchange gain on borrowings

Unrealised loss on interest and cross-currency swap fair value

Finance charge on discounting

Net effect

NCC Group
long-term loan
to a related
party of the
Sellers

NCC Group
short-term loan
to the Sellers

Roll-back of
losses related
to swap

Additional
borrowings of
NCC Group

(32)

–

(32)

–

(1)

iii

–

(13)

(18)

–

(31)

Total

(32)

(13)

(18)

(1)

(38)

i At closing of the NCC Acquisition, the long-term loan receivable by the NCC Group from the immediate parent company of one of the Sellers have
been assigned to the Global Ports Group. The amount of this loan was USD 603.6 million. On acquisition, this amount then is fully eliminated on
consolidation of the enlarged Group and does not affect the amount of the total consolidated debt. This adjustment represents the reversal of
interest income related to this loan receivable accrued during 2013.

ii Prior to the closing of the NCC Acquisition, the dividends declared by NCC Group have been offset with a short-term loans receivable by NCC
Group from the companies related to the Sellers, as a non-cash transaction. This adjustment represents the reversal of the discounting effect
related to this short-term loan receivable accrued in 2013.

iii

In 2013, the NCC Group entered into interest and cross-currency swap arrangement. Had the NCC acquisition occurred on 1 January 2013,
this arrangement would have been accounted for using hedge accounting rules in the Global Ports Group Consolidated Financial Statements.
According to these rules, the unrealised gains/losses are recorded in an equity reserve. This adjustment represents the reversal of the unrealised
losses charged to the income statement in the Consolidated Financial Statements of NCC Group.

iv Interest expense on the long-term bank loan of USD 238.4 million to finance the acquisition of NCC Group. This adjustment is calculated by

applying an interest rate of 5.25% per annum. This adjustment also reflects the estimated accounting foreign exchange loss of USD 18 million for
year ended 31 December 2013 resulting from translation of this loan into the local subsidiaries’ functional currency.

This negative impact on the profit for the year would be partly offset by an income tax gain of USD 6 million for the year ended 31 December 2013
(at a 20% income tax rate).

Extract from Unaudited Illustrative Combined Consolidated Statement of Cash Flows for the Year Ended 31 December 2013

(USD million)

flows from operating activities

Cash flows from investing activities

incl. purchases of property, plant and equipment

Cash flows from financing activities

Net decrease in cash and cash equivalents

GPI Group

NCC Group

Illustrative
adjustments

Notes

Illustrative
Combined

220

(248)

(72)

149

(24)

(7)

(111)

–

(13)

(7)

375

(272)

(79)

(60)

C Adjustment to reflect the income tax effect of the accrued interest on the USD 238.4 million long-term loan, less the tax deductible foreign

exchange impact on revaluation of the loan payable, assuming an applicable tax rate of 20% (see (B)(iv) above).

D Adjustment to reflect the payment of the accrued interest on the USD 238.4 million long-term loan (see (B)(iv) above). Due to the grace period no

principal payments are reflected.

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013

Unaudited Selected Illustrative Combined Financial Metrics

NOTES TO THE UNAUDITED ILLUSTRATIVE COMBINED FINANCIAL METRICS
(CONTINUED)

Reclassifications to the NCC Group’s historical financial information
Certain reclassification adjustments have been made to the NCC Group financial information included in the Illustrative Combined Financial Metrics
from that as presented in the NCC Group Consolidated Financial Statements as of and for the year ended 31 December 2013 in order to align the
presentation with that consistent with the Group’s Consolidated Financial Statements. The NCC Group’s financial information below should be read in
conjunction with the NCC Group Consolidated Financial Statements as of and for the year ended 31 December 2013.

Reclassification of NCC Group consolidated income statement

Revenue

Cost of sales

Gross profit

Selling, general and administrative expenses

Depreciation and amortization expenses

Other (expenses)/income, net

Administrative, selling and marketing expenses

Impairment of property, plant and equipment

Other gains/(losses), net

Operating profit

Finance income

Finance costs

Foreign exchange gain/(loss), net

Finance income/(costs), net

Historical

Reclassification

Reclassified

NCC Group

Adjustments

Notes

NCC Group

(USD million)

257

(73)

184

(15)

(35)

(5)

–

(4)

(91)

(7)

–

(43)

(16)

(38)

(66)

a, c, f

a, b

c, e

d, e

257

(116)

141

–

(16)

–

130

–

(66)

These reclassification adjustments are summarised below:

a) Income statement line “Depreciation and amortisation expenses” was reallocated to “Cost of sales” of USD 34 million and “Administrative, selling

and marketing expenses” for USD 1 million respectively.

b) Income statement line “Selling, general and administrative expenses” was fully allocated to “Administrative, selling and marketing expenses”.

c) From income statement line “Other (expenses)/income, net” “Taxes other than income tax” and “Loss on disposal of property, plant and

equipment” (see note 8 of NCC Group Consolidated Financial Statements) were included within “Cost of sales”. In addition, certain items included
within “Other (expenses)/income, net” (see note 8 of NCC Group Consolidated Financial Statements) were reclassified to “Cost of sales”.

d) Income statement lines “Finance income” of USD 38 million and “Finance costs” of USD 91 million were reclassified to

“Finance income/(costs) – net”.

e) From the income statement line “Foreign exchange gain/(loss), net” foreign exchange gains related to working capital of USD 4 million were
allocated under “Other gains/(losses) – net” and losses related to financial activities of USD 13 million were allocated under “Finance income/
(costs) – net”.

Income statement line “Impairment of property, plant and equipment” was fully allocated to “Cost of sales”.

5. APPENDICESGlobal PortsAPPENDIX 4:
SHAREHOLDER INFORMATION AND KEY CONTACTS

DEPOSITARY
J.P. Morgan
1 Chase Manhattan Plaza, Floor 58
New York, NY 10005
+1 (866) JPM-ADRS
adr@jpmorgan.com

STOCK EXCHANGE
London Stock Exchange PLC
10 Paternoster Square, London EC4M 7LS, UK
Phone: +44 20 7797 1000
Website: www.londonstockexchange.com

INDEPENDENT AUDITORS
PricewaterhouseCoopers Limited
City House, 6 Karaiskakis Street
CY-3032, Limassol, Cyprus
Phone: +357 25 555 000
Fax: +357 25 555 001

GLOBAL PORTS INVESTMENTS PLC

LEGAL ADDRESS
Omirou 20
Agios Nikolaos
CY-3095
Limassol, Cyprus

POSTAL ADDRESS
Kanika International Business Center,
Office 201,Profiti Ilia Street, 4, Germasogeia
Limassol P.C. 4046, Cyprus

INVESTOR RELATIONS
Michael Grigoriev
Head of Investor Relations
Phone: +357 25 503 163
GSM: +7 (916) 991 73 96
Tatyana Stepanova
Investor Relations Analyst
E-mail: irteam@globalports.com

MEDIA RELATIONS
Russian Media
Anna Vostrukhova
Head of Media Relations
Phone: +357 25 503 163
E-mail: media@globalports.com

International Media
Holloway & Associates
Laura Gilbert, Zoe Watt
Phone: +44 20 7240 2486
E-mail: globalports@rholloway.com

Created by Wardour
www.wardour.co.uk
Printed by Newnorth

2. STRATEGIC REVIEW4. CORPORATE GOVERNANCE3. BUSINESS REVIEW5. APPENDICES1. ABOUT USAnnual Report 2013A
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ANNUAL REPORT 2013

GLOBAL PORTS INVESTMENTS PLC