Global Ports Holding Plc Annual Report 2018

FY2018 Annual Report · Global Ports Holding Plc

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Regaining
forward
momentum

Global Ports Investments PLC
Annual Report 2018

Global Ports

During 2018 the Group continued to implement its strategy
of harnessing the recovery of the container market, developing additional
revenue streams, improving operational efficiency, maximising Free Cash
Flow, and deleveraging.

Global Ports’ Consolidated Marine Container Throughput increased 12.2% year-on-year in 2018 outperforming the overall market
which grew by 10%. The Group continued to deliver impressive growth in bulk throughput posting a 15.9% year-on-year increase
in Consolidated Marine Bulk Throughput in 2018. In accordance with the Group’s strategy of developing additional revenue streams,
a new coal handling facility at ULCT was successfully launched in December 2018.

In 2018 the Group achieved а 4.0% growth in Revenue and an 8% growth of Adjusted EBITDA compared to 2017. Adjusted EBITDA
Margin expanded by 224 basis points to 63.2%. Net Debt to Adjusted EBITDA decreased to 3.6x as of 31 December 2018 from 4.3x
as at the end of 2017.

Key Strengths1

№1

container terminal
operator in Russia
Undisputed industry leader in Russia
in terms of container throughput and
capacity, handling almost one in every three
containers coming in and out of the country2

323 hectares

of land
(equivalent to more than 450 football fields)
and 5 km of quay wall in key
sea basins

marine container
and multipurpose terminals1
in Russia and Finland,
covering 2 major sea basins3

1.35 mln TEU

Consolidated Marine Container
Throughput
in 2018

3.1 mln tonnes

of Consolidated Marine Bulk
Throughput
A record result for the Group

2018 Results

increase in Adjusted EBITDA

12%

increase in Consolidated Marine
Container Throughput

0.7x

reduction in the Group’s
financial leverage
in 2018 (3.6x as of 31.12.2018)4

224

basis point – increase
in Adjusted EBITDA Margin

16%

increase in the Group’s
Consolidated Bulk Throughput

LTIFR 1.28

close to 5 year low

Regaining forward momentum

Global Ports Investments PLC

Overview

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

Overview

Strategic
Report

Corporate
Governance

Consolidated
Financial
Statements

Parent
Company
Financial
Statements

Additional
Information

02
About Us

08
Chairman’s
Statement

38
Corporate
Governance

10
Chief Executive
Officer’s Statement

43
Board of Directors

14
Strategy

48
Executive
Management

18
Business Review

50
Terminal Directors

32
Corporate Social
Responsibility

52
Risk Management

01
Management
Report and
Consolidated
Financial Statement

01
Management
Report and Parent
Company Finacial
Statements

01
Directors’
Responsibility
Statement

02
Definitions

05
Shareholder
Information and
Key Contacts

For more information,
please, visit our
corporate website:

http://www.globalports.com

1. Hereinafter all operational statistics is stated without Vopak E.O.S. (VEOS) which was sold in April 2019.
2. Based on 2018 overall container throughput in the Russian Federation ports (Source: ASOP) and public sources on capacity.
3. Including Joint Ventures.
4. Rounding adjustments have been made in calculating some of the financial and operational information included in this report. As a result, some numerical figures used in this report may not be exact

arithmetic aggregations of the figures of which they are composed.

Annual Report 2018

Global Ports Investments PLC

About Us –
Performance

In 2018 Global Ports delivered on its potential:
its share of the container market of Russia began to recover, the non-container
segment produced a solid performance, it reported Adjusted EBITDA growth of 8%
and a further substantial reduction in financial leverage (Net Debt/Adjusted EBITDA
declined 0.7x to its lowest level in 4 years)1.

Ownership Structure2

Consolidated Financial and Operating Data

Selected IFRS Financial Information

20.5%

Revenue

Cost of sales and administrative, selling and
marketing expenses

Gross profit

Operating profit/(loss)

Net profit/(loss)

2017
USD million

2018
USD million

Change
USD million

Change, %

330.5

343.6

(191.2)

(174.9)

13.1

16.3

(9%)

182.0

207.6

25.6

14%

(5.3)

(52.9)

131.6

(58.3)

137.0

(2,569%)

(5.4)

10%

30.75%

Free-float (LSE listing)

Delo Group

APM Terminals

Ilibrinio Establishment Ltd

Polozio Enterprises Ltd

APM Terminals operates a global terminal
network of 22,000 professionals with
74 operating port facilities and 117 Inland
Services operations in 58 countries around
the globe. APM Terminals is a part of
A.P. Moller-Maersk, the world’s largest
integrator of container and ports logistics.

Delo Group is one of the largest private
transportation and logistics holding
companies in Russia. The Group offers
a full range of services in the port of
Novorossiysk, including stevedoring, tug
boats and vessels bunkering (DeloPorts).
Delo Group also offers multimodal freight
forwarding services using own inland
terminals, warehouses, flatcars (RUSCON).
Delo Group operates two marine terminals
and five inland terminals and employs
a workforce of over 2,000 people.

Ilibrinio Establishment Limited and Polozio
Enterprises Limited (former owners of NCC
Group) each own 9% of the share capital
of Global Ports.

Selected operating information

2017
USD million

2018
USD million

Change
USD million

Change, %

Consolidated Marine Container Throughput, mln
TEU

Consolidated Marine Bulk Throughput, mln
tonnes

Ro-Ro, thousand units

Cars, thousand units

1.2

2.7

23.9

95.4

1.4

3.1

20.3

121.1

0.1

0.4

(3.6)

25.6

12.2%

15.9%

(14.9%)

26.9%

Balance sheet and cash flow statement

Total assets

Cash and cash equivalents

Net cash from operating activities

2017
USD million

2018
USD million

Change
USD million

Change, %

1,655.6

1,288.3

(367.2)

(22.2%)

130.4

173.9

91.6

174.3

(38.8)

(29.8%)

0.4

0.2%

Selected non-IFRS financial information

2017
USD million

2018
USD million

Change
USD million

Change, %

Total Operating Cash Costs

(128.9)

(126.3)

Adjusted EBITDA

Adjusted EBITDA Margin

Net debt

Net debt to Adjusted EBITDA

201.6

61.0%

865.9

4.3

217.3

63.2%

780.3

2.6

15.7

(2.0%)

7.8%

(85.6)

(9.9%)

3.6

(0.7)

(16.4%)

1. 3.6x as of 31 December 2018 versus 4.3x as of 31 December 2017.
2. As of April 2019.

Overview  About Us Global Ports Investments PLCRegaining forward momentumNon-Container Cargo Business has excellent momentum (four-fold growth in 4 years,
from 16% of Revenue to 26% of Revenue). Such performance justifies the Group’s
focus on this segment and associated investments. With its unique asset base,
(323 ha of land and 5 km of quay wall) the Group is in an excellent position to exploit
further opportunities in the non-container business segment.

KEY MILESTONES

April
Delo Group, one of the largest
private transportation and
logistics holding companies in
Russia, becomes a co-controlling
shareholder of Global Ports.
Through its subsidiary DeloPorts,
Delo owns and operates marine
container and grain terminals in
the port of Novorossiysk (Black
Sea basin) alongside operating
agency, tugboat and bunkering
services. The board is re-elected in
May to reflect new composition of
shareholders.

April
Unique portfolio of services
makes FCT and PLP the only
Russian ports of call for the
world’s largest ice class container
vessels operated by Maersk.

July
Vladimir Bychkov appointed
as CEO of Global Ports.
Mr. Bychkov has twenty years
of experience in the logistics and
transportation industry.

September
PLP celebrates the 10th
anniversary of its car handling
terminal. Almost 900,000 cars
have been handled at PLP over
its ten years of operations.

September
PLP becomes the first Baltic port
of call for Venta Maersk during
its historic first ever container
vessel voyage via Artic Route.

September
Global Ports completes the
sale of JSC Logistika-Terminal,
one of its two inland facilities.
The 1.9 billion rouble sale
proceeds are put towards
further financial deleveraging.

December 2018 –
January 2019
On 1st January 2019, Global
Ports launched a new ERP
system in all of the marine
terminals in Russia, as well as in
certain other companies across
the Group. This will result in
better management and further
integration of business processes
and therefore improved levels
of efficiency and productivity.

December
ULCT delivers its inaugural
shipment of coal-handling
services. ULCT has excellent rail
connectivity and the capability
to support up to 1.0 million
tonnes of coal shipments per
year. The first coal deliveries
began arriving at ULCT in
November 2018, with the
inaugural shipment completed
on 27 December. The container
handling capacity of the terminal
remains unchanged at 440
thousand TEU per annum.

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018Overview 
About us

Strong presence in Russia’s
key container and bulk gateways1

Baltic Sea Basin
The Group’s container and
multipurpose 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.

FINLAND

Baltic Sea

Gulf of Finland

5
2
1 6
4

ESTONIA

RUSSIA

LATVIJA

Cargo from
the Americas

51%

Share of Baltic Basin terminals
in the overall container throughput of
Russian terminals.

2.0 mteu2

Global Ports marine terminal capacity.

St. Petersburg

Moscow

Ekaterinburg

By Sea

By rail

By road

By Rail
The Far East Basin is the fastest route for transporting containers
from Asia to the European part of Russia and many CIS countries
and transit to EU. The shorter transit time is a key advantage for
customers shipping high-value and time-sensitive cargo.

By Sea
The Baltic Sea Basin’s container terminals are close to key transhipment
hubs for Russia’s inbound and outbound containers, such as Hamburg
and Rotterdam. The basin has a strong customer base due to its
economic development, access to Russia’s most populous regions and
cost-effective transportation of containers to major Russian cities.

First Container
Terminal (FCT)

Location:
St. Petersburg

Cargo handled:
Containers

Container throughput
berth/yard capacity3:
1.25m/0.95m TEU
per year

Land total 88.6 ha

Ownership: 100%

Petrolesport (PLP)

Location:
St. Petersburg

Cargo handled:
Containers, Ro-Ro,
bulk and general cargo

Container throughput
berth/yard capacity3:
1m/0.35m TEU per
year

Land total 119.0 ha

Ownership: 100%

Vostochnaya
Stevedoring
Company (VSC)

Location: Nakhodka

Cargo handled:
Containers, Ro-Ro,
bulk cargo (coal)

Container throughput
berth/yard capacity3:
0.65m/0.65m TEU
per year

Land total 76.6 ha

Ownership: 100%

UST-LUGA Container
Terminal (ULCT)

Location:
Ust-Luga port cluster

Cargo handled:
Containers, bulk cargo

Container throughput
berth/yard capacity3:
0.44m/0.44m TEU
per year

Land total 38.9 ha

Ownership: 80%

Moby Dik (MD)

Yanino (YLP)

Location:
Kronstadt
(St. Petersburg)

Cargo handled:
Containers, Ro-Ro,
bulk and general cargo

Container throughput
berth/yard capacity3:
0.4m/0.28m TEU per
year

Land total 12.9 ha

Ownership: 75%

Location:
St. Petersburg

Cargo handled:
Containers, bulk cargo

Container throughput
capacity3:
0.2m TEU per year

Land total 51.2 ha

Ownership: 75%

Fully consolidated in IFRS

Overview  About Us Global Ports Investments PLCRegaining forward momentumOverview

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

Global Ports owns 323 ha of land and 5 km of quay wall in the key marine gateways of Russia.
Its modern fleet of equipment, advanced rail and road connections, skilled personnel, and
advanced client-focused IT solutions underpin the Group’s strong market position in container
handling and provide a growth platform for its non-container businesses. Well-invested
terminals reduce the need for extensive maintenance CAPEX.

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

CHINA

RUSSIA

DPRK

Sea of Japan

30%

Share of Far East Basin terminals
in the overall container throughput of
Russian terminals.

0.65 mteu2

Global Ports marine terminal capacity.

Our Partners:

Entity: Moby Dik, Finnish Ports, Yanino
Partner: Container Finance Ltd Oy
Share: 25% in each

Entity: UCLT
Partner: Eurogate
Share: 20%

Cargo from
the Americas

57%4

of land freehold

323

hectares of land
(more than 450 football pitches)

2.7 mteu

capacity

5 km

of quay

MLT Kotka

MLT Helsinki

Location: Helsinki and
Kotka, Finland

Cargo handled:
Containers, Ro-Ro,
bulk cargo

Container throughput
capacity3:
0.15m TEU per year

Container throughput
capacity3:
0.27m TEU per year

Land total 0.5 ha

Land total 7 ha

Ownership: 75%

Russian Ports segment:
PLP, VSC, FCT, ULCT, Moby Dik,
Yanino

Finnish Ports segment:
MLT Kotka and MLT Helsinki

1. Numbers for the Group are presented on a consolidated basis.
2. Based on yard capacity. Company data.
3. Company estimates based on annual potential berth and yard throughput capacity. To maximise the efficiency of its operations, the
Group may choose to flex headcount, working hours and used equipment at its terminals. As a result, current actual capacity may
differ from the published numbers based on annual potential berth and yard throughput capacity.

4. On consolidated basis.

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018Strategic Report 
Chairman’s Statement / Chief Executive Officer’s Statement / Strategy / Business Review / Corporate Social Responsibility

Strategic
Report

/ Chairman’s Statement /

/ Chief Executive Officer’s Statement /

/ Strategy /

/ Business Review /

/ Corporate Social Responsibility /

Strategic Report  Chairman’s Statement / Chief Executive Officer’s Statement / Market Overview / Strategy / Business Review / Corporate Social ResponsibilityGlobal Ports Investments PLCRegaining forward momentumOverview
Overview

Strategic
Strategic
Report
Report

Corporate
Corporate
Governance
Governance

Consolidated
Consolidated
Financial Statements
Financial Statements

Parent Company
Parent Company
Financial Statements
Financial Statements

Additional
Additional
Information
Information

Regaining
forward
momentum

Strong financial performance
Adjusted EBITDA

USD 217.3 m

2018

2017

Rapid deleverage
Net Debt/Adjusted EBITDA

3.6

2018

2017

8%

217.3

201.6

0.7

3.6

4.3

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018Strategic Report 
Chairman’s Statement / Chief Executive Officer’s Statement / Strategy / Business Review / Corporate Social Responsibility

Chairman’s
Statement

Last year I remarked that Global Ports

had emerged from the downturn a stronger, leaner
and more focused organisation and that I was optimistic
about the prospects for 2018. Our 2018 results
demonstrate that optimism was justified, as the Group
regained its forward momentum. The results reveal
that Global Ports is in robust shape and that prior
strategic decisions to diversify our revenue base
and to support the business during the downturn
have paid off.

Against a recovering Russian container
market that grew by 10% in 2018, our
own performance outpaced even this
strong result. Our consolidated container
volumes grew by an impressive 12%,
while our marine bulk cargo activities
produced another year of record volumes,
with throughput up almost 16%. We
expect bulk cargo handling to be an
important source of future growth for
the Group and we successfully launched
coal handling operations at our Ust-Luga
Terminal at the end of the year.

Healthy operational performance
contributed to a strong financial result,
with revenues growing by 4%, and non-
container revenues climbing almost 17%
to where they now represent a quarter
of the Group is revenues. Strong revenue
growth and strict cost discipline delivered
robust cash flows, strong profits and
further profit margin expansion, and led
to a reduction in net debt.

Strategy
Our goal is to create sustainable long term
value for our shareholders. We operate
in a sector that is growing, that has high
barriers to entry, and that can deliver
stable cash flows over the long term.
As the leading infrastructure player in
the sector, Global Ports, with its world-
class portfolio of assets in key container
gateways, is strategically well placed to
deliver that long term value objective.

In 2018, we continued to follow our
strategy of harnessing recovery of the
container market, developing new revenue
streams, optimising operational efficiency,
maximising cash generation, and paying
down debt. Our results show that we met
our business objectives in each of these
critical areas in 2018, which highlights the
strength of the business model and the
high calibre and professionalism of our
management team.

Governance and the Board
Strong governance is critical as it helps
underpin the sustainability of our
business and our strategy. As I wrote
in my report last year, the Board’s role

is to act as custodians of shareholder
value for the long term. Accordingly,
ensuring we have the right mix of
skills, experience and diversity in the
boardroom is vital if we are to set the
right tone from the top. I chair a high
quality, balanced Board of Directors
comprised of individuals with deep
industry expertise and significant
commercial experience, all of whom are
committed to serving the best interests
of the company and all its shareholders.
The Board’s activities are covered in
more detail in the Governance section
of this Report.

There were a number of changes to
the Board in 2018. I myself became
Chairman in February 2018, and in
July 2018, I was delighted to welcome
Vladimir Bychkov as the new Chief
Executive Officer, in succession to
Mikhail Loganov. Vladimir joins us
from Delo Group, where he was the
President of the container and logistics
segment of the group. He is a respected
person in our industry and his in-depth
knowledge of the sector will be an
invaluable asset as we execute the next

Regaining forward momentum

Global Ports Investments PLC

Our consolidated volumes
grew by an impressive

12%

Revenues growing by

4%,

and non-container revenues
climbing almost 17%

Finally, good results can only be
delivered through the efforts and
commitment of a loyal workforce, and on
behalf of the Board, I would like to thank
all our colleagues for their unstinting
efforts in 2018.

Morten Engelstoft
Chairman

24 April 2019

phase of our growth. I would also want
to warmly thank Mikhail for his sizeable
contribution to Global Ports during his
tenure as CEO and previously as CFO,
and to wish him well for the future.
I also extend a sincere welcome to our
new Board members who joined in 2018
and I look forward to working with them
for the Group’s benefit.

We are fortunate to be able to draw
on the expertise of our co-controlling
shareholders, APM Terminals and
Delo Group. Their presence on the
shareholder register is a validation
of the container market’s long term
potential in Russia. Their involvement
confers real benefits to Global Ports,
allowing the company to tap into
APMT’s international best practices,
scale an industry know-how and Delo’s
deep local market knowledge. We look
forward to building on our relationships
with both groups over the coming years.

Safety
We want Global Ports to lead the way
in providing a safe working environment,
in developing our employees and in
supporting our communities. We are
a responsible organisation and by
acting appropriately we create value
for the business and our stakeholders.
We continue to work closely with the
executive team to embed the right culture
and behaviours across the Group.

Making sure our people go home safely
every day remains a top priority. It is
disappointing to have to report that
in 2018 we experienced a 16% rise in
recordable injury rates compared with
2017. I am also saddened to report the

distressing news that, since the year end,
we have suffered a fatality at PLP. Any
loss of life is a tragedy and this incident
underlines the absolute requirement to
continue ensuring that our operational
practices are fully aligned with our safety
policies. We cannot compromise the
safety of our people or our operations
and the Board will continue to impose
heightened safety standards.

Outlook
Global Ports made great progress in
2018, with a return to organic revenue
and EBITDA growth, combined with solid
cash generation and a further reduction
in financial leverage. Having regained
our forward momentum, our focus is
on sustaining these trends through 2019
pursuing our strategy of optimising
our world-class asset base, developing
additional revenue streams, improving
operational efficiency, maximising cash
flow and deleveraging.

Longer term, the container industry’s
prospects remain compelling
as containerisation levels in Russia
remain behind those of other major
economies. Meanwhile, a fundamental
shift is underway in the economics of the
sector as the rapid growth of containerised
exports is changing how container ports
operate and the services they offer. With
our portfolio of high quality terminals
in key gateway locations, the Group
is exceptionally well placed to capitalise
on the opportunities that will undoubtedly
emerge as the industry reshapes itself for
the future. 2019 has started promisingly
and we look forward with confidence
to the year ahead.

Global Ports Investments PLCAnnual Report 2018OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationStrategic Report 
Chairman’s Statement / Chief Executive Officer’s Statement / Strategy / Business Review / Corporate Social Responsibility

Chief Executive Officer’s
Statement

I was excited to join Global Ports in July

as Chief Executive Officer. It is still too early for me
to point to specific achievements but it is clear that I have
joined an organisation with significant potential. We have
well-maintained facilities based on strong service ethics,
a blue-chip customer base, a clear strategy and talented
people to execute it. In short, we have all the right
ingredients to set Global Ports on a long-term
growth trajectory.

After a period of market volatility, 2018
marked a return to sustainable growth for
the container sector in Russia. The market
delivered double digit growth in volumes,
boosted by significant growth in laden
exports leading to strong utilisation across
the industry. Against these encouraging
market trends, Global Ports confirmed its
own growth potential with an outstanding
all-round performance in 2018. Our
container volumes outpaced the market
and our non-container volumes hit a new
Group record. Our financial results
reflected these positive trends, with
good top line revenue growth and strong
profitability. The Group’s robust cash
generation enabled a further reduction
in its financial leverage.

Our markets
The container market in Russia continued
its recovery in 2018. Overall marine
container throughput by Russian terminals
grew by 10% year-on-year, maintaining
its 16% increase from 2017, to reach
4.87 million TEU. Healthy consumer
demand drove a further recovery in laden
imports which increased by 8%, and laden
export throughput climbed almost 14%.
Increased throughput volumes pushed

average capacity utilisation to above 70%
for the year, helping to maintain a stable
pricing environment.

Looking more closely at cargo flows, the
Baltic Basin, where Global Ports has six
marine container terminals, handled 51%
of total Russian container throughput
in 2018, with cargo volumes growing at
11% year-on-year, due to cost advantages
and increased vessel capacity. The Far
East Basin, where Global Ports operates
VSC, handled 30% of Russia’s container
traffic and maintained its strong trajectory
growing volumes by 13% year-on-year.
The Black Sea Basin, where Global Ports
is not present, handled 16% of Russia’s
container traffic and lagged the overall
market at 2% year-on-year growth.

Throughput statistics signal that the
containerisation of export supply chains
continues to accelerate. In the last five
years laden container exports have
increased by 76%, and the percentage
of imported containers being exported
full has doubled from 40% to 80%.
This is a significant trend that has clear
structural implications for the economics
of the market. It is likely to mean a more

stable market generally as export volumes
balance imports, alongside greater cost
competition for imports. Furthermore,
capacity utilisation should increase
because laden exports typically require
more terminal yard capacity. Revenue per
TEU is likely to show greater resilience
as terminals charge higher tariffs for
laden exports than for export of empty
containers. And lastly this trend implies
that marine terminal operators have to
provide integrated services along the
logistics supply chain.

Operating performance
We generated robust commercial
momentum in 2018 and delivered strong
results. We grew our container volumes
strongly, outperforming the market. The
Group’s Consolidated Marine Container
Throughput increased by 12% to 1.35
million TEUs in 2018.

In addition to growing container volumes,
we continued to focus on increasing our
bulk cargo volumes, as a part of our drive
to improve utilisation of our terminals.
Consolidated Marine Bulk Throughput
increased by 16% to a record 3.1 million
tonnes, up from 2.7 million tonnes in 2017.

Regaining forward momentum

Global Ports Investments PLC

Record in Consolidated Marine
Bulk Throughput

Adjusted EBITDA increased
by 7.8% to

3.1 mln tonnes

USD 217.3 m

We are the acknowledged leader with
a strong reputation, an experienced
management team, supportive
shareholders and a portfolio of well-
invested terminals in key gateway
locations. This is a great platform to
pursue growth in a rapidly changing
Russian market. I want to personally
thank all of my colleagues for their hard
work in 2018. We look to the future with
energy and optimism.

Vladimir Bychkov
CEO

24 April 2019

The Group’s passenger car handling
volumes increased by 27%, supported by
the upgrade of our car handling terminal at
PLP. As a part of our strategy to diversify
revenue streams and optimise the use
of existing terminal infrastructure we
launched a new coal handling facility at
Ust-Luga Container Terminal at the end
of 2018.

The other important operational focus for
us was on the Group’s value proposition to
its customers. We launched a Unified Client
Service across all our terminals that will give
our customers faster, easier access to our
service teams. We also continued to invest
in enhancing our digital and IT capabilities.
As a part of this initiative, PLP upgraded its
terminal operating system in order to improve
efficiency and customer service levels.

Financial results
In line with the Group’s overall strategy,
a key focus for us in 2018 was on growing
revenue, maximising free cash generation
and deleveraging. We have delivered well
against these strategic objectives.

Revenue increased by 4% to USD 343.6
million, largely driven by strong growth of
17% in our Non-Container revenue. Container
Revenue was broadly flat at USD 255.2
million, as double digit growth in container
volumes was largely offset by a reduction in
Revenue per TEU, the result of a higher share
of exports and a change to the service mix.
The Group continued to reduce its costs and
Total Operating Cash Costs decreased by 2%,
despite increased cargo volumes. Capital
expenditure amounted to USD 40.8 million,
with maintenance representing the bulk of
these expenses and the remainder being
represented by the new coal handling facility
at ULCT.

Adjusted EBITDA increased by 7.8%
to USD 217.3 million and Adjusted
EBITDA margin increased by 224 basis
points to 63.2% from 61.0 in 2017, as
a result of strong volume growth and good
cost discipline. The Group continued its
rapid deleveraging in line with its stated
strategy, reducing Net Debt by another
USD 86 million to USD 780 million at the
year end. Net Debt to Adjusted EBITDA
ratio fell to 3.6 as at 31 December 2018,
which is the lowest level since 2014.

Outlook
Although concerns over the global
economy persist and growth rates have
been trimmed, Russian exporters remain
busy and consumer demand continues
to drive growth in imports.

Excellent results in 2018 demonstrate
that we are on the right track and have
good forward momentum. Most of the
building blocks needed to capture organic
growth opportunities are in place. My
core priority as CEO is to ensure that the
Group remains focused and capable of
capturing these growth opportunities.
We will accomplish this by being the
most efficient operator, by getting closer
to the customer, by building relationships
with participants along the entire supply
chain, by effectively managing costs,
and by operating responsibly. We will
therefore continue to prioritise operating
efficiency, doing more to add value and
optimise our asset base. In 2019, we will
focus on improving our value proposition
for customers and continuing to improve
our service. We will maintain our financial
discipline and continue to deleverage.
We will redouble our efforts to improve
safety of our workforce and integrity
of our operations.

Outperforming
the container
market

Global Ports outperformed
the market with container
volumes up 12%

Global Ports handles almost
every second laden export
container in North-West
and Far East of Russia

Average container
handling capacity utilisation
for the Russian market1

Growth of Laden Export
containers since 2013

70%

76%

1. Company estimates throughput based on ASOP. Capacity estimated on companies websites (www.port-bronka.ru, www.deloports.ru, www.terminalspb.ru, www.nmtp.info and other public available

sources). Yard capacity for the Group used for calculations.

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Strategy

Our strategy aims to deliver strong returns to shareholders, excellent
service to customers and consistent value to our all stakeholders.
We aim to create sustainable value through our business model, which drives
performance against our strategic priorities of capitalising on the growth
of the container industry in Russia, developing new revenue opportunities,
optimising operational efficiency and deleveraging.

STRATEGIC PRIORITIES STRATEGIC OBJECTIVES

2018 ACTIONS

2018 OUTCOMES

EFFICIENTLY UTILISE
CORE ASSETS
AND EXISTING
INFRASTRUCTURE

> Prioritise safety operations

> Harness recovery in container market

> Consolidated Marine Container Throughput +12% to 1.35 m TEU

> Focus on core (maritime) activities

> Focus on customer service and improving response times in vessel,

> Record 3.1 million tonnes of marine bulk throughput, up 16% year-on-year

> Maximise value from assets

> Generate new revenue streams

> Improve value proposition

to customers

yard, and gate operation

> Continued focus on bulk cargoes to better utilise idle terminal space

> Coal handling facility launched at ULCT. Supports 1.0 million tonnes

of coal shipments per annum

> Client satisfaction survey conducted

> Investment in IT systems

> Considering a rise in LTIF rate in 2018, full safety review conducted at
all terminals. We thoroughly reviewed the occurrences and enacted
corrective measures to reduce the likelihood of repeat incidents

MAXIMISE
EFFICIENCY AND
COST CONTROL

> Implementing continuous cost
savings measures through
increasing efficiency

> Focus on improving productivity

> Stringent cost controls maintained

> Optimizing the equipment fleet, standardizing procurement and

repair procedures, and servicing opportunity cargo in between peak
demands to create steady workloads

> Optimised workforce scheduling

> ERP implementation and further centralisation of core fuctions

FOCUS ON CASH
FLOW AND
DELEVERAGING

> Optimise CAPEX

> Capital expenditure focused on planned maintenance requirements

> Total CAPEX limited to USD 41 million; ULCT coal-handling facility is main

> Debt repayment
and deleveraging

and attractive growth projects with high IRR and short payback periods

recipient of non-maintenance CAPEX

> Reviewing equipment relocation opportunities to drive optimal usage

> Maintenance CAPEX target in line with guidance of USD 25-35 million per

and reduce new purchase needs

annum

> Accelerated debt reduction – net debt levels fell further

> Healthy Free Cash Flow of USD 134 million

> Generated significant positive cash flow

> Net Debt reduced by an additional USD 86 million

> Proceeds from LT sale used for further deleveraging

> Net Debt/Adjusted EBITDA of 3.6x, its lowest level since 2014

Regaining forward momentum

Global Ports Investments PLC

> Car volumes grew 27% higher year-on-year

> Coal handling launched at ULCT in December 2018

> Non-container revenue grew strongly to 26% of total revenue (2017: 23%)

> Unified Client Service Centre created across all GPI terminals

> Comprehensive set of behavioural-change measures introduced to: embed

safety culture; improve reporting and monitoring; incentivise staff; align

external contractor policies more closely with GPI’s own safety protocols

and greater leadership participation in safety

> Total Operating Cash Costs decreased by 2% despite 12% increase in cargo

volumes and 16% increase in bulk cargo throughput

> Adjusted EBITDA margin increased to 63% (2017: 61%)

> As of the beginning of 2019 ERP launched at all marine terminals in Russia

STRATEGIC PRIORITIES STRATEGIC OBJECTIVES

2018 ACTIONS

2018 OUTCOMES

EFFICIENTLY UTILISE

CORE ASSETS

AND EXISTING

INFRASTRUCTURE

> Maximise value from assets

> Generate new revenue streams

> Improve value proposition

to customers

> Prioritise safety operations

> Harness recovery in container market

> Consolidated Marine Container Throughput +12% to 1.35 m TEU

> Focus on core (maritime) activities

> Focus on customer service and improving response times in vessel,

> Record 3.1 million tonnes of marine bulk throughput, up 16% year-on-year

yard, and gate operation

> Continued focus on bulk cargoes to better utilise idle terminal space

> Coal handling facility launched at ULCT. Supports 1.0 million tonnes

of coal shipments per annum

> Client satisfaction survey conducted

> Investment in IT systems

> Considering a rise in LTIF rate in 2018, full safety review conducted at

all terminals. We thoroughly reviewed the occurrences and enacted

corrective measures to reduce the likelihood of repeat incidents

> Car volumes up 27% year-on-year

> Coal handling launched at ULCT in December 2018

> Non-container revenue grew strongly to 26% of total revenue (2017: 23%)

> Unified Client Service Centre created across all GPI terminals

> Comprehensive set of behavioural-change measures introduced to: embed
safety culture; improve reporting and monitoring; incentivise staff; align
external contractor policies more closely with GPI’s own safety protocols
and greater leadership participation in safety

Increase in Consolidated
Marine Container Throughput

+12%

Increase in Marine
Consolidated Bulk Throughput

+16%

> Total Operating Cash Costs decreased by 2% despite 12% increase in cargo

volumes and 16% increase in bulk cargo throughput

Adjusted EBITDA Margin

repair procedures, and servicing opportunity cargo in between peak

> Adjusted EBITDA margin increased to 63% (2017: 61%)

> As of the beginning of 2019 ERP launched at all marine terminals in Russia

FOCUS ON CASH

FLOW AND

DELEVERAGING

> Debt repayment

and deleveraging

> Optimise CAPEX

> Capital expenditure focused on planned maintenance requirements

> Total CAPEX limited to USD 41 million; ULCT coal-handling facility is main

and attractive growth projects with high IRR and short payback periods

recipient of non-maintenance CAPEX

> Reviewing equipment relocation opportunities to drive optimal usage

> Maintenance CAPEX target in line with guidance of USD 25-35 million per

and reduce new purchase needs

annum

> Accelerated debt reduction – net debt levels fell further

> Healthy Free Cash Flow of USD 134 million

> Generated significant positive cash flow

> Net Debt reduced by an additional USD 86 million

> Proceeds from LT sale used for further deleveraging

> Net Debt/Adjusted EBITDA of 3.6x, its lowest level since 2014

63%

Reduction in Group
Net Debt

USD 86 m

MAXIMISE

EFFICIENCY AND

COST CONTROL

savings measures through

increasing efficiency

> Implementing continuous cost

> Stringent cost controls maintained

> Focus on improving productivity

demands to create steady workloads

> Optimizing the equipment fleet, standardizing procurement and

> Optimised workforce scheduling

> ERP implementation and further centralisation of core fuctions

Non-Container
Cargo business

The Group continues to focus
on developing additional
revenue streams
and optimising its existing
terminal infrastructure

Share of Consolidated Non-Container
Revenue in total revenue, %

Share of Non-Container
Revenue represents more
than a quarter of The
Group’s revenue

26%

2018

2017

2016

2015

2014

26%

23%

19%

16%

Bulk throughput grew 4x in 4 years driven by coal
handling at VSC and ULCT and strong growth
in metal and timber handling at PLP

> New coal handling facility was successfully

launched in ULCT in December 2018. Excellent
rail connectivity supports up to 1.0 million tonnes
of coal shipments per year

Overview

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Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

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Review

During 2018 the Group continued to implement its strategy
of harnessing the recovery of the container market, developing
additional revenue streams, improving operational efficiency,
maximising Free Cash Flow generation, and deleveraging.

Summary

Global Ports’ Consolidated Marine
Container Throughput increased 12.2%
year-on-year in 2018 outperforming the
market growth of 10.0%1. The Group
continued to deliver strong growth in
bulk throughput posting a 15.9% year-
on-year increase in Consolidated Marine
Bulk Throughput in 2018. In accordance
with the Group’s strategy of developing
additional revenue streams, a new coal
handling facility at ULCT was successfully
launched in December 2018.

As a result, revenue increased by 4.0% to
USD 343.6 million. Gross profit increased
by 14.0% to USD 207.6 million and
Adjusted EBITDA grew by 7.8% to USD
217.3 million* mainly due to the growth in
throughput and strict control over costs.
Adjusted EBITDA margin expanded by
224 basis points from 61.0%* in 2017
to 63.2%* in 2018.

The Group’s Net Debt was reduced by
a further USD 85.6 million* over the
period with Net Debt to Adjusted EBITDA
decreasing to 3.6x* as of 31 December
2018 from 4.3x* as at the end of 2017.

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

See more information
Consolidated Financial Statements
on page 60

Group financial and operational
highlights for the twelve months
ended 31 December 2018

> The Russian container market grew 10.0%
in 2018 driven by the continued recovery
in laden import of 8.2% and supported
by strong growth in laden export
containers of 13.9%, resulting in total
Russian container market throughput of
4.87 million TEU.

> The Group’s Consolidated Marine

Container Throughput increased 12.2% to
1,352 thousand TEU in 2018 compared
to 1,205 thousand TEU in 2017. The
growth rate of the Group’s Consolidated
Marine Container Throughput therefore
outpaced that of the Russian container
market.

> The Group focused on increasing bulk

cargo volumes to improve the utilisation
of its terminals. As a result, Consolidated
Marine Bulk Throughput increased by
15.9% to 3.12 million tonnes in 2018,
a record level for the Group, driven by
growth in bulk cargoes at PLP and ULCT.

> As a part of its strategy to focus on

developing additional revenue streams
and optimising its existing terminal
infrastructure, the Group commissioned
a new coal handling facility at Ust-Luga
Container Terminal in December 2018.
ULCT has excellent rail connectivity and
the capability to support up to 1.0 million
tonnes of coal shipments per year.

> Revenue in 2018 increased by 4.0%
to USD 343.6 million compared to
USD 330.5 million in 2017. This was mainly
driven by 16.8% growth in Consolidated
Non-Container Revenue. Consolidated

Container Revenue was broadly flat in
2018 at USD 255.2 million, growth of 0.1%
compared to 2017, as 12.2% growth in
Consolidated Marine Container Throughput
was partially offset by a 10.1% decline in
Revenue per TEU. Only a low single digit
percentage of this reduction in Revenue per
TEU was attributable to change in tariffs,
with the majority of the decline largely
attributable to lower share of imports and
the change in customer and service mix.

> In September 2018 the Group completed the
previously announced sale of its holding in JSC
Logistika-Terminal (LT), one of the Group’s two
inland terminals, to PJSC TransContainer for a
consideration of 1.9 billion Russian roubles2.
As previously announced, the proceeds of the
sale were used for further deleveraging. The
deconsolidation of LT since the completion of
the transaction also impacted both revenue
and Revenue per TEU.

> The Group continued to exert strict

control over costs. Total Operating Cash
Costs decreased by 2.0% during the
reporting period despite double digit
growth in throughput of both container
and non-container cargoes. FX adjusted
Total Operating Cash Costs3 increased by
around 5.8%.

> Gross profit in 2018 increased 14.0% to

USD 207.6 million or by 7.3% adjusted for
impairments that took place in 2017.

> Adjusted EBITDA in 2018 increased 7.8%
to USD 217.3 million* mainly due to the
growth in throughput and strict control over
costs.

> Adjusted EBITDA margin expanded by 224
basis points from 61.0%* in 2017 to 63.2%*
in 2018.

1. Source: ASOP. Here and after in this report all numbers on Russian container market statistics based on ASOP (for ASOP definition, please see Additional Information section of this report).
2. USD 27.9 million at the exchange rate as of the date of closing.
3. Management estimate calculated as if effective USD/RUB exchange rate in 2018 was the same as in 2017.

Global Ports Investments PLCRegaining forward momentumStrategic Report  Chairman’s Statement / Chief Executive Officer’s Statement / Strategy / Business Review / Corporate Social ResponsibilityRevenue 4%

Gross profit 14%

USD 343.6 m

USD 207.6 m

2018 has been a year

of regaining forward momentum for
Global Ports. We delivered double
digit container handling growth,
outpacing the growth of the Russian
container market, and achieved
another year of record volume of
bulk cargo throughput. Coupled
with excellent cost control, this
performance enabled us to grow
both Adjusted EBITDA and Adjusted
EBITDA margin. We generated
strong Free Cash Flow and continued
to deleverage further, reducing Net
Debt to Adjusted EBITDA to 3.6x,
our lowest level since 2014.

Vladimir Bychkov
CEO of Global Ports Management LLC

of its debt portfolio, the currency of its
cash and deposits and the use of hedging
instruments in relation to both revenue
and debt.

> The Group continued to deleverage and
reduced Net Debt by a further USD 85.6
million* in 2018. The Group decreased
its Total Debt by USD 124.4 million*
in 2018.

> Net Debt to Adjusted EBITDA decreased

from 4.3x* to 3.6x* during 2018.

> In line with statements made in March
2015, the Group continues to prioritise
deleveraging over dividend distribution.

> Operating profit in 2018 was USD 131.6
million compared to USD 5.3 million
Operating loss in 2017. This substantial
increase was driven both by the growth
in Gross profit and the fact that 2017 was
negatively impacted by non-monetary
items such as impairment, loss from
the Group’s share of the result in joint
ventures, and recycling of derivative
losses previously recognised through
other comprehensive income.

> Loss before income tax increased from
USD 24.1 million in 2017 to USD
53.6 million in 2018. This change was
mainly driven by the depreciation of the
Russian rouble which resulted in a loss
on revaluation of US dollar-denominated
borrowings (from Group and non-
Group entities) in the Group’s Russian
subsidiaries having the Russian rouble
as their functional currency.

> The Group’s capital expenditure on

a cash basis was USD 40.8 million in
2018. Maintenance capital expenditure
focused on planned maintenance
projects, scheduled upgrades of existing
container handling equipment and coal
handling equipment at VSC as well as
the implementation of environmental

protection measures related to coal
handling. Maintenance capex remained in
line with the Group’s mid-term guidance
of USD 25-35 million per annum with the
remainder accounting for development of
the new coal handling facility at ULCT.

> Net cash from operating activities

increased by USD 0.4 million, or 0.2%,
from USD 173.9 million in 2017 to USD
174.3 million in 2018.

> In August 2018, an amendment to the

Law on Seaports came into force which
prescribes that all handling tariffs in
Russian ports are set in Russian roubles.
While the law stipulates the mandatory
currency of tariffs, it does not restrict port
operators’ ability to change actual tariff
levels. Tariffs for stevedoring services in
Russian ports remain unregulated and
are market-driven. Since the law came
into force, the Group has retained its
ability to revise tariff policy in response
to substantial changes in the industry,
currency fluctuations or macroeconomic
environment. Although the share of
rouble nominated revenues is expected
to increase in 2019, the group believes
that its FX exposure is adequately
balanced by the currency composition

The table on the right sets out the
container and bulk cargo throughput of the
Group’s terminals for the periods indicated.
Gross throughput is shown on a 100%
basis for each terminal, including terminals
held through joint ventures and accounted
for using the equity method.

In September 2018 the Group completed
the previously announced sale of its
holding in JSC Logistika-Terminal, one of
the Group’s two inland terminals. The table
below includes 2018 results of LT until
the date of completion of the transaction
(3 September 2018).

The Russian container market continued
its recovery in 2018 increasing by 10.0%
year-on-year driven by a strong increase
in the handling of laden import containers.
Throughput of laden export containers
at Russian terminals continued its rapid
growth (+13.9% year-on-year), mainly
due to increased exports and the wider
use of containers in Russia. Laden exports
have risen 76% since 2013 supported by
increased exports and the containerisation
of export supply chains. The latter helps
to reduce inefficiencies in supply chains,
provides more flexibility and enables
companies to directly market small quantities
(as little as one container) globally.

Overall marine container throughput
at Russian terminals reached 4.87 million
TEU in 2018 compared to 4.43 million
TEU for 2017. 441 thousand TEU were
handled by marine terminals in Russia in
December 2018 – the highest monthly
throughput since June 2014. The growth
of the Russian container market continued
in 2019 with 8.4% year-on-year increase
in container throughput in January-
February 2019.

FY 2017

FY 2018

Change

Abs

Marine Terminals

Containerised cargo (thousand TEUs)

PLP

VSC

FCT

ULCT

Non-containerised cargo

Ro-ro (thousand units)

Cars (thousand units)

206.3

370.8

553.8

74.1

23.9

95.4

246.4

419.2

617.0

68.9

20.3

121.1

40.2

48.4

63.2

(5.2)

(3.6)

25.6

Other bulk cargo (thousand tonnes)

2,731.2

3,161.7

430.5

19.5%

13.1%

11.4%

(7.1%)

(14.9%)

26.9%

15.8%

(30.6%)

(29.3%)

12.2%

(30.6%)

15.9%

(29.3%)

171.8

324.1

119.2

229

1,205.0

1,351.6

171.8

119.2

2,694.9

3,122.8

324.1

229

(52.2)

(95.0)

146.6

(52.2)

427.9

(95.0)

167.6

115.6

81.7

107.1

(85.9)

(51.2%)

(8.5)

(7.4%)

2.1

(0.0)

(1.9%)

Inland Terminal

Containerised cargo (thousand TEUs)

Bulk cargo throughput (thousand tonnes)

Consolidated Marine Container Throughput

Consolidated Inland Container Throughput

Consolidated Marine Bulk Throughput

Consolidated Inland Bulk Throughput

Operational statistics of Joint Ventures

Containerised cargo (thousand TEUs)

Moby Dik

Finnish Ports

Non-containerised cargo

VEOS (million tonnes)

Inland Terminal

Yanino

Containerised cargo (thousand TEUs)

Bulk cargo throughput (thousand tonnes)

116.2

498.6

122.8

542.8

6.6

44.2

5.7%

8.9%

Consolidated Marine Container
Throughput, thousand TEUs

Cars,
thousand units

2018

2017

12.2%

1,352

2018

1,205

2017

Consolidated Marine Bulk Throughput,
thousand tonnes

Ro-Ro,
thousand units

2018

2017

 15.9%

3,123

2018

2,695

2017

 26.9%

121.1

95.4

 14.9%

20.3

23.9

450

400

350

300

250

Russian container market volumes
(by basin, 2018)

30%

51%

JAN13
Source: ASOP

JULY13

JAN14

JULY14

JAN15

JULY15

JAN16

JULY16

JAN17

JULY17

JAN18 JULY18 JAN19 FEB19 MAR19

Laden export growth is sustained trend over the last five years (million TEU)

5,2

0,6

-0,3

0,1

-0,8

0,1

4,9

16%

Baltic Basin

6%

Northern Ports Basin

Black Sea Basin

Far East Basin

2013
Source: ASOP

Laden Export

Laden Import Empty Import

Empty Export

Cabotage
and Transit

2018

Source: ASOP

Continuous growth of undercontainerised market

Russian container market volumes
(million teu)

Container/thousand capita in 2018
(teu/k people)

Global markets growth in 2018
(%)

2018

2017

2016

2015

2014

2013

NORTH AMERICA

EUROPE

TURKEY

WORLD

RUSSIA

4.9

4.4

3.8

5.1

5.2

138

133

131

104

RUSSIA

WORLD

TURKEY

EUROPE

NORTH AMERICA

Source: ASOP

Source: Drewry; some 2018 numbers estimated

Strong growth in laden export

Laden export container throughput
(k teu)

Share of laden export container throughput
in St. Petersburg (and area)

Imports of empty containers
(k teu)

76% (2013-2018)

2018

2017

2016

2015

2014

2013

1,346

2018

1,182

2017

1,054

2016

937

2015

920

2014

764

2013

79%

2018

76%

2017

76%

2016

68%

2015

50%

2014

40%

2013

Source: ASOP

10.0%

4.3%

7.9%

4.9%

6.1%

110

103

Global Ports Investments PLCAnnual Report 2018OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional Information

Container throughput in the Far East
demonstrated even higher growth rates
of 13.1% year-on-year. The growth in
container throughput at the terminals
in Saint-Petersburg and the surrounding
area accelerated to 10.6% due to cost
advantages and increased vessel capacity
while container throughput at the Russian
South basin (+2.2% year-on-year) lagged
the market due to inland infrastructure
bottlenecks and reduced cost advantages.

The Group’s Consolidated Marine
Container Throughput increased 12.2%
to 1,352 thousand TEU in 2018 compared
to 1,205 thousand TEU in the same period
of 2017. The overall growth rate of the
Group’s Consolidated Marine Container
Throughput outpaced that of the Russian
container market.

The Group continued to focus on
increasing bulk cargo volumes to improve
utilisation rates at its terminals. As a result,
Consolidated Marine Bulk Throughput
increased by 15.9% (428 thousand tonnes)
to 3,123 thousand tonnes, a record level
for the Group. This growth in Consolidated
Marine Bulk Throughput was primarily
driven by the growth in export in metal
and other export bulk cargo handling at
PLP and ULCT.

The Group’s passenger car handling
volumes increased by 27% from 95
thousand units in 2017 to 121 thousand
units in 2018. The key drivers of this
growth were an overall increase in
car imports into Russia and growth in
export of cars produced in Russia, which
was underpinned by the growth in the
Groups’ clients’ market shares as well as
investments made by PLP to upgrade its
car handling terminal and related services.

Impact of industry developments
The rapid growth of containerised laden
export over the last five years supports
the increase of capacity utilisation in
the industry due to the higher capacity
requirements on container yards of laden
exports. A key operational impact for
terminal operators has been an overall
reduction in yard capacity of container
terminals as laden export containers
require significantly longer dwell time
compared to laden import containers
or empty export containers, which in
turn lengthens the turnover time of
the container storage yard. Currently
the Group estimates average container
handling capacity utilisation for the Russian
market in 2019 at above 70%1.

As a result of the growth in laden exports,
staff reductions due to cost efficiency
programmes and the redistribution of
equipment between its terminals in
2014-2018, the Group believes that the
following numbers reflect the medium-
term berth and yard capacity of the
Group’s terminals, with berth and gate
capacity broadly unchanged.

The Group operates well-invested
terminals in key gateways and with its
available container capacity is able to
balance its activity in line with market
requirements. By flexing headcount,
working hours and used equipment at
its terminals, the Group can maximise
or minimise terminal yard capacity. The
Group believes that its yard capacity has
the potential to be increased (should the
market require it) within the previously
announced planned maintenance capital
expenditure guidance. The Group expects
that its terminals will require moderate
maintenance CAPEX in the near-term with
2019 maintenance CAPEX expected to be
broadly in line with 2018.

The recovery in the Russian

container market continued in
2018, growing by 10% during the
year. Global Ports outperformed
the market and delivered a 12%
increase in container volumes. Over
the last five years, the structure of
the container market has changed
materially. Looking forward, we see
a significant growth opportunity in
both laden export and the import
of empty containers, driven mainly
by ongoing containerisation and
global demand. We look forward to
taking advantage of the long-term
opportunities that this offers.

Brian Bitsch
CCO of Global Ports Management LLC

Berth and gate
capacity as at 31
December 2018

Yard capacity
as at 31
December 2018

thousand TEU per
annum

thousand TEU
per annum

1,000

650

1,250

440

3,340

350

650

915

440

2,355

PLP

VSC

FCT

Total

In 2019, the Group will continue to focus
on offering a strong value proposition to
its clients. Even though capacity utilisation
is expected to increase, competition in
the industry remains strong which will be
reflected in the Group’s approach to pricing
in 2019, with headline pricing expected to
decrease in the single digit area.

1. Company estimates throughput based on ASOP. Capacity estimated on companies websites (www.port-bronka.ru, www.deloports.ru, www.terminalspb.ru, www.nmtp.info and other public available

sources). Yard capacity for Group used for calculations.

In 2018 revenue increased by 4.0% to USD
343.6 million from USD 330.5 million in 2017
driven by higher revenue from container
handling revenue adjusted for LT and strong
growth in other revenue adjusted for LT.

Revenue from container handling adjusted
for LT increased 0.8%, or USD 2.1 million,
to USD 251.2 million*. This change was
driven by an increase in Consolidated
Container Throughput of 12.2% that was
partially offset by an 10.1% decrease in
consolidated Revenue per TEU. Only a low
single digit percentage of the reduction
in Revenue per TEU was attributable
to change in tariffs, and the remainder
is largely attributable to lower share of
imports and the change in customer and
service mix.

Other revenue adjusted for LT increased by
20.1%, or USD 14.3 million, to USD 85.7
million*, driven by growth in coal and other
bulk cargo handling revenue.

Revenue of LT in consolidated revenue of
Global Ports decreased by USD 3.3 million or
33.3% from USD 10.0 million in 2017 to USD
6.7 million in 2018. This change was primarily
driven by the fact that LT revenue was
consolidated in Group’s revenue only for the
period from 1 January 2018 to 3 September
2018.

The share of Consolidated Non-Container
Revenue in consolidated revenue of the
Group increased from 22.9%* in 2017
to 25.7%* in 2018.

Results of operations of Global Ports for the twelve months ended
31 December 2018 and 2017.

The following table sets out the principal components of the Group’s consolidated income
statement and certain additional non-IFRS data of the Group for the twelve months ended 31
December 2018 and 2017.

Selected consolidated financial information

Revenue

Cost of sales

incl. impairment of property, plant and equipment and
intangible assets

Gross profit

Administrative, selling and marketing expenses

Share of (loss)/profit of joint ventures accounted for using
the equity method

Other gains/(losses) – net

Operating profit

Finance income

Finance costs

Change in fair value of derivative

Net foreign exchange gains/(losses) on financial activities

Finance income/(costs) – net

Loss before income tax

Income tax expense

Loss for the period

Attributable to:

Owners of the Company

Non-controlling interest

FY 2017

FY 2018

Change

USD mln USD mln USD mln

330.5

343.6

(148.5)

(136.0)

(11.4)

182.0

207.6

(42.7)

(38.9)

13.1

12.5

11.4

25.6

3.8

4.0%

(8.4%)

14.0%

(8.9%)

(73.3)

(12.4)

60.8

(83.0%)

(71.3)

(5.3)

2.0

(90.9)

42.1

27.9

(18.8)

(24.1)

(28.8)

(52.9)

(24.6)

131.6

2.6

(85.1)

(27.5)

(75.2)

46.8

(65.6%)

137.0 (2,569.0%)

0.5

5.7

25.1%

(6.3%)

(69.6)

(165.4%)

(103.1)

(369.1%)

(185.3)

(166.5)

885.6%

(53.6)

(4.7)

(58.3)

(29.5)

122.3%

24.1

(83.7%)

(5.4)

10.2%

(53.0)

(59.3)

(6.3)

11.9%

0.0

1.0

0.9 3,553.8%

Key Non-IFRS financial information

Gross profit adjusted for impairment

193.4*

207.6*

14.2

7.3%

Gross profit margin (Adjusted for Impairment)

58.5%*

60.4%*

Adjusted EBITDA

Adjusted EBITDA margin

201.6*

217.3*

15.7

7.8%

61.0%*

63.2%*

Cost of Sales Adjusted for Impairment

(137.1)*

(136.0)*

1.1

(0.8%)

Cash Cost of sales

Total Operating Cash costs

(87.1)*

(88.9)*

(1.7)

2.0%

(128.9)*

(126.3)*

2.6

(2.0%)

Operating Profit Adjusted for Impairment

6.1*

131.6*

125.6 2,069.6%

Profit for the Period Adjusted for Impairment

Free Cash Flow

(41.5)*

(58.3)*

145.9*

133.6*

(16.8)

(12.3)

40.4%

(8.4%)

Revenue

The following table sets forth the components of the consolidated revenue for the twelve
months of 2018 and 2017.

Container handling revenue adjusted for LT1

Other revenue adjusted for LT

Total revenue

FY 2017

FY 2018

Change

USD mln USD mln USD mln

249.1*

251.2*

2.1

0.8%

71.3*

85.7*

14.3

20.1%

10.0*

6.7*

(3.3)

(33.3%)

330.5

343.6

13.1

4.0%

1. Container handling revenue adjusted for LT consists of Consolidated Container Revenue of the Group less container revenue of LT in the reporting period. Other revenue adjusted for LT consists of

Consolidated Non-Container Revenue of Group less non-container revenue of LT.

Global Ports Investments PLCAnnual Report 2018OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional Information

Cost of sales

Total Operating Cash Costs
(usd million)

The following table sets out a breakdown by expense of the Cost of sales for 2018 and 2017:

2.0%

126.3

128.9

FY 2017

FY 2018

Change

USD mln

34.3

12.9

(2.7)

(0.1)

2018

2017

(7.4%)

(0.6%)

37.0

12.9

11.4

41.9

8.3

7.6

7.1

6.8

5.2

10.2

148.5

87.1*

(11.4)

(100.0%)

42.1

6.9

8.8

7.4

8.3

5.0

10.4

136.0

88.9*

0.2

(1.5)

1.2

0.3

1.5

(0.2)

0.2

0.5%

(17.9%)

15.6%

4.4%

21.3%

(4.5%)

2.0%

(12.5)

(8.4%)

1.7

2.0%

Total Operating Cash Costs Adjusted
for FX (usd million)3

5.8%

2018

2017

Net Debt / Adjusted EBITDA

2018

2017

136.3

128.9

0.7

3.6

4.3

Administrative, selling and marketing
expenses
Administrative, selling and marketing
expenses decreased by USD 3.8 million,
or 8.9%, from USD 42.7 million in
2017 to USD 38.9 million in 2018.
This was primarily due to a decrease
of USD 0.8 million, or 3.1%, in Staff
costs due to the depreciation of the
Russian rouble, cost optimisation
as well as USD 1.7 million or 57.1%
decrease in Operating lease costs
from USD 3.0 million in 2017 to USD
1.3 million in 2018 due to the relocation
of headquarters to Saint-Petersburg and
the optimisation of rented offices.

Adjusted EBITDA and Adjusted
EBITDA margin
Adjusted EBITDA in 2018 increased
7.8% or USD 15.7 million to USD
217.3 million* from USD 201.6 million*
in 2017 mainly due to the growth
in throughput and strict control over cash
costs. Adjusted EBITDA margin improved
by 224 basis points from 61.0%* in 2017
to 63.2%* in 2018.

Share of profit/(loss) of joint ventures
accounted for using the equity
method
The Group’s share of loss from joint
ventures decreased by USD 60.8 million
or 83.0% from USD 73.3 million in
2017 to USD 12.4 million in 2018.
The loss in 2017 was principally due to
unfavourable results from Vopak E.O.S
(Estonia), which in turn were due to
a structural deterioration in the business
environment in which the terminal
operates, which is heavily dependent
on the exports of Russian oil products.
As a result, the Group took USD
71.6 million of impairment charge on its
investment in 2017. The investment in
Vopak E.O.S has been impaired to the
carrying amount of USD 7.3 million
as of 31 December 2017.

As a result of deterioration of the business
environment for VEOS, in the end of 2018
the Group decided to put this JV for a
potential sale. Due to this reason, the
investment in VEOS was reclassified to
assets held for sale. Its carrying amount
is its fair value less costs to sell.

Depreciation of property, plant and equipment

Amortisation of intangible assets

Impairment of property, plant and equipment and
intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and
equipment

Purchased services

Taxes other than on income

Other operating expenses

Total Cost of sales

Cash Сost of Sales

Cost of sales decreased by USD 12.5
million, or 8.4%, from USD 148.5 million
in 2017 to USD 136.0 million in 2018. The
decline was primarily driven by a non-cash
property, plant and equipment impairment
charge of USD 11.4 million incurred in
2017 in relation to LT1.

Cash Cost of Sales increased by only
2.0% from USD 87.1 million* in 2017 to
USD 88.9 million* in 2018 despite the
double-digit growth in throughput in both
container and bulk cargo handling combined
with the 4.2% inflation rate in Russia2 in
2018. The change in cost items such as Fuel,
electricity and gas, Purchased services and
Transportation expenses is directly linked to
the change in volumes of cargo handling. In
addition, the movement in Transportation
expenses reflects the deconsolidation of LT
and one-off expenses related to the railway
delivery at VSC in 2017.

Gross profit
Gross profit increased by USD 25.6 million,
or 14.0%, from USD 182.0 million in
2017 to USD 207.6 million in 2018. This
increase was due to the factors described
above under Revenue and Cost of sales.

1. See Global Ports’ releases dated 16 August 2017 and 14 March 2018 for details of the Impairment charge recognised in relation to LT.
2. Source: Federal State Statistics Service http://www.gks.ru.
3. Management estimate, calculated as if effective USD/RUB exchange rate in 2017 was the same as in 2017.

VEOS

MLT

CD Holding

Total share of profit/(loss) of joint ventures

Share in the result of MLT changed
from a profit of USD 5.2 million in
2017 to a loss of USD 14.3 million in
2018. The result was primarily driven
by decline in throughput at Moby Dik
due to the reduction of cargo volumes.
The valuation of Moby Dik was based
on the expected fair value less cost to
sell of those assets which have active
market and their value could be reliably
determined. As a result, the investment
in MLT Ltd (being the parent of Moby
Dik) was impaired by USD 14 million.

Other gains/(losses) – net
Other gains/(losses) amounted to
a net loss of USD 24.6 million in 2018,
compared to a loss of USD 71.3 million
in 2017. The 2017 result was impacted
by a loss relating to the recycling of
derivative losses previously recognised
through other comprehensive income
of USD 69.6 million. The nature of this
loss was linked to the acquisition of NCC
at the end of 2013, following which the
Group designated an acquired derivative
as a cash flow hedge instrument on one of
NCC’s loans. At the end of 2015 the Group
partly restructured its debt portfolio. In
the course of the restructuring, this loan
was terminated. This then resulted in the
termination of the cross-currency interest
rate swap arrangement outlined above.
The termination of the cross-currency
interest rate swap arrangement together
with the settlement of the related loan led
to the cancellation of the related cash flow
hedge and non-cash loss recycling in the
Group’s consolidated income statement
during the contractual maturity of the
settled loan. As of 31 December 2017,
the loss was recycled in full.

FY 2017

FY 2018

Change

USD mln

(77.5)

5.0

82.5

(106.5%)

5.2

(1.0)

(73.3)

(14.3)

(3.1)

(12.4)

(19.5)

(374.9%)

(2.1)

60.8

211.2%

(83.0%)

In 2018 the Group disposed of a subsidiary
with net liabilities of USD 0.94 million for
a cash consideration of USD 0.86 million.
The main asset of the subsidiary was
loading equipment. The transaction did not
have any adverse effect on the operations
of the Group. The transaction resulted
in an overall gain of USD 4.6 million
booked within ‘Other gains/(losses) – net’,
comprising a USD 1.8 million gain from
sale of the subsidiary and USD 2.8 million
of foreign translation differences that were
reclassified from the translation reserve
to the income statement.

In September 2018, upon obtaining
approval of relevant regulatory authorities,
the Group completed the sale of its 100%
holding in LT for a cash consideration of
RUB 1.9 billion. The result of the disposal
is a USD 0.6 million gain that is reflected
within ‘other gains/(losses) – net’. In
addition, USD 29.9 million are recycled
to ‘other gains/(losses) – net’ from the
currency translation reserve. This is the
amount related to LT that was recognised
in other comprehensive income and
accumulated in the equity.

Operating profit/(loss)
The Group’s operating profit changed
from operating loss of USD 5.3 million
to operating profit of USD 131.6 million
in 2018 due to the factors described
above under Gross profit, Share of
profit/(loss) of joint ventures accounted
for using the equity method and Other
gains/(losses) – net.

Finance income/(costs) – net
Finance income/(costs) – net increased
from a cost of USD 18.8 USD million

in 2017 to a cost of USD 185.3 million
in 2018. This move was primarily due to
a foreign exchange gain from financing
activities of USD 27.9 million in 2017
reducing to a loss of USD 75.2 million
in 2018. This was a result of the
depreciation of the Russian rouble1,
which in turn led to a change from the
gain to loss on revaluation of US dollar-
denominated borrowings in the Group’s
Russian subsidiaries. Further, the change
in fair value of derivative instruments2
turned from a profit of USD 42.1 million
in 2017 to a loss of USD 27.5 million in
2018, which contributed to the movement
in finance income/(costs) – net.

Profit/(loss) before income tax
Loss before income tax increased from
loss of USD 24.1 million in 2017 to USD
53.6 million or by USD 29.5 million due
to the factors and change in non-cash
items described above under Operating
profit/(loss) and Finance income/
(costs) – net.

Income tax expense
In 2018, the income tax expense was
USD 4.7 million, compared to USD
28.8 million in 2017. The difference in
the effective tax rate from the normally
applicable Russian statutory tax rate
of 20% was largely driven by the impact
of expenses and losses not deductible
for tax purposes, withholding tax on
undistributed profits and nontaxable
results of joint ventures.

Profit/(loss) for the period
The company reported a loss of USD
58.3 million in 2018 compared to a loss
of USD 52.9 million in 2017 due to the
factors described above.

1. During 2018 the exchange rate of US Dollar increased from 57.6 RUB as of 31 December 2017 to 69.5 RUB as of 31 December 2018 that represents the strengthening of US Dollar against Russian

Rouble by 20.6%.

2. During 2015 and 2016 the Group entered into three cross-currency swap arrangements to exchange its RUB-denominated liabilities related to the newly issued bonds (3 issues of RUB 5,000 million

each) with fixed interest rate of approximately 13% in the amount RUB 15,000 million to USD-denominated debt with the lower fixed interest rate.

Global Ports Investments PLCAnnual Report 2018OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional Information

Liquidity and capital resources

General
As at 31 December 2018, the Group
had USD 91.6 million in cash and cash
equivalents.

The Group’s liquidity requirements arise
primarily in connection with repayments
of principal and interest payments, capital
investment programme and ongoing
operating costs of its operations. In 2018
the Group’s liquidity needs were met
primarily by cash flows generated from its
operating activities. The Group expects
to fund its liquidity requirements in both
the short and medium term with cash
generated from operating activities.

As a result of the shareholding or joint
venture agreements at Moby Dik, the
Finnish Ports, Yanino and Vopak E.O.S.,
the cash generated from the operating
activities of each of the entities in those
businesses is not freely available to
fund the other operations and capital
expenditures of the Group or any other
businesses within the Group and can
only be lent to an entity or distributed as
a dividend with the consent of the other
shareholders to those arrangements.

As of 31 December 2018, the Group had
USD 871.9 million* of total borrowings,
of which USD 21.2 million* comprised
current borrowings and USD 850.8 million*
comprised noncurrent borrowings. As at
31 December 2018, the Group had no
meaningful undrawn borrowing facilities.
See also Capital resources.

Cash flows
The following table sets out the principal components of the Group’s consolidated cash
flow statement for 2018 and 2017:

Net cash from operating activities

Cash generated from operations

Tax paid

FY 2017 FY 2018

Change

USD mln USD mln USD mln

173.9

174.3

0.4

196.7

208.0

11.3

(33.5)

(35.4)

(1.9)

0.2%

5.7%

5.6%

Net cash from operating activities before dividends received
from joint ventures and adjusted for income tax

163.2

172.6

9.4

5.8%

Dividends received from joint ventures

10.8

1.7

(9.0)

(84.0%)

Net cash used in investing activities

(34.6)

(13.5)

21.1

(60.9%)

Purchases of intangible assets

(1.8)

(2.6)

(0.7)

38.4%

Purchases of property, plant and equipment

(28.0)

(40.8)

(12.7)

45.3%

Proceeds from sale of property, plant and equipment

0.3

0.5

0.2

59.1%

Loans granted to related parties

(7.5)

(1.4)

6.1

(81.3%)

Loan repayments received from related parties

1.2

0.3

(0.9)

(78.0%)

Disposal of subsidiary

Interest received

28.8

–

1.3

1.6

0.3

27.1%

Net cash used in financing activities

(129.1)

(196.2)

(67.1)

51.9%

Repayments of borrowings

Interest paid

(57.5)

(154.2)

(96.6)

168.0%

(89.1)

(84.4)

4.7

(5.3%)

Proceeds from derivative financial instruments

20.3

43.1

22.8

112.6%

Finance lease principal payments (third parties)

(2.7)

(0.8)

2.0

(71.8%)

Free cash flow (Net cash from operating activities – Purchase
of PPE)

145.9

133.6

(12.3)

(8.4%)

Debt maturity profile as of 31 December 2018 (usd million)

144

314

Cash&
Equivalents
as of 31.12.2018

2019

2020

2021

2022-2023
Average

2024

Net cash from operating activities
Net cash from operating activities
increased by USD 0.4 million, or 0.2%,
from USD 173.9 million in 2017, to
USD 174.3 million in 2018. Growth in
Net cash from operating activities was
primarily due to a USD 11.3 million, or
5.7%, increase in the Cash generated from
operations, due to the growth in Revenue

and Adjusted EBITDA described above.
This growth in Cash generated from
operations was partially offset by the
USD 9.0 million or 84.0% decrease
in Dividends received from joint ventures
due to a reduced dividend payment from
Moby Dik and as a result of the elevated
dividend that had been declared by VEOS
previously and paid in 2017.

Our strong financial

performance was underpinned by
constructive market fundamentals
and excellent operational execution.
Revenue increased by 4.0% in 2018,
primarily driven by 16.8% growth
in Consolidated Non-Container
Revenue. We continued to focus on
strict cost control and achieved a
2% decline in Total Operating Cash
Costs in dollars. Our strong cash
generation and treasury initiatives
have enabled us to continue to
deleverage at a rapid pace.

Alexander Roslavtsev
CFO of Global Ports
Management LLC

Consistent net debt reduction
(usd million)

2018

2017

2016

2015

2014

2013

780

866

947

1,048

1,208

1,350

Net cash used in investing activities
Net cash used in investing activities
decreased by USD 21.1 million, or 60.9%,
from USD 34.6 million in 2017 to USD
13.5 million in 2018. The USD 6.1 million
decrease in Loans granted to related
parties which are primarily related to the
Group’s joint venture, Yanino Logistics Park
(YLP), was partially offset by the USD 12.7
million growth in Purchases of property,
plant and equipment.

The increase in Purchases of property,
plant and equipment was in line with the
mid-term CAPEX guidance of USD 25-
35 million per annum and an additional
investment into new coal handling facility
at ULCT. Capital expenditure in the period
was focused on planned maintenance
projects, the scheduled upgrade of
existing container handling equipment
(replacement of container straddle
carries at FCT to improve both efficiency
of operations and level of service) and
coal handling equipment at VSC as well
as environmental protection measures
undertaken in relation to coal handling.

USD 28.8 million of Disposal of subsidiary
reflect mainly proceeds from sale of LT in
September 2018.

Net cash used in financing activities
Net cash used in financing activities
increased by USD 67.1 million, or 51.9%,
from USD 129.1 million in 2017 to USD
196.2 million in 2018 due to repayment
of borrowings increased to USD 154.2
million in 2018 as the Group in additional
scheduled repayment of debt fully prepaid
a bilateral bank loan and bought back
certain amount of its own Eurobonds.

The Group’s cash outflows related to the
servicing of debt (calculated as net of
Interest paid and Proceeds from derivative
financial instruments) amounted to USD
41.3 million in 2018 which was 40% or
USD 27.5 million* lower than in 2017 (USD
68.8 million) due to the decrease in total
debt described above as well as a result of
termination of the cross-currency interest
rate swap arrangements in the end of 2018.
The net proceeds received on termination
of swaps amounted to USD 27.7 million.

Capital resources
The Group’s financial indebtedness
consists of bank borrowings, bonds,
finance leases liabilities and amounted
to USD 871.9 million* as at 31 December
2018. As of that date, all of the Group’s
borrowings were secured by guarantees
and suretyships granted by certain Group
members. Certain of these borrowings
contain covenants requiring the Group
and the borrower to maintain specific
indebtedness to Adjusted EBITDA and
other ratios, as well as covenants having
the effect of restricting the ability of the
borrower to transfer assets, make loans
and pay dividends to other members of
the Group.

The weighted average interest rate of the
Group’s debt portfolio is 8.5%*.

As at 31 December 2018, the Group had
leverage of Net debt to Adjusted EBITDA
ratio of 3.6x* (compared to a ratio of 4.3x*
as at 31 December 2017 and 4.2x* as at
31 December 2016).

The following table sets out the maturity
profile of the Group’s total borrowings
(including finance leases) as at 31
December 2018.

2019

2020

2021

2022 and after

Total

USD mln

21.2

71.8

143.9

635.1

871.9

As at 31 December 2018, the carrying
amounts of the Group’s borrowings were
denominated in the following currencies:

Rouble

US dollar

Total

USD mln

229.5

642.4

871.9

Global Ports Investments PLCAnnual Report 2018OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional Information

Reconciliation of Additional data (non-IFRS) to the consolidated financial
information for the twelve-month period ended 31 December 2018

Reconciliation of Adjusted EBITDA to Profit for the period

Profit for the year

Adjusted for

Income tax expense

Finance costs – net

Amortisation of intangible assets

Depreciation of property, plant and equipment

Impairment of goodwill and property, plant and
equipment

FY 2017

FY 2018

Change

USD mln

(52.9)

(58.3)

(5.4)

10.2%

28.8

18.8

13.0

38.0

11.4

4.7

(24.1)

(83.7%)

185.3

166.5

885.6%

12.9

35.8

(0.1)

(2.2)

(0.4%)

(5.9%)

–

(11.4)

–

Other (losses)/gains – net

71.3

24.6

(46.8)

(65.6%)

Share of (loss)/profit of joint ventures accounted for
using the equity method

73.3

12.4

(60.8)

(83.0%)

Adjusted EBITDA*

201.6

217.3

15.7

7.8%

Reconciliation of Adjusted EBITDA Margin

Revenue

Adjusted EBITDA*

FY 2017

FY 2018

Change

USD mln

330.5

343.6

201.6*

217.3*

13.1

15.7

4.0%

7.8%

Adjusted EBITDA* margin

61.0%

63.2%

Reconciliation of Total Operating Cash Costs to Cost of sales and administrative, selling and
marketing expenses

Cost of sales

FY 2017

FY 2018

Change

USD mln

148.5

136.0

(12.5)

Administrative, selling and marketing expenses

42.7

38.9

(3.8)

Total

Adjusted for

191.2

174.9

(16.3)

Impairment of property, plant and equipment

Depreciation of property, plant and equipment

Amortisation of intangible assets

(11.4)

(38.0)

(13.0)

–

11.4

(35.8)

(12.9)

2.2

0.1

(8.4%)

(8.9%)

(8.5%)

(5.9%)

(0.4%)

Total Operating Cash Costs*

128.9*

126.3*

(2.6)

(2.0%)

Reconciliation of Cash Costs of Sales to Cost of sales

Cost of sales

Adjusted for

Impairment of property, plant and equipment

Depreciation of property, plant and equipment

Amortisation of intangible assets

Cash Cost of Sales*

FY 2017

FY 2018

Change

USD mln

148.5

136.0

(12.5)

(8.4%)

(11.4)

(37.0)

(12.9)

(34.3)

(12.9)

87.1*

88.9*

–

11.4

(7.4%)

(0.6%)

2.0%

2.7

0.1

1.7

Reconciliation of Cash Administrative, Selling and Marketing Expenses to Administrative,
selling and marketing expenses

FY 2017

FY 2018

Change

USD mln

Administrative, selling and marketing expenses

42.7

38.9

(3.8)

(8.9%)

Adjusted for

Depreciation of property, plant and equipment

Amortisation of intangible assets

Cash Administrative, Selling and Marketing
expenses*

(1.0)

(0.03)

(1.5)

(0.05)

(0.5)

(0.03)

49.8%

93.8%

41.7*

37.4*

(4.3)

(10.3%)

Reconciliation of Net Debt and Total Debt to borrowings

Non-current Borrowings

Current Borrowings

Adjusted for

Derivative financial instruments (non-current assets)

Derivative financial instruments (current assets)

Total Debt*

Adjusted for

As at
31.12.2017

As at
31.12.2018

Change

USD mln

1,005.7

850.8

(154.9)

(15.4%)

69.1

21.2

(47.9)

(69.3%)

(58.8)

(19.5)

–

58.8

(100.0%)

19.5

(100.0%)

996.4*

871.9*

(124.4)

(12.5%)

Cash and cash equivalents

(130.4)

(91.6)

38.8

(29.8%)

Net Debt*

865.9*

780.3*

(85.6)

(9.9%)

Reconciliation of Free Cash Flow to Net cash from operating activities

Net cash from operating activities

173.9

174.3

0.4

Adjusted for

FY 2017

FY 2018

Change

USD mln

0.2%

Purchases of property, plant and equipment

(28.0)

(40.8)

Free Cash Flow*

145.9*

133.6*

(12.7)

(12.3)

45.3%

(8.4%)

Annual Report 2018

Global Ports Investments PLCOverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional Information

Strategic Report 
Chairman’s Statement / Chief Executive Officer’s Statement / Market Overview / Strategy / Business Review / Corporate Social Responsibility

Regaining forward momentum

Global Ports Investments PLC

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

A sustainable
and safe business

At Global Ports, Corporate Social
Responsibility (CSR) is an integral part
of executing our core strategic priorities.
The objectives for our business and CSR
strategies are the same – to generate
sustainable shareholder value over
the long term.

Our CSR activity embraces 5 key objectives that
support delivery of the Group’s overall commercial
strategy. As a sustainable and responsible
organisation, our objectives are to:

> Operate with integrity;

> Deliver economic and social benefit
to the communities we serve;

Build employee advocacy for the Group
and its role in the community;

> Manage the environmental impacts
of our business operations; and

Communicate our commitment to corporate
responsibility openly and transparently.

Annual Report 2018

Global Ports Investments PLC

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018

Strategic Report 
Chairman’s Statement / Chief Executive Officer’s Statement / Strategy / Business Review / Corporate Social Responsibility

Corporate
Social Responsibility

At Global Ports, corporate social responsibility (CSR)
is an integral part of realising our core strategic priorities.
The objectives for our business and CSR strategies are the same –
to generate sustainable shareholder value over the long term.

Introduction
Our CSR activity embraces 5 key objectives
that support delivery of the Group’s overall
commercial strategy. As a sustainable and
responsible organisation, our objectives
are to:

As a company, our goal is to build and
embed a sustainable safety culture that
changes the way our people think about
health and safety, that is easy for our
people to understand and that is simple to
implement, based on three core principles:

Being a responsible

business is a critical component of
how we operate at Global Ports and
fundamental to our delivering long-
term sustainable growth.

> Follow responsible business practices

> Providing a safe working environment;

especially with regard to Health, Safety
and Environment;

> Deliver economic and social benefit to

the communities we serve;

> Build employee advocacy for the Group

and its role in the community;

> Manage the environmental impacts of our

business operations; and

> Communicate our commitment to
corporate responsibility openly and
transparently.

Safety

Introduction
Safety remains the highest priority for
the business. Nothing is more important
than the health and safety of our people
and we view their well-being as a primary
responsibility of any company.

The nature of our industry means our
people are regularly exposed to activities
that put them at risk. Therefore our ultimate
safety goal is zero-harm, with all our people
returning home safely every day.

Strong leadership and management
involvement is critical to building a
responsible safety culture. At Global
Ports, our Board and senior executives
understand that the tone is set from the
top and are fully committed to driving
forward our safety agenda.

> Providing comprehensive implementation
plans built around best practice safety
and compliance standards;

> Offering comprehensive training programs
focused on risk awareness and reduction.

Ensuring a safe working
environment
We expect our people to put safety first
in everything they do. To achieve this, we
invest in Safety, providing suitable resources,
training and time with priority given to
addressing behavioural and cultural attitudes.

At the same time, we recognise that the
work place is a dynamic environment so we
constantly review our working processes
to ensure they are the safest they can be.

The Group has put in place a focused
safety management framework that covers
all aspects of performance monitoring,
benchmarking, target-setting, training and
development.

We ensure a safe working environment
in a number of ways:

> By establishing critical minimum

safety standards in line with industry
best practice (Global Minimum
Requirements, GMR);

> Through regular safety audits that

benchmark our facilities’ compliance
in implementing our GMRs;

Britta Dalunde
Chairman of the Audit
and Risk Committee
Senior Independent
Director

> Through regular safety and risk awareness
training for our staff and contractors.
Health & Safety forms part of the
induction process for new employees
and for any new visitors visiting our
production areas. We conduct regular
safety-training exercises for staff covering
general safety issues including, but not
limited to: fire drills, first aid, electrical
safety, traffic rules around facilities and
safe working at height;

> In addition, the Group runs regular

specialised training programmes for its
employees that need more specialised
training for example in the safe operation
of hazardous production facilities or
handling of hazardous materials;

> Through regular monitoring of the health
and wellbeing of our employees aimed
at improving and maintaining their
wellbeing and reducing the incidence
of occupational illnesses.

Regaining forward momentum

Global Ports Investments PLC

Governance Framework
The Board is responsible for setting the
Group’s health and safety strategy, and for
creating the overarching policies and safety
standards that set the guidelines for safety
throughout all of Global Ports’ operations.

The Senior Executives of the Group and its
companies oversee implementation of the
strategy and run the initiatives across all our
businesses. They regularly review Business
Unit commentary and performance reports
in order to monitor the safety performance
of individual business units.

The Senior Executives supply the Board with
quarterly performance reports for discussion.
The Board conducts a regular review of the
Group’s safety performance and agrees with
the Senior Executives a plan of action and
targets for the coming months.

How We Performed in 2018
The Group has delegated to the Chief
Operational Officer of Global Ports
Management Company the monitoring
and measurement of health and safety
performance through a number of metrics.

Over the last three years, our safety record
has been on an improving trend with the
frequency rate of injuries suffered at our
facilities LTIFR steadily reducing. In 2018,
we expanded our general cargo operations
into new services. As many of these cargo
operations are more manual in nature,
this creates an increased exposure to
potential minor injuries. Unfortunately, we
experienced an increase in reportable injuries
in this area last year. Consequently, our Lost
Time Injury Frequency Rate (LTIFR) increased
to 1.28 in 2018 (2017: 1.10). Every reported
injury case was thoroughly reviewed and
corrective measures enacted to reduce the
likelihood of repeat incidents.

Tragically, although the Group suffered no
fatalities in 2018 (0 fatalities / thousand
employees), we have to report that we
experienced one fatality after the year
end at our PLP terminal. This is a matter
of greatest concern for the Board and
management team, as it is the first fatality
the Group has suffered since it became

a listed company. It also means that in 2019
we will not reach our goal of zero fatalities.

LTIFR

The Board instigated a full investigation into
the circumstance surrounding the fatal incident
at PLP, as required under our safety rules. This
has resulted in an immediate review of all our
safety programmes and procedures, and the
implementation of measures to reinforce
our safety culture and further strenghen our
safety programmes and procedures.

Our priorities in 2019
The Board is determined to transform the
safety ethos of the company, and our 2019
focus will concentrate on:

> Improving our monitoring, reporting and
reviewing of safety including adopting
a more rigorous approach to incident
reporting and follow-up;

> Developing Safety Improvement strategy;

> Implementing a comprehensive
behavioural-change package of
measures including greater leadership
involvement in safety initiatives;

> Reviewing cargo handling to reduce

or eliminate manual handling of cargo;

> Developing an employee rewards
programme that focuses on safety
embracing safety champions in dealing
with unsafe situations;

2018

2017

2016

2015

2014

1.28

1.1

1.51

2.3

2. 13

Training & Development
In 2018, we conducted our first ever
complex (incl. questionnaire, interviews with
managers and meeting with all employees)
employee survey among the staff of our
Management Company because we wanted
to hear our employees’ views on life at
Global Ports and to identify the issues that
they think are most important to them.
Thanks to a great response rate, we have
a much better understanding of what
our staff feel and think about their life in
the company in all aspects and about the
business. The feedback from the survey has
been incorporated into a series of action
plans and initiatives that are prioritising:

> Improving information-sharing about the
Company’s activities, and increasing the
level of management communication with
all team members;

> Building a shared sense of unity and

teamwork among employees;

> Increasing risk awareness training for

> Building cross-functional working and

stevedores and dockers;

reducing complexity;

> Implementing our External Contractor
safety programme to align contractor
selection more closely to our internal
safety policies.

Employee Engagement

We employ more than 2,700 people1 and
our success depends on our ability to hire
the best people at every level across the
business, provide their well-being at work
and look after them so that they are inspired
to perform. This is core to the success of the
business and our competitive position.

> Reviewing rewards and benefit packages;

> Improving development and career growth.

Employee development is a significant part
of what we offer to our people. We want to
provide a dynamic and exciting workplace
that is attractive to both existing employees
and new recruits.

We provide career opportunities across
the Group for our high potential employees.
And we place a strong emphasis on
identifying and nurturing the next
generation of leaders in the business.

1. As at 31 December 2018. More than 3000 people including Joint Ventures.

Recognising and rewarding our employees
in a fair and transparent way ensures
that our people feel incentivised to
succeed, that outstanding performance
is recognised, and that individuals are
differentiated based on abilities and
results. The Group has performance
management systems in place throughout
its operations to ensure that corporate and
individual goals are clearly aligned.

Diversity
While our industry has traditionally
employed many more men than women,
women are represented at all levels in
the business including the Board, senior
management, production and administration.

As of 31 December 2018, females
represented 33%1 of all employees, broken
down into 27% of production staff, 13%
of executive management and 65% of
administrative staff 2. Women make up
27% of the entire Board and 2 out of the
3 independent directors are female. The
importance of equality is set out in our Code
of Conduct and underpinned by our values.

Diversity: length of service (years)

21%

26%

30%

23%

Less than 5 years

5-10 years

11-20 years

More than 20 year

Human Rights
We believe all people are entitled to
fundamental rights and freedoms and
creating an equal fair and diverse workplace
is a priority for the Group. Therefore we
are committed to upholding the rights of
everyone who works for the Group and
those who have dealings with it.

1. 36% in 2017. The decrease was primarily driven by sale of LT.
2. On a consolidated basis.

Diversity data

Diversity: females as a percentage of total staff

33%

Diversity: females as a percentage of department staff

Production

27%

Administration

65%

Female

Our approach to human rights and diversity
is based on our Code of Conduct and
underpinned by our values. We support
the standards of fair treatment and non-
discrimination, and we work to prevent and
mitigate adverse human rights impacts in our
operations. We implement our employees’
human rights protections through our Code
of Conduct. Through our CSR and HR
teams we monitor and work to address any
alleged human rights complaints or concerns,
whether from our employees or third-parties.

Engaging with our people
We believe that open and transparent
communication is vital to a successful
workplace. We recognise that regular
engagement with our workforce helps to
motivate them to perform.

We provide updates on our strategic priorities
and business performance through a variety
of communication channels including
management briefings, internal emails and our
recently launched intranet portal.

We also seek regular feedback from our
employees to measure engagement and
gather important insights about our business.
We conduct regular staff surveys and all
feedback is reviewed, and any important
issues identified for further review.

Environmental

Global Ports is committed to protecting the
environment and improving the quality of life
of the local communities wherever it operates.
Being good neighbours to the communities

67%

73%

35%

Male

where we operate also means continuing to
reduce our impact on the environment.

The Group aims to comply strictly with all
applicable requirements of environmental laws
in the regions where it operates. Responsibility
towards the environment is embedded in
all of Global Ports’ investment programmes.

Across our port terminals we continue to
prioritise schemes that reduce our energy
and water usage and improve our waste
management performance. The Group
regularly invests in energy efficiency and
environmental protection related projects.
These projects include: construction and
upgrading of waste water treatment facilities,
installation of energy efficient lighting,
renovation and renewal of storm water
drainage systems, construction of new coal
dust protection facilities and the installation
of energy-efficient heating systems.

Waste Management
Global Ports aims to reduce the amount
of waste that its port terminals produce,
renewable resources where possible and
disposed of waste in a way that minimises
the environmental impact while maximising
operational and financial efficiency.

Generally the activities of the Group do
not lead to the formation of any solid or
dangerous waste products. However, the
Group does monitor and analyse its waste
management activities, and each facility
regularly reviews opportunities for waste
recycling and reuse of materials. Global
Ports is also working with its industry

Regaining forward momentum
Regaining forward momentum

34
34

Global Ports Investments PLC
Global Ports Investments PLC

Energy Usage:

Electricity consumption per 1 tonne of cargo handled
by Russian Ports’ marine terminals

Fuel consumption per 1 tonne of cargo handled
by Russian Ports’ marine terminals

Energy intensity of Russian Ports’ marine terminals
(MWh per million of sales revenue in USD)

Unit

kWh

2016

2.46

2017

2.15

2018

2.14

l/t

0.47

0.44

0.45

team is also able to access information
and advice on global best practice through
its involvement with the APM Terminals
global networks.

USD

120

117

119

Our Communities

partners to reduce the impact of shipping
and port operations on water quality at its
port terminals.

We are working to reduce our environmental
footprint. Specifically, we are examining ways
to increase our energy efficiency and also
reduce air emissions. For instance, we are
working with our customers to find ways to
reduce the impact that visiting vessels have
on the ports’ air quality. All non-recyclable
waste such as waste oil is carefully stored
in ways designed to prevent any harmful
substances escaping into the environment.

Global Ports also makes strenuous efforts
to manage water resources effectively and
to minimise the impact of negative water
quality on the environment. As a part
of our natural resource management,
all accumulated rainwater and waste
water is treated before being returned
to waterways. We do not recycle waste
water so in 2018 the Group recycled zero
per cent of its waste water.

VSC continue to implement the terms
of the tri-partite agreement signed with
administrations of city of Nakhodka and
Primorsk Territory in 2017. According to
its terms approximately 670 million RUR
will be invested in 2018-2021 into various
environmental protection measures
including additional water treatment
facilities, coal dust suspension systems,
air and water pollution monitoring
systems and other initiatives.

Governance & Ethics

The Group recognises that its reputation and
good name are amongst its most valuable
assets, which could easily be lost by actual
or suspected corrupt or unethical behaviour.

We maintain a strict stance against bribery
and corruption and operate a zero tolerance

regime to all forms of corruption. Global
Ports’s Anti-Corruption Policy sets out the
goals and objectives, the defining principles
and the role of the Board and executive
management in executing the Group’s zero
tolerance approach to these matters.

The Group has an anti-corruption compliance
framework in place as a part of its risk
management arrangements. It is based on the
Group’s Code of Conduct which sets out how
we should conduct our business.

Employees are encouraged to approach
management and legal department whenever
they have questions about what to do in
difficult situations and Internal audit and
Independent Board Members when they
want to voice concerns about known
violations of the Group’s policy.

The Group’s whistleblowing service
enables employees, contractors, suppliers
and members of the public to report any
significant concerns about the business,
or behaviour of individuals. The new system
was established in 2017. The Group aims
to provide anti-corruption training to all
line managers, including those working in
central office functions.

The Group enjoys good relations with its
suppliers and is working closely with our
key suppliers to establish high operating
standards and ensure accountability
through the supply chain. The Group
operates to a strict set of guidelines that
are covered by its Procurement policy. As
a matter of policy, all procurement for the
largest port terminals is centralised and
actioned at Group level by the corporate
centre. All tenders are conducted via
publication of RFQ on open website, creating
transparency and equal rights for all potential
suppliers. The process is conducted in
accordance with the Procurement Standard
issued by the organization. Our procurement

The Group believes that good community
relations are important to the long term
development and sustainability of its
operations. Global Ports is committed
to supporting the local communities where
it operates and improving the quality of life
for its employees and their communities
through supporting community-driven
social investment. This is the philosophy
that underpins the Group’s approach
to social investment.

Global Ports funds a variety of social and
charitable projects. These are focused
around the themes of Health, Education,
Culture, and Welfare. Under the Health
banner, the Group supports a variety of
sports programmes in its communities.
The Group also backs various educational
programmes and funds welfare projects,
principally those dealing with vulnerable
adults and children. The Group also
prioritises support for social infrastructure,
sponsoring socially important projects
in the regions where it operates, for
instance funding heritage restoration
projects. As a matter of policy, entities
and representatives of legislative, executive
or judiciary authorities, political parties,
commercial entities, and individuals or
legal entities associated with them are not
eligible for charity and sponsor support.

In 2018, via its social programmes the Group
provided support for a number of projects:

> VSC, FCT, ULCT and PLP supported the
Life Line Charitable Foundation which
helps to support seriously ill children;

> VSC sponsored the purchase of medical
equipment for Vostochny Hospital in the
city of Nakhodka;

> ULCT supported various groups including
a children’s football club and a singing
team and also paid for the renovation
of a military cemetery at Kingisepp.

Global Ports Investments PLCAnnual Report 2018OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional Information
Corporate Governance 
Corporate Governance 
Corporate Governance / Board of Directors / Executive Management / Terminal Directors / Risk Management
Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

Corporate
Governance

/ Corporate Governance

/ Board of Directors

/ Executive Management

/ Terminal Directors

/ Risk Management

Regaining forward momentum

Global Ports Investments PLC

Corporate

Governance

Overview
Overview

Strategic
Strategic
Report
Report

Corporate
Corporate
Governance
Governance

Consolidated
Consolidated
Financial Statements
Financial Statements

Parent Company
Parent Company
Financial Statements
Financial Statements

Additional
Additional
Information
Information

Effective governance
is central to Global Ports’
long-term success

Annual Report 2018

Global Ports Investments PLC

Corporate Governance 
Corporate Governance / Board of Directors / Executive Management / Terminal Directors / Risk Management

Corporate
Governance

The Board of Directors is committed to ensuring
that the highest standards of governance,
values and behaviours are in place and consistently
applied in the boardroom and across the Group.

The Board believes that effective
governance is essential to protecting
shareholder value and the sustainable
growth of the Group. Although the
Company is not subject to the provisions
of UK Corporate Governance Code,
it actively seeks to align itself with
international recognised governance best
practices customary for public companies
listed on the London Stock Exchange.

Director average age

49 years

Board Age Ranges from

33 to 71 years

Tenure of Board

Board independence

20%

47%

33%

< 1 year

1-4 year

> 4 years

Board diversity
Whole Board

27%

73%

Executive Director

Non-Executive Director

Independent Non-Executive Director

Independent Directors

33%

67%

73%

Male

Female

Male

Female

Superior mix of knowledge and experience

Director average
compensation 79.2 th. USD in 2018.

For other corporate governance policies,
see the Group’s website:
http://www.globalports.com

Transport & Logistics

International business

Business Administration

Finance

Audit & Accounting

Law

Technologies

International Taxation

Investment Banking

Regaining forward momentum

Global Ports Investments PLC

Overview

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

CORPORATE GOVERNANCE

Board of Directors

15 members including
3 Independent Directors

Chairman
Leads the Board and ensures
its effectiveness

Chaired by Independent Director

AUDIT AND RISK COMMITTEE
5 members including
3 Independent Directors

NOMINATION COMMITTEE
5 members including
1 Independent Director

REMUNERATION COMMITTEE
5 members including
1 Independent Director

Secretary of the Board
of Directors
Ensures that Board procedures are respected
and that information flows between
the Board and the management team

Executive management

Internal audit

Reporting lines

The Board of Directors leads the
process of making new Board member
appointments and recommends on
the appointments of new members
to shareholders. 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.

The Board currently has 15 members.
The Board reviews the size of the Board
annually and considers the current size of
the Board as appropriate for the current
scope and nature of the Group’s operations.

Mr. Peder Sondergaard was the Chairman
of the Board until 01 February 2018.
Mr. Morten Henrick Engelstoft was
elected the Chairman of the Board
of Directors on 26 February 2018.
Mrs. Britta Dalunde was elected the
Senior Independent Director on 31 May
2018 following the resignation of Capt.
Bryan Smith. There were no other
significant changes in the responsibilities
of the Directors during 2018 except
for membership in the committees
as described in the Management Report
in the Consolidated Financial Statement.

Role of the Board of Directors

Code of ethics and conduct

Global Ports is governed by its Board of
Directors (“the Board”), which is collectively
responsible to the Group’s shareholders for
the long-term success of the Group. The
Board is responsible for setting the Group’s
strategic objectives and ensuring that the
necessary governance, structure, financial
management and resources are in place
to deliver its objectives. As a Board, we
recognise that strong governance supports
a heathy company culture and that it is
important that the Board leads by example
and sets the right tone in championing
the behaviours we expect to see. The Board
is satisfied that the Directors have the
right blend of skills, experience, industry
knowledge and independence appropriate
to the Group’s needs and its ongoing
progress. The Board maintains a sound
system of internal control and enterprise
risk management to safeguard the Group’s
assets and shareholders’ and bondholders’
investments.

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 on
the Global Ports website.

The new Code of Ethics was approved
by the Board of Directors on 08 December
2016 and was introduced in the companies
of the Group in the course of the year
2017. On 03 October 2017 the Board
of Directors approved the revised
Terms of reference of the Audit and Risk
Committee and Charity and Sponsorship
Policy. On 18 September 2018 the Board
approved the amended and restated
versions of the following policies: Antifraud
policy, Policy on Reporting of Improper
Activities, Anti-Corruption Policy, Foreign
Trade Controls Policy. On the same day the
Board adopted a new Investigation policy.

Global Ports’ Code of Ethics and Conduct
outlines the general business ethics and
acceptable standards of professional
behaviour expected of all directors,
employees and contractors. The Code
of Ethics was approved by the Board
of Directors on 08 December 2016
and introduced throughout the Group
companies over the course of 2017.

The Code, given to all new staff as part
of their induction, means that everyone
at Global Ports is accountable for their
own decisions and conduct. As well as
general standards of behaviour, the Code
together with the relevant policies cover
fraud and corruption (including approaches
on acceptance of gifts and benefits),
ethics and conflicts of interest. Employees
and external parties are encouraged
to report any suspected breaches, via
various channels including a dedicated
confidential hotline telephone and email
service established in 2017. Over the
course of 2018 the Board and executive
management set about raising awareness
about the use of the hotline service as
an appropriate mechanism to raise any
concerns in a responsible and effective
manner. This work will continue in 2019.

The Code is accessible to all staff via
the Group’s website (in the Corporate
Governance section) and available in
the HR department at every operating
facility. There are also other more detailed
rules concerning our anti-fraud and
whistleblowing policies.

The Board is updated on a regular basis
on any breach of policies with the specific
focus on the fraud incidents and resulting
actions, and significant breaches have
to be reported to the Board immediately.

For other corporate governance policies, see the
Group’s website:
http://www.globalports.com

For details on the changes in the composition
of the committees of the Board, please refer
to the Management report in the financial
statements.

Corporate Governance  Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management Global Ports Investments PLCRegaining forward momentumChairman of the Board
of Directors

Non-executive and Independent
Directors

Board remuneration

The role of the Chairman of the
Board of Directors is to ensure that
Board meetings are held as and when
necessary, lead the directors, ensure
their effectiveness and review the
agenda of Board meetings. The Chairman
together with the Secretary of the Board
review Board materials before they are
presented to the Board and ensures
that Board members are provided with
accurate, timely and clear information.
The Members of the management team
who have prepared the materials, or who
can provide additional insights into the
issues being discussed, are invited to
present materials or attend the Board
meeting at the relevant time. Board
members regularly hold meetings with
the Group’s management to discuss their
work and evaluate their performance.

The Chairman monitors communications
and relations between the Group and its
shareholders, the Board and management,
and independent and non-independent
directors, with a view to encourage
dialogue and constructive relations.
The Chairman also works closely with
non-executive directors.

The Group separates the positions of the
chairman and CEO to ensure an appropriate
segregation of roles and responsibilities.

Board committees

There are three Board committees which
were all established in 2008: the Audit and
Risk Committee, the Nomination Committee
and the Remuneration Committee.

For further details on the Board committees,
please refer to the Management report in the
financial statements.

There are fourteen non-executive
directors (including the chairman).

Mrs. Britta Dalunde (senior independent
director), Mrs. Inna Kuznetsova and Mr.
Lambros Papadopoulos are independent
directors, and have no relationship with
the Group, its related companies or their
officers. This means they can exercise
objective judgment on corporate affairs
independently from management.

The independent Directors bring external
perspectives and insight to the deliberations
of the Board and its Committees, providing
a range of business knowledge and
other experience from different sectors.
They play a particularly important role
in the formulation and progression of the
Board’s agreed strategy. In reviewing and
monitoring the performance of the executive
management in the implementation
of this strategy, they ensure that the
interests of all stakeholders, shareholders,
bondholders, employees, customers,
suppliers and the communities where
the Company operates, are considered.

Managing Director

Alexander Iodchin a Managing Director
and the Board granted him the powers
to carry out all business related to the
Group’s business up to a total value of
US$ 500,000 per transaction. The Board
has also granted him powers to discharge
other managerial duties related to the
ordinary course of business of the Group,
including representing the Group 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
contain the list of such reserved matters.

In addition, Mr. Iodchin has been acting as
the Board Secretary since December 2008.

Directors serve on the Board pursuant
to letters of appointment, which specify
the terms of their appointment and
remuneration.

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 the discharge of their duties.
Non-executive directors are not eligible for
bonuses, retirement benefits or to participate
in any incentive plans operated by the Group.
The Chairmen of the committees receive
additional remuneration.

The shareholders of the Company approved
the remuneration of the members of the
Board on 12 May 2017, 11 December
2017, 29 January 2018, 2 March 2018
14 May 2018 and 29 June 2018.

The total remuneration of the members
of the Board of Directors paid by the Group
and its subsidiaries in 2018 amounted to US$
1,188 thousand (2017: US$ 1,085 thousand).

Company Secretary

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

Team Nominees Limited has been acting
as the company secretary since the
Group’s incorporation in February 2008.

The company secretary’s responsibilities
include ensuring compliance by the Group,
its management bodies and officers
with the law and the Group’s charter
and internal documents. The company
secretary organises 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 Group; and review
of communications from shareholders.

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018Internal audit

External auditors

Investor relations/disclosures

The internal audit function is carried out
by Group’s Internal Audit Service (IAS).
It 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:

> risks are appropriately identified,

assessed, responded to and managed;

> there is interaction with the various

governance groups occurs as needed;

> significant financial, managerial, and
operating information is accurate,
reliable, and timely;

At the Annual General Meeting of Global
Ports, an external auditor is appointed
on an annual basis to review the Group’s
financial and operating performance.

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.
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;

> employees’ actions are in compliance
with policies, standards, procedures,
and applicable laws and regulations;

> Compliance with requirements for
external auditor independence.

In 2018, the shareholders of Global Ports
re-appointed PricewaterhouseCoopers
as the independent external auditor for
the purposes of auditing the Group’s
IFRS financial statements for 2018.
PricewaterhouseCoopers Limited will
be proposed for re-election as the
auditor for 2019 at the next Annual
General Meeting.

> resources are acquired economically,

used efficiently and adequately
protected;

> programs, plans and objectives are

achieved;

> quality and continuous improvement
are fostered in the Group’s control
process;

> significant legislative or regulatory
issues impacting the Group are
recognised and addressed properly.

The Head of the IAS, Mr. Ilya Kotlov,
reports directly to the Audit and Risk
Committee.

The Group’s external relations are guided
by its information and disclosure policy
and rules, which is consistent with best
international practices applicable to
shareholder relations. Given that the
Group became public in June 2011
upon placing 25% of its shares on the
London Stock Exchange (LSE) in the form
of Global Depositary Receipts (GDRs),
all of its companies should meet information
disclosure standards set forth by the LSE.

The main principles of the Group’s
information policy are regularity, efficiency,
availability, reliability, completeness,
balance, equality and safety of information
resources.

The Investor Relations (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
and analyst community by arranging
teleconferences to discuss the Group’s
financial performance, one-on-one
meetings and participation in international
investor conferences. The Group also
organises regular visits to its production
facilities, thus providing investors with
the opportunity to see the assets first-
hand and meet senior management.
Members of the Board of Directors and
senior management participate in regular
meetings with current and potential
investors. During these meetings, the
Group’s representatives inform them
of strategic areas of development and
take into account shareholders’ opinions
on key strategic matters when making
important decisions.

For further information on corporate governance
at the Group, please refer to the Management
report in the financial statements.

Mr. Morten Engelstoft
Chairman of the Board of Directors,
Non-Executive Director

Mrs. Iana Boyd
Ex-Member of the Board of Directors,
Non-Executive Director

Mr. Anton Chertkov
Member of the Board of Directors,
Non-Executive Director

YEAR OF APPOINTMENT
Mr. Engelstoft was appointed as a Non-
Executive member of the Board of Directors
of Global Ports in October 2016.

YEAR OF APPOINTMENT
Mrs. Boyd was appointed as a Non-Executive
member of the Board of Directors of the
Company in January 2018, resigned on
19 April 2019

YEAR OF APPOINTMENT
Mr. Chertkov was appointed as a Non-
Executive member of the Board of Directors
of the Company in May 2018.

SKILLS AND EXPERIENCE
Mr. Engelstoft was appointed as CEO of APM
Terminals on November 2016 and to the
Executive Board of A.P. Moller-Maersk A/S on
1 December 2017. Prior to that he was the CEO
of APM Shipping Services from 2014, a role
that included responsibilities as CEO of Maersk
Tankers and the Chairman of DAMCO, Svitzer
and Maersk Supply Services. From 2007 until
2014, he was Chief Operating Officer of Maersk
Line, where he was responsible for global
operations, procurement, fleet, technical vessel
management and sustainability strategy. He
joined Maersk in 1986 and has three decades
of experience in the container shipping industry.
He has held various senior executive positions at
Maersk in Singapore, Italy, Taiwan and Vietnam.
Mr. Engelstoft holds an Executive MBA from
IMD in Lausanne, Switzerland.

EXTERNAL APPOINTMENTS
Chief Executive Officer of APM Terminals,
The Hague, the Netherlands. Executive
Board member of A.P. Moller-Maersk A/S,
Copenhagen, Denmark.

SKILLS AND EXPERIENCE
Mrs. Boyd is an experienced professional
with diverse executive and boardroom
experience. For the past six years, she has
served as the Portfolio Manager for Russia
and the Baltics at APM Terminals. In this role,
she has represented APM Terminals on the
boards of several operating entities of Global
Ports. Mrs. Boyd joined APM Terminals in
2006 as M&A and Business Development
Manager and later held the positions of
Global Head of HR Operations, Head of M&A
and BDV for Europe and Asia, and Chief
Operating Officer for Europe and North
Africa. Prior to joining APM Terminals, Mrs.
Boyd worked for Maersk Line and Sea-Land
Service across several functions, including
country management, line management and
strategic marketing. Mrs. Boyd has a Master’s
degree in International Business Studies from
the University of South Carolina, United
States. She grew up in Sofia, Bulgaria and has
lived and worked in the United States and
the Netherlands.

SKILLS AND EXPERIENCE
Mr. Chertkov has extensive capital markets
experience across a range of industry sectors
and has held a number of board positions
over the course of his career. He served as
the General Counsel and the Secretary of the
Board of Freight One from 2012 to 2014.
Prior to that, Mr. Chertkov was Vice-President,
Legal & Corporate, at Russian Platinum
Group, where he prepared the company
for its IPO on the London Stock Exchange.
He also played key management roles at Basic
Element from 2008 to 2011, including EN+
Group, where he helped prepare SMR for
listing on the HKSE, following his role as Head
of Legal, Strategic Projects at Uralkali from
2006 to 2007 where he advised on the USD
1 billion IPO on the LSE. From 2001-2006 he
worked in Coca-Cola HBC Eurasia, where he
held a position of Country Legal Counsel from
2003. Mr. Chertkov started his career in Ernst
& Young Moscow in 1999 and is a graduate
of the Moscow State University, Law Faculty.

EXTERNAL APPOINTMENTS
General Counsel of Delo Group, Member
of the Management Board of Delo Group.

Board member TT Club Mutual Insurance Ltd
(Director)

Board member Chembulk Tankers (Director)

EXTERNAL APPOINTMENTS
Partner in BIANA BV (NL) and BIANA LLC
(USA).

MEETING PARTICIPATION

86%

MEETING PARTICIPATION2

MEETING PARTICIPATION

95%

86%

COMMITTEES MEMBERS

А Audit and risk committee N Nomination committe R Remuneration committee

Chairman of a committee

1. In alphabetical order.
2. Based on number of meetings eligible to attend during the year.

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018

Corporate Governance 
Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

BOARD OF DIRECTORS

Mr. Michalakis Christofides
Member of the Board of Directors,
Non-Executive Director

Mrs. Britta Dalunde
Member of the Board of Directors, Senior
Independent Non-Executive Director

А Mr. Alexander Iodchin

YEAR OF APPOINTMENT
Mr. Christofides was appointed as a Non-
Executive member of the Board of Directors
of the Company in July 2014.

YEAR OF APPOINTMENT
Mrs. Dalunde was appointed as an
Independent Non-Executive member of the
Board of Directors of the Company in May
2017.

SKILLS AND EXPERIENCE
Mr. Christofides has extensive Banking
experience since 1969. As the Senior
Manager in International Business Services,
he was responsible for the development and
growth of activities of International Business
Units of Bank of Cyprus in Cyprus and its
Representative Offices in Russia, Ukraine,
the USA, Canada, South Africa and Romania.
Between January 2012 and January 2013,
he was a member of the Supervisory Board
of Kreditprombank-Kiev. Mr. Christofides
holds an Advanced Diploma in Business
Administration (Cyprus Institute of Marketing).
He also attended the Senior Manager Course
at Manchester Business School of the
University of Manchester.

EXTERNAL APPOINTMENTS
Does not hold positions in other companies.

SKILLS AND EXPERIENCE
Mrs. Dalunde has over 25 years of experience
as an executive and a board member
of various companies. Ms. Dalunde was
CFO at SJ AB, the Swedish national rail
operator, from 2009 until 2013. She has
almost 20 years of experience working as
a CFO while working in different industries
including transportation, engineering and IT.
Mrs. Dalunde graduated from the University
of Uppsala with a Bachelor’s degree in
Business Administration and International
Business. She has also earned an Executive
MBA degree with a specialism in Strategic
Planning from the Edinburgh Business School
at Herriot Watt University.

Mrs. Dalunde owns 21,000 ordinary shares
of Global Ports Investments PLC (7,000
GDRs).

MEETING PARTICIPATION

100%

EXTERNAL APPOINTMENTS
Mrs. Dalunde currently also serves
as Independent Non-Executive director
and Chairman of the audit-committee of
ForSea AB, Weum Gas AB, Swedegas AB and
Projektengagemang Sweden AB, Independent
Non-Executive Director of Arlandabanan
Infrastructure AB and Chairman of Cereb AB,
Chorus AB, StraightTalk AB, JustBeforeTime
AB, Pamagi Advisory AB.

MEETING PARTICIPATION

95%

Member of the Board of Directors,
Executive Director

YEAR OF APPOINTMENT
Mr. Iodchin was appointed as an executive
member of the Board of Directors of the
Company and has been Secretary of the Board
of Directors since 2008. Mr Iodchin was
internal auditor of Global Ports from 2008
until 2011.

SKILLS AND EXPERIENCE
Mr. Iodchin currently also serves as
a Secretary of the Boards of Directors
of various Group Companies and as the
Chairman of the Board of Directors First
Container Terminal Inc, and as the Board
member of Global Ports (Finance) Plc and
other companies of the Group. Mr. Iodchin
is responsible for corporate governance
matters across the Group and supervises the
activities of holding and finance companies
within the Group. Mr. Iodchin graduated from
the Lomonosov Moscow State University
where he obtained a Master’s degree 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. He has
a diploma in international finance, reporting
standards and corporate finance.

EXTERNAL APPOINTMENTS
Currently does not hold positions in other
external companies.

MEETING PARTICIPATION

90%

COMMITTEES MEMBERS

А Audit and risk committee N Nomination committe R Remuneration committee

Chairman of a committee

Regaining forward momentum
Regaining forward momentum

44
44

Global Ports Investments PLC
Global Ports Investments PLC

BOARD OF DIRECTORS

Mr. Soren Sjostrand Jakobsen
Member of the Board of Directors,
Non-Executive Director

Mr. Demos Katsis
Member of the Board of Directors,
Non-Executive Director

Mrs. Inna Kuznetsova
Member of the Board of Directors,
Independent Non-Executive Director

YEAR OF APPOINTMENT
Mr. Jakobsen was appointed as a Non-Executive
member of the Board of Directors of Global Ports
in March 2018.

YEAR OF APPOINTMENT
Mr. Katsis was appointed as a Non-Executive
member of the Board of Directors of the
Company in May 2018.

YEAR OF APPOINTMENT
Mrs. Kuznetsova was appointed an
Independent Non-Executive member of
the Board of Directors of Global Ports in
December 2017 effective January 2018.

SKILLS AND EXPERIENCE
Mr. Jakobsen brings extensive international
experience in the maritime industry and port
development due to his 38-year career in A.P.
Moller – Maersk Group, having spent the last 13
years with APM Terminals. Since 2013, he has
been APM Terminals Portfolio Manager for Africa,
Middle East and South Asia, based in Dubai,
United Arab Emirates, responsible for eight ports
and several logistics entities in the region. Mr.
Jakobsen also serves on the board of various APM
Terminals companies. His APM Terminals career
has included roles as the Regional Manager for
Latin America, based in Panama and as Global
Head of Project Implementation, based in The
Hague, the Netherlands. Prior to joining APM
Terminals, Mr. Jakobsen worked at Maersk Line
and Svitzer. Mr. Jakobsen is a graduate of the A.P.
Moller – Maersk International Shipping Education
and executive education courses at IMD in
Lausanne, Switzerland and INSEAD Business
School in Fontainebleau, France.

EXTERNAL APPOINTMENTS
Portfolio Manager, APM Terminals, Africa, Middle
East & South Asia region. Mr. Jakobsen holds
a number of other Board positions including: Sogester
S.A., Angola; Douala International Terminal S.A.,
Cameroon ; Cai Mep International Terminal Co.
Ltd., Vietnam; Aqaba Container Terminal Company
Ltd., Jordan; Salalah Port Services Company SOAG,
Oman; APM Terminals Bahrain B.S.C.; LCB Container
Terminal 1 Ltd, Thailand; Poti Sea Port Corporation,
Georgia; South East Asia Gateway Terminal Pvt. Ltd,
Sri Lanka; and Meridian Port Services, Ghana.

SKILLS AND EXPERIENCE
Mr. Katsis is the founder, partner and
managing director of Katsis LLC law firm
which is based in Cyprus with offices in
Limassol and Nicosia and associated offices
worldwide. As managing director of the
firm, Mr. Katsis leverages his broad legal
experience in trusts, tax, corporate litigation,
corporate finance, commercial law and
advanced mitigation.

Prior to founding Katsis LLC in 2010, Mr.
Katsis worked at the George Georgiou LLC
firm between 1999 and 2003 and other
international law firms from 2003 to 2009.
He served as a Partner at an International
Law Firm between 2009 and 2010, having
established and managed the firm’s new
affiliate office in Athens between 2006 and
2009. He graduated with honors from the
University of Bristol with a Bachelor of Law
and a Master of Law. Additionally, he was
awarded a full E.U. scholarship to pursue
a Masters’ degree in Human Rights &
Democratization at the University of Malta.

Mr. Katsis is an active author of various articles
in relation to corporate and commercial
issues and he holds the position of Professor
at Pericles Able Project in Moscow.

EXTERNAL APPOINTMENTS
Partner and managing director of Katsis LLC.

MEETING PARTICIPATION

COMMITTEES MEMBERS

А Audit and risk committee N Nomination committe R Remuneration committee

Chairman of a committee

100%

SKILLS AND EXPERIENCE
Mrs. Kuznetsova is the former President and
Chief Operating Officer of INTTRA, a SaaS
portal for ocean shipping, processing over
a quarter of all containers in global trade.
Before joining INTTRA she was the Chief
Commercial Officer and member of the
Executive Board at CEVA Logistics. Prior to
that Mrs. Kuznetsova spent 19 years at IBM
in a variety of global roles, primarily focused
on fast growth opportunities or turnaround
situations. In her last role she was the global
VP, Marketing & Sales, IBM Systems Software.
Her prior board engagements include Sage
Plc (LSE: SGE), a FTSE100 software company
where she served as Independent Non-
Executive Director from 2014-2017. Mrs.
Kuznetsova completed her Masters and PhD.
study at Moscow State University and later
earned an Executive MBA from Columbia
Business School.

EXTERNAL APPOINTMENTS
No other commitments

MEETING PARTICIPATION

100%

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Corporate Governance 
Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

BOARD OF DIRECTORS

Mrs. Laura Michael
Member of the Board of Directors,
Non-Executive Director

Mr. Lambros Papadopoulos
Member of the Board of Directors,
Independent Non-Executive Director

А Mr. Stavros Pavlou

Member of the Board of Directors,
Non-Executive Director

YEAR OF APPOINTMENT
Mrs. Michael was appointed as a Non-
Executive member of the Board of Directors
of the Company in January 2013.

YEAR OF APPOINTMENT
Mr. Papadopoulos was appointed as an
Independent Non-Executive member of
the Board of Directors of Global Ports in
December 2017 effective January 2018.

YEAR OF APPOINTMENT
Mr. Pavlou was appointed as a Non-Executive
member of the Board of Directors of the
Company in May 2018.

SKILLS AND EXPERIENCE
Mrs. Michael is a member of the Institute
of Chartered Accountants of Scotland (ICAS)
and the Certified Public Accountants of
Cyprus (ICPAC). She is the Finance Manager
of Vistra (Cyprus) Ltd. Before joining Vistra
(Cyprus) Ltd, she previously worked at
Deloitte Ltd (Cyprus) between 2009-2011 and
started her career at Ernst & Young (London)
between 2006-2009. Mrs. Michael has a B.Sc.
Accounting and Management degree from the
University of Bristol, England.

EXTERNAL APPOINTMENTS
Finance Manager of Vistra (Cyprus) Ltd.

MEETING PARTICIPATION

SKILLS AND EXPERIENCE
Mr. Papadopoulos has over 25 years of
experience as an executive and a board
member of various companies. In 2013,
Mr. Papadopoulos founded PenteP Advisors
Ltd. Prior to that he was an analyst with
Citigroup (London), where as a Managing
Director was Head of Greece/ Cyprus Equity
Research and Head of Continental European
Small and Mid Cap Companies. He started
his career with Ernst & Young in London.
Mr. Papadopoulos studied Accounting with
Computing (B.A.(Hons)) at the University of
Kent at Canterbury in the United Kingdom.
He is a Member of the Institute of Chartered
Accountants in England and Wales.

95%

EXTERNAL APPOINTMENTS
Mr. Papadopoulos currently also serves as
Non-Executive Chairman of Trastor Real
Estate Investment Company, which is listed on
the Greek Stock Exchange. He is the Founder
and General Manager of PenteP Advisors Ltd
(Cyprus).

SKILLS AND EXPERIENCE
Mr. Pavlou is the Senior and Managing Partner
of the law firm Patrikios Pavlou & Associates
LLC. Having joined the firm as an advocate
in 1986, Mr. Pavlou went on to serve as
a Partner between 1989 and 1992, and as
the Managing Partner between 1993 and
2002. Mr. Pavlou’s core practice areas include
commercial litigation, arbitration, corporate
law and M&A, trusts & asset protection,
banking & finance, international tax planning
and commercial law.

Mr. Pavlou was appointed as a Fellow at the
Chartered Institute of Arbitrators in 2017,
having become a member in 2014. He became
a Trust and Estate Practitioner in 2011 and
was admitted to the Cyprus Bar in 1986.
Mr. Pavlou holds a BSc in Economics of Industry
and Trade from LSE, as well as a Postgraduate
Diploma in Law from City University London
and is a member of the Honourable Society
of Gray’s Inn. Additionally, he has composed
or co-authored 15 academic legal publications
and has often lectured on matters of corporate
governance and Directors Duties and Liabilities.

MEETING PARTICIPATION

EXTERNAL APPOINTMENTS
Mr. Pavlou is the Senior and Managing Partner
of the law firm Patrikios Pavlou & Associates LLC.

100%

MEETING PARTICIPATION

86%

COMMITTEES MEMBERS

А Audit and risk committee N Nomination committe R Remuneration committee

Chairman of a committee

Regaining forward momentum
Regaining forward momentum

46
46

Global Ports Investments PLC
Global Ports Investments PLC

BOARD OF DIRECTORS

Mr. Sergey Shishkarev
Member of the Board of Directors,
Non-Executive Director

Mr. Nicholas Charles Terry
Member of the Board of Directors,
Non-Executive Director

Mr. George Yiallourides
Member of the Board of Directors,
Non-Executive Director

YEAR OF APPOINTMENT
Mr. Shishkarev was appointed as a Non-
Executive member of the Board of Directors
of the Company in May 2018.

YEAR OF APPOINTMENT
Mr. Terry was appointed as a Non-Executive
member of the Board of Directors of the
Company in October 2016.

YEAR OF APPOINTMENT
Mr. Yiallourides was appointed as a Non-
Executive member of the Board of Directors
of the Company in May 2018.

SKILLS AND EXPERIENCE
Mr. Shishkarev founded the Delo Group
in 1993 and remained at the helm of the
company until 1999. He was then elected to
the State Duma of the Russian Federation
where he held various executive positions
within the Committee on International Affairs,
the Committee on Energy, Transport and
Communications. Until 2011 Mr. Shishkarev
was the Head of the Committee on Transport,
before returning to Delo Group in 2014 as
President. Mr. Shishkarev is an author of over
50 bills in the field of transportation.

Mr. Shishkarev graduated with Honours
from the Military Red Banner Institute of
the Ministry of Defense in 1992. In 2003
he graduated from the Russian Academy
of Public Administration cum laude, with
a degree in State and Municipal Management.
In 2010 he became a Doctor of Law.

SKILLS AND EXPERIENCE
Mr. Terry is a member of The Institute
of Chartered Accountants in England and
Wales (ICAEW). He is currently Director of
Operations at Vistra (Cyprus) Ltd., having led
the client accounting department since 2011.
In 2015, he was also appointed Managing
Director of Orangefield (Cyprus) Ltd. for
the interim period of the merger of the two
companies. He has extensive experience
in Finance and Audit departments at a range
of companies, including land, air and sea
security service provider Hart Security
Ltd. and Global Management Ltd., which
offers marine insurance brokerage and crew
management services to the shipping industry.
Mr. Terry holds a B.Sc. in Mathematics from
the University of Hull, England.

EXTERNAL APPOINTMENTS
Director of Operations at Vistra (Cyprus) Ltd.

SKILLS AND EXPERIENCE
George Yiallourides is the Managing
Director at the chartered accountancy firm,
Yiallourides & Partners LTD based in Limassol,
Cyprus. He has worked as an auditor both
in UK and in Cyprus for companies such as
Hereward Philips (now Smith&Williamson),
Coopers & Lybrand (now PWC) and Horwath
before setting up his own practice in 1999,
focusing on audit and international taxation
for clients from Central Europe, Eastern
Europe, UK and US.

He received his undergraduate degree in
Accounting and Financial Management with
Honours at the University of Essex, UK and
qualified as a Chartered Accountant of the
Institute of England and Wales (ICAEW) in
London, UK. He is currently a member of the
Institute of Chartered Accountants of England
and Wales (ICAEW) and the Institute of
Certified Public Accountants of Cyprus
(ICPAC).

EXTERNAL APPOINTMENTS
Mr. Shishkarev is the President of Delo Group
and the President of the Handball Federation
of Russia.

MEETING PARTICIPATION

95%

EXTERNAL APPOINTMENTS
Managing Director at Yiallourides & Partners
LTD, Non-Executive Director at Broker Credit
(Cyprus) LTD.

86%

MEETING PARTICIPATION

86%

COMMITTEES MEMBERS

А Audit and risk committee N Nomination committe R Remuneration committee

Chairman of a committee

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018

Corporate Governance 
Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

EXECUTIVE MANAGEMENT1

Mr. Vladimir Bychkov
Chief Executive Officer of Global Ports
Management LLC

Mr. Brian Bitsch
Chief Commercial Officer of Global Ports
Management LLC

Mr. Andrei Bubnov
Director for Strategy and Development
of Global Ports Management LLC

YEAR OF APPOINTMENT
Mr. Bychkov was appointed as Chief Executive
Officer of Global Ports Management LLC
in July 2018.

YEAR OF APPOINTMENT
Mr. Bitsch was appointed as Chief Commercial
Officer of Global Ports Management LLC
in July 2017.

YEAR OF APPOINTMENT
Mr. Bubnov was appointed as Director for
Strategy and Development of Global Ports
Management LLC in July 2018.

SKILLS AND EXPERIENCE
Prior to his appointment, he was Chief
Commercial Officer at Sogester S.A. in Angola
from 2011. Before that he was a management
consultant in Denmark for several years.
Between 2006 and 2008, Mr. Bitsch served
in various senior executive roles at MSC
Scandinavia Holding A/S. He started his
career in 1990 as a trainee at Maersk
and worked there for 16 years in various
departments and regions, progressing to
Senior General Manager. During his time
at Maersk, Mr. Bitsch worked in Denmark,
the USA, Bulgaria and Angola. Mr. Bitsch
has completed A.P. Moller Shipping School
and holds a Graduate Diploma in Business
Administration from Copenhagen Business
School as well as a YMP from INSEAD.

SKILLS AND EXPERIENCE
Mr. Bychkov has worked at Delo Group since
2000, starting with the position of freight
forwarder. In 2003, he became Deputy
CEO, managing procurement and bunkering
services before taking on the role of CEO
of Krasnodarteploset to restructure the
business. During 2004-2009, he was the CEO
of Delo Group where he was instrumental to
M&A, strategic partnerships, attracted equity
finance while successfully transforming the
Group into an efficient transport business
with a core focus on stevedoring and logistics.

In July 2010, he became the President
of Ruscon, the container and logistics segment
of Delo Group that operates terminals and
warehouses in the Novorossiysk and Moscow
regions offering full range of handling
services and storage facilities as well as sea
freight transportation and turn-key logistics
multimodal solutions.

Mr. Bychkov is a law graduate of the Academy
of Federal Security of the Russian Federation,
of the Finance Academy of the Russian
Federation and has successfully completed
the Executive MBA program of the School
of Business of Moscow State University.

SKILLS AND EXPERIENCE
Mr. Bubnov joined Global Ports Group in 2018
and is responsible for identifying and driving
growth opportunities across the business.

Prior to joining the Group, he managed
the restructuring of Russian Regional
Development Bank following a five-year
period as Chief Financial Officer and then
Chief Executive Officer of Delo Group.
Between 2011-2012, Mr. Bubnov held the
position of Deputy CEO at NCSP, Europe’s
third largest port operator in terms of cargo
turnover, focusing on the implementation
of a new corporate strategy as well as taking
responsibility for the Finance and Investor
Relations functions.

From 2003 to 2011, Mr. Bubnov held
a number of positions in the London and
Moscow offices of Morgan Stanley, most
recently as Head of Fixed Income Capital
Markets in Moscow. He has a strong
track record of advising Russian transport
companies on obtaining and maintaining
credit ratings and has successfully
implemented a range of projects, including
multiple debt and equity capital markets
transactions for large Russian and
international corporations.

Mr. Bubnov has a degree from the Moscow
State Institute of International Relations.

1. In alphabetical order.

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Global Ports Investments PLC
Global Ports Investments PLC

EXECUTIVE MANAGEMENT

Mr. Alexander Roslavtsev
Chief Financial Officer of Global Ports
Management LLC

Mr. Douglas Smith
Chief Operational Officer of Global Ports
Management LLC

Mr. Mikhail Loganov
Former Chief Executive Officer of Global
Ports Management LLC

YEAR OF APPOINTMENT
Mr. Roslavtsev was appointed as the Chief
Financial Officer of Global Ports Management
LLC in September 2017.

YEAR OF APPOINTMENT
Mr. Smith was appointed as Chief Operational
Officer of Global Ports Management LLC
in March 2016.

SKILLS AND EXPERIENCE
Mr. Roslavtsev has over thirteen years of
experience as a CFO in various industries.
Before joining Global Ports, Alexander
Roslavtsev was CFO of Rusagro, one of
Russia’s largest agricultural companies. From
January 2010 until May 2016, he was CFO
of Hewlett Packard Russia and CIS. From
January 2006 until January 2010 he was CFO
and Vice- President of Rosinter Restaurants
Holding. Previously, Mr. Roslavtsev has also
worked for Intel Corporation, Ford Motor
Company, KPMG UK and KPMG Russia.
Mr. Roslavtsev is a Member of the Association
of Chartered Certified Accountants (ACCA).
In 1995, Mr. Roslavtsev graduated from the
Moscow State Aviation Institute with an
M.S. Economics and Engineering and has
also attended a number of business courses
at Wharton Business School, Philadelphia,
Pennsylvania.

SKILLS AND EXPERIENCE
Mr. Smith has over 20 years of experience
in port terminal management. Most
recently, he was APM Terminals’ Regional
Chief Operating Officer in Africa and the
Middle East. Prior to that, he was Director
of Global Field Safety at APM Terminals,
driving the corporate safety programme
across the Group’s 238 global marine and
inland container facilities around the world.
Mr. Smith joined AP Moller-Maersk group
in 1994 and held a number of managerial
positions with APM Terminals in the USA,
Nigeria, UAE and the Netherlands. He is
a graduate of the United States Merchant
Marine Academy and also holds an MBA in
Global Management.

Mr. Loganov served as the Chief Executive
Officer of Global Ports Management LLC from
March 2017 until July 2018. He was the Chief
Financial Officer of Global Ports from October
2013 until September 2017. Mr. Loganov
served as a member of the Board of Directors
of the Company since December 2008 until
July 2018 and was a member of its Audit and
Risk and Remuneration Committees from
December 2008 until October 2013 until he
took up the position of CFO.

Mr. Loganov 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
has served as a Managing Director and
Executive member of the Board of Directors
of Globaltrans Investment PLC since April
2008 until 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 Globaltrans Group.

Mr. Loganov started his career with American
Express (Europe) Ltd in the UK as a financial
analyst in 2001. Mr. Loganov graduated with
honours from the University of Brighton in
the UK with a degree in Business Studies with
Finance.

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Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

TERMINAL DIRECTORS1

Mr. Andrey Bogdanov
Managing Director of Ust-
Luga Container Terminal

Mr. Alexander Dudko
Managing Director of VSC

Mr. Albert Likholet
Managing Director
of Petrolesport2

Mr. Vitaly Mishin
General Manager of Moby Dik

YEAR OF APPOINTMENT
Mr. Bogdanov was appointed
as the Managing Director of the
Ust-Luga Container Terminal
in 2018, before he served as its
General Manager since 2012.

SKILLS AND EXPERIENCE
For five years prior to 2012 he
was the Commercial Director
of First Container Terminal.
He served as Director for
Operations in the Sea Port
of St. Petersburg from 2003.
From 2000 to 2003 he held
the position of Chief Executive
Officer of MCT PORT. From
1993 he served as Head of
Department of MCT Petersburg,
before being promoted to Chief
Operations Officer. In 1984-
1993 Mr. Bogdanov worked
for Leningrad Sea Commercial
Port (from 1992 known as the
Sea Port of St. Petersburg).
Mr. Bogdanov graduated from
Admiral Makarov State Maritime
Academy.

YEAR OF APPOINTMENT
Mr. Dudko was appointed
Managing Director of VSC
in February 2015.

YEAR OF APPOINTMENT
Mr. Likholet was appointed
as Managing Director of
Petrolesport in August 2018.

SKILLS AND EXPERIENCE
Mr. Dudko has served for three
years as the General Director of
Moby Dik, one of the Group’s
container terminals in the Big
Port of St. Petersburg, and had
been the Director for Operations
of VSC from 2011 to 2012. He
joined the company from DP
World Southampton (UK), where
he spent three years in various
positions. Mr. Dudko started
his career in the ports industry
working for First Container
Terminal in St. Petersburg where
he had a role in the Finance
Department between 2004 and
2006. Mr. Dudko has a degree
from the State Marine Technical
University of St. Petersburg and
an M.Sc. in Logistics, Trade and
Finance from Cass Business
School, London. Mr. Dudko
graduated from the APM
Terminals MAGNUM program,
a corporate-led programme
in partnership with a ESADE
Business School, in 2014.

SKILLS AND EXPERIENCE
Mr. Likholet has held the position
of CEO at Novoroslesexport
(“NLE”), the NCSP Group
container terminal located on
the north-east coast of the Black
Sea, for seven years, having been
promoted from his role as the
Container Terminal Manager.

Mr. Likholet commenced his
career in the ports industry
in 2002 working as a grain
inspector for the Control Union
at Novorossiysk, Temryuk and
Port Kavkaz marine terminals.
He joined NLE in 2003 as
a berths and yards development
coordinator before making his
way up to hold a number of
management positions. During
his term NLE was converted
into a modern container
terminal through several stages
of investment, while retaining
historic bulk and general
cargoes. He has a degree in
Management & Economics from
the Novorossiysk State Maritime
Academy.

YEAR OF APPOINTMENT
Mr. Mishin was appointed as
General Manager of Moby Dik
in 2015. Prior to that, from 2010
to 2014 he has served as General
Manager of Logistika-Terminal.

SKILLS AND EXPERIENCE
From 2006 to 2010, he served
as Operations Manager and
Managing Director in Sea
Port of St. Petersburg. From
1999 till then, he served as
Chief Executive Officer in
Fourth Stevedoring Company.
Between 1994 and 1999 he
was Chief Executive Officer
at First Stevedoring Company.
He began his career in 1980
at Leningrad Sea Commercial
Port (since 1992 – Sea Port
of St. Petersburg). Mr. Mishin
graduated from the Admiral
Makarov State Maritime
Academy.

1. In alphabetical order.
2. On 24th of April 2019 the Board decided to appoint Albert Likholet as a Managing Director of both Petrolestport and First Container Terminal, effective from 13 May 2019. A.Tikhov will stay with

the Group as an adviser of CEO of Global Ports Management LLC.

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Global Ports Investments PLC
Global Ports Investments PLC

TERMINAL DIRECTORS

Mr. Ivan Radchenko
General Manager of Yanino
Logistic Park

Mr. Alexander Tikhov
Managing Director of First
Container Terminal1

Mr. Dirk van Assendelft
General Manager of Multi-Link
Terminals

YEAR OF APPOINTMENT
Ivan Radchenko was appointed
as the General Manager of Yanino
Logistic Park in September 2018.

SKILLS AND EXPERIENCE
Prior to his appointment, Mr.
Radchenko worked as a Business
Development Manager for Maersk
Line in Vladivostok. He also served
as the CEO of Pacific Logistic
LLC between 2015 and 2018,
overseeing a 15%-20% yearly
increase in throughput as well
as the implementation of a range of
infrastructure projects. Additionally,
Mr Radchenko worked as a terminal
manager at Global Ports’ Moby
Dik container terminal, and a
Senior Sales Manager at Yanino
Logistics Park between 2010 and
2011, having begun his career as
Head of Analysis and the Forecast
Division at JSC “Commercial Port
of Vladivostok” in 2006.

Mr. Radchenko was awarded
an undergraduate degree with
honours from Russia’s Far Eastern
State Technical Fishing University.

YEAR OF APPOINTMENT
Mr. Tikhov was appointed as
the Managing Director of the
First Container Terminal in
2007 before he served there as
General Manager since 2001.

YEAR OF APPOINTMENT
Mr. van Assendelft has served as
the managing director of Multi-
Link Terminals Ltd Oy since
December 2004 and was the
General Manager of Moby Dik
from June 2004 until July 2010.

SKILLS AND EXPERIENCE
Mr. van Assendelft has also held
a position as a member of the
board of directors of Niinisaaren
Portti Osakeyhtio Oy (NiPO)
since April 2007. Prior to his
appointment as the managing
director of Multi-Link Terminals
Ltd Oy, he worked for Container-
Depot Ltd Oy as a director until
December 2005. He studied
at the Helsinki University
of Technology and the Kotka
Svenska Samskola.

SKILLS AND EXPERIENCE
Mr. Tikhov has extensive
experience in the transportation
and logistics industry in Russia.
From 2003 to 2004, he was
Chief Executive Officer and
Chairman of the Board of
Directors of Sea Port of St.
Petersburg and previously held
the position of Sales Director of
Sea Port of St. Petersburg from
2000. From 1991 until 2000
he was Chief Executive Officer
in MCT St. Petersburg and
from 1984 to 1991 he worked
for Leningrad Sea Commercial
Port (from 1992 known as the
Sea Port of St. Petersburg).
Mr. Tikhov is a graduate of the
Admiral Makarov State Maritime
Academy.

1. On 24th of April 2019 the Board decided to appoint Albert Likholet as a Managing Director of both Petrolestport and First Container Terminal, effective from 13 May 2019. A.Tikhov will stay with

the Group as an adviser of CEO of Global Ports Management LLC.

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Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

Risk
Management

The Group is exposed to a variety of risks and opportunities that can have commercial,
financial, operational and compliance impacts on its business performance, reputation
and licence to operate. The Board recognises that creating shareholder value involves
the acceptance of risk. Effective management of risk is therefore critical to achieving
the corporate objective of delivering long-term growth
and added value to our shareholders.

Risk Management Process, Principal
Risks and Uncertainties

Global Ports bases its risk management
activities on a series of well-defined risk
management principles, derived from
experience, leading practice, and corporate
governance regimes. Global Ports has an
enterprise risk management system (the
ERM) that is designed to identify, assess,
respond, monitor and, where possible,
mitigate or eliminate threats to the
business caused by changes in the external
and internal business, financial, regulatory
and operating environment.

The Board has overall oversight
responsibility for the GPI’s risk management
and the establishment of the framework
of prudent and effective controls and

it systematically monitors and assesses
the risks attributable to the Group’s
performance and delivery of the GPI
strategy. After identifying and assessing
a risk, the Group selects and deploys the
appropriate risk response aimed at reducing
the likelihood of its occurrence and/or
potential adverse impact.

The Board delegates to the Chief Executive
Officer of LLC Global Ports Management
responsibility for effective and efficient
implementation and maintenance of the
risk management system. Day-to-day
responsibility for the risk management lies
with the management team. The Audit
and Risk Committee is authorized by
the Board to monitor, review and report
on the organization, functionality and
effectiveness of the Group’s ERM system.

Global Ports is exposed to a variety of risks
which are listed below. The order in which
the risks are presented is not intended
to be an indication of the probability of
their occurrence or the magnitude of their
potential effect.

Not all of these risks are within the Group’s
control, and the list cannot be considered
to be exhaustive, as other risks and
uncertainties may emerge in a changing
external and internal environment that
could have a material adverse effect on
the Group’s ability to achieve its business
objectives and deliver its overall strategy.

Further information on our risk
management system including a detailed
description of identified risk factors is
contained in the notes to the Financial
Statements attached to this report.

Risk factor

Strategic risks

Market conditions:

Global Ports’ operations are dependent on the global
macroeconomic environment and resulting trade flows, including
in particular container volumes.

Container market throughput is closely correlated with the
volume of imported goods, which in turn is driven by domestic
consumer demand, combined with volatility of the Russian rouble
against USD/Euro.

The Group remains exposed to the risk of contraction in the
Russian economy which if it were to occur could further dampen
consumer demand and lead to a deterioration in the container
market which could have a materially adverse impact on the
Group.

Risk management approach

The Group has reacted to the volatility of throughput in the
container market by:

Focusing on quality and value-driven services (getting closer to
the customer);

> Greater focus on export container flows;

> Offering operational flexibility to all clients;

Effective cost containment;

Adopting new revenue streams and attracting new cargo.

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Global Ports Investments PLC
Global Ports Investments PLC

Risk factor

Competition:

Barriers to entry are typically high in the container terminal
industry due to the capital-intensive nature of the business.
However, challenging market conditions mean that competition
from other container terminals continues to be a significant factor.
Further consolidation between container terminal operators and
container shipping companies, introduction of new/upgraded
capacity and carrier consolidation could result in greater price
competition, lower utilisation, and a potential deterioration
in profitability.

In recent years, the Russian market has witnessed the introduction
of significant new container handling capacity, an example being
the new terminal at Bronka, which competes with the Group’s
ports in the Baltic Sea Basin.

Additionally, strategic international investors may develop or
acquire stakes in existing competing Russian container terminals,
which could bring new expertise into the market and divert clients
and cargoes away from the Group.

Given the historically high margins in the Russian container
handling industry, this trend may continue.

Political, economic and social stability:

Instability in the Russian economy as well as social and political
instability could create an uncertain operating environment and
affect the Group’s ability to sell its services due to significant
economic, political, legal and legislative risks.

Certain government policies or the selective and arbitrary
enforcement of such policies could make it more difficult for
the Group to compete effectively and/or impact its profitability.

The Group may also be adversely affected by US, EU and other
authorities sanctions against Russian business/companies whose
measures have had and may continue to have an adverse effect
on the Russian economy and demand for commodities. Ongoing
sanctions could also adversely impact the Group’s ability to obtain
financing on favourable terms and to deal with certain persons
and entities in Russia or in other countries.

Risk management approach

The Group actively monitors the competitive landscape and
adjusts its commercial strategy accordingly, i.e. the Group
prioritises building close long-term relationships with leading
customers (locally, regionally and with headquarters) based
on a global approach to account management and contractual
agreements incentivizing growth of throughput and/or share
of business.

The Group’s focus on service quality is a key differentiator from
its competition and the Group believes this is one of its key
competitive advantages.

The Group has made long-term investments in its terminals
and modern equipment to ensure competitive levels of service.
It operates on a long-term horizon and its terminals represent
core infrastructure in Russia that will continue to operate for
the next 10-20 years and beyond. Because the Group possesses
well-invested facilities with available berth capacity and sufficient
land plots it has flexibility to balance minimal capital expenditure
to maintain capacity at the existing level and its efficient
development should the market require it.

In light of the macroeconomic challenges faced by the ports
industry in recent years, the Group has focused on improving
its resilience, in particular its ability to withstand short-term
economic shocks/fluctuations in Russia, as well as the wider
regional and global environment. This has included a strong focus
on cost containment measures, and strengthening its financial
position through a series of measures designed to derisk the
Group’s balance sheet, including refinancing all its debt switching
to longer maturities at fixed rates. In addition, the Group has
broadened its growth strategy to include exports as well as new
revenue streams to counteract any lows in consumer sentiment
and any macro-economic downturn.

The Group has developed a system to monitor compliance with
restrictions posed by international sanctions and fend off the risk
of secondary sanctions.

The Group continues to maintain an international base of
shareholders, bondholders and business partners.

The Group is not aware of any specific sanctions risks related
to its ownership or operations.

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Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

Risk factor

Operational risks

Leases of terminal land:

Risk management approach

The Group leases a significant amount of the land and quays
required to operate its terminals from government agencies.
Any revision or alteration of the terms of these leases or the
termination of these leases, or changes to the underlying property
rights under these leases, could adversely affect the Group’s
business.

The Group believes it has a stable situation at present regarding
its land leases and its terminals have been in operation for
a number of years. The Group owns the freehold on 66% of the
total land of its terminals and 70% of the land of its container and
inland terminals in Russia. The remainder is held under long-term
leases (up-to 54 years and usually renewable at immaterial costs).

Customer Profile and Concentration:

The Group is dependent on a relatively limited number of major
customers (shipping lines, etc.) for a significant portion of its
business.

The Group conducts extensive and regular dialogue with key
customers and actively monitors changes that might affect our
customers’ demand for our services.

These customers are affected by conditions in their market sector
which can result in contract changes and renegotiations as well
as spending constraints, and this is further exacerbated by carrier
consolidation.

The Group has a clear strategy to reduce its dependence on its
major customers, by targeting new potential customers, increasing
the share of business from other existing global customers, and
from new cargo segments.

Reliance on third parties:

The Group is dependent on the performance of services by third
parties outside its control, including the performance by all other
participants in the logistics chain, such as customs inspectors,
supervisory authorities and others, and the performance of
security procedures carried out at other port facilities and by its
shipping line customers.

Tariff regulation:

Tariffs for certain services at certain of the Group’s terminals
have been in the past regulated by the Russian Federal
Antimonopoly Service (FAS). As a result, the tariffs charged for
such services were, and may potentially in the future be, subject
to a maximum tariff rate and/or fixed in Russian roubles as PLP,
VSC, and FCT, like many other Russian seaport operators,
are classified as natural monopolies under Russian law.

The Group is also steadily growing its share of non-container
revenues through building its presence in marine bulk cargo
such as coal (share of non-container revenue was 26% and 23%
in 2018 and 2017 respectively).

The Group strives to maintain a continuous dialogue with third
parties across the supply chain. In addition, its geographic
diversification provides it with some flexibility in its logistics,
should bottlenecks develop in one area.

Changes to tariff legislation (as of 14 August 2018) now require
that all tariffs are set in Russian roubles. The Group believes
it is in full compliance with the new legislation.

The Group continues to monitor any legislative proposals and
regulatory actions that could lead to changes to the existing
tariff regulations. It seeks a proactive dialogue with the relevant
Russian federal authorities. It believes it is as well placed as
any market participant to adapt to any future changes in tariff
regulation.

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Global Ports Investments PLC

Risk factor

Risk management approach

Human resources management:

The Group’s competitive position and prospects depend on
the expertise and experience of its key management team and
its ability to continue to attract, retain and motivate qualified
personnel.

Industrial action or adverse labour relations could disrupt the
Group’s operating activities and have an adverse effect on
performance results.

The Group offers competitive salaries and benefits to employees
at all levels to foster and retain skilled labour and provide yearly
indications or revision of salaries.

The Group invests in the professional development of its staff,
including international best practices implementation and internal
“learning effect” programmes realization.

The Group engages in socially responsible business practices and
support of local communities.

The Group strives to maintain a positive working relationship with
labour unions at its facilities. Moreover, it pursues overall labour
policies designed to provide a salary and benefit package in line
with the expectations of our employees.

Health, safety, security and environment:

Accidents involving the handling of 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.

The Group has implemented clear environmental and safety
policies designed around international best practices and
benchmark using such measures as GPI Global Minimum
Requirements.

The risk of safety incidents is inherent in the Group’s businesses.

The Group’s operations could be adversely affected by terrorist
attacks, natural disasters or other catastrophic events beyond its
control.

Safety is one of the Group’s top priorities. A safety strategy and
annual action plan have been developed, to build a sustainable
safety culture across the whole Group. The detailed roadmap
is designed to ensure sustainable implementation of safety culture
over the medium term.

Similarly, GPI works with all its stakeholders to maintain high
levels of security around port facilities and vessel operations
to minimise the risk of terrorist attack.

Regulatory risks

Regulatory compliance:

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

The Group strives to be in compliance at all times with all
regulations governing its activities and devotes considerable
management and financial resources to ensure such compliance.

The Group’s terminal operations are subject to extensive laws
and regulations governance, among other things, the loading,
unloading and storage of hazardous materials, environmental
protection and health and safety.

Changes in regulations:

Changes to existing regulations or the introduction of new
regulations, procedures or licensing requirements are beyond
the Group’s control and may be influenced by political or
commercial considerations not aligned with the Group’s interests.
Any expansion of the scope of the regulations governing the
Group’s environmental obligations, in particular, would likely
involve substantial additional costs, including costs relating
to maintenance and inspection, development and implementation
of emergency procedures and insurance coverage or other
financial assurance of its ability to address environmental
incidents or external threats.

The Group maintains a constructive dialogue with relevant
federal, regional and local authorities regarding existing and
planned regulations. The Group does not have the power to block
any or all regulations it may judge to be harmful, but this dialogue
should ensure it has time to react to changes in the regulatory
environment.

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Corporate Governance / Board of Directors / Executive Management/ Terminal Directors / Risk Management

Risk factor

Risk management approach

Compliance and shareholder risk

Conflict of interests:

The Group’s controlling beneficial shareholders may have interests
that conflict with those of the holders of the GDRs or notes.

The major implications of this risk are that (i) co-controlling
shareholders pursue other businesses not related to GPI and
hence may not be deeply involved with developing GPI and (ii)
one of the major shareholders is also a major customer of the
Group.

Legal and tax risks:

Adverse determination of pending and potential legal actions
involving the Group’s subsidiaries could have an adverse
effect on the Group’s business, revenues and cash flows and
the price of the GDRs. Weaknesses relating to the Russian
legal and tax system and appropriate Russian law create an
uncertain environment for investment and business activity and
legislation may not adequately protect against expropriation and
nationalisation. The lack of independence of certain members
of the judiciary, the difficulty of enforcing court decisions and
governmental discretion claims could prevent the Group from
obtaining effective representation in court proceedings.

Financial risks

FOREX risks:

The Group is subject to foreign-exchange risk arising from
various currency exposures, primarily 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 timely plan for and appropriately react
to fluctuations in foreign-exchange rates. Risk also arises from
revaluation of assets and liabilities denominated in foreign
currency.

The Group’s corporate governance system is designed to
maximise the company’s value for all shareholders and ensure the
interests of all stakeholders are taken into account. The Group’s
LSE listing ensures our compliance with the highest international
standards. In addition, the Board has highly experienced members,
including strong independent directors.

The Group maintains a strong and professional legal function
designed to monitor legal risks, avoid legal actions where possible
and carefully oversee any legal actions that may occur.

The Group performs ongoing monitoring of changes in relevant
tax legislation and court practice in the countries where its
companies are located and develops the Group’s legal and tax
position accordingly.

Starting from 2019, a significant part of the Group’s revenue will
be denominated in Russian rouble as the Group has switched
the currency of its tariffs to RUR, and a major part of the Group’s
debt is denominated in U.S. dollars, whereas most of the Group’s
operating expenses are and will continue to be denominated
and settled in Russian roubles. In order to mitigate the risk of FX
mismatch between the currency of revenue and the currency of
debt, the Group has begun to convert its existing US$ debt into
the currency of revenue to avoid significant foreign exchange risks
arising from such a mismatch, i.e. in 2018 the Group cancelled
cross-currency swaps on the RUB denominated bonds issued by
the First Container Terminal Inc. The Group also plans to employ
different instruments and strategies to minimise future risks that
may arise from volatility in the value of the Russian rouble and US
dollar. Although the Group has negotiated with its customers the
right to change its Russian rouble tariffs should the exchange rate
move by 5, 10 or 15%, the risk above the levels of these currency
moves remains.

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Risk factor

Credit risk:

Risk management approach

The Group may be subject to credit risk due to its dependence
on key customers and suppliers.

The Group closely tracks its accounts receivables overall and
the creditworthiness of key customers and suppliers.

Debt, leverage and liquidity:

The Group’s indebtedness or the enforcement of certain
provisions of its financing arrangements could affect its
business or growth prospects.

Failure to promptly monitor and forecast compliance with debt
covenants both at the Group and individual terminal levels
may result in covenant breaches and technical defaults.

If the Group is unable to access funds (liquidity) it may be
unable to meet financial obligations when they fall due,
or on an ongoing basis, to borrow funds in the market at
an acceptable price to fund its commitments.

Information technology and security:

The Group’s container terminals rely on IT and technology
systems to keep their operations running efficiently, prevent
disruptions to logistic supply chains, and monitor and control
all aspects of their operations.

Any IT glitches can create major disruptions for complex
logistic supply chains.

Any prolonged failure or disruption of these IT systems,
whether a result of a human error, a deliberate data breech
or an external cyber threat could create major disruptions
in terminal operations. This could dramatically affect the
Group’s ability to render its services to customers, leading
to reputational damage, disruption to business operations
and an inability to meet its contractual obligations.

The Group has been able to reduce its total debt level in 2018,
as planned, and continued reduction of the debt above and
beyond minimum repayment requirements which remains
a management priority in 2019.

Liquidity risk is carefully monitored, with regular forecasts
prepared for the Group and its operating entities.

Although the risk of liquidity shortfalls within the following
18-24 months has been significantly reduced via extensions
of debt maturities through public debt issuances in 2016,
the liquidity position is carefully monitored in case of further
deterioration of financial performance.

The Group regularly stress tests scenarios when different
negative trends that could affect cash flows are identified.

The Group has centralised its IT function in recent years
and believes this is an important step in ensuring both the
efficiency and consistency of the Group’s security protocols
implementation. We are in the process of alignment of our
IT strategy with the business objectives.

We regularly review, update and evaluate all software,
applications, systems, infrastructure and security.

All software and systems are upgraded or patched regularly
to ensure that we have minimised our vulnerabilities.

Each of our business units has an IT disaster recovery plan.

Our security policies and infrastructure tools are updated or
replaced regularly to keep pace with changing and growing
threats.

Our security infrastructure is updated regularly and employs
multiple layers of defence.

Connectivity to our partners’ systems is controlled, monitored
and logged.

OverviewStrategic ReportCorporate GovernanceConsolidatedFinancial StatementsParent CompanyFinancial StatementsAdditional InformationGlobal Ports Investments PLCAnnual Report 2018Consolidated Financial Statements 
Board of Directors and other officers / Management report / Directors’ Responsibility Statement / Consolidated income statement for the year ended 31 December 2018 /
Consolidated statement of comprehensive income for the year ended 31 December 2018 / Consolidated balance sheet as at 31 December 2018 /
Consolidated statement of changes in equity for the year ended 31 December 2018 / Consolidated statement of cash flows for the year ended 31 December 2018 /
Notes to the consolidated financial statements

Consolidated
Financial
Statements

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Global Ports Investments PLC
Global Ports Investments PLC

Overview

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

Consolidated

Financial

Statements

Annual Report 2018

Global Ports Investments PLC

Consolidated Financial Statements 
Board of Directors and other officers / Management report / Directors’ Responsibility Statement / Consolidated income statement for the year ended 31 December 2018 /
Consolidated statement of comprehensive income for the year ended 31 December 2018 / Consolidated balance sheet as at 31 December 2018 /
Consolidated statement of changes in equity for the year ended 31 December 2018 / Consolidated statement of cash flows for the year ended 31 December 2018 /
Notes to the consolidated financial statements / Independent Auditor’s Report

Table of Contents

Board of Directors and other officers

Management report

Directors’ Responsibility Statement

Consolidated income statement for the year ended 31 December 2018

Consolidated statement of comprehensive income for the year ended 31 December 2018

Consolidated balance sheet as at 31 December 2018

Consolidated statement of changes in equity for the year ended 31 December 2018

Consolidated statement of cash flows for the year ended 31 December 2018

Notes to the consolidated financial statements

1. General information

2. Basis of preparation and summary of significant accounting policies

Financial risk management

4. Critical accounting estimates and judgements

Segmental information

Expenses by nature

7. Other gains/(losses) – net

Employee benefit expense

Finance income/(costs) – net

10. Net foreign exchange gains/(losses)

11.

Income tax expense

12. Basic and diluted earnings per share

13. Dividend distribution

14. Property, plant and equipment

15.

Intangible assets

16. Financial instruments by category

17. Credit quality of financial assets

18.

Inventories

19. Trade and other receivables

20. Cash and cash equivalents

21. Share capital, share premium

22. Borrowings

23. Derivative financial instruments

24. Deferred income tax liabilities

25. Trade and other payables

26. Assets held for sale

27. Joint ventures

28. Contingencies

29. Commitments

30. Related party transactions

31. Events after the balance sheet date

Independent Auditor’s Report

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Global Ports Investments PLC

Overview

Strategic
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Corporate
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Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

Board of Directors
and other officers

Board of Directors

Mr. Morten Henrick Engelstoft (appointed 31 October 2016)

(Mrs. Olga Gorbarenko is the alternate to Morten Henrick Engelstoft)

Chairman of the Board of Directors

Non-Executive Director

Member of Remuneration and Nomination Committees

Mrs. Iana Penkova Boyd (appointed 29 January 2018)

Non-Executive Director

Mr. Anton Chertkov (appointed 14 May 2018)

(Mr. Alexander Iodchin is the alternate to Mr. Anton Chertkov)

Non-Executive Director

Member of Remuneration and Nomination Committees

Mr. Michalakis Christofides (appointed 30 July 2014)

Non-Executive Director

Mrs. Britta Dalunde (appointed 12 May 2017)

Senior Independent Non-Executive Director

Chairman of Audit and Risk Committee

Mr. Alexander Iodchin (appointed 15 August 2008)

Executive Director

Mr. Soren Jakobsen (appointed 02 March 2018)

(Mrs. Olga Gorbarenko is the alternate to Mr. Soren Jakobsen)

Non-Executive Director

Member of Remuneration, Nomination and Audit and Risk Committees

Mr. Demos Katsis (appointed 14 May 2018)

Non-Executive Director

Mrs. Inna Kuznetsova (appointed 01 January 2018)

Independent Non-Executive Director

Chairman of Remuneration and Nomination Committees

Member of Audit and Risk Committee

Mrs. Laura Michael (appointed 23 January 2013)

(Mr. Nicholas Charles Terry is the alternate to Mrs. Laura Michael)

Non-Executive Director

Mr. Lampros Papadopoulos (appointed 01 January 2018)

Independent Non-Executive Director

Member of Audit and Risk Committee

Mr. Stavros Pavlou (appointed 14 May 2018)

Non-Executive Director

Member of Remuneration and Nomination Committees

Annual Report 2018

Global Ports Investments PLC

Board of directors
and other officers (continued)

Board of Directors (continued)

Mr. Sergey Shishkarev (appointed 14 May 2018)

(Mr. Anton Chertkov and Mr. Stavros Pavlou are the alternates to Mr. Sergey Shishkarev)

Non-executive Director

Mr. Nicholas Charles Terry (appointed 31 October 2016)

(Mrs. Laoura Michael is the alternate to Mr. Nicholas Charles Terry)

Non-executive Director

Mr. George Yiallourides (appointed 14 May 2018)

Non-Executive Director

Member of Audit and Risk Committee

Mr. Gerard Jan van Spall (resigned on 29 January 2018)

Mr. Peder Sondergaard (resigned on 01 February 2018)

Mr. Mikhail Loganov (resigned on 12 April 2018)

Mr. Nikita Mishin (resigned on 12 April 2018)

Mrs. Elia Nicolaou (resigned on 12 April 2018)

Mr. Konstantin Shirokov (resigned on 12 April 2018)

Mr. Vadim Kryukov (resigned on 14 May 2018)

Capt. Bryan Smith (resigned on 14 May 2018)

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

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Global Ports Investments PLC

Overview

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

Management report

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 (hereafter collectively referred to as the
“Group”) for the year ended 31 December 2018. 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 and nature of operations of the Group

The principal activities of the Group, which are unchanged from the previous year, are the operation of container, general cargo 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.

Changes in group structure

3. During the year ended 31 December 2018 the management of the Group continued its efforts in optimisation of the Group structure. LLC

ZASM was merged with LLC Farwater. The management finalised the liquidation of LLC Container-Depot East and LLC Cargo Connexion
East.

In September 2018 the Group completed the sale of its holding in JSC Logistika-Terminal (LT), one of the Group’s two inland terminals,
to PJSC TransContainer for a consideration of 1.9 billion Russian roubles. As previously announced, the proceeds from the sale went
towards the further deleveraging of the Group.

5. During the year ended 31 December 2018 the Group disposed its two subsidiaries – LLC PLP Mineral (owner of handling equipment) and
LLC Porttransservis (freight forwarding services in Saint-Petersburg). The Group acquired a 100% stake in LLC Transportmecanisation,
a company rendering equipment repair and maintenance services in Saint-Petersburg.

There were no other material changes in the group structure.

Review of Developments, Position and Performance of the Group’s Business

The Russian container market grew 10.0% in 2018 driven by the continued recovery in laden import of 8.2% and supported by strong
growth in laden export containers of 13.9%, resulting in total Russian container market throughput of 4.87 million TEU.

The Group’s Consolidated Marine Container Throughput increased 12.2% to 1,352 thousand TEU in 2018 compared to 1,205 thousand TEU
in 2017. The growth rate of the Group’s Consolidated Marine Container Throughput therefore outpaced that of the Russian container market.

The Group focused on increasing bulk cargo volumes to improve the utilisation of its terminals. As a result, Consolidated Marine Bulk Throughput
increased by 15.9% to 3.12 million tonnes in 2018, a record level for the Group, driven by growth in bulk cargoes at PLP and ULCT.

10. As a part of its strategy to focus on developing additional revenue streams and optimising its existing terminal infrastructure, the Group

commissioned a new coal handling facility at Ust-Luga Container Terminal in December 2018. ULCT has excellent rail connectivity and the
capability to support up to 1.0 million tonnes of coal shipments per year.

11. Revenue in 2018 increased by 4.0% to USD 343.6 million compared to USD 330.5 million in 2017. This was mainly driven by 16.8%

growth in Consolidated Non-Container Revenue. Consolidated Container Revenue was broadly flat in 2018 at USD 255.2 million, growth
of 0.1% compared to 2017, as 12.2% growth in Consolidated Marine Container Throughput was partially offset by an 10.1% decline in
Revenue per TEU. Only a low single digit percentage of the reduction in Revenue per TEU was attributable to change in tariffs, with the
majority of the decline largely attributable to lower share of imports and the change in customer and service mix.

12. The Group continued to exert strict control over costs. Total Operating Cash Costs decreased by 2.0% during the reporting period despite double
digit growth in throughput of both container and non-container cargoes. FX adjusted Total Operating Cash Costs1 increased by around 5.8%.

1. Management estimate calculated as if effective USD/RUB exchange rate in 2018 was the same as in 2017.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Review of Developments, Position and Performance of the Group’s Business (continued)

13. Gross profit in 2018 increased 14.0% to USD 207.6 million or by 7.3% adjusted for impairments that took place in 2017.

14. Adjusted EBITDA in 2018 increased 7.8% to USD 217.3 million* mainly due to the growth in throughput and strict control over costs.

15. Adjusted EBITDA margin expanded by 224 basis points from 61.0% in 2017 to 63.2%* in 2018.

16. Operating profit in 2018 was USD 131.6 million compared to USD 5.3 million Operating loss in 2017. This substantial increase was driven
both by the growth in Gross profit and the fact that 2017 was negatively impacted by non-monetary items such as impairment, loss from
the Group’s share of the result in joint ventures, and recycling of derivative losses previously recognised through other comprehensive
income. Loss before income tax increased from USD 24.1 million in 2017 to USD 53.6 million in 2018. This change was predominantly
driven by the depreciation of the Russian rouble which resulted in mainly unrealised loss on revaluation of US dollar-denominated
borrowings (from Group and non Group entities) in the Group’s Russian subsidiaries using Russian rouble as their functional currency.

17. The Group’s capital expenditure on a cash basis was USD 40.8 million in 2018. Maintenance capital expenditure focused on planned

maintenance projects, scheduled upgrades of existing container handling equipment and coal handling equipment at VSC as well as the
implementation of environmental protection measures related to coal handling. Maintenance capex remained in line with the Group’s mid-
term guidance of USD 25-35 million per annum with the remainder accounting for development of a new coal handling facility at ULCT.

18. Net cash from operating activities increased by USD 0.4 million, or 0.2%, from USD 173.9 million in 2017 to USD 174.3 million in 2018.

19.

In August 2018, an amendment to the Law on Seaports came into force which prescribes that all handling tariffs in Russian ports are set
in Russian roubles. While the law stipulates the mandatory currency of tariffs, it does not restrict port operators’ ability to change actual
tariff levels. Tariffs for stevedoring services in Russian ports remain unregulated and are market-driven. Since the law came into force,
the Group has retained its legal ability to revise tariff policy in response to substantial changes in the industry, currency fluctuations or
macroeconomic environment. Although the share of Russian rouble nominated revenues is expected to increase in 2019, the group
believes that its FX exposure is adequately balanced by the currency composition of its debt portfolio, the currency of its cash and
deposits and the use of hedging instruments in relation to both revenue and debt.

20. The Group continued to deleverage and reduced Net Debt by a further USD 85.6 million* in 2018. The Group decreased its Total Debt by

USD 124.4 million* in 2018.

21. Net Debt to Adjusted EBITDA decreased from 4.3x* to 3.6x* during 2018.

Certain non-IFRS financial measures and operational information above which is derived from the management accounts is marked
with an asterisk {*}. Terms used above are defined as follows:

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, share of
profit/(loss) of joint ventures accounted for using the equity method, other gains/(losses)—net and impairment of goodwill and
property, plant and equipment and intangible assets.

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

Consolidated Container Revenue is defined as revenue generated from containerised cargo services.

Consolidated Non-Container Revenue is defined as a difference between total revenue and Consolidated Container Revenue.

Consolidated Marine Bulk Throughput is defined as combined marine bulk throughput by consolidated terminals: PLP, VSC, FCT and ULCT.

Consolidated Marine Container Throughput is defined as combined marine container throughput by consolidated marine terminals:
PLP, VSC, FCT and ULCT.

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Free Cash Flow (a non-IFRS financial measure) is calculated as Net cash from operating activities less Purchase of property, plant and
equipment.

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

Revenue per TEU is defined as the Global Ports Group’s Consolidated Container Revenue divided by total container marine
throughput.

Total Debt (a non-IFRS financial measure) is defined as a sum of current borrowings, non-current borrowings and derivative financial
instruments.

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

Risk Management Process, Principal Risks and Uncertainties

22. GPI is exposed to a variety of risks and opportunities that can have commercial, financial, operational and compliance impacts on its

business performance, reputation and licence to operate. The Board recognises that creating shareholder value involves the acceptance of
risk. Effective management of risk is therefore critical to achieving the corporate objective of delivering long-term growth and added value
to our shareholders.

23. Global Ports bases its risk management activities on a series of well-defined risk management principles, derived from experience, leading
practice, and corporate governance regimes. Global Ports has an enterprise risk management system (the ERM) that is designed to
identify, assess, respond, monitor and, where possible, mitigate or eliminate threats to the business caused by changes in the external and
internal business, financial, regulatory and operating environment.

24. The Board has overall oversight responsibility for the GPI’s risk management and the establishment of the framework of prudent and

effective controls and it systematically monitors and assesses the risks attributable to the Group’s performance and delivery of the
GPI strategy. After identifying and assessing a risk, the Group selects and deploys the appropriate risk response aimed at reducing the
likelihood of its occurrence and/or potential adverse impact.

25. The Board delegates to the Chief Executive Officer of LLC Global Ports Management responsibility for effective and efficient

implementation and maintenance of the risk management system. Day-to-day responsibility for the risk management lies with the
management team. The Audit and Risk Committee is authorized by the Board to monitor, review and report on the organization,
functionality and effectiveness of the Group’s ERM system.

26. Global Ports is exposed to a variety of risks which are listed below. The order in which the risks are presented is not intended to be an

indication of the probability of their occurrence or the magnitude of their potential effects.

27. Not all of these risks are within the Group’s control, and the list cannot be considered to be exhaustive, as other risks and uncertainties

may emerge in a changing external and internal environment that could have a material adverse effect on the Group’s ability to achieve its
business objectives and deliver its overall strategy.

28. Further information on our risk management system including a detailed description of identified risk factors is contained in the notes

to the Financial Statements attached to this report.

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

financial statements.

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

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Risk Management Process, Principal Risks and Uncertainties (continued)

Risk factor

Strategic risks

Market conditions:

Risk management approach

Global Ports’ operations are dependent on the global
macroeconomic environment and resulting trade flows, including
in particular container volumes.

The Group has reacted to the volatility of throughput in the
container market by:
>

Focusing on quality and value-driven services (getting closer
to the customer);

Container market throughput is closely correlated to the volume
of predominantly imported goods, which in turn is driven by
domestic consumer demand, combined with volatility of the
Russian rouble against USD/Euro.

> Greater focus on export container flows;
> Offering operational flexibility to all clients;
>
>

Effective cost containment;
Adopting new revenue streams and attracting new cargo.

Competition:

Barriers to entry are typically high in the container terminal
industry due to the capital-intensive nature of the business.
However, challenging market trading conditions mean that
competition from other container terminals continues to be
a significant factor. Further consolidation between container
terminal operators and container shipping companies, introduction
of new/upgraded capacity and carrier consolidation could result
in greater price competition, lower utilisation, and a potential
deterioration in profitability.

Additionally, strategic international investors may develop or
acquire stakes in existing competitor Russian container terminals,
which could bring new expertise into the market and divert clients
and cargoes away from the Group.

Given the historically high margins in the Russian container
handling industry, this trend may continue.

The Group’s focus on service quality is a key differentiator from
its competition and the Group believes this is one of its key
competitive advantages.

The Group has made long-term investments in its terminals
and modern equipment to ensure competitive levels of service.
It operates on a long-term horizon and its terminals represent
core infrastructure in Russia that will continue to operate for
the next 10-20 years or beyond. Because the Group possesses
well-invested facilities with available berth capacity and sufficient
land plots it has flexibility to balance minimal capital expenditure
to maintain capacity at the existing level and its efficient
development should market require it.

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Risk factor

Risk management approach

Political, economic and social stability:

Certain government policies or the selective and arbitrary
enforcement of such policies could make it more difficult for the
Group to compete effectively and/or impact its profitability.

In light of the macroeconomic challenges faced by the ports industry
in recent years, the Group has focused on improving its resilience,
in particular its ability to withstand short-term economic shocks/
fluctuations in Russia, as well as the wider regional and global
environment. This has included a strong focus on cost containment
measures, and strengthening its financial position through a series
of measures designed to derisk the Group’s balance sheet, including
refinancing all its debt switching to longer maturities at fixed rates.
In addition, the Group has broadened its growth strategy to include
exports as well as new revenue streams to counteract any lows in
consumer sentiment and any macro-economic downturn.

The Group has developed a system to monitor compliance with
restrictions posed by international sanctions and fend off the risk
of secondary sanctions.

The Group continues to maintain an international base of
shareholders, bondholders and business partners.

The Group is not aware of any specific sanctions risks related
to its ownership or operations.

Operational risks

Leases of terminal land:

The Group believes it has a stable situation at present regarding its
land leases and its terminals have been in operation for a number
of years. The Group owns the freehold on 66% of the total land
of its terminals and 70% of the land of its container and inland
terminals in Russia. The remainder is held under long-term leases
(up-to 54 years and usually renewable at immaterial costs).

Customer Profile and Concentration:

The Group is dependent on a relatively limited number of major
customers (shipping lines, etc.) for a significant portion of its
business.

The Group conducts extensive and regular dialogue with key
customers and actively monitors changes that might affect our
customers’ demand for our services.

The Group is also steadily growing its share of non-container
revenues through building its presence in marine bulk cargo like
coal (share of non-container revenue was 26% and 23% in 2018
and 2017 respectively).

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Risk Management Process, Principal Risks and Uncertainties (continued)

Risk factor

Reliance on third parties:

Oil products:

The Group’s oil products business was significantly affected in
the past and could be affected by changes in Russia’s exports of
oil products and the 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.

Tariff regulation:

Tariffs for certain services at certain of the Group’s terminals have
been in the past regulated by the Russian Federal Antimonopoly
Service (FAS). As a result, the tariffs charged for such services
were, and may potentially in the future be, subject to a maximum
tariff rate and/or fixed in Russian roubles as PLP, VSC, and FCT,
like many other Russian seaport operators, are classified as natural
monopolies under Russian law.

Human resources management:

The Group’s competitive position and prospects depend on
the expertise and experience of its key management team and
its ability to continue to attract, retain and motivate qualified
personnel.

Industrial action or adverse labour relations could disrupt the
Group’s operating activities and have an adverse effect on
performance results.

Risk management approach

The Group recognises, that global demand for oil products is
cyclical in nature and might grow again over the medium term.

Focus on storage and accumulation of large shipments, utilising
the unique features of the tank farm consisting of 78 tanks of
different sizes. This allows the Group’s oil product business to
decrease its dependency onchanges in Russia’s exports of oil
products.

Changes to tariff legislation (as of 14 August 2018) now require all
tariffs to be set in Russian roubles. The Group believes it is in full
compliance with the new legislation.

The Group continues to monitor for any legislative proposals and
regulatory actions that could lead to changes to the existing tariff
regulations. It seeks a proactive dialogue with the relevant Russian
federal authorities. It believes it is as well placed as any market
participant to adapt to any future changes in tariff regulation.

The Group offers competitive salaries and benefits to employees
at all levels to foster and retain skilled labour and provide yearly
indications or revision of salaries.

The Group invests in the professional development of its staff,
including international best practices implementation and internal
“learning effect” programmes realization.

The Group engages in socially responsible business practices and
support of local communities.

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Risk factor

Risk management approach

Health, safety, security and environment:

IAccidents involving the handling of 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.

The Group has implemented clear environmental and safety
policies designed around international best practices and
benchmark using such measures as GPI Global Minimum
Requirements.

The risk of safety incidents is inherent in the Group’s businesses.

The Group’s operations could be adversely affected by terrorist
attacks, natural disasters or other catastrophic events beyond its
control.

Safety is one of the Group’s top priorities. A safety strategy and
annual action plan have been developed, to build a sustainable
safety culture across the whole Group. The detailed roadmap is
designed to ensure sustainable implementation of safety culture
over the medium term.

Similarly, GPI works with all its stakeholders to maintain high
levels of security around port facilities and vessel operations
to minimise the risk of terrorist attack.

Regulatory risks

Regulatory compliance:

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

The Group strives to be in compliance at all times with all
regulations governing its activities and devotes considerable
management and financial resources to ensure compliance.

The Group’s terminal operations are subject to extensive laws and
regulations governing, among other things, the loading, unloading
and storage of hazardous materials, environmental protection and
health and safety.

Changes in regulations:

Changes to existing regulations or the introduction of new
regulations, procedures or licensing requirements are beyond
the Group’s control and may be influenced by political or
commercial considerations not aligned with the Group’s interests.
Any expansion of the scope of the regulations governing the
Group’s environmental obligations, in particular, would likely
involve substantial additional costs, including costs relating to
maintenance and inspection, development and implementation
of emergency procedures and insurance coverage or other
financial assurance of its ability to address environmental
incidents or external threats.

The Group maintains a constructive dialogue with relevant federal,
regional and local authorities regarding existing and planned
regulations. The Group does not have the power to block any
or all regulations it may judge to be harmful, but this dialogue
should ensure it has time to react to changes in the regulatory
environment.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Risk Management Process, Principal Risks and Uncertainties (continued)

Risk factor

Risk management approach

Compliance and shareholder risk

Conflict of interests:

The Group’s controlling beneficial shareholders may have interests
that conflict with those of the holders of the GDRs or notes.

The major implications of this risk are that (i) co-controlling
shareholders pursue other businesses not related to GPI and
hence may not be deeply involved with developing GPI and
(ii) one of the major shareholders is also a major customer
of the Group.

Legal and tax risks:

Financial risks

FOREX risks:

The Group’s corporate governance system is designed to maximise
the company’s value for all shareholders and ensure the interests
of all stakeholders are taken into account. The Group’s LSE listing
ensures our compliance with the highest international standards.
In addition, the Board has highly experienced members, including
strong independent directors.

The Group maintains a strong and professional legal function
designed to monitor legal risks, avoid legal actions where possible
and carefully oversee any legal actions that may occur.

Starting from 2019, a significant part of the Group’s revenue will
be denominated in Russian rouble as the Group has switched the
currency of its tariffsto RUR, and a major part of the Group’s debt is
denominated in U.S. dollars, whereas most of the Group’s operating
expenses are and will continue to be denominated and settled in
Russian roubles. In order to mitigate the risk of FX mismatch between
the currency of revenue and the currency of debt, the Group has
begun to convert its existing US$ debt into the currency of revenue
to avoid significant foreign exchange risks arising from such a
mismatch, i.e. in 2018 the Group cancelled cross-currency swaps on
the RUB denominated bonds issued by the First Container Terminal
Inc. The Group also plans to employ various different instruments and
strategies to minimise future risks that may arise from volatility in the
value of the Russian rouble and US dollar. Although the Group has
negotiated with its customers the right to change its Russian rouble
tariffs should the exchange rate move by 5, 10 or 15%, the risk above
the levels of these currency moves remains.

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Risk factor

Credit risk:

Risk management approach

The Group may be subject to credit risk due to its dependence on
key customers and suppliers.

The Group closely tracks its accounts receivables overall and the
creditworthiness of key customers and suppliers.

Debt, leverage and liquidity:

The Group’s indebtedness or the enforcement of certain
provisions of its financing arrangements could affect its business
or growth prospects.

The Group has been able to reduce its total debt level, as planned, in
2018 and continued reduction of the debt above and beyond minimum
repayment requirements remains a management priority in 2019.

Failure to promptly monitor and forecast compliance with loan
covenants both at the Group and individual terminal levels may
result in covenant breaches and technical defaults.

Liquidity risk is carefully monitored, with regular forecasts
prepared for the Group and its operating entities.

If the Group is unable to access funds (liquidity) it may be unable
to meet financial obligations when they fall due, or on an ongoing
basis, to borrow funds in the market at an acceptable price to fund
its commitments.

Although the risk of liquidity shortfalls within the following 18-24
months has been significantly reduced via extensions of debt
maturities through public debt issuances in 2016, the liquidity
position is carefully monitored in case of further deterioration
of financial performance.

The Group regularly stress tests scenarios when different negative
trends that could affect cash flows are identified.

Information technology and security:

The Group’s container terminals rely on IT and technology systems
to keep their operations running efficiently, prevent disruptions to
logistic supply chains, and monitor and control all aspects of their
operations.

The Group has centralised its IT function in recent years and
believes this is an important step in ensuring both the efficiency
and consistency of the Group’s security protocols implementation.
We are in the process of alignment of our IT strategy with the
business objectives.

Any IT glitches can create major disruptions for complex logistic
supply chains.

Any prolonged failure or disruption of these IT systems, whether
a result of a human error, a deliberate data breech or an external
cyber threat could create major disruptions in terminal operations.
This could dramatically affect the Group’s ability to render its
services to customers, leading to reputational damage, disruption
to business operations and an inability to meet its contractual
obligations.

We regularly review, update and evaluate all software,
applications, systems, infrastructure and security.

All software and systems are upgraded or patched regularly
to ensure that we have minimised our vulnerabilities.

Each of our business units has an IT disaster recovery plan.

Our security policies and infrastructure tools are updated or
replaced regularly to keep pace with changing and growing threats.

Our security infrastructure is updated regularly and employs
multiple layers of defence.

Connectivity to our partners’ systems is controlled, monitored
and logged.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Internal control and risk management systems in relation to the financial reporting process

31. The internal control and risk management systems relating to financial reporting are designed to provide reasonable assurance regarding

the reliability of financial reporting and to ensure compliance with applicable laws and regulations.

32. Financial reporting and supervision are based on approved budgets and on monthly performance reporting.

33. The Audit and Risk Committee of the Board of directors of the Company reviews certain high-risk areas at least once a year, including the

following:
- Significant accounting estimates;
- Material changes to the accounting policies;

34. Reporting from various Group entities to the centralised unit is supervised on an ongoing basis and procedures have been established for

control and checking of such reporting. Procedures have also been set up to ensure that any errors are communicated to, and corrected
by, the reporting entities. The internal controls are subject to ongoing reviews, including in connection with the regular control inspections
at subsidiaries conducted by the central unit. The results from these reviews are submitted to the executive management, the Audit and
Risk Committee and Board of Directors. The internal financial reporting ensures an effective process to monitor the Company’s financial
results, making it possible to identify and correct any errors or omissions. The monthly financial reporting from the respective entities is
analysed and monitored by the centralised department in order to assess the financial and operating performance as well as to identify any
weaknesses in the internal reporting, failures to comply with procedures and the Group accounting policies. The Audit and Risk Committee
follows up to ensure that any internal control weaknesses are mitigated and that any errors or omissions in the financial statements
identified and reported by the auditors are corrected, including controls or procedures implemented to prevent such errors or omissions.

Use of financial instruments by the Group

35. 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. For a description of the Group’s financial risk management objectives and policies and a summary
of the Group’s exposure to financial risks please refer to Note 3 of the consolidated financial statements.

Future Developments of the Group

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

Results

37. The Group’s results for the year are set out on pages 26-27.

Dividends

38. 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.

39. 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 (shareholder agreements, bank
borrowings covenants, and terms of the issuance of the public debt instruments). 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.

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40. The Company has a Dividend Policy in place which provides for the payment of not less than 30% of any imputed consolidated net

profit for the relevant financial year of the Group. Imputed profit is calculated as the consolidated net profit for the period of the Group
attributable to the owners of the Company as shown in the Company’s consolidated financial statements for the relevant financial year
prepared under EU IFRS and in accordance with the requirements of the Cyprus Companies Law, Cap. 113, less certain non-monetary
consolidation adjustments. The Company’s dividend policy is subject to modification from time to time as the Board of Directors may
deem appropriate.

41.

In 2015 following the revision of current market situation, market prospects and prioritising the deleveraging strategy over dividend
distribution, which should ensure the long-term robustness of the Group’s finances, the Board suspended the payment of the dividends
in the mid-term. The Board continues to monitor the market for recovery as well as for levels of volatility in order to identify the
appropriate timing for a resumption of the payment of a dividend, subject to maintaining conservative leverage ratios.

42. During the years 2017 and 2018 the Company did not declare or pay any dividends.

43. The Board of Directors of the Company does not recommend the payment of a final dividend for the year 2018.

Share Capital

Authorised share capital
44. The authorised share capital of the Company amounts to US$175,000,000.00 divided into 750,000,000 ordinary shares and

1,000,000,000 ordinary non-voting shares with a par value of US$0.10 each.

Issued share capital
45. 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.

46. 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.

Rules for Amending Articles

47. The Articles of association of the Company may be amended from time to time by the special resolution of the General Meeting of the

shareholders.

Corporate Governance

48. The Group has a diverse set of stakeholders, from international institutions holding our shares and bonds, to our customers, employees,

regulators and communities. Made up of seasoned industry professionals, the Board of Directors is committed to acting in the best interest of
all stakeholders. The Company is not subject to the provisions of UK Corporate Governance Code, but follows internationally recognised best
practices customary to the public companies having GDRs with standard listing and admitted to trading at London Stock Exchange.

49.

Improving its corporate governance structure in accordance with the internationally recognised best practices the Company adopted
in 2008, 2012, 2015, 2016 and 2018 important policies and procedures. The Group is regularly reviewing and updating its policies and
procedures. The new Code of Ethics was approved by the Board of Directors on 08 December 2016 and was introduced in the companies
of the Group in the course of the year 2017. On 03 October 2017 the Board of Directors approved the revised Terms of reference of the
Audit and Risk Committee and Charity and Sponsorship Policy. On 18 September 2018 the Board approved the amended and restated
versions of the policies marked with (*) below. On the same day the Board adopted a new Investigation policy.

50. 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;

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Management report (continued) and sub-heading Corporate Governance (continued)

Terms of reference of the Audit and Risk, Nomination and Remuneration Committees;

Code of Ethics and Conduct;

Antifraud policy*;

Policy on Reporting of Improper Activities*;

Investigation policy;

Anti-Corruption Policy*;

Foreign Trade Controls Policy*;

Insurance Standard;

Charity and Sponsorship Policy; and

> Group Securities Dealing Code.

51.

52.

In order to further strengthen the corporate governance and clearly set the management authority limits within the Group the Board of
Directors approved the Authority Matrix framework at the end of the year 2016. This framework is based on the Board of Directors reserved
matters, which are set in the Terms of reference of the Board of Directors and Shareholder`s reserved matters as set out in Company`s
Charter. All other matters are reserved for the management. The implementation of this framework within the Group started in the year 2017,
continued in 2018 and will finalise in the year 2019. Currently the key operating assets of the Group have implemented this framework.

In the course of the year ended 31 December 2017 in order to further strengthen the corporate governance procedures and streamline
the reporting of negligence, non-compliance or any other kind of wrongdoing the Group established a hotline mail-box and telephone line.
It is an important mechanism enabling staff and other members of the Group as well as third parties to voice concerns in a responsible and
effective manner. Throughout 2018 the Board together with the management worked on raising the awareness about the hotline among
the Group workforce.

Code of ethics and conduct

53. Global Ports’ code of ethics and conduct outlines the general business ethics and acceptable standards of professional behaviour that we

expect of all our directors, employees and contractors. This code, given to all new staff as part of their induction, means that everyone
at Global Ports is accountable for their own decisions and conduct. As well as general standards of behaviour, the code covers fraud and
corruption (including approaches on acceptance of gifts and benefits), ethics and conflicts of interest. Employees and external parties are
encouraged to report any suspected breaches, via various channels including the dedicated hotline.

54. The code is available to all staff on Global Ports’ website (in the Corporate Governance section) and in the HR department at every

operating facility. There are also other more detailed rules concerning our anti-fraud and whistleblowing policies.

55 The Board is updated on a regular basis on any breaches various policies with the specific focus on the fraud incidents and resulting

actions, although significant breaches have to be reported to the Board immediately.

The Role of the Board of Directors

56. The Company is governed by its Board of Directors (also referred as “the Board”) which is collectively responsible to the shareholders for
the short- and long-term sustainable success of the Group, generating value to shareholders and contributing to wider society as a whole.
Its responsibility is to promote adherence to best-in-class corporate governance.

57. The Board of Directors’ role is to provide entrepreneurial leadership to the Group through establishing the Group’s purpose, values and

strategy, setting out the corporate governance standards, satisfying itself that these and its culture are aligned, ensuring that the necessary
financial and human resources are in place for the Group to meet its objectives and reviewing management performance. The Group seeks
directors who bring strong track records and a deep understanding of the industry. The Board sets the Group’s values and standards and
ensures all obligations to shareholders are understood and met. The Board ensures the Group establishes a framework of prudent and
effective controls, which enables risk to be assessed and managed and maintains a sound system of internal control, corporate compliance
and enterprise risk management to safeguard the Group’s assets and shareholders’ investments in the Group.

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58. The roles and responsibilities of the Chairman, Senior Independent Director, board and committees’ members are set out in writing in the
Terms of Reference of the Board and committees. 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 on the Company`s website.

Members of the Board of Directors

59. 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. Following the best practice
guidance, the members of the Board of Directors are re-elected on an annual basis. Any term beyond six years for a Non-Executive
Director is subject to particularly rigorous review, and takes into account the need to refresh the Board on a regular basis.

60. The Board currently has 15 members and they were appointed as shown on pages 2 and 3.

61. On 29 January 2018 Mr. Gerard Jan Van Spall resigned from the Board and Mrs. Iana Boyd replaced him on the same day. On 01 February
2018 Mr. Peder Sondergaard resigned from the Board and Mr. Soren Jakobsen replaced him on 02 March 2018. On 12 April 2018 Mr.
Mikhail Loganov, Mr. Nikita Mishin, Mrs. Elia Nicolaou and Mr. Konstantin Shirokov resigned from the Board. They were replaced by Mr.
Anton Chertkov, Mr. Stavros Pavlou, Mr. Sergey Shishkarev and Mr. George Yiallourides on 14 May 2018. On 14 May 2018 Mr. Vadim
Kryukov resigned from the Board and Mr. Demos Katsis replaced him on the same day. Capt. Bryan Smith resigned from the Board on
14 May 2018. All new Board members were reviewed and recommended for appointment by Nominations Committee.

62. All other Directors were members of the Board throughout the year ended 31 December 2018.

63. 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 held on
14 May 2018 all present directors are subject to re-election at the next Annual General Meeting of the Shareholders of the Company.
An EGM was called for 19 April 2019 to consider the resignation of Mrs. Iana Boyd and appointment of Mr. Tom Hyldelund to the Board.

64. The changes in the composition of the committees of the Board of Directors are described below.

65. Mr. Peder Sondergaard was the Chairman of the Board until 01 February 2018. Mr. Morten HenrickEngelstoft was elected the Chairman
of the Board of Directors on 26 February 2018. Mrs. Britta Dalunde was elected the Senior Independent Director on 31 May 2018
following the resignation of Capt. Bryan Smith. There were no other significant changes in the responsibilities of the Directors during 2018
except for membership in the committees as described below.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Directors’ Interests

66. The interests in the share capital of Global Ports Investments Plc, both direct and indirect, of those who were Directors as at 31 December

2018 and 31 December 2017 are shown below:

Name

Type of holding

Shares held at
31 December 2018

Shares held at
31 December 2017

Nikita Mishin

Through shareholding in
Transportation Investments Holding
Limited and other related entities

NOT APPLICABLE

42,267,114 ordinary shares

16,477,011 ordinary non-voting shares

Britta Dalunde

Through holding of the GDRs

7,000 GDRs representing 21,000
ordinary shares

7,000 GDRs representing 21,000 ordinary
shares

Sergey Shishkarev

Through shareholding in LLC
Management Company “Delo” and
other related entities

126,814,024 ordinary shares

49,435,976 ordinary non-voting
shares

NOT APPLICABLE

Chairman of the Board of Directors

67. Mr. Morten Engelstoft was appointed Chairman of the Board in February 2018.

68. The role of the Chairman of the Board of Directors is to ensure that Board meetings are held as and when necessary, lead the directors,

ensure their effectiveness and review the agenda of Board meetings. The Chairman together with the Secretary of the Board review Board
materials before they are presented to the Board and ensure that Board members are provided with accurate, timely and clear information.
The members of the management team who have prepared the papers, or who can provide additional insights into the issues being
discussed, are invited to present papers or attend the Board meeting at the relevant time. Board members regularly hold meetings with the
Group’s management to discuss their work and evaluate their performance.

69. The Chairman monitors communications and relations between the Group and its shareholders, the Board and management, and

independent and non-independent directors, with a view to encouraging dialogue and constructive relations. The Chairman should
demonstrate objective judgement and promote a culture of openness and debate. In addition, the Chairman facilitates constructive board
relations and the effective contribution of all non-executive directors.

70. The Group separates the positions of the chairman and CEO to ensure an appropriate segregation of roles and duties.

Non-executive and Independent Directors

71. There are fourteen non-executive directors (including the chairman).

72. Mrs. Britta Dalunde, Mrs. Inna Kuznetsova and Mr. Lampros Papadopoulos are independent directors, and have no relationship with the
Group, its related companies or their officers. This means they can exercise objective judgment on corporate affairs independently from
management.

73. Although all directors have an equal responsibility for the Group’s operations, the role of the independent non-executive directors

is particularly important in ensuring that the management’s strategies are constructively challenged. As well as ensuring the Group’s
strategies are fully discussed and examined, they must take into account the long-term interests, not only of the major shareholders, but
also of bondholders, employees, customers, suppliers and the communities in which the Group conducts its business.

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74. Mrs. Britta Dalunde was appointed as the Senior Independent Director on 31 May 2018 replacing Capt. Bryan Smith, who stepped down

from the Board. The role of Senior Independent Director is to provide a sounding board for the Chairman and serve as an intermediary
for the other directors and shareholders. Led by the senior independent director, the non-executive directors should meet without the
Chairman present at least annually to appraise the Chairman’s performance, and on other occasions as necessary.

The Board Committees

75. 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

76. The Audit and Risk Committee comprises of five Non-Executive Directors, three of whom are independent, and meets at least four times
a year. The Audit and Risk Committee is chaired by Mrs. Britta Dalunde (an Independent Non-Executive Director) and its other members
are Mrs. Inna Kuznetsova (an Independent Non-Executive Director appointed as of 01 January 2018), Mr. Lampros Papadopoulos (an
Independent Non-Executive Director appointed as of 01 January 2018), Mr. Soren Jakobsen (appointed as of 02 March 2018) and Mr.
George Yiallourides (appointed as of 14 May 2018). Mr. Morten Henrick Engelstoft and Mr. Konstantin Shirokov resigned from the Audit
and Risk Committee on 26 February 2018 and 12 April 2018 respectively.

77. The Committee is responsible for:

> monitoring the integrity of the financial statements of the company and any formal announcements relating to the company’s financial

performance, and reviewing significant financial reporting judgements contained in them;
providing advice (where requested by the board) on whether the annual report and accounts, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for shareholders to assess the company’s position and performance, business
model and strategy;
reviewing the company’s internal financial controls and internal control and risk management systems;

>
> monitoring and reviewing the effectiveness of the company’s internal audit function;
> making recommendations to the board, about the appointment, reappointment and removal of the external auditor, and giving the
recommendations in relation to remuneration and terms of engagement of the external auditor for audit and non-audit services;
reviewing and monitoring the external auditor’s independence and objectivity;
reviewing the effectiveness of the external audit process;
developing and implementing policy on the engagement of the external auditor to supply non-audit services; and
reporting to the Board on how it has discharged its responsibilities.

>
>
>
>

78.

In 2018 the Audit and Risk Committee met 17 times to review and discuss inter alia the following significant issues and matters in addition
and on top of those listed above:

b. Discussion of the level of clarity and completeness of disclosures in financial statements with the management and external auditors and

making the recommendations;
Consideration and approval of audit schedules and review of the impairment models and the impact of the new IFRS standards on the
Company`s financial statements. The Committee`s task was to align the impairment models with the short-, mid- and long-term forecasts
and to understand what impact the new standards would have on the financial statements and Group`s compliance with the covenants.
The Committee also discussed, how to incorporate the new requirements of the standards into the budgeting process;

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

The Audit and Risk Committee (continued)

d. Review of the major risks, including but not limited to strategic, fraud and compliance, commercial, operational, financial, human

resources, environmental and other risks. The Committee discussed the approach to establishment and monitoring of the risk appetite
of the Group;

e. Review of internal control framework and its deficiencies, consideration of management proposals on its further development and

improvement. The Committee concentrated on the integration of automatic controls into the ERP system and on further development
and integration of authority matrix framework into day-to-day processes;

f. Discussing the level of Corporate governance in the Group and making the recommendations to the Board and the management on how

further to improve it;

g. Consideration of various reports from the management;
h. Meetings with external and internal auditors to discuss the matters related to the audit work done by them and any issues arising from

their audits;
Consideration of various updated and restated Group Policies and making the recommendations to the Board on their approval.
In particular, the Committee reviewed the Policy on Assessment of Independence and Objectivity of External Auditor and the Accounting
Policy of the Group;
Consideration and approval of the engagement of external auditors for rendering of non-audit services. In each particular case the
Committee was assessing the impact of non-audit services on the independence and objectivity of the external auditor. The Committee
reviewed the scope of services on compliance with the list of permitted non-audit services, the potential impact of the services on the
audit work and financial statements and discussed with the external auditor how their internal compliance procedures were performed
and whether all internal compliance requirements were met. The Committee monitors the share of non-audit service in relation to its
compliance with the standards. During the year 2018 the share of fees for non-audit services was significantly below the 70% of the last
three years average audit fees;

k. Assessment of efficiency of external auditor by discussing the audit approach and audit plan, monitoring of compliance with the plan,

receiving the feedback from the members of the management team, involved in the audit process, assessing the internal resources
allocated by the external auditor, the key risks to the audit process and their mitigation measures, review of the auditor`s management
letter, consideration of the level and quality of communication between the external auditor and Committee during the audit process;
l. Discussion of the term of tenure of the current audit partner – Mr. Tasos Nolas and making the recommendations to extend it from five to

six years;

m. Conducting the executive search for the new Head of Internal Audit function and discussing and giving the recommendations on the

strengthening of Internal Audit function and extending its scope to joint-venture companies of the Group;

n. Review of IT security setup, corporate social responsibility report, legal matters report, differences between Russian GAAP and IFRS, site
visits to the Group terminals located in Saint-Petersburg area and Far-East of Russia, discussion with the Board of the results of these site-
visits;

o. Discussion of the training requirements of the Committee members.

The Nomination Committee

79. 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 Mrs. Inna Kuznetsova (an Independent Non-Executive Director
appointed as a member of Committee as of 01.01.2018 and as a Chairman as of 14 May 2018). Mrs. Inna Kuznetsova replaced Capt.
Bryan Smith who stepped down from the Board. The other members are Mr. Anton Chertkov (appointed on 14 May 2018), Mr. Morten
Henrick Engelstoft, Mr. Soren Jakobsen (appointed on 02 March 2018) and Mr. Stavros Pavlou (appointed on 14 May 2018). Mr. Peder
Sondergaard resigned from his position as a member of the Nomination Committee in February 2018 and Mr. Nikita Mishin and Mrs. Elia
Nicolaou resigned from their positions as members in April 2018.

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80. The Committee’s role is to prepare selection criteria and appointment procedures for members of the Board of Directors as well as

the Key Management of the companies of the Group and to review on a regular basis the structure, size, diversity and composition of
the Board of Directors of the Company. In undertaking this role, the Committee refers to the skills, knowledge and experience required
of the Board and Key Management given the Company’s and Group’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 and Key
Management as well as making recommendations regarding the membership of the Audit and Risk Committee and the Remuneration
Committee. The Committee monitors the compliance of the appointment procedures with the corporate governance standards and
makes the recommendations to the Board and the management on changes to these procedures. The Committee develops plans for
orderly succession to both the Board and Key Management positions and oversees the development of a diverse pipeline for succession.
The Committee relies on both independent search consultancy and internal sources in making the proposals for the Board and Key
Management appointments.

81.

In 2018 the Nomination Committee met eleven times to discuss and recommend to the Board the appointment of Key Management
of the Group companies, including the change of the CEO of LLC Global Ports Management and also to recommend the Directors the
candidates to the Board and the position of the Chairman of the Board and to discuss and recommend the composition of the Board
Committees. In the year 2019 one of the key focuses of the work of Nomination Committee will be the succession planning for the Board
and the Key Management and talent management.

The Remuneration Committee

82. The Remuneration 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 Remuneration Committee is chaired by Mrs. Inna Kuznetsova (an Independent Non-Executive
Director appointed as a member of Committee as of 01 January 2018 and as a Chairman as of 14 May 2018). Mrs. Inna Kuznetsova
replaced Capt. Bryan Smith who stepped down from the Board. The other members are Mr. Anton Chertkov (appointed on 14 May 2018),
Mr. Morten Henrick Engelstoft, Mr. Soren Jakobsen (appointed on 02 March 2018) and Mr. Stavros Pavlou (appointed on 14 May 2018)
Mr. Peder Sondergaard resigned from his position as a member of the Remuneration Committee in February 2018 and Mr. Nikita Mishin
and Mrs. Elia Nicolaou resigned from their positions as members in April 2018.

83. The Committee is responsible for determining and reviewing the remuneration of the executive directors, Chairman and the Key

Management and the Company’s remuneration policies. The Committee also reviews the policy on payment of performance based
bonuses and the alignment of incentives and rewards with culture. The remuneration of independent Directors is a matter for the
Chairman of the Board of Directors and is subject to approval of the shareholders. Remuneration of the executive directors in their
executive capacity is subject to the Board approval. No director or manager may be involved in any decisions and discussions as to his
or her own remuneration.

84.

In 2018 the Remuneration Committee met 13 times to discuss and recommend to the Board the Group management remuneration
guidelines and the remuneration of the new Board members and the Key Management of the Group. In determining the level of
remuneration of the key senior management of the Group the Committee referred to the level of skills and expertise, the position and
scope of work and responsibilities as well as to the market levels for similar positions. The Committee did not engage any external
remuneration consultants. In addition the Committee considered and recommended to the Board to approve the changes to the principles
of payment of performance based bonuses to the management. The recommendations were approved by the Board in full.

Board Performance

85. The Board meets at least five 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.

86.

In 2018 the Board met formally 21 (2017: 25) times to review current performance and to discuss and approve important business
decisions.

87.

In 2018 the Board met to discuss and approve important business decisions:

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Board Performance (continued)

b. Review of segments financial and operational performance;
c. Consideration of 2019 financial budget, major risks and uncertainties, commercial strategy, corporate social responsibility matters, internal

control framework;

Consideration of various compliance matters;

d. Changes in Group management and the Board of Directors, election of the new Chairman and Senior Independent Director;
e. Revision of various group wide policies and regulations;
f.
g. Consideration and approval of the revision of external and internal financing arrangements and organizational restructurings;
h. Consideration and approval of major capital expenditures and investment projects; and
i.

Consideration and approval of various resolutions related to the operations of the Company`s subsidiaries and joint ventures.

88. The number of Board and Board Committee meetings held in the year 2018 and the attendance of directors during these meetings was as

follows:

Board of Directors

Nomination Committee

Remuneration Committee

Audit and Risk Committee

Iana Boyd

Anton Chertkov

Michalakis Christofides

Britta Dalunde

Morten Henrick Engelstoft

Alexander Iodchin

Soren Jakobsen

Demos Katsis

Vadim Kryukov

Inna Kuznetsova

Mikhail Loganov

Laura Michael

Nikita Mishin

Elia Nicolaou

Lampros Papadopoulos

Stavros Pavlou

Konstantin Shirokov

Sergey Shishkarev

Bryan Smith

Peder Sondergaard

Nicholas Charles Terry

George Yiallourides

A = Number of meetings attended

B = Number of meetings eligible to attend during the year

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89. The operation of the Board, its Committees and individual Directors is subject to regular evaluation. The evaluation of the Board and

individual Directors’ performance can be 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 did not engage any external advisors for evaluation of its performance in the years 2017 and 2018.

Board Diversity

90. The Company does not have a formal Board diversity policy with regard to matters such as age, gender or educational and professional
backgrounds, but following the best practice while making the new appointments and considering the current composition of the Board
of Directors, these aspects are taken into account.

91. As of the date of publication of these financial statements the Board has 3 females representing 20% from the total number of directors.
The average age of directors is 49 years ranging from 33 to 71 years. The Board has a necessary balance of skills and expertise to run the
Company and the Group. The Board members have the following educational backgrounds: port and transportation industry, accounting
and financial, banking sector and legal. There are 6 nationalities present in the Board. The Board members reside in 6 countries with the
majority of the Board members being the tax residents of Cyprus.

Board and Management Remuneration

92. 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.

93. 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. Non-executive
Directors are not eligible for bonuses, retirement benefits or to participate in any incentive plans operated by the Group. The Chairmen
of the committees receive additional remuneration.

94. The shareholders of the Company approved the remuneration of the members of the Board on 12 May 2017, 11 December 2017, 29

January 2018, 2 March 2018, 14 May 2018 and 29 June 2018.

95. The Directors did not waive or agreed to waive any emoluments from the company or any company of the Group during the period under

review or future emoluments.

96. The performance based part of the remuneration of the Key Management is based on the Key Rules of Awarding and Payment of

Performance Based Bonuses of GPI Group adopted by the Board on 15 June 2016 and regularly updated with the last update on 18
October 2018. The Remuneration Committee monitors the efficiency of the Rules and makes the recommendations to the Board on their
amendment and revision.

97. Neither the Board members, nor the management have long-term incentive schemes.

98. Refer to Note 30(f) to the consolidated financial statements for details of the remuneration paid to the members of the Board and key

management.

Managing director

99. Mr. Alexander Iodchin occupies the position of managing director and the Board granted him the powers to carry out all business related
to the Group’s business up to a total value per transaction of US$500,000. It has also granted him powers to discharge other managerial
duties related to the ordinary course of business of the Group, including representing the Group before any government or government-
backed authority.

100. 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.

101. Mr. Iodchin is also acting as the Board Secretary since December 2008.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Company Secretary

102. The Group maintains a company secretary, who is responsible for safeguarding the rights and interests of shareholders, including the

establishment of effective and transparent arrangements for securing the rights of shareholders.

103. Team Nominees Limited has been acting as the company secretary since the Group’s incorporation in February 2008.

104. The company secretary’s responsibilities include ensuring compliance by the Group, its management bodies and officers with the law

and the Group’s charter and internal documents. The company secretary organises 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 Group; and review of communications from shareholders.

Corporate Social Responsibility Report

105. The Corporate Social Responsibility Report is drawn up as a separate report and will be made public at the Company`s website (the
address of which, at the date of publication of this report, is www.globalports.com) within six months from the balance sheet date.

Events after the balance sheet date

106. The events after the balance sheet date are disclosed in Note 31 to the consolidated financial statements.

Research and development activities

107. The Group is not engaged in research and development activities.

Branches

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

Treasury shares

109. 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

110. 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
principle risks and uncertainties, budget for 2019 and the latest forecasts over a period of 5-7 years reflecting its business and investment
cycles, including cash flows and borrowing facilities, the Directors consider that the Group has adequate resources to meet its liabilities
as they fall due and to continue in operation for the foreseeable future.

Internal audit

111. The internal audit function is carried out by Group’s Internal Audit Service (IAS). It 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:

risks are appropriately identified, assessed, responded to and managed;

there is interaction with the various governance groups occurs as needed;

significant financial, managerial, and operating information is accurate, reliable, and timely;

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employee’s actions are in compliance with policies, standards, procedures, and applicable laws and regulations;

resources are acquired economically, used efficiently and adequately protected;

programs, plans and objectives are achieved;

quality and continuous improvement are fostered in the Group’s control process; and

significant legislative or regulatory issues impacting the Group are recognised and addressed properly.

112. The Head of the IAS, Mr. Ilya Kotlov, reports directly to the Audit and Risk Committee.

External auditors

113. At the Global Ports AGM, an external auditor is appointed on an annual basis to review the Group’s financial and operating performance.

114. This follows proposals drafted by the Audit and Risk Committee for the Board of Directors regarding the reappointment of the external

auditor of the Group.

115. In 2018, the shareholders of Global Ports re-appointed the Independent Auditors, PricewaterhouseCoopers as the external auditor for the

purposes of auditing the Group’s IFRS financial statements for 2018.

116. 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

Morten Engelstoft
Chairman of the Board

27 March 2019

Alexander Iodchin
Secretary of the Board

Annual Report 2018

Global Ports Investments PLC

Directors’ 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
26 to 93 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

Morten Engelstoft
Chairman of the Board

Alexander Iodchin
Secretary of the Board

Limassol

27 March 2019

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Consolidated income statement

for the year ended 31 December 2018

(in thousands of US dollars)

Revenue

Cost of sales

Gross profit

Administrative, selling and marketing expenses

Share of profit/(loss) of joint ventures accounted for using the equity method including impairment

Other gains/(losses) – net

Operating profit/(loss)

Finance income

Finance costs

Change in fair value of derivatives

Net foreign exchange gains/(losses) on financial activities

Finance income/(costs) – net

Profit/(loss) before income tax

Income tax expense

Profit/(loss) for the year

Attributable to:

Owners of the Company

Non-controlling interest

For the year ended
31 December

Note

2018

2017

343,575

330,505

(136,020)

(148,511)

207,555

181,994

(38,925)

(12,425)

(24,561)

131,644

(42,731)

(73,267)

(71,329)

(5,333)

2,561

2,048

(85,148)

(27,509)

(75,185)

(90,879)

42,089

27,944

(185,281)

(18,798)

(53,637)

(4,692)

(58,329)

(24,131)

(28,816)

(52,947)

(59,279)

(52,973)

950

(58,329)

(52,947)

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

(0.10)

(0.09)

The notes on pages 31 to 93 are an integral part of these consolidated financial statements.

Annual Report 2018

Global Ports Investments PLC

Consolidated statement
of comprehensive income

for the year ended 31 December 2018

(in thousands of US dollars)

Profit/(loss) for the year

Other comprehensive income/(loss)

Items that may be subsequently reclassified to the income statement

Currency translation differences

Share of currency translation differences of joint ventures accounted for using the equity method

Reclassification to income statement of translation differences due to disposal of subsidiaries

Cumulative other comprehensive income movement relating to assets classified as held for sale

Reclassification to income statement of a loss/(gain) on cash flow hedge termination

Reclassification to currency translation reserve of gain on cash flow hedge termination

For the year ended
31 December

Note

2018

2017

(58,329)

(52,947)

7,26

(85,628)

(8,003)

27,106

(3,472)

–

32,356

13,115

1,560

69,566

(12,140)

Total items that can be reclassified subsequently to the income statement

(69,997)

104,457

Items that may not be subsequently reclassified to the income statement

Share of currency translation differences attributable to non-controlling interest

Total items that cannot be reclassified subsequently to the income statement

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

Total comprehensive income/(loss) for the year

Total comprehensive income/(loss) attributable to:

Owners of the Company

Non-controlling interest

Total comprehensive income/(loss) for the year

(2,846)

812

(72,843)

105,269

(131,172)

52,322

(129,276)

51,484

(1,896)

838

(131,172)

52,322

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 31 to 93 are an integral part of these consolidated financial statements.

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Consolidated balance sheet

as at 31 December 2018

(in thousands of US dollars)

ASSETS

Non-current assets

Property, plant and equipment

Intangible assets

Investments in joint ventures

Prepayments for property, plant and equipment

Deferred tax assets

Derivative financial instruments

Trade and other receivables

Current assets

Inventories

Derivative financial instruments

Trade and other receivables

Income tax receivable

Cash and cash equivalents

Assets classified as held for sale

TOTAL ASSETS

EQUITY AND LIABILITIES

Total equity

Equity attributable to the owners of the Company

Share capital

Share premium

Capital contribution

Currency translation reserve

Transactions with non-controlling interest

Retained earnings

Non-controlling interest

Total liabilities

Non-current liabilities

Borrowings

Trade and other payables

Deferred tax liabilities

Current liabilities

Borrowings

Trade and other payables

Current income tax liabilities

Liabilities directly associated with assets classified as held for sale

TOTAL EQUITY AND LIABILITIES

As at 31 December

Note

2018

2017

1,133,885

1,428,401

460,942

565,238

24,795

7,513

60,499

–

14,898

553,304

690,858

56,918

8,393

45,529

58,840

14,559

154,453

227,158

6,555

–

40,901

3,611

91,613

11,773

5,769

19,546

33,630

2,366

130,434

35,413

1,288,338

1,655,559

246,066

231,831

57,317

923,511

101,300

377,238

361,107

57,317

923,511

101,300

(829,373)

(759,376)

(209,122)

188,198

247,477

14,235

16,131

1,042,272

1,278,321

981,202

1,178,872

850,766

1,005,664

–

9,266

130,436

163,942

61,070

21,183

38,776

1,111

–

99,449

69,089

26,420

1,513

2,427

1,288,338

1,655,559

On 27 March 2019 the Board of Directors of Global Ports Investments Plc authorised these consolidated financial statements for issue.

Morten Engelstoft, Director

Alexander Iodchin, Director

The notes on pages 31 to 93 are an integral part of these consolidated financial statements.

Annual Report 2018

Global Ports Investments PLC

Consolidated statement
of changes in equity

for the year ended 31 December 2018

(in thousands of US dollars)

Attributable to the owners of the Company

Note Share capital

Share
premium

Capital
contribution

Translation
reserve

Cash flow
hedge
reserve

Transactions
with non-
controlling
interest

Retained
earnings*

Total

Non-
controlling
interest

Total

57,317

923,511

101,300

(806,407)

(57,426)

(209,122)

300,450

309,623

15,293

324,916

–

47,031

57,426

–

104,457

812

105,269

–

(52,973)

(52,947)

–

47,031

57,426

–

(52,973)

51,484

838

52,322

57,317

923,511

101,300

(759,376)

–

(209,122)

247,477

361,107

16,131

377,238

–

(69,997)

–

(69,997)

–

(69,997)

(2,846)

(72,843)

–

(59,279)

950

(58,329)

–

(59,279)

(129,276)

(1,896)

(131,172)

57,317

923,511

101,300

(829,373)

(209,122)

188,198

231,831

14,235

246,066

Balance at 31
December 2016

Total other
comprehensive
income/(loss)

Profit/(loss) for
the year

Total
comprehensive
income/(loss) for
the year ended
31 December
2017

Balance at 31
December 2017

Total other
comprehensive
income/(loss)

Profit/(loss) for
the year

Total
comprehensive
income/(loss) for
the year ended
31 December
2018

Balance at 31
December 2018

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

shareholders.

The notes on pages 31 to 93 are an integral part of these consolidated financial statements.

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Consolidated statement of cash flows

for the year ended 31 December 2018

(in thousands of US dollars)

Cash flows from operating activities

Profit/(loss) before income tax

Adjustments for:

Depreciation of property, plant and equipment

Impairment of property, plant and equipment

Loss on disposal of subsidiaries and assets held for sale

(Profit)/loss on sale of property, plant and equipment

Write off of property, plant and equipment

Amortisation of intangible assets

Interest income

Interest expense

Loss on extinguishment of financial liabilities

Share of (profit)/loss in jointly controlled entities including impairment

Change in fair value of swap

Foreign exchange differences 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

Dividends received from joint ventures

Income tax paid

Net cash from operating activities

Cash flows from investing activities

Purchases of intangible assets

Purchases of property, plant and equipment

Proceeds from sale of property, plant and equipment

Proceeds from sale of subsidiary, net of cash held by the subsidiary

Loans granted to related parties

Loan repayments received from related parties

Interest received

Net cash used in investing activities

Cash flows from financing activities

Proceeds from borrowings

Repayments of borrowings

Interest paid

Proceeds from derivative financial instruments not used for hedging

Finance lease principal payments (third parties)

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Exchange gains/(losses) on cash and cash equivalents

Cash and cash equivalents at end of the year

For the year ended
31 December

Note

2018

2017

(53,637)

(24,131)

9,22

26,7

30(g)

22,23

35,764

–

24,689

(129)

12,909

(2,561)

83,383

1,765

12,425

27,509

76,345

663

38,007

11,400

(162)

12,966

(2,048)

90,879

73,267

(42,089)

41,570

(930)

219,128

198,809

(1,956)

(9,895)

758

(637)

(1,810)

366

208,035

196,728

1,725

10,765

(35,418)

(33,549)

174,342

173,944

(2,554)

(40,752)

463

28,909

(1,400)

260

1,619

(1,846)

(28,041)

291

(7,500)

1,183

1,274

(13,455)

(34,639)

100

(155,567)

(82,994)

43,064

(774)

–

(57,533)

(89,094)

20,254

(2,741)

(196,171)

(129,114)

(35,284)

10,191

130,434

119,279

(3,537)

91,613

964

130,434

The notes on pages 31 to 93 are an integral part of these consolidated financial statements.

Annual Report 2018

Global Ports Investments PLC

Notes 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 Street, AyiosNicolaos, CY-3095, 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 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”.

Until April 2018 the Group was jointly controlled by Transportation Investments Holding Limited (“TIHL”) and APM Terminals B.V.
(“APMTerminals”). In April 2018 TIHL has completed the sale of its 30.75% stake in GPI to LLC Management Company “Delo” (“Delo
Group”). The Group has been informed that in connection with the transaction, Delo Group has acceded to the shareholder agreement
with APM Terminals B.V. and that TIHL has been released from its obligations under such agreement. Since April 2018 the Group is jointly
controlled by Delo Group and APM Terminals.

Approval of the consolidated financial statements
These consolidated financial statements were authorised for issue by the Board of Directors on 27 March 2019.

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.

Composition of the Group and its joint ventures
The Group’s terminals are located in the Baltic and Far East Basins, key regions for foreign trade cargo flows. The Group operates:

five container terminals in Russia – Petrolesport, First Container Terminal (FCT, Ust-Luga Container Terminal (ULCT) and Moby Dik
in the St. Petersburg and Ust-Luga port cluster, and Vostochnaya Stevedoring Company (VSC) in the Port of Vostochny;

two container terminals in Finland – Multi-Link Terminals Helsinki and Multi-Link Terminals Kotka (Multi-Link Terminals);

inland Yanino Logistics Park (YLP), located in the vicinity of St. Petersburg;

oil product terminal AS Vopak E.O.S. that is located in Estonia (see Note 26(b) and Note 27).

See also Note 5 for the description of segmental information of the Group. All entities above are fully consolidated, except for Moby Dik,
Multi-Link Terminals and Yanino Logistics Park, which are joint ventures accounted for using the equity method of accounting.

The Company fully controls all of the above terminals except for as described below:

> MLT and CD Holding groups are joint ventures where the Company has 75% effective ownership interest (Note 27). Moby Dik (a container
terminal in the vicinity of St. Petersburg), Multi-Link Terminals and Multi-Link Terminals Ltd constitute the MLT group. Yanino Logistics Park
(an inland container terminal in the vicinity of St. Petersburg) and CD Holding constitute the CD Holding group.

AS Vopak E.O.S. and its subsidiaries (VEOS) is a joint venture with Royal Vopak, the world’s largest independent tank storage provider,
specialising in the storage and handling of liquid chemicals, gasses and oil products, where the Company has a 50% effective ownership
interest (Note 26(b) and Note 27). VEOS facilities are located in Estonia.

> Ust-Luga Container Terminal (located in Ust-Luga, North-West Russia) is an 80% subsidiary where Eurogate, one of the leading container

terminal operators in Europe has a 20% non-controlling interest.

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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) that are effective as at 1 January 2018 have been adopted by the EU through
the endorsement procedure established by the European Commission.

The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation
of derivatives and measurement of assets held for sale at fair value less cost of disposal.

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.

New and amended standards adopted by the Group
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 2018:

IFRS 9 Financial Instruments;

IFRS 15 Revenue from Contracts with Customers;

Classification and Measurement of Share-based Payment Transactions – Amendments to IFRS 2;

Annual Improvements 2014-2016 cycle;

Transfers to Investment Property – Amendments to IAS 40;

Interpretation 22 Foreign Currency Transactions and Advance Consideration.

Apart from the accounting policy changes resulting from the adoption of IFRS 9 and IFRS 15 that are effective from 1 January 2018, the
adoption of the remaining amendments listed above did not have a material effect on the accounting policies of the Group. IFRS 9 and IFRS
15 were adopted using the simplified transition method without restating the comparative information, with the impact of adoption to be
recognised in the opening retained earnings and other components of equity as appropriate. The comparatives are stated based on the previous
accounting policies of the Group for financial instruments and revenue recognition which are also presented below to the extent that these
are different from the new accounting policies. The adoption of all of the above standards and amendments did not result in any material
adjustment to the opening reserves or the comparative figures presented in these consolidated 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 2018, 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:

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

2. Basis of preparation and summary of significant accounting policies (continued)

(a) Adopted by the European Union

IFRS 16 Leases

The Group will adopt the Standard in 2019 using the simplified transition approach (see below) and the practical expedients detailed
below. IFRS 16 introduces a single lessee accounting model, requiring a lessee to recognise assets and liabilities for all leases with a term
of more than 12 months, unless the underlying asset is of low value. The lessee is required to recognise a right-of-use asset representing
its right to use the underlying leased asset, and a lease liability representing its obligation to make lease payments. Thus, most leases
classified as operating leases with lease payments recorded in the income statement under the existing policy will be included in the
consolidated balance sheet.

The new treatment of leases will result in an increase in non-current assets and financial liabilities as these leases are capitalised as well as
a decrease in lease expenses, offset by an increase in depreciation and an increase in finance charges. This will result in a higher operating
profit. In general, the depreciation charge is constant over the lease period, but finance charges decrease as the remaining lease liability
decreases.

Net debt is expected to increase due to the recognition of lease liabilities which are considered financial liabilities, whilst working capital will
remain unaffected.

Cash generated from operations is expected to increase due to certain lease expenses no longer being recognised as operating cash
outflows, but this will be offset by a corresponding increase in cash used in financing activities due to repayments of the principal on
lease liabilities. Net cash flow will remain unchanged.

Some lease agreements of the Group are short-term in nature and not individually material in value. The Group has elected to apply the practical
expedient which excludes lease agreements which are short-term in nature and not individually material in value from being recognised as
leases in terms of IFRS 16.

The Group has also elected to adopt the transitional practical expedient such that the IFRS 16 definition of a lease would only be
applied to assess whether contracts entered into after the date of initial application (1 January 2019) are, or contain leases. All contracts
previously assessed not to contain leases are not revisited.

The Group has elected to apply IFRS 16 using the simplified transition approach with the cumulative effect of initially applying the Standard
recognised at the date of initial application (1 January 2019). The comparative amounts for the year prior to the first adoption will not be
restated.

The Group’s assessment of the impact of adopting this Standard is in the process of being finalised, but the estimated range of potential
impact on the Group’s key metrics as at 31 December 2018 is as follows:

Total assets: increase 1–2%;

Total liabilities: increase 1–2%;

> Net debt: increase 2–3%;

> Operating profit: increase 2–3%;

Profit for the year: increase 1-2%.

There are no other standards that are not yet effective and that would be expected to have a material impact on the Group in the current
or future reporting periods and on foreseeable future transactions.

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Basis of consolidation

(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group
is exposed to, or has the rights to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the 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 at 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 arrangements
Under IFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual
rights and obligations each investor has rather than the legal structure of the joint arrangement. Group has assessed the nature of its joint
arrangements and determined them to be joint ventures. Joint ventures are accounted for using equity method of accounting.

Under the equity method of accounting, interests in joint ventures are initially recognised in the consolidated balance sheet at cost and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the
Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in
substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the joint ventures. The Group applies the requirements of IFRS 9 to determine whether any
additional impairment loss needs to be recognised in respect of loans given to joint ventures, before taking into account the effect (if any) of the
Group’s share of joint ventures’ losses applied against long-term interests in the joint ventures as detailed below.

The Group’s share of losses in a joint venture is first allocated against the Group’s investment in the joint venture and then to any other
long term interests that in substance form part of the Group’s net investment.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

2. Basis of preparation and summary of significant accounting policies (continued)

Basis of consolidation (continued)

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Investments in joint ventures are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised through profit or loss 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. Value in use is calculated by estimating the Group’s share of the present value of the estimated future cash flows expected to be
generated from the asset, including the cash flows from the operations of the asset and the proceeds from the ultimate disposal of the
asset. An impairment loss recognised in prior years is reversed where appropriate if there has been a change in the estimates used to
determine the recoverable amount.

Revenue recognition

Accounting policies applied from 1 January 2018:
Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods
or services to the customer, excluding amounts collected on behalf of third parties (for example, value-added taxes).

The Group recognises revenue when the parties have approved the contract and are committed to perform their respective obligations,
the Group can identify each party’s rights and the payment terms for the goods or services to be transferred, the contract has commercial
substance, it is probable that the Group will collect the consideration to which it will be entitled in exchange for the goods or services that
will be transferred to customer and when specific criteria have been met for each of the Group’s contracts with customers as described
below. 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. In evaluating whether collectability of an amount of consideration is probable, the Group considers only
the customer’s ability and intention to pay the amount of consideration when it is due. Revenues earned by the Group are recognised on
the following bases:

(a) Sales of services
The Group offers its customers a wide range of cargo handling services for its import and export logistics operations. These services are
provided over time and usually do not exceed one month. Revenue from rendering of these services is recognised when the Group satisfies
a performance obligation by transferring control over promised service to a customer over time in the accounting period in which the services
are rendered. Revenue from the rendering of these services is recognised net of discounts and estimates for rebates that are in accordance
with the contracts entered into with the customers. Revenue is recognised to the extent that is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur when the uncertainty in relation to the rebates and discounts is resolved. Estimations
for rebates and discounts are based on the Group’s experience with similar contracts and forecasted sales to the customer.

(b) Sales of goods
The Group sells unused materials and goods. Sales of goods are recognised when the Group satisfies a performance obligation by transferring
a control over promised goods to a customer at a point in time at which the customer obtains control of the goods, which is usually when
the customer takes the goods out of the territory of the terminal.

(c) Financing component
The Group does not have any material contracts where the period between the transfer of the promised goods or services to the customer
and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value
of money.

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(d) Contract assets and contract liabilities
In case the services rendered by the Group as of the reporting date exceed the payments made by the customer as of that date and the
Group does not have the unconditional right to charge the client for the services rendered, a contract asset is recognised. The Group
assesses a contract asset for impairment in accordance with IFRS 9 using the simplified approach permitted by IFRS 9 which requires
expected lifetime losses to be recognised from initial recognition of the contract asset. An impairment of a contract asset is measured,
presented and disclosed on the same basis as a financial asset that is within the scope of IFRS 9. If the payments made by a customer
exceed the services rendered under the relevant contract, a contract liability is recognised. The Group recognises any unconditional rights to
consideration separately from contract assets as a trade receivable because only the passage of time is required before the payment is due.

The Group has changed the presentation of certain amounts in the consolidated balance sheet to reflect the terminology of IFRS 15.
Specifically, contract liabilities recognised in relation to stevedoring services that were previously included in trade and other payables
as advances are now disclosed as contract liabilities.

Accounting policies applied until 31 December 2017:
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
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
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).

Other incomes

(a) Rental income
See accounting policy for leases below.

(b) Interest income

Accounting policies applied from 1 January 2018:
Interest income on financial assets at amortised cost and financial assets at FVOCI calculated using the effective interest method. Interest
income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets
that subsequently become credit impaired. For credit-impaired financial assets – Stage 3 the effective interest rate is applied to the net
carrying amount of the financial asset (after deduction of the loss allowance), for Stage 1 and Stage 2 – gross amount of financial assets.

Interest income on derivative financial instruments (cross-currency interest rate swap arrangements) at fair value through profit or loss
is calculated on nominal basis based on the difference between interest expenses on RUR-denominated bonds and lower interest rates
embodied in the swap arrangements.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

2. Basis of preparation and summary of significant accounting policies (continued)

Other incomes (continued)

Accounting policies applied until 31 December 2017:
Interest income is recognised on a time-proportion basis using the effective interest method and is included within finance income.

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.

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.

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, cash and cash equivalents and borrowings are presented net in the income
statement within ‘net foreign exchange losses on financing activities’. 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 exchange rates prevailing at the date of transaction or using average rates as a reasonable approximation;

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.

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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.

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 (refer to accounting policy for intangible assets in relation to the impairment
of goodwill) 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.

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

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.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

2. Basis of preparation and summary of significant accounting policies (continued)

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 at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’.
Goodwill on acquisition of joint ventures is included in the carrying amount of the Group’s investment in the joint venture (refer to Note 2,
Basis of consolidation, (c)).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.

(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) 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 up to 54 years as of 31 December 2018) 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.

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.

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(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.

Financial instruments

Accounting policies applied from 1 January 2018:
On 1 January 2018, the date of initial application of IFRS 9, the Group has assessed which business models apply to the financial assets held
by the Group and has classified its financial instruments into the appropriate IFRS 9 categories. Based on the analysis performed, the financial
assets previously classified into ‘loans and receivables’ category were reclassified into those measured subsequently at amortised cost, with
no impact on their measurement. The Group did not have any financial assets in other than the ‘loans and receivables’ and ‘derivatives’
categories as at the date of transition. The accounting treatment and presentation of derivatives remain the same (see accounting policy
below). The changes in classification categories did not result in changes of presentation in the consolidated balance sheet. Classification
and measurement of the Group’s financial liabilities under IFRS 9 remained consistent with IAS 39, since the new requirements only affect
the accounting for financial liabilities measured at fair value through profit or loss and the Group does not have any such financial liabilities.
No adjustments to the opening retained earnings were required in relation to the Group’s loans and borrowings, as none of the loans and
borrowings outstanding on 1 January 2018 had been refinanced in prior periods. The amount of expected credit losses on the Group’s financial
assets as at 1 January 2018 assessed under the new impairment rules set out in IFRS 9 did not significantly differ from the allowance recognised
in the Group’s consolidated financial statements as at 31 December 2017 and therefore there is no quantitative effect of the change
as of 1 January 2018.

The adoption of IFRS 9 “Financial Instruments” does not have a material impact on the amounts recognised in these consolidated
financial statements, however the policies have been amended to be consistent to the requirements of the standard as follows:

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

2. Basis of preparation and summary of significant accounting policies (continued)

(i) Investments and other financial assets

Classification.

From 1 January 2018, the Group classifies its financial assets into the following measurement categories:
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those to be measured subsequently at fair value (either through OCI, or through profit or loss), and
those to be measured at amortised cost.

The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses are either recorded in profit or loss or OCI.

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

Recognition and derecognition:

All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (‘regular
way’ purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other
purchases and sales are recognized when the Group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership.

Measurement.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit
or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at FVPL are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics
of the asset. There are three measurement categories into which the Group classifies its debt instruments:

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in ‘other gains/(losses)-
net’, together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or
loss. Financial assets measured at amortised cost comprise cash and cash equivalents, loans receivable, trade receivables and other financial
assets at amortised cost.

FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows
represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI,
except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in
profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity
to profit or loss and recognised in ‘other gains/(losses)-net’. Interest income from these financial assets is included in finance income using
the effective interest rate method. Foreign exchange gains and losses are presented in ‘other gains/(losses)-net’ and impairment expenses
are presented as separate line item in the statement of profit or loss. The Group does not hold any such instruments.

FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is
subsequently measured at FVPL is recognised in profit or loss and presented net within ‘other gains/(losses)-net’ in the period in which it
arises.

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(ii) Impairment

From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI and cash and cash equivalents. The Group measures expected credit losses (‘ECL’) and recognises credit loss
allowance at each reporting date. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of the loss is recognised
in the income statement within ‘net impairment losses on financial and contract assets’. For trade receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the
receivables. For all other financial assets that are subject to impairment under IFRS 9 the Group applies a general approach – three
stage model for recognizing and measuring expected losses based on changes in credit quality since initial recognition. A financial
instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at
an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual
maturity, if shorter (‘12 Months ECL’). If the Group identifies a significant increase in credit risk (‘SICR’) since initial recognition, the asset
is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering
expected prepayments, if any (‘Lifetime ECL’). Refer to Note 3, Credit risk section for a description of how the Group determines when
a SICR has occurred. If the Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is
measured as a Lifetime ECL.

Additionally, for debt instruments that qualify as low credit risk, the loss allowance is limited to 12 months expected credit losses. For
a description of how the Group determines low credit risk financial assets refer to Note 3, Credit risk section below.

Accounting policies applied until 31 December 2017:

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.

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 trade receivables are initially recognised at fair value plus transaction costs. Loans and trade 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 trade 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 loans and trade 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 loans or trade receivables. Significant financial difficulties
of the debtor, probability that the debtor 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
of and the recoverable amount, being the present value of estimated future cash flows, discounted at the original effective interest rate.
For trade receivables the amount of the provision is recognised in the income statement within ‘administrative, selling and marketing
expenses’. For loans receivable the amount of the provision is recognised in the income statement within ‘other gains/(losses) – net’.
Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

2. Basis of preparation and summary of significant accounting policies (continued)

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).

Derivative financial instruments not designated as a hedging instrument are included within financial assets at fair value through profit
or loss when fair value is positive and within financial liabilities at fair value through profit or loss when fair value is negative. They
are presented as current assets or liabilities if they are expected to be settled within 12 months after the end of the reporting period.
Changes in the fair value of foreign currency derivatives (cross-currency swaps) are presented in the income statement within ‘change in
fair value of derivatives’ as part of ‘finance income/(costs) – net’.

At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items
including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged
items. The Group documents its risk management objective and strategy for undertaking its hedge transactions.

The fair values of various derivative instruments used for hedging purposes are disclosed in Note 23. 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 of cross-currency interest rate swap hedging variable rate
borrowings is recognised immediately in the income statement within ‘finance costs’ and gain or loss relating to the hedging of currency
risk in forecast sale is recognised in ‘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 cross-currency interest rate swap
hedging variable rate borrowings is recognised in the income statement within ‘finance costs’ and gain or loss relating to the hedging of
currency risk in forecast sale is recognised in ‘other gains/(losses)-net’.

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. Gain or loss existing in equity is recognised immediately in the income statement if the forecast transaction is no
longer expected to occur.

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.

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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.

Non-current assets held for sale
Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

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.

Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in
the event of default, insolvency or bankruptcy of the company or the counterparty.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

2. Basis of preparation and summary of significant accounting policies (continued)

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.

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 over the period of the borrowings
using the effective interest method.

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.

Borrowings are removed from the consolidated balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party
and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss within ‘finance
income/(costs) – net’.

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.

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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.

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. Staff costs of the Group mainly
consists of salaries.

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.

Annual Report 2018

Global Ports Investments PLC

Notes 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 on monetary items like cash in banks, short-term investments, trade and other receivables, borrowings
and trade and other payables denominated in currency other than functional currency of each of the entities of the Group.

The analysis below 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 usually non-
linear, and larger or smaller impacts should not be interpolated or extrapolated from these results. The sensitivity analysis does 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 analysis 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.

Currently the long-term debt of the Group is denominated in US dollars and Russian roubles. The US dollar interest rates are
relatively more attractive compared to the Russian rouble interest rate. The revenues of Russian operations are mainly priced in US
dollars and Russian roubles, whereas most of expenses are denominated and settled in Russian roubles. The Group uses from time
to time foreign currency swaps (derivatives) to manage its exposures to foreign exchange risk. The analysis below does not cover
borrowings in joint ventures as they are not included in the financial position of the Group.

The carrying amount of financial 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

2018

2017

84,842

584

575

118,257

323,848

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 2018, would have (decreased)/increased by US$10,111 thousand
(2017: 15% change, effect US$24,671 thousand) and the equity would have (decreased)/increased by US$10,111 thousand
(2017: 15% change, effect US$24,671 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.

The carrying amount of financial assets and liabilities in Russian operations denominated in Euros as at 31 December 2018
and 31 December 2017 are as follows:

(in thousands of US dollars)

Assets

Liabilities

Capital commitments

As at 31 December

2018

–

1,227

2017

102

18,916

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Had Euro exchange rate strengthened/weakened by 15% against the Russian rouble and all other variables remained unchanged,
the post-tax profit and the equity of the Group for the year ended 31 December 2018, would have increased/(decreased) by US$
6 thousand (2017: 15% change, effect US$ 7 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.

(ii) Cash flow and fair value interest rate risk

The Group is not exposed to changes in market interest rates as all of its borrowings portfolio consists of fixed rate debt as of 31 December
2018. However, the Group is exposed to fair value interest rate risk through market value fluctuations of loans receivable, borrowings and
lease liabilities with fixed rates.

For the year ended 31 December 2017, 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$ 8 thousand.

Management monitors changes in interest rates and takes steps to mitigate these risks as far as practicable and economically
feasible.

(b) Credit risk

(i) Risk management

Financial assets, which potentially subject the Group to credit risk, consist principally of trade receivables and loans receivable (Note 19)
and cash and cash equivalents (Note 20). 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 60% and 57% of the Group’s revenue for the year ended 31 December
2018 and 31 December 2017, respectively.

(ii) Impairment of financial assets

The Group has three types of financial assets that are subject to the expected credit loss model:

Trade receivables for sales of goods and from the provision of services;

> Debt instruments and other financial assets carried at amortised cost (loans to related parties and other receivables); and

Cash and cash equivalents.

Cash and cash equivalents:
The Group’s cash and cash equivalents which have investment grade credit ratings with at least one major rating agency are considered
to have low credit risk, and the loss allowance to be recognised during the period was therefore limited to 12 months expected losses.
The identified impairment loss for cash and cash equivalents was immaterial to be accounted for. For the split of cash and cash equivalents
by credit rating refer to Note 17.

Trade receivables:
To measure the expected lifetime credit losses, the Group performed the assessment on an individual basis for its major customers based
on days past due and the corresponding historical credit losses experienced by the Group with those customers.

For those customers who are independently rated, the Group monitors their credit quality based on the external credit ratings.
Otherwise, if there is no independent rating, the Group monitors the credit quality of trade receivables on the basis of past
experience, identifying customers with working history with the Group of over 12 months and no losses arising and others, and also
by reference to the days past due.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

3. Financial risk management (continued)

Financial risk factors (continued)

(b) Credit risk (continued)

Loans and other receivables:
With respect to other financial assets at amortised cost, the Group considers the probability of default upon initial recognition of
the asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
To assess whether there is a significant increase in credit risk the Group compares the risk of a default occurring on the asset as
at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive
forwarding-looking information. Especially the following indicators are incorporated:

actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant
change to the borrower’s/counterparty’s ability to meet its obligations;

actual or expected significant changes in the operating results of the borrower/counterparty; and

significant changes in the expected performance and behaviour of the borrower/counterparty, including changes in the payment
status of counterparty and changes in the operating results of the borrower.

Regardless of the analysis above, a significant increase in credit risk for loans and other receivables with a third party is presumed
if a debtor is more than 30 days past due in making a contractual payment.

A default on loans and other receivables with a third party is when the counterparty fails to make contractual payments within 90
days of when they fall due and/or the counterparty is assessed as unlikely to pay its obligations in full without realisation of collateral,
regardless of the existence of any past-due amount or the number of days past due.

Financial assets including trade and other receivables are written off when there is no reasonable expectation of recovery, such as
a debtor/counterparty failing to engage in a repayment plan with the Group. Where loans or receivables have been written off, the
Group continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are
recognised in consolidated income statement.

The Group’s loans receivable from related parties are within Stage 3 of the IFRS 9 impairment model. No material lifetime expected
credit losses were identified in relation to the Group’s loans receivable from related parties.

For more information on the credit risk quality of trade and other receivables of the Group at 31 December 2018 refer to Notes
17 and 19.

Management controls current liquidity based on expected cash flows and expected revenue receipts.

Cash flow forecasting is performed at the level of operating entities of the Group and at consolidated level by Group finance department.
Group finance department monitors forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational
needs as well as scheduled debt service while maintaining sufficient headroom to ensure that the Group does not breach covenants
(where applicable) on any of its borrowing facilities. Such forecasting takes into consideration potential variations in operating cash flows
due to market conditions, the Group’s debt repayments and covenant compliance.

Taking into account expected levels of operating cash flows, availability of cash and cash equivalents amounting to US$91,613 thousand
(31 December 2017: US$130,434 thousand) (Note 20) the Group has the ability to meet its liabilities as they fall due and mitigate risks
of adverse changes in the financial markets environment.

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The management of the Group believes that it is successfully managing the exposure of the Group to liquidity risk.

The table below summarises the analysis of financial liabilities by maturity as of 31 December 2018 and 2017. 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)

Less than 1
month

1-3 months

3-6 months

6 months –
1 year

1-2 years

2-5 years

Over 5 years

Total

As at 31 December
2018

Borrowings

Trade and other
payables

12,144

5,074

20,822

13,271

17,105

4,405

26,018

9,030

194,936

894,294

50,150

1,215,469

–

31,780

Total

17,218

34,093

21,510

35,048

194,936

894,294

50,150

1,247,249

As at 31 December
2017

Borrowings

Trade and other
payables

Derivative financial
instruments:

- payments

- receipts

Total

12,145

4,407

24,393

11,538

30,315

361

64,306

1,572

126,678

787,784

436,543

1,482,164

–

10,609

–

28,487

–

4,152

(11,081)

16,552

29,002

2,324

(5,670)

27,330

6,476

12,952

225,799

(16,751)

(33,502)

(304,998)

–

251,703

(372,002)

55,603

106,128

719,194

436,543

1,390,352

(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 equity 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

2018

871,949

1,118,015

78%

2017

1,074,753

1,451,992

74%

Annual Report 2018

Global Ports Investments PLC

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.

The disclosure of the fair value of financial instruments carried at amortised cost and the fair value of financial instruments carried at fair
value is determined using 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 is disclosed in Note 23. It was valued using Level 2 valuation technique from
the table above. At 31 December 2018 the Group did not hold any financial instruments carried at fair value.

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.

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) Estimated impairment of goodwill and property, plant and equipment and investments in joint ventures
The Group follows its accounting policies to test goodwill and other non-financial assets for possible impairment or reversal of impairment.
For the purposes of the preparation of the current financial statements the Group performed a test of the estimated recoverable amount
of the cash-generating units (CGUs) using the value-in-use method, compared to their carrying value, for all CGUs except for VEOS
and MD for which fair value less costs to sell method was used (see below). The value-in-use assessment requires making judgments

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about long-term forecasts related to the CGUs subject to review for which the recoverable amount was calculated based on estimated
discounted future cash flows. These forecasts are uncertain as they require assumptions about volumes, prices for the products and
services, discount rates, future market conditions and future technological developments. Significant and unanticipated changes in these
assumptions could require a provision for impairment in a future period.

For VEOS see Note 26(b) and Note 27.

For MD following the substantial reduction of cargo volumes the recoverable amount was determined based on the expected fair value
less cost to sell of those assets which have active market and their value could be reliably determined. As a result the investment in Multi-
Link Terminals Ltd (being the parent of MD) was impaired by US$13,946 thousand (see Note 5 and Note 27).

For all CGUs tested based on discounted future cash flows, cash flow projections cover a period of five years based on the assumptions
of the next 12 months. 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 segments a terminal growth rate of 3% has been applied (2017: 3%). The discount rate applied for Russian
ports CGUs in projections prepared as at 31 December 2018 is 10.6% (2017: 10.4%).

Key assumptions for Russian ports CGUs tested based on discounted future cash flows are throughput volume, price per unit, growth
rates, and discount rates. The projected volumes reflect past experience adjusted by the management view on the prospective market
developments. For CGUs in the Russian ports segment 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, the long-term average throughput growth rate for the Russian container market is higher than in
developed markets.

Based on the results of the impairment tests for other CGUs carried out in 2018, the Board of Directors believes that there are no
indications for reversal of impairments recognised in previous periods for non-financial assets other than goodwill.

For all CGU units except for ULCT and FCT CGUs management believes that any reasonably possible change in the key assumptions on
which these units’ recoverable amounts are based would not cause carrying amounts of these units to exceed their recoverable amounts.

In ULCT, the recoverable amount calculated based on the value in use exceeded the carrying value by US$6.5 million. A decrease of
handling volumes by approximately 3% each year as opposed to volume projections used by the management or a decrease in the average
tariffs by approximately 2% each year as opposed to those used in projections would remove the remaining headroom. Reasonable
changes in other key parameters do not result in the elimination of the existing remaining headroom.

In FCT, the recoverable amount calculated based on value in use exceeded the carrying value by US$172.7 million. A decrease of handling
volumes by approximately 4% each year as opposed to volume projections used by the management or a decrease in the average revenue
per TEU by approximately 4% each year as opposed to those used in projections would remove the remaining headroom. Reasonable
changes in other key parameters do not result in the elimination of the existing remaining headroom.

(ii) Russian legislation
Russian tax, currency and customs legislation is subject to varying interpretations (Note 28).

Annual Report 2018

Global Ports Investments PLC

Notes 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; 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 with the exclusion of joint ventures and the netting off of deferred tax assets and liabilities. For the purposes of the internal
reporting, joint ventures are assessed on a 100% ownership basis.

Assets are allocated based on the operations of the segment and the physical location of the asset.

For segmental reporting purposes the Group’s consolidated financial position and consolidated results are presented by using the
proportionate consolidation in relation to interests in jointly controlled entities (VEOS and MLT and CDH groups). There are additional
disclosures to reconcile segmental information with the consolidated income statement and the consolidated balance sheet.

According to this method of accounting, the Group combined 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 recognised 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. Unrealised gains
on transactions between the Group and its joint venturers were eliminated to the extent of the Group’s interest in the joint venture.
Unrealised losses were also eliminated unless the transaction provided evidence of an impairment ofthe asset transferred.

The brief description of segments is as follows:

Russian ports
The segment consists of the following operating units:

Petrolesport, Farwater (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.

First Container Terminal (FCT), the biggest container terminal in Russia, located in St. Petersburg port, North-West Russia.

> Ust-Luga Container Terminal (ULCT), a container terminal in Ust-Luga, near St. Petersburg, North-West Russia.

Vostochnaya Stevedoring Company (VSC) and various other entities (including some intermediate holdings) that own and manage
a container terminal in Port of Vostochny near Nahodka, Far-East Russia.

> Moby Dik (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 Logistics Park (YLP) being an in-land container terminal in Yanino near St. Petersburg, North-West Russia.

Finnish ports
The segment consists of container terminals in the ports of Vuosaari (Helsinki) and Kotka, Finland owned and operated by Multi-Link Terminals
Ltd Oy.

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Global Ports Investments PLC

Overview

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

VEOS
The segment consists of AS Vopak 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. See Note 26(b) and Note 27.

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 managing, 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 material regular transactions between segments except for those which mainly relate to management and
financing activities.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

5. Segmental information (continued)

The segment results for the year ended 31 December 2018 are as follows:

(in thousands of US dollars)

Reconciliation adjustments

Russian ports

VEOS

Finnish ports

Total operating
segments

Holdings

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Sales to third parties

365,190

30,939

15,009

411,138

Inter-segment revenue

–

365,190

30,939

15,009

411,138

(171,806)

(12,815)

(13,039)

(197,660)

–

488

–

(24,641)

–

(24,641)

15,057

–

386,497

(488)

285

269

–

386,497

(182,318)

(45,315)

(15,798)

(7,666)

(1,111)

(24,575)

(25,663)

4,654

Total revenue

Cost of sales

Administrative, selling
and marketing expenses

Other gains/(losses)
– net

(24,477)

(247)

150

(24,574)

3,838

(3,917)

(24,563)

Operating profit/(loss)

153,109

10,211

1,009

164,329

(21,337)

(4,840)

(3,851)

134,301

Finance income/
(costs) – net

incl. interest income

incl. interest expenses

incl. change in the fair
value of derivative
instruments

incl. net foreign exchange
gains/(losses) on
financing activities

(187,614)

3,171

(85,851)

(265)

(244)

(314)

(188,193)

–

(63)

3,178

(86,158)

(1,238)

(787)

303

(27,509)

–

(189)

(27,698)

–

991

(30)

421

(77,425)

(28)

(62)

(77,515)

148

553

–

(187,989)

(1,508)

1,508

–

1,943

(85,467)

(27,651)

(76,814)

Profit/(loss) before
income tax

Income tax expense

Profit/(loss) after tax

(34,505)

(4,210)

(38,715)

9,946

–

9,946

695

(23,864)

(22,124)

(3,849)

(3,851)

(53,688)

(149)

546

(4,359)

(28,223)

(265)

(22,389)

(17)

(3,866)

–

(3,851)

(4,641)

(58,329)

CAPEX* on cash basis

41,618

1,405

4,587

47,610

296

(2,140)

–

45,766

*CAPEX represents purchases of property, plant and equipment.

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Global Ports Investments PLC

Overview

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Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

The reconciliation of results for the year ended 31 December 2018 calculated with proportional consolidation to the results presented
in consolidated income statement above is as follows:

(in thousands of US dollars)

Sales to third parties

Inter-segment revenue

Total revenue

Cost of sales

Administrative, selling and marketing expenses

Share of profit/(loss) of joint ventures accounted for using the equity method

Other gains/(losses) – net

Operating profit/(loss)

Finance income/(costs) – net

incl. interest income

incl. interest expenses

incl. change in the fair value of derivative instruments

incl. net foreign exchange gains/(losses) on financing activities

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

Group as per
proportionate
consolidation

Equity method and other
adjustments

Group as per equity
method consolidation of
joint ventures

386,497

–

386,497

(182,318)

(45,315)

–

(24,563)

134,301

(187,989)

1,943

(85,467)

(27,651)

(76,814)

(53,688)

(4,641)

(58,329)

(42,922)

–

(42,922)

46,298

6,390

(12,425)

(2,657)

2,708

618

319

142

1,629

(51)

–

343,575

–

343,575

(136,020)

(38,925)

(12,425)

(24,561)

131,644

(185,281)

2,561

(85,148)

(27,509)

(75,185)

(53,637)

(4,692)

(58,329)

CAPEX on cash basis

45,766

(5,014)

40,752

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

5. Segmental information (continued)

The segment items operating expenses for the year ended 31 December 2018 are as follows:

(in thousands of US dollars)

Reconciliation adjustments

Russian ports

VEOS

Finnish ports

Total operating
segments

Holdings

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

37,621

1,033

1,863

40,517

837

(1,655)

13,126

108

–

(10,422)

18,488

–

13,234

(10,422)

18,488

–

(110)

5,211

(1,136)

55,466

14,593

8,516

78,575

18,630

(11,040)

Fuel, electricity and gas

10,182

9,198

2,542

7,188

422

640

12,162

18,010

9,892

2,971

1,064

13,927

–

(1,962)

(4,034)

(2,135)

Depreciation of
property, plant and
equipment

Amortisation of
intangible assets

Reversal of impairment
of property, plant and
equipment

Impairment of
intangible assets and
goodwill

Staff costs

Transportation
expenses

Repair and
maintenance of
property, plant and
equipment

Total

Other operating
expenses

Total cost of sales,
administrative,
selling and marketing
expenses

153,973

18,013

12,505

184,491

19,498

(16,861)

33,631

2,468

1,645

37,744

6,165

(2,850)

(554)

40,505

187,604

20,481

14,150

222,235

25,663

(19,711)

(554)

227,633

–

39,699

13,131

(5,211)

17,352

86,165

10,200

13,988

11,804

187,128

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Global Ports Investments PLC

Overview

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Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

The reconciliation of operating expenses for the year ended 31 December 2018 calculated with proportional consolidation to the results
presented in consolidated income statement above is as follows:

(in thousands of US dollars)

Depreciation of property, plant and equipment

Amortisation of intangible assets

Reversal of impairment of property, plant and equipment

Impairment of intangible assets and goodwill

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Total

Other operating expenses

Total cost of sales, administrative, selling and marketing expenses

Group as per
proportionate
consolidation

Equity method and other
adjustments

Group as per equity
method consolidation of
joint ventures

39,699

13,131

(5,211)

17,352

86,165

10,200

13,988

11,804

187,128

40,505

227,633

(3,935)

(222)

5,211

(17,352)

(18,597)

(3,344)

(4,914)

(3,433)

(46,586)

(6,102)

(52,688)

35,764

12,909

–

67,568

6,856

9,074

8,371

140,542

34,403

174,945

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

5. Segmental information (continued)

The segment items assets and liabilities as at 31 December 2018 are as follows:

(in thousands of US dollars)

Reconciliation adjustments

Property, plant and equipment
(including prepayments for PPE)

Investments in joint ventures

Intangible assets

Other non-current assets

Inventories

Trade and other receivables (including
income tax prepayment)

Russian ports

VEOS

Finnish ports

Total
operating
segments

Holdings

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

494,794

18,958

8,492

522,244

2,433

(18,795)

–

505,882

784

566,045

106,976

–

115

–

784

165,861

–

(166,645)

–

566,177

3,773

(557)

–

569,393

126,708

233,684

1,076,084

(33,016)

(1,272,515)

7,193

1,967

–

9,160

–

(1,143)

–

4,237

8,017

43,752

10,527

3,900

58,179

3,600

(6,636)

(1,288)

53,855

Cash and cash equivalents

95,758

2,398

1,465

99,621

2,182

(3,135)

–

98,668

Total assets

1,315,302

33,965

140,582

1,489,849

1,253,933

(63,282)

(1,440,448)

1,240,052

Long-term borrowings

Other long-term liabilities

Trade and other payables

Short-term borrowings

Other short-term liabilities

857,258

132,072

32,547

21,184

592

2,575

1,340

861,173

22,810

(6,095)

(23,893)

853,995

–

5,624

2,175

–

217

132,289

(279)

(61,382)

2,669

40,840

8,220

818

217

24,177

809

515

(3,961)

(1,292)

(56)

–

70,666

45,172

22,885

1,268

Total liabilities

1,043,653

10,374

5,261

1,059,288

31,583

(11,683)

(85,202)

993,986

Non-controlling interest

14,235

–

14,235

–

14,235

Included within ‘Russian ports’, ‘Finnish ports’ and ‘Holdings’ segments ‘Other non-current assets’ are investments in subsidiaries in the
total amount of US19,665 thousand, US$126,614 thousand and US$1,075,338 thousand respectively (fully eliminated on consolidation).

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Global Ports Investments PLC

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Financial Statements

Parent Company
Financial Statements

Additional
Information

The reconciliation of total segment assets and liabilities as at 31 December 2018 calculated with proportional consolidation to the results
presented in consolidated balance sheet above is as follows:

(in thousands of US dollars)

Property, plant and equipment (including prepayments for PPE)

Investments in joint ventures

Intangible assets

Other non-current assets

Inventories

Trade and other receivables (including income tax prepayment)

Cash and cash equivalents

Assets classified as held for sale

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

Group as per
proportionate
consolidation

Equity method and other
adjustments

Group as per equity
method consolidation of
joint ventures

505,882

–

569,393

4,237

8,017

53,855

98,668

–

1,240,052

853,995

70,666

45,172

22,885

1,268

993,986

14,235

(37,427)

24,795

(4,155)

71,160

(1,462)

(9,343)

(7,055)

11,773

48,286

(3,229)

59,770

(6,396)

(1,702)

(157)

48,286

–

468,455

24,795

565,238

75,397

6,555

44,512

91,613

11,773

1,288,338

850,766

130,436

38,776

21,183

1,111

1,042,272

14,235

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

5. Segmental information (continued)

The segment results for the year ended 31 December 2017 are as follows:

(in thousands of US dollars)

Reconciliation adjustments

Russian ports

VEOS

Finnish ports

Total operating
segments

Holdings

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Sales to third parties

360,470

51,348

10,916

422,734

Inter-segment revenue

–

360,470

51,348

10,927

422,745

(166,245)

(197,102)

(10,160)

(373,507)

–

(35,906)

(3)

(35,909)

105,514

(17,953)

(8,703)

(729)

(27,385)

(27,669)

5,221

–

(8)

386,828

–

386,828

(267,949)

(49,748)

(71,195)

196

Operating profit/(loss)

105,077

(154,261)

(70,979)

7,212

(45)

(7,488)

(71,300)

(49,126)

(20,457)

74,781

(7,367)

(2,169)

(70)

–

(85)

(18,842)

2,968

(92,228)

(721)

(481)

(19,633)

2,986

(530)

872

(92,794)

(1,476)

42,089

–

42,089

28,329

(258)

28,086

–

521

(40)

549

–

(31)

(19,675)

(2,248)

1,570

2,248

(91,473)

–

42,089

(31)

28,140

Total revenue

Cost of sales

Administrative, selling
and marketing expenses

Other gains/(losses)
– net

Finance costs – net

incl. interest income

incl. interest expenses

incl. change in the fair
value of derivative
instruments

incl. net foreign exchange
gains/(losses) on
financing activities

Profit/(loss) before
income tax

86,235

(154,982)

Income tax expense

(31,923)

–

Profit/(loss) after tax

54,312

(154,982)

(12)

(1)

(13)

(68,759)

(20,987)

75,302

(7,398)

(21,844)

(31,924)

762

–

(100,683)

(20,928)

76,064

(7,398)

(31,103)

(52,947)

CAPEX* on cash basis

28,477

1,716

–

30,193

3,445

(1,828)

–

31,810

*CAPEX represents purchases of property, plant and equipment.

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Global Ports Investments PLC

Overview

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Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

The reconciliation of results for the year ended 31 December 2017 calculated with proportional consolidation to the results presented
in consolidated income statement above is as follows:

(in thousands of US dollars)

Sales to third parties

Inter-segment revenue

Total revenue

Cost of sales

Administrative, selling and marketing expenses

Share of profit/(loss) of joint ventures accounted for using the equity method

Other gains/(losses) – net

Operating profit/(loss)

Finance costs – net

incl. interest income

incl. interest expenses

incl. change in the fair value of derivative instruments

incl. net foreign exchange gains/(losses) on financing activities

Profit/(loss) before income tax

Income tax expense

Profit/(loss) for the year

Group as per
proportionate
consolidation

Equity method and other
adjustments

Group as per equity
method consolidation of
joint ventures

386,828

–

386,828

(267,949)

(49,748)

–

(71,300)

(2,169)

(19,674)

1,570

(91,473)

42,089

28,140

(21,844)

(31,103)

(52,947)

(56,323)

–

(56,323)

119,438

7,017

(73,267)

(29)

(3,164)

876

478

594

–

(196)

(2,287)

2,287

–

330,505

–

330,505

(148,511)

(42,731)

(73,267)

(71,329)

(5,333)

(18,798)

2,048

(90,879)

42,089

27,944

(24,131)

(28,816)

(52,947)

CAPEX on cash basis

31,810

(3,769)

28,041

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

5. Segmental information (continued)

The segment items operating expenses for the year ended 31 December 2017 are as follows:

(in thousands of US dollars)

Reconciliation adjustments

Russian ports

VEOS

Finnish ports

Total
operating
segments

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Holdings

Depreciation of property,
plant and equipment

Amortisation of intangible
assets

Impairment of property,
plant and equipment and
intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance
of property, plant and
equipment

41,051

18,826

1,744

61,621

(10,624)

13,211

103

11,400

143,155

56,061

10,814

9,237

15,331

11,452

8,561

–

5,612

367

514

13,314

154,555

77,004

22,633

18,312

10,123

2,937

1,194

14,254

–

(113)

(71,578)

18,426

(10,652)

–

(6,435)

(4,747)

(2,269)

–

51,070

13,201

82,977

84,778

16,198

13,571

11,989

273,784

Total

151,897

200,365

Other operating expenses

32,301

5,440

9,431

1,458

361,693

18,509

(106,418)

39,199

9,160

(4,317)

(129)

43,913

Total cost of sales,
administrative, selling and
marketing expenses

184,198

205,805

10,889

400,892

27,669

(110,735)

(129)

317,697

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Global Ports Investments PLC

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Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

The reconciliation of operating expenses for the year ended 31 December 2017 calculated with proportional consolidation to the results
presented in consolidated income statement above is as follows:

(in thousands of US dollars)

Depreciation of property, plant and equipment

Amortisation of intangible assets

Impairment of property, plant and equipment and intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Total

Other operating expenses

Total cost of sales, administrative, selling and marketing expenses

Group as per
proportionate
consolidation

Equity method and other
adjustments

Group as per equity
method consolidation of
joint ventures

51,070

13,201

82,977

84,778

16,198

13,571

11,989

273,784

43,913

317,697

(13,063)

(235)

(71,577)

(16,625)

(7,852)

(5,679)

(3,871)

(118,902)

(7,553)

(126,455)

38,007

12,966

11,400

68,153

8,346

7,892

8,118

154,882

36,360

191,242

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

5. Segmental information (continued)

The segment assets and liabilities as at 31 December 2017 are as follows:

(in thousands of US dollars)

Reconciliation adjustments

62,561

7,334

Property, plant and equipment
(including prepayments for PPE)

Investments in joint ventures

Intangible assets

Other non-current assets

Russian
ports

VEOS

Finnish ports

Total
operating
segments

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Holdings

627,910

10,517

6,125

644,552

4,792

(16,112)

(33,713)

599,519

784

718,925

148,023

–

219

–

784

165,853

–

(166,637)

–

719,144

–

(2,138)

–

717,006

126,713

274,736

1,062,679

(33,017)

(1,241,837)

Inventories

6,725

1,928

–

8,653

–

(1,165)

(154)

Trade and other receivables
(including income tax
prepayment)

59,247

15,417

2,313

76,977

15,232

(9,253)

20,341

103,297

Cash and cash equivalents

135,371

3,487

4,139

142,997

3,097

(4,539)

(835)

140,720

Total assets

1,696,985

31,568

139,290

1,867,843

1,251,653

(66,224)

(1,422,835)

1,630,437

Long-term borrowings

Other long-term liabilities

Trade and other payables

Short-term borrowings

Other short-term liabilities

1,012,589

180,542

21,736

83,590

1,615

5,648

–

7,209

3,884

–

1,307

1,019,544

21,000

180,626

1,883

30,828

756

88,230

1,670

8,165

–

(7,601)

(1,405)

(4,618)

(2,352)

(41)

(21,000)

1,011,943

(47,366)

131,896

(1,304)

(13,661)

2,427

33,071

72,217

4,056

Total liabilities

1,300,072

16,741

4,085

1,320,898

29,206

(16,017)

(80,904)

1,253,183

Non-controlling interest

16,131

–

16,131

–

16,131

Included within ‘Russian ports’, ‘Finnish ports’ and ‘Holdings’ segments ‘Other non-current assets’ are investments in subsidiaries in the total
amount of US$19,665 thousand, US$126,614 thousand and US$1,062,015 thousand respectively (fully eliminated on consolidation).

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Global Ports Investments PLC

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Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

The reconciliation of total segment assets and liabilities as at 31 December 2017 calculated with proportional consolidation to the results
presented in consolidated balance sheet above is as follows:

(in thousands of US dollars)

Property, plant and equipment (including prepayments for PPE)

Investments in joint ventures

Intangible assets

Other non-current assets

Inventories

Trade and other receivables (including income tax prepayment)

Cash and cash equivalents

Assets classified as held for sale

Total assets

Long-term borrowings

Other long-term liabilities

Trade and other payables

Short-term borrowings

Other short-term liabilities

Liabilities directly associated with assets classified as held for sale

Total liabilities

Non-controlling interest

Group as per
proportionate
consolidation

Equity method and other
adjustments

Group as per equity
method consolidation
of joint ventures

599,519

–

717,006

62,561

7,334

103,297

140,720

–

1,630,437

1,011,943

131,896

33,071

72,217

4,056

–

1,253,183

16,131

(37,822)

56,918

(26,148)

56,367

(1,565)

(47,755)

(10,286)

35,413

25,122

(6,279)

41,312

(6,651)

(3,128)

(2,544)

2,427

25,137

–

561,697

56,918

690,858

118,928

5,769

55,542

130,434

35,413

1,655,559

1,005,664

173,208

26,420

69,089

1,513

2,427

1,278,321

16,131

The revenue of the Group mainly comprises of stevedoring services, storage and ancillary port services for container and bulk cargoes
(Russian ports and Finnish ports segments) and oil products (VEOS segment). The subsidiaries and joint ventures of the Group also
provide services which are of support nature in relation to the core services mentioned above.

The consolidated revenue comprises only from the services related to containers and bulk cargo since the operations of VEOS are equity
accounted (Note 2, Basis of consolidation, (c)).

Revenue attributable to domestic and foreign customers for the year ended 31 December 2018 is disclosed below in accordance with
their registered address. Major clients of the Group are internationally operating companies and their Russian branches. 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

Denmark

Other

Revenue from foreign customers total

Total revenue

For the year ended
31 December

2018

14,970

224,818

26,537

20,344

56,906

328,605

343,575

2017

17,971

199,317

46,700

19,609

46,908

312,534

330,505

In both 2018 and 2017 there was one customer representing more than 10% of consolidated revenue. This customer originated from
Russian ports segment and was domiciled in Russia.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

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 of property, plant and equipment (Note 14)

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

Total cost of sales, administrative, selling and marketing expenses

For the year ended
31 December

2018

67,568

35,764

12,909

–

6,856

9,074

8,371

5,417

2,867

1,379

4,122

8,310

900

2017

68,153

38,007

12,966

11,400

8,346

7,892

8,118

5,680

3,518

1,397

5,976

6,849

1,025

11,408

174,945

11,915

191,242

The total fees charged by the Company’s statutory auditor for the statutory audit of the annual financial statements of the Company for
the year ended 31 December 2018 amounted to US$295 thousand (2017: US$280 thousand) The total fees charged by the Company’s
statutory auditor for the year ended 31 December 2018 for other assurance services amounted to US$63 thousand (2017: US$60
thousand), for tax advisory services amounted to US$1 thousand (2017: US$14 thousand).

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 of property, plant and equipment (Note 14)

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

For the year ended
31 December

2018

42,133

34,310

12,855

–

6,856

8,780

7,400

4,952

2,827

8,310

549

7,048

2017

41,893

37,037

12,938

11,400

8,346

7,573

7,085

5,183

2,958

6,849

642

6,607

136,020

148,511

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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

For the year ended
31 December

2018

25,435

1,454

294

971

465

2,867

1,379

1,295

351

4,360

2017

26,260

970

319

1,033

497

3,518

1,397

3,018

383

5,308

Total administrative, selling and marketing expenses

38,925

42,731

7. Other gains/(losses) – net

(in thousands of US dollars)

Foreign exchange gains/(losses) on non-financing activities – net (Note 10)

Settlement of commercial claims

Gain on a disposal of a subsidiary

Net loss on disposal of assets held for sale (Note 26(a))

Recycling of derivative losses previously recognised through other comprehensive income (Note 23(ii))

Other gains/(losses) – net

Total

For the year ended
31 December

2018

2017

453

(1,261)

4,558

(29,247)

–

936

(24,561)

(1,176)

–

(69,566)

(587)

(71,329)

In 2018 the Group disposed a subsidiary with net liabilities of US$940 thousand for a cash consideration of US$862 thousand.
The main asset of the subsidiary was loading equipment. The transaction did not have any adverse effect on the operations
of the Group. The transaction resulted in the overall gain of US$4,558 thousand booked within ‘Other gains/(losses) – net’,
comprising of US$1,802 thousand gain from sale of the subsidiary and US$2,756 thousand foreign translation differences which
were reclassified from the translation reserve to the income statement.

8. Employee benefit expense

(in thousands of US dollars)

Salaries

Social insurance costs

Other staff costs

Total

Average number of staff employed during the year

For the year ended
31 December

2018

52,923

12,531

2,114

67,568

2,464

2017

52,877

12,242

3,034

68,153

2,726

Included within ‘Social insurance costs’ for 2018 are contributions made to the state pension funds in the total amount of US$8,727
thousand (2017: US$9,080 thousand).

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

9. Finance income/(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 30(g))

Total finance income calculated using effective interest rate method

Included in finance costs:

Interest expenses on bank borrowings

Interest expenses on bonds

Interest expenses on finance leases

Interest expenses on loans from third parties

Loss on extinguishment of financial liabilities (Note 22)

Total finance costs

Included in the change in fair value of derivatives:

Interest component*

Foreign currency exchange component

Total change in fair value of derivatives (Note 23(i))

Net foreign exchange gains/(losses) on financing activities

Finance income/(costs) – net

For the year ended
31 December

2018

2017

562

1,060

939

2,561

(3,125)

(78,253)

(1,340)

(665)

(1,765)

612

644

792

2,048

(7,178)

(81,611)

(1,530)

(560

(85,148)

(90,879)

16,013

(43,522)

(27,509)

(75,185)

(185,281)

20,214

21,875

42,089

27,944

(18,798)

*Interest component represents the difference between interest expenses on RUR-denominated bonds and lower interest rates embodied in swap agreements

(see Note 23).

10. Net foreign exchange gains/(losses)

The exchange differences (charged)/credited to the income statement are as follows:

(in thousands of US dollars)

Included in ‘finance income/(costs) – net’ (Note 9)

Included in ‘other gains/(losses) – net’ (Note 7)

Total

For the year ended
31 December

2018

(75,185)

453

(74,732)

2017

27,944

(1,176)

26,768

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11. Income tax expense

(in thousands of US dollars)

Current tax

Deferred tax (Note 24)

Total

For the year ended
31 December

2018

33,243

(28,551)

4,692

2017

32,932

(4,116)

28,816

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/(loss) before tax

Tax calculated at the applicable tax rates – 20% (1)

Tax effect of expenses not deductible for tax purposes

Tax effect of share of profit in jointly controlled entities

Withholding tax on undistributed profits

Tax charge

For the year ended
31 December

2018

(53,637)

(10,727)

9,047

2,485

3,887

4,692

2017

(24,131)

(4,826)

20,242

14,653

(1,253)

28,816

(1) The applicable tax rate used for 2018 and 2017 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.

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 is subject to corporation tax on taxable profits at the rate of 12.5%. Under certain conditions, interest may be exempt from
income tax and only subject to defence contribution at the rate of 30%. In certain cases dividends received from abroad may be subject
to defence contribution at the rate of 17%. In certain cases dividends received from other Cyprus tax resident Companies may also be
subject to special contribution for defence.

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.

(in thousands of US dollars)

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

2018

(59,279)

573,171

(0.10)

2017

(52,973)

573,171

(0.09)

13. Dividend distribution

During 2018 and 2017 the Company did not declare or pay dividends to the equity holders of the Company.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

14. Property, plant and equipment

(in thousands of US dollars)

At 1 January 2017

Cost

Accumulated depreciation and
impairment

Land

Buildings and
facilities

Assets under
construction

Loading
equipment and
machinery

Other
production
equipment

Office
equipment

Total

181,138

346,439

29,721

192,545

39,035

1,897

790,775

–

(105,465)

(1,243)

(84,100)

(18,010)

(1,731)

(210,549)

Net book amount

181,138

240,974

28,478

108,445

21,025

166

580,226

Additions

Transfers

Assets included in a disposal group
classified as held for sale and other
disposals

–

14,373

2,871

–

(2,871)

7,809

–

3,027

(46)

1,059

26,268

–

(16,727)

(13,327)

(386)

(2,663)

(788)

(77)

(33,968)

Depreciation charge (Note 6)

–

(20,863)

Impairment charge (Note 26)

(11,400)

–

Translation reserve

9,440

12,752

1,799

(14,288)

(2,699)

(157)

–

5,058

–

1,126

–

(38,007)

(11,400)

30,185

Closing net book amount

162,451

236,780

27,020

104,361

21,645

1,047

553,304

At 31 December 2017

Cost

Accumulated depreciation and
impairment

162,451

364,718

28,263

203,161

40,240

2,914

801,747

–

(127,938)

(1,243)

(98,800)

(18,595)

(1,867)

(248,443)

Net book amount

162,451

236,780

27,020

104,361

21,645

1,047

553,304

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(in thousands of US dollars)

At 1 January 2018

Cost

Accumulated depreciation and
impairment

Land

Buildings and
facilities

Assets under
construction

Loading
equipment and
machinery

Other
production
equipment

Office
equipment

Total

162,451

364,718

28,263

203,161

40,240

2,914

801,747

–

(127,938)

(1,243)

(98,800)

(18,595)

(1,867)

(248,443)

Net book amount

162,451

236,780

27,020

104,361

21,645

1,047

553,304

Additions

Transfers

Disposals

Depreciation charge (Note 6)

–

Translation reserve

(27,758)

11,756

4,696

(161)

(20,128)

(40,093)

5,573

(2,868)

–

(5,239)

14,649

(1,832)

(97)

(12,831)

(17,823)

6,603

(79)

(2,543)

(4,052)

307

38,888

–

(262)

(184)

–

(337)

(35,764)

(95,149)

Closing net book amount

134,693

192,850

24,486

86,427

21,577

909

460,942

At 31 December 2018

Cost

Accumulated depreciation and
impairment

134,693

310,970

24,486

174,489

38,184

2,534

685,356

–

(118,120)

–

(88,062)

(16,607)

(1,625)

(224,414)

Net book amount

134,693

192,850

24,486

86,427

21,577

909

460,942

Annual Report 2018

Global Ports Investments PLC

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: Non-cash items – 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.

For the year ended
31 December

2018

2017

337

(3)

334

129

463

209

(80)

129

162

291

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

Total

As at
31 December

2018

6,371

266

6,637

2017

7,951

9,279

17,230

Depreciation expense amounting to US$34,310 thousand in 2018 (2017: US$37,037 thousand) has been charged to ‘cost of sales’
and US$1,454 thousand in 2018 (2017: US$970 thousand) has been charged to ‘administrative, selling and marketing’ expenses (Note 6).

There were no capitalised borrowing costs in 2018 and 2017.

Lease rentals relating to the lease of machinery and property amounting to US$2,827 thousand in 2018 (2017: US$2,958 thousand) have
been charged to ‘cost of sales’ and US$1,295 thousand in 2018 (2017: US$3,018 thousand) has been charged to ‘administrative, selling
and marketing expenses’.

As at 31 December 2018 the amounts prepaid for equipment not delivered and prepayments for construction works not yet carried out
were US$7,513 thousand (2017: US$8,393 thousand).

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15. Intangible assets

(in thousands of US dollars)

At 1 January 2017

Cost

Accumulated amortisation and impairment

Net book amount

Additions

Amortisation charge (Note 6)

Translation reserve

Closing net book amount

At 31 December 2017

Cost

Accumulated amortisation and impairment

Net book amount

Additions

Amortisation charge (Note 6)

Translation reserve

Closing net book amount

At 31 December 2018

Cost

Accumulated amortisation and impairment

Net book amount

Goodwill

Contractual
rights

Computer
software

9,637

–

9,637

–

512

10,149

–

10,149

–

(1,734)

8,415

–

8,415

764,303

(108,010)

656,293

–

(12,303)

34,679

678,669

804,740

(126,071)

678,669

–

(12,013)

(114,833)

551,823

667,742

(115,919)

551,823

726

(433)

293

2,387

(663)

2,040

3,118

(1,078)

2,040

4,390

(896)

(534)

5,000

6,820

(1,820)

5,000

Total

774,666

(108,443)

666,223

2,387

(12,966)

35,214

690,858

818,007

(127,149)

690,858

4,390

(12,909)

(117,101)

565,238

682,977

(117,739)

565,238

As at 31 December 2018 the remaining useful lives for contractual rights were up to 54 years (2017: up to 55 years).

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)

Total

As at
31 December

2018

3,640

4,775

8,415

2017

4,390

5,759

10,149

The recoverable amount of the above CGUs is determined based on value in use calculations. These calculations are based on post-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(i) for details of assumptions used.

Annual Report 2018

Global Ports Investments PLC

Notes 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)

Financial assets at amortised costs (Loans and receivables at 31 December 2017):

Financial assets as per balance sheet:

Trade and other receivables (1)

Cash and cash equivalents

Total

Financial liabilities measured at amortised cost

Financial liabilities as per balance sheet:

Borrowings

Trade and other payables (2)

Total

(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

As at 31 December

2018

2017

43,144

91,613

134,757

35,431

130,434

165,865

871,949

43,735

915,684

1,074,753

28,487

1,103,240

The credit quality of financial assets that are fully performing (i.e. neither past due nor 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 – existing (more than one year of working history with the Group)

Trade and other receivables from other customers (third parties)

Trade and other receivables from related parties with Baa3 credit rating by Moody's Investors Service as at 31 December 2018

Total

As at 31 December

2018

2017

12,520

3,196

7,809

9,134

857

7,834

23,525

17,825

*The total gross carrying amount of trade and other receivables from related parties (including past due but not impaired portion) with Baa3 credit rating
as of 31 December 2018 was US$8,414 thousand (Note 19).

Trade and other receivables from third parties are related to highly reputable counterparties with no external credit rating.

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Cash at bank and short-term bank deposits (Note 20):

(in thousands of US dollars)

Agency

International rating agency Moody's Investors Service

Rating

A1 – Aa3

International rating agency Moody's Investors Service

B1 – Baa3

International rating agency Moody's Investors Service

Caa1 – Caa2

Fitch Ratings

* No rating

Total

BBB

No rating

As at 31 December

2018

3,669

52,609

156

35,008

171

91,613

2017

3,855

105,381

208

20,912

130,434

* 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 the
respective Group entities.

18. Inventories

(in thousands of US dollars)

Spare parts and consumables

Total

All inventories are stated at cost.

19. Trade and other receivables

As at 31 December

2018

6,555

2017

5,769

(in thousands of US dollars)

As at 31 December

Trade receivables – third parties

Trade receivables – related parties (Note 30(d))

Total trade receivables

Other receivables

Other receivables – related parties (Note 30(d))

Loans to related parties (Note 30(g))

VAT and other taxes recoverable

Total financial assets at amortised cost

Prepayments for goods and services

Prepayments for goods and services – related parties (Note 30(e))

Total trade and other receivables

Less non-current portion:

Loans to related parties

Total non-current portion

Current portion

2018

16,127

8,414

24,541

3,661

–

14,942

7,404

26,007

5,249

55,799

2017

11,875

7,817

19,692

1,157

14,559

6,039

21,778

6,168

551

48,189

(14,898)

(14,559)

40,901

33,630

Annual Report 2018

Global Ports Investments PLC

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 average effective interest rate on loans receivable from related parties were 6.4% (2017: 6.4%).

At 31 December 2018, trade and other receivables amounting to US$23,525 thousand were zero days past due (31 December 2017:
US$17,825 thousand fully performing).

Trade and other receivables amounting to US$4,677 thousand (31 December 2017: US$3,047 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 analysis 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

2018

2,842

1,781

–

2017

2,186

436

125

300

4,677

3,047

During 2018 trade receivables amounting to US$549 thousand (2017: US$27 thousand) were impaired and written off in full. These are
individually impaired receivables mainly related to customers, which were in a difficult economic situation.

Other classes within trade and other receivables do not contain impaired assets.

The fair value of receivables approximates their carrying value as the impact of the discounting is insignificant and is within Level 3 of the
fair value hierarchy. The fair value is based on discounting of cash flows using 7% (2017: 7%) discount rate.

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

2018

2017

24,535

24,932

31,111

22,952

153

305

55,799

48,189

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.

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20. 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

2018

35,155

56,458

2017

31,342

99,092

91,613

130,434

The effective average interest rate on short-term deposits was 1.93% in 2018 (2017: 1%) and these deposits have an average maturity
of 22 days in 2018 (2017: 20 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

21. Share capital, share premium

As at 31 December

2018

2017

91,613

130,434

91,613

130,434

Authorised share capital
The authorised share capital of the Company amounts to US$175,000,000.00 divided into 750,000,000 ordinary shares and 1,000,000,000
ordinary non-voting shares with a par value of US$0.10 each.

Issued 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.

(in thousands of US dollars)

Number of
shares ‘000

Share capital

Share premium

Total

At 1 January/31 December 2017/ 31 December 2018

573,171

57,317

923,511

980,828

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

22. Borrowings

(in thousands of US dollars)

Non-current borrowings

Bank loans

Non-convertible unsecured bonds

Finance lease liabilities

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

Non-convertible unsecured bonds – interest payable

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

2018

2017

43,000

842,664

953,308

8,005

9,356

850,766

1,005,664

–

135

–

43,000

156

840

371

795

246

21,045

21,183

23,681

69,089

871,949

1,074,753

As at 31 December

2018

2017

71,746

42,729

771,015

607,995

–

345,584

842,761

996,308

Bank borrowings mature until 2024 (31 December 2017: 2019) and bonds mature until 2023 (31 December 2017: 2023).

Changes in liabilities and assets arising from financing activities:

(in thousands of US dollars)

For the year ended 31 December 2018

At beginning of year

Interest charged

Loss on extinguishment of financial liabilities

Bank loans and leases taken

Borrowings and leases repaid during the year

Interest repaid during the year and swap cash settlements

Change in fair value of derivative financial instruments

Foreign exchange differences

Net proceeds received upon termination of derivative financial instruments

At end of year

* Represents net position (liabilities less assets) of derivative financial instruments.

Borrowings and
leases

Fair value of
derivative financial
instruments*

Total changes in assets
and liabilities from
financing activities

1,074,753

(78,386)

23(i)

83,383

1,765

376

(156,341)

(82,994)

–

(48,993)

–

871,949

–

15,350

27,509

7,813

27,714

–

996,367

85,148

376

(154,950)

(69,035)

27,509

(41,180)

27,714

871,949

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(in thousands of US dollars) For the year ended 31 December 2017

At beginning of year

Interest charged

Borrowings and leases repaid during the year

Interest repaid during the year and swap cash settlements

Change in fair value of derivative financial instruments

Foreign exchange differences

At end of year

* Represents net position (liabilities less assets) of derivative financial instruments

Borrowings and leases

Fair value of
derivative financial
instruments*

Total changes in
assets and liabilities
from financing
activities

1,119,556

(52,957)

1,066,599

23(i)

90,879

(60,274)

(89,094)

–

13,686

1,074,753

–

20,254

(42,089)

(3,594)

(78,386)

90,879

(60,274)

(68,840)

(42,089)

10,092

996,367

In the 2015-2016 the Group partly restructured its debt portfolio with the aim of facilitating greater financial flexibility and diversification
of the debt portfolio of the Group. For this purpose the Group has repaid certain bank facilities before their maturity dates, terminated
the exiting swap arrangement, placed 3 issues RUR-denominated bonds of RUR 5 billion each in the total amount of RUR 15 billion and
entered in swap agreements (see Note 23). These swap agreements were terminated in the second half of 2018 (see Note 23).

In April and September 2016 the GPI group has successfully finalised issue of two tranches of Eurobonds on the Irish Stock Exchange
in the total amount of US$700 million at a fixed coupon rate. Some companies within GPI group have unconditionally and irrevocably
guaranteed these Eurobonds on a joint and several basis.

In 2018 the Group has repurchased some part of Eurobonds and derecognised the related liability.

Fair value of bank loans and non-convertible unsecured bonds was as follows:

(in thousands of US dollars)

Non-convertible unsecured bonds

Bank loans

Total

Level 1

Level 2

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

As at 31 December

2018

2017

873,577

1,025,491

100

86,156

873,677

1,111,647

As at 31 December

2018

1,506

1,576

4,296

50,150

57,528

2017

2,276

1,441

4,406

63,793

71,916

(49,388)

(61,349)

8,140

10,567

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

22. Borrowings (continued)

The present value of finance lease liabilities is analysed as follows:

(in thousands of US dollars)

Under 1 year

Between 1 and 2 years

Between 2 and 5 years

Over 5 years

Total

As at 31 December

2018

138

190

7,739

8,140

2017

1,208

9,339

10,567

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

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

Total

As at 31 December

2018

–

2017

1,629

844,609

693,724

6,160

354,946

850,769

1,050,299

As at 31 December

2018

2017

229,543

277,730

642,406

797,023

871,949

1,074,753

As of 31 December 2017 US$267,820 thousand from the above amount of borrowings denominated in RUR were covered by swap
arrangements effectively converting the RUR-denominated obligation into USD denominated one (Note 23). In 2018 these swap
arrangements were terminated (see Note 23).

Agreements of the bank loans given to some of the subsidiaries the Group include certain covenants which set fort certain financial ratios
that have to be complied with. The Group was in compliance with all covenants.

The weighted average effective interest rate on borrowings is 8.5% (2017: 8.4%). As of 31 December 2017 the weighted average
effective interest rate on borrowings which includes the effect of the cross-currency swap would be 6.8%.

The Group is leasing mainly container loading equipment, cars and terminal facilities.

The finance lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

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23. Derivative financial instruments

In 2018 the Group terminated the cross-currency interest rate swap arrangement (see Note 23(i)). As of 31 December 2017 the fair value
of derivatives was positive – US$78,386 thousand.

In 2017 the fair value of derivative was classified as a non-current asset if the remaining maturity of the hedging relationship is more
than 12 months and, as a current asset, if the maturity of the hedging relationship is less than 12 months.

(i) Derivatives related to RUR-denominated bonds issues

During 2015 and 2016 the Group entered into three cross-currency swap arrangements to exchange its RUR-denominated liabilities related to
the newly issued bonds (3 issues of RUR 5,000 million each) with fixed interest rate of approximately 13% in the amount RUR 15,000 million
(see Note 22) to USD-denominated debt with a lower fixed interest rate. The Group decided not to apply hedge accounting rules to the new
swaps. As a result the change in fair value is presented in the income statement under “change in fair value of derivatives” as part of “finance
income/(costs) – net” (see Note 9).

Cash collected/paid in relation to the swap arrangements not used for hedging that relate to the swap of fixed RUR denominated interest
to fixed USD denominated interest is presented in the consolidated statement of cash flows as “proceeds from derivative financial
instruments not used for hedging”.

At the end of 2018 the Group terminated the cross-currency interest rate swap arrangements. The net proceeds received on termination
of swaps amounted to US$27,714 thousand.

(ii) Derivatives used for hedging

Upon acquisition of NCC at the end of 2013 the Group designated an acquired derivative as a cash flow hedge instrument where it was hedging
the variability of the interest rate on an external borrowing of a Group entity and the highly probable forecasted revenues of the same Group
entity which were expected to occur in USD (due to USD/RUR exchange rate).

At the end of 2015 the Group partly restructured its debt portfolio (see Note 22). This resulted in the termination of cross-currency
interest rate swap arrangement explained above.

The termination of the cross-currency interest rate swap arrangement together with the settlement of the related loan led to the
cancellation of the related interest rate cash flow hedge.

During 2017 there was recycled US$57,426 thousand of derivative losses previously recognised through other comprehensive income
that related to the cash flow hedge on forecasted sales. This amount has been recycled as a loss of US$69,566 thousand through the
income statement under ‘other gains/losses – net’ (Note 7) and as a credit charge in amount of US$12,140 thousand, relating to the
foreign exchange difference arising on the retranslation of the cash flow hedge reserve using historic foreign exchange rate and average
foreign exchange rate for the period, through currency translation differences in other comprehensive income. The recycling was based
on the original forecasted sales that were expected to occur during the period.

As at 31 December 2017 there remained no derivative losses in equity.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

24. 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 assets:

Deferred tax asset to be recovered after more than 12 months

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 (Note 11)

Other movements:

Reclassification to liabilities directly associated with assets classified as held for sale

Currency translation differences

At the end of the year

As at 31 December

2018

2017

60,499

45,529

(130,436)

(163,942)

(69,937)

(118,413)

For the year ended
31 December

2018

2017

(118,413)

(118,271)

28,551

4,116

–

1,868

19,925

(6,126)

(69,937)

(118,413)

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)

Property,
plant and
equipment

Withholding
tax provision

Intangible
assets

Borrowings

Tax losses

Subtotal Other assets
and liabilities

Grand total

At 1 January 2017

(62,174)

(5,404)

(129,411)

(3,602)

80,742

(119,849)

1,578

(118,271)

Income statement (Note 11)

Reclassification to liabilities directly
associated with assets classified as
held for sale

3,314

1,916

3,749

2,411

3,403

(2,011)

10,866

(6,750)

–

1,916

(48)

4,116

1,868

Translation differences

At 31 December 2017

(3,194)

(243)

(6,838)

(60,138)

(1,898)

(133,838)

Income statement (Note 11)

1,777

(3,197)

2,245

10,205

630

22,659

Translation differences

At 31 December 2018

(130)

(329)

–

4,260

(6,145)

(6,126)

82,991

(113,212)

(5,201)

(118,413)

21,930

(14,008)

22,804

19,486

5,747

439

985

28,551

19,925

(69,937)

(48,156)

(4,465)

(108,934)

(280)

90,913

(70,922)

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through
future taxable profits is probable. The amount of unremitted earnings of certain subsidiaries and joint ventures on which no withholding
tax provision was recognised amounts to US$659,619 thousand (2017: US$848,103 thousand).

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25. Trade and other payables

(in thousands of US dollars)

Trade payables – third parties

Trade payables – related parties (Note 30(e))

Payables for property, plant and equipment

Other payables – third parties

Other payables – related parties (Note 30(e))

Payroll payable

Accrued expenses and deferred gains

Contract liabilities (2017: advances received)

Taxes payable (other than income tax)

Total trade and other payables

Less non-current portion

Current portion

As at 31 December

2018

3,351

109

1,339

4,777

831

1,858

2017

3,690

304

957

1,338

682

1,875

18,867

18,298

3,987

3,657

5,007

3,535

38,776

35,686

–

(9,266)

38,776

26,420

The fair value of trade and other payables approximates their carrying amount at the balance sheet date.

26. Assets held for sale

(a) Disposal of Logistika-Terminal

In September 2018, upon obtaining approval of relevant regulatory authorities, the Group completed the sale of its 100% holding in JSC
Logistika-Terminal (LT), one of the Group’s two inland terminals located near St. Peterburg which was included in the Russian ports segment,
to PJSC TransContainer for a cash consideration of RUR 1.9 billion. As previously announced, the proceeds from the sale went towards the
further deleveraging.

The result of the disposal is a US$615 thousand gain that is reflected within ‘other gains/(losses) – net’. In addition, US$(29,862) thousand
(negative) are recycled to ‘other gains/(losses) – net’ from the currency translation reserve. This is the amount related to LT that was
recognised in other comprehensive income and accumulated in the equity.

LT assets and liabilities were reclassified to assets and liabilities held for sale in August 2017 when the sales agreement was signed.
The property, plant and equipment of LT was tested for impairment based on fair value less costs of disposal using comparative market
method taking into account the sales agreement. As a result, an impairment of US$11,400 thousand was recognised in 2017 (Note 14).

The movement in currency translation reserve related to LT since reclassification to assets held for sale until the disposal was US$(3,472)
thousand (negative).

The following assets and liabilities were classified as held for sale in relation to LT:

(in thousands of US dollars)

Property, plant and equipment

Trade and other receivables and other current assets

Cash and cash equivalents

Assets classified as held for sale

Deferred tax liabilities

Trade and other payables

Liabilities directly associated with assets classified as held for sale

Net carrying amount classified as held for sale

As at

Time of sale

31 December 2017

28,549

759

426

29,734

1,631

671

2,302

27,432

33,713

865

835

35,413

1,867

560

2,427

32,986

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

26. Assets held for sale (continued)

(b) Potential disposal of VEOS

As a result of deterioration of the business environment for VEOS, in the end of 2018 the Group decided to put this joint venture for a potential
sale. Due to this reason, the investment in VEOS was reclassified to assets held for sale. Its carrying amount is its fair value less costs to sell.

Once disposed, amounts recognised in other comprehensive income and accumulated in equity relating to VEOS will be recycled from the
other comprehensive income to the income statement. As of 31 December 2018 this accumulated other comprehensive income relating
to VEOS amounted to approximately US$(33) million (negative). It is reflected within currency translation reserve in the consolidated
balance sheet.

27. Joint ventures

The Group has the following investments in joint ventures – VEOS, MLT group and CD Holding group. These entities are an integral part
of operations of the Group. See Note 1 and Note 5 for more details.

There are no contingent liabilities or commitments relating to the Group’s interest in the joint ventures.

The summarised investments in joint ventures accounted for using the equity method as at 31 December 2018 and 31 December 2017
are as follows:

(in thousands of US dollars)

At 1 January 2018

Recognised share of profit/(loss)

Dividends declared by joint venture

Share of losses of joint ventures applied against other long-term interests (Note 30(g))

Reclassified to assets held for sale (Note 26(b))

Translation differences (through other comprehensive income/(loss))

At 31 December 2018

VEOS

7,341

5,020

–

(11,773)

MLT

CD Holding

Total

48,315

1,262

56,918

(14,305)

(3,140)

(12,425)

(1,618)

–

(1,618)

–

1,696

–

182

–

(11,773)

(8,003)

24,795

(588)

(7,597)

–

24,795

“Recognised share of profit/(loss)“ includes US$13,946 thousand of effect of impairment of the Group’s investment in MLT (see Note 4(i)) and
the Group’s share of reversal of previously recognised impairment related to VEOS in the amount of US$5,211 thousand.

(in thousands of US dollars)

At 1 January 2017

Recognised share of profit/(loss)

Dividends declared by joint venture

Other movements (Note 30(g))

Translation differences (through other comprehensive income/(loss))

At 31 December 2017

VEOS

MLT

CD Holding

Total

74,854

46,868

1,427

123,149

(77,462)

5,213

(1,018)

(73,267)

–

9,949

7,341

(6,863)

–

3,097

48,315

–

784

1,262

(6,863)

784

13,115

56,918

“Recognised share of profit/(loss)“ includes US$71,578 thousand of effect of impairment related to VEOS (see Note 4(i)).

Set out below are the selected summarised financial information for joint ventures that are accounted for using the equity method.

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Selected income statement items

(in thousands of US dollars)

Revenue

Depreciation, amortisation and impairment

Reversal of impairment of property, plant and equipment

Interest income

Interest expense

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

Other comprehensive income/(loss)

Total comprehensive income/(loss)

Dividends declared by joint venture

Selected balance sheet items

(in thousands of US dollars)

Total non-current assets

Cash and cash equivalents (including current deposits with maturity over 90 days)

Other current assets

Total current assets

Total assets

Non-current financial liabilities

Other non-current liabilities

Total non-current liabilities

Current financial liabilities excluding trade and other payables

Other current liabilities including trade and other payables

Total current liabilities

Total liabilities

Net assets

For the year ended 31 December 2018

VEOS

30,939

(1,141)

10,422

(244)

10,040

(1,175)

8,865

MLT

CD Holding

25,834

(8,533)

108

(261)

(548)

(480)

(5,579)

(6,059)

2,157

10,851

(789)

(936)

(4,187)

240

(3,947)

As at 31 December 2018

VEOS

MLT

CD Holding

19,073

25,085

14,272

2,352

12,495

14,847

33,920

2,575

–

2,575

2,175

5,624

7,799

10,374

7,498

5,134

12,632

37,717

2,590

1,116

3,706

819

3,595

4,414

8,120

339

992

1,331

15,603

16,639

–

16,639

–

1,226

17,865

23,546

29,597

(2,262)

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

27. Joint ventures (continued)

Selected income statement items

(in thousands of US dollars)

Revenue

Depreciation, amortisation and impairment

Interest income

Interest expense

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

Other comprehensive income/(loss)

Total comprehensive income/(loss)

Dividends declared by joint venture

Selected balance sheet items

(in thousands of US dollars)

Total non-current assets

Cash and cash equivalents (including current deposits with maturity over 90 days)

Other current assets

Total current assets

Total assets

Non-current financial liabilities

Other non-current liabilities

Total non-current liabilities

Current financial liabilities excluding trade and other payables

Other current liabilities including trade and other payables

Total current liabilities

Total liabilities

Net assets

For the year ended 31 December 2017

VEOS

MLT

CD Holding

51,348

31,083

(162,076)

(4,212)

(481)

(154,924)

123

(314)

9,560

–

(2,610)

(154,924)

19,897

(135,027)

–

6,950

2,788

9,738

9,151

9,845

(894)

–

(922)

(918)

(439)

(1,357)

(1,265)

–

As at 31 December 2017

VEOS

10,736

13,527

7,152

20,679

31,415

5,648

3,884

7,202

11,086

16,734

MLT

CD Holding

34,207

12,060

4,954

17,014

51,221

4,608

4,323

8,931

1,640

2,837

4,477

17,421

231

1,225

1,456

18,877

14,500

1,298

15,798

1,396

13,408

17,194

14,681

37,813

1,683

The information above reflects the amounts presented in the financial statements of the joint ventures adjusted for differences
in accounting policies between the group and the joint ventures.

Set out below is the reconciliation of the summarised financial information presented to the carrying amount of the Group interest
in joint ventures.

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(in thousands of US dollars)

For the year ended 31 December 2018

Opening net assets at the beginning of the year

Profit/(loss) for the period

Dividends declared

Other comprehensive income/(loss)

Closing net assets at the end of the year

Ownership interest

Interest in joint venture

VEOS

14,681

10,040

(1,175)

23,546

MLT

CD Holding

37,813

638

(480)

(4,187)

(2,157)

(5,579)

29,597

240

(3,309)

Total

53,132

5,373

(2,157)

(6,514)

49,834

50%

75%

11,773

22,197

(2,480)

31,490

Reclassification to assets held for sale (Note 26(b))

(11,773)

Share of losses of joint ventures applied against other long-term interests (Note 30(g))

Other movements

Goodwill

Impairment of investment (Note 4(i))

Carrying value on 31 December 2018

(in thousands of US dollars)

Opening net assets at the beginning of the year

Profit/(loss) for the period

Dividends declared

Other comprehensive income/(loss)

Closing net assets at the end of the year

Ownership interest

Interest in joint venture

Other movements

Goodwill

Carrying value on 31 December 2017

16,544

(13,946)

24,795

(11,773)

1,696

784

1,696

784

16,544

(13,946)

24,795

For the year ended 31 December 2017

VEOS

MLT

CD Holding

Total

149,708

37,226

1,903

188,837

(154,924)

6,950

(1,357)

(149,331)

–

(9,151)

19,897

14,681

50%

7,341

–

7,341

2,788

37,813

75%

28,360

–

19,955

48,315

–

638

75%

478

784

–

1,262

(9,151)

22,777

53,132

36,179

784

19,955

56,918

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

28. Contingencies

Operating environment of the Group
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 frameworks continue to develop and are subject to frequent changes and varying interpretations. The Russian
economy continues to be negatively impacted by ongoing political tension in the region and international sanctions against certain Russian
companies and individuals. Firm oil prices, low unemployment and rising wages supported a modest growth of the economy in 2018.
The operating environment has a significant impact on the Group’s operations and financial position. Management is taking necessary measures
to ensure sustainability of the Group’s operations. However, the future effects of the current economic situation are difficult to predict and
management’s current expectations and estimates could differ from actual results.

The tariff legislation has changed as of 14 August 2018 and requires all tariffs to be set in Russian roubles. The Group is in full compliance
with the new legislation.

The Group continues to monitor for any legislative proposals and regulatory actions that could lead to changes to the existing tariff
regulations. It seeks a proactive dialog with the relevant Russian federal authorities. It believes it is as well placed as any market
participant to adapt to any future changes in tariff regulation.

Estonia and Finland represent established market economies with more stable political systems and developed legislation based on EU
directives and regulations. However, the situation in Estonia remained challenging and is characterised by a structural deterioration
of the business environment in which the Group`s oil products terminal operates, which is heavily dependent on the flows of Russian
oil products.

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 challenged by the tax 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 when
a decision about the review was made. Under certain circumstances reviews may cover longer periods.

The Russian transfer pricing legislation is to a large extent aligned with the international transfer pricing principles developed by the
Organisation for Economic Cooperation and Development. This legislation provides the possibility for tax authorities to make transfer
pricing adjustments and impose additional tax liabilities in respect of controlled transactions (transactions with related parties and some
types of transactions with unrelated parties), provided that the transaction price is not on an arm’s length basis.

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 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. The Controlled
Foreign Company (CFC) legislation introduced Russian taxation on the profits of foreign companies and non-corporate structures
(including trusts) controlled by Russian tax residents (controlling parties). The CFC income is subject to a 20% tax rate. This interpretation
of the 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 could 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.

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Additional
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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 2018 and as of 31 December 2017 management believes that
no additional tax liability has to be accrued in the financial statements.

Legal proceedings and investigations
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 provisions should be recognised in these consolidated financial
statements.

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 the 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 continuously 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.

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

As at 31 December

2018

6,540

2017

26,515

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

29. Commitments (continued)

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

30. Related party transactions

As at 31 December

2018

2,598

10,005

44,205

56,808

2017

3,022

11,807

54,954

69,783

Until April 2018 the Group was jointly controlled by Transportation Investments Holding Limited (“TIHL”) and APM Terminals B.V. (“APM
Terminals”). In April 2018 TIHL has completed the sale of its 30.75% stake in Global Ports to LLC Management Company “Delo” (“Delo
Group”). The Group has been informed that in connection with the transaction, Delo Group has acceded to the shareholder agreement
with APM Terminals B.V. and that TIHL has been released from its obligations under such agreement. Since April 2018 the Group is jointly
controlled by Delo Group and APM Terminals.

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)

Entities under control of owners of controlling entities

Joint ventures in which GPI is a venturer

Other related parties

Total

(b) Purchases of services and incurred expenses

(in thousands of US dollars)

Entities under control of owners of controlling entities

Other related parties

Total

For the year ended
31 December

2018

2017

93,089

86,118

93,137

86,174

For the year ended
31 December

2018

330

2,334

2,664

2017

2,561

2,452

5,013

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(in thousands of US dollars)

Joint ventures in which GPI is a venturer

Total

(d) Trade and other receivables and prepayments

(in thousands of US dollars)

Entities under control of owners of controlling entities

Joint ventures in which GPI is a venturer

Other related parties

Total

(e) Trade and other payables

(in thousands of US dollars)

Entities under control of owners of controlling entities

Other related parties

Total

(f) Key management compensation/directors’ remuneration

(in thousands of US dollars)

Key management compensation:

For the year ended
31 December

2018

2017

939

792

As at 31 December

2018

8,414

2017

8,368

8,416

8,391

As at 31 December

2018

2017

853

940

796

190

986

For the year ended
31 December

2018

2017

Salaries, payroll taxes and other short-term employee benefits

10,041

8,831

Directors’ remuneration (included also above):

Fees

Emoluments in their executive capacity

Total

(g) Loans to related parties

The details of loans provided mainly 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

Fair value loss upon inception

GPI’s share of losses of joint ventures applied against other long-term interests (Note 27)

Foreign exchange differences

At the end of the year (Note 19)

375

813

408

677

1,188

1,085

For the year ended
31 December

2018

14,559

1,400

939

(260)

–

(1,696)

–

2017

8,472

7,500

792

(1,204)

(1,045)

14,942

14,559

The loans are not secured, bear effective interest at 6.4% (2017: 6.4%) and are repayable in 2022.

Annual Report 2018

Global Ports Investments PLC

Notes to the consolidated
financial statements (continued)

31. Events after the balance sheet date

There were no material post balance sheet events which have a bearing on the understanding of these consolidated financial statements.

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Report

Corporate
Corporate
Governance
Governance

Consolidated
Consolidated
Financial Statements
Financial Statements

Parent Company
Parent Company
Financial Statements
Financial Statements

Additional
Additional
Information
Information

Independent Auditor’s Report
To the Members of Global Ports Investments Plc

Report on the Audit of the Consolidated Financial Statements

Our opinion

In our opinion, the accompanying consolidated financial statements of Global Ports Investments Plc (the “Company”) and its subsidiaries
and joint ventures ( hereafter collectively referred to as the “Group”) give a true and fair view of the consolidated financial position of the
Group as at 31 December 2018, and of its consolidated financial performance and its consolidated cash flows for the year then ended
in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the
Cyprus Companies Law, Cap. 113.

What we have audited
We have audited the consolidated financial statements which are presented in pages 26 to 93 and comprise:

the consolidated balance sheet as at 31 December 2018;

the consolidated income statement for the year then ended;

the consolidated statement of comprehensive income for the year then ended;

the consolidated statement of changes in equity for the year then ended;

the consolidated statement of cash flows for the year then ended; and

the notes to the consolidated financial statements, which include a summary of significant
accounting policies.

The financial reporting framework that has been applied in the preparation of the consolidated financial statements is International
Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

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

Independence
We remained independent of the Group throughout the period of our appointment in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to
our audit of the consolidated financial statements in Cyprus and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code.

PricewaterhouseCoopers Ltd, City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus
P O Box 53034, CY-3300 Limassol, Cyprus
T: +357 25 – 555 000, F:+357 – 25 555 001, www.pwc.com.cy

PricewaterhouseCoopers Ltd is a private company registered in Cyprus (Reg. No.143594). Its registered office is at 3 Themistocles Dervis Street, CY-1066, Nicosia.
A list of the company’s directors, including for individuals the present and former (if any) name and surname and nationality, if not Cypriot and for legal entities the
corporate name, is kept by the Secretary of the company at its registered office. PwC refers to the Cyprus member firm, PricewaterhouseCoopers Ltd and may
sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

Annual Report 2018

Global Ports Investments PLC

Our audit approach

Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial
statements. In particular, we considered where the Board of Directors made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits,
we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there
was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

Audit scope

Key audit
matters

Overall group materiality: US$5,5 million, which represents 2.5%
of Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”).

We conducted full scope audit procedures for the parent entity;
all the significant components; and the consolidation process.

For the remaining non-significant components we performed
a full scope audit; or analytical procedures; and/or audit of specific
account balances.

We have identified the impairment assessment of goodwill
and other non-financial assets including individual assets
and cash generating units as the key audit matter.

Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether
the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are
considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group
materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative
considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate
the effect of misstatements, both individually and in aggregate on the consolidated financial statements as a whole.

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Overall group materiality

How we determined it

US$5,5 million

2.5% of EBITDA

Rationale for the
materiality benchmark
applied

We chose EBITDA as the benchmark, because, in our view:

It is the benchmark against which the performance of the Group
is most commonly measured by the users;
and

It is a generally accepted benchmark.

We chose 2.5% which is within the range of acceptable
quantitative materiality thresholds in auditing standards.

We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above US$0,55
million as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

How we tailored our group audit scope
Global Ports Investments Plc controls or has joint control over a number of entities situated in a number of territories namely Russia,
Estonia, Finland and Cyprus. Considering our ultimate responsibility for the opinion on the Company’s consolidated financial statements
we areresponsible for the direction, supervision and performance of the group audit.

The Group’s operations comprise 9 components. The financial information of these components is included in the consolidated financial
statements of the Group. We tailored the scope of our audit and determined the nature and extent of the audit procedures for the
components of the Group to ensure that we perform sufficient work to enable us to provide an opinion on the consolidated financial
statements as a whole. In this context, the determining factors were the structure of the Group, the significance of each component,
the risk profile and relevant activities of the components, the accounting processes and controls, and the industry in which the Group
operates.

We conducted full scope audit procedures for the parent entity; all the significant components; and the consolidation process. For the
remaining non-significant components we performed a full scope audit; or analytical procedures; and/or audit of specific account
balances.

The group consolidation was audited by the group engagement team. For components located in Russia and Estonia we used component
auditors from other PwC network firms who are familiar with the local laws and regulations to perform the audit work. Where the work
was performed by component auditors, we as group engagement team determined the level of involvement we needed to have in the
audit work at those reporting units to enable us to conclude whether sufficient appropriate audit evidence had been obtained as a basis
for our opinion on the group financial statements as a whole.

Our involvement in the work performed by other auditors of the significant components included, amongst others, regular calls with the
component auditors; discussion and agreement for the nature, timing and extent of the work; and review of the work performed by these
component auditors for significant risk areas

Annual Report 2018

Global Ports Investments PLC

Our involvement in the work performed by other auditors of the non-significant components included, amongst others, discussion and
review of the work performed by these component auditors for significant risk areas including impairment.

By performing the procedures above at components level, combined with the additional procedures at group level, we have obtained
sufficient and appropriate audit evidence regarding the consolidated financial information of the Group as a whole to provide a basis for
our audit opinion on the consolidated financial statements.

Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of material misstatements
due to fraud Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

How our audit addressed the Key Audit Matter

The Group performed an impairment test for all the cash
generating units (“CGUs”). We focused on this area due to:

the size of the goodwill and other nonfinancial assets;

the assessment of the recoverable amount of the CGUs involves
complex and subjective judgements about the future results
of the business and the applicable discount rates to be used
and the estimation of the fair value less costs of disposal
of the CGUs; and

the results of the impairment test may indicate a higher
recoverable amount than the carrying amount of assets
previously impaired (other than goodwill) and an assessment
should be made whether reversal of impairment may be
necessary, which involves subjective judgements.

In particular, we focused our audit effort on the Board of
Directors’ assessment of impairment of the following CGUs:

> Moby Dik (MD) CGU, a component of Multi Link Terminals
Limited, due to the fact that there was material impairment
during the period; and

First Container Terminal (FCT) and UstLuga Container Terminal
(ULCT) CGUs as a reasonably possible change in the key
assumptions would cause the carrying amounts of these CGUs
to exceed their recoverable amounts.

We evaluated the valuation inputs and assumptions,
methodologies and calculations adopted by the Company’s Board
of Directors in determining the CGUs’ recoverable amounts.
In order to assist us in our audit we involved PwC valuation
experts that have the knowledge and experience in the industry
and country of operation to assist us in evaluating methodology,
models and assumptions used in value in use calculations as well
as evaluating the fair value less cost to sell.

For MD CGU, we challenged and evaluated whether the fair value
less costs of disposal approach is more appropriate than value
in use approach to determine the CGU’s recoverable amount given
the specific circumstances of the CGU. We further evaluated the
work of the management’s expert involved for the valuation of
MD CGU’s assets by assessing the competence, capabilities and
objectivity of the independent appraiser and by also engaging
PwC valuation experts to assess the methodology, models and
inputs used by the management’s expert.

With respect to the value in use models used for FCT and
ULCT CGUs and Multi Link Terminals Limited Oy (MLT Oy) we
challenged and evaluated the composition of the future cash flow
forecasts in the model including comparing them to the latest
budgets approved by the Board of Directors.

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Key Audit Matter

How our audit addressed the Key Audit Matter

We challenged and evaluated:
>

the Board of Directors’ key assumptions for the long term
growth rates of key inputs, such as volume and price and
compared them to historical results, economic and industry
forecasts;
the discount rate applied to these cash flows, by assessing the
weighted average cost of capital, cost of debt and considering
territory specific factors; and
the macroeconomic assumptions used by the Board of Directors,
by comparing them to market benchmarks and publicly available
information.

For FCT and ULCT CGUs, we have challenged and evaluated the
Board of Directors on the noreversal of previously recognised
impairment.

We further challenged and evaluated the Board of Directors on
the adequacy of their sensitivity calculations over FCT and ULCT
CGUs’ recoverable amount and determined the assumptions that
created the most variability; being assumptions for throughput
volume, price per unit, growth rates, and discount rates.

We lastly evaluated the adequacy of the disclosures made in
Notes 4 and 27 of the consolidated financial statements, including
those regarding the key assumptions and sensitivities to changes
in such assumptions.

Based on the evidence obtained, we found that the
methodologies, assumptions and data used within the models and
disclosures are appropriate.

The recoverable amount of the investment in joint venture
Multi Link Terminals Limited (MLT) was determined based
on the recoverable amounts of MD CGU and Multi Link
Terminals Limited Oy (MLT Oy) CGU. The recoverable amount
of MD CGU was determined by the Board of Directors based
on the fair value less costs of disposal approach as following
a substantial reduction in cargo volumes during the year,
the fair value less costs of disposal approach was considered
to give rise to higher recoverable amount than value in use
approach. In determining the fair value of MD CGU, management
involved an independent appraiser (the management’s expert).
The recoverable amount of MLT Oy CGU was based on value
in use calculations.

The recoverable amounts of FCT and ULCT CGUs were
determined based on value in use calculations.

The expected cash flows (budgets) for the year 2019
and the remaining assumptions used for the CGUs’ value
in use calculations have been approved by the Company’s
Board of Directors. Certain assumptions made by the Board
of Directors in the determination of the CGUs’ value in use
calculations were considered to be key estimates.

Based on the results of the impairment tests no impairment
losses were recognised other than the impairment loss
for the investment in joint venture Multi Link Terminals
Limited amounting to US$13,946 thousand that was
recognised through the share of profit/(loss) of joint ventures,
reducing the carrying amount of the investment in the joint
venture to US$24,795 thousand.

For FCT and ULCT CGUs, it was determined that despite
the fact that the impairment test has shown a recoverable
amount higher than the carrying amount of the CGU no reversal
ofpreviously recognised impairment was necessary because
there is no observable external or internal information to support
reversal as required by IAS 36 “Impairment of reversal as required
by IAS 36 “Impairment of Assets”; and the tests are still sensitive
to the change of certain key parameters.

Refer to Notes 4 and 27 to the consolidated financial statements for
the related disclosures.

Annual Report 2018

Global Ports Investments PLC

Reporting on other information

The Board of Directors is responsible for the other information. The other information comprises the information included in the
Consolidated Management Report, including the Corporate Governance Statement, and the Directors’ responsibility statement which we
obtained prior to the date of this auditor’s report and the Annual Report, which is expected to be made available to us after that date.
Other information does not include the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form
of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on
the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

When we read the Group’s complete Annual Report, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance and if not corrected, we will bring the matter to the attention of the members
of the Company at the Company’s Annual General Meeting and we will take such other action as may be required.

Responsibilities of the Board of Directors and those charged with governance for the Consolidated Financial
Statements

The Board of Directors is responsible for the preparation of the 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.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Board
of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

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Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the
audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

> Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
the Board of Directors.

Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
the consolidated financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.

> Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group

to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Annual Report 2018

100

Global Ports Investments PLC

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters.

Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent
Auditor’s Report, which is required in addition to the requirements of International Standards on Auditing.

Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Company in 2008 by shareholder resolution for the audit of the financial statements for the
period ended 31 December 2008. Our appointment has been renewed annually, since then, by shareholder resolution. In 2011 the
Company was listed in the Main Market of the London Stock Exchange and accordingly the first financial year after the Company qualified
as an EU PIE was the year ended 31 December 2012. Since then, the total period of uninterrupted engagement appointment was 7 years.

Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the consolidated financial statements expressed in this report is consistent with the additional
report to the Audit and Risk Committee of the Company, which we issued on 26 March 2019 in accordance with Article 11 of the EU
Regulation 537/2014.

Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors
Law of 2017 were provided. In addition, there are no nonaudit services which were provided by us to the Group and which have not
been disclosed in the consolidated financial statements or the consolidated management report.

Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

In our opinion, based on the work undertaken in the course of our audit, the consolidated management report has been prepared in
accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated
financial statements.

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Consolidated
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Additional
Information

In our opinion, based on the work undertaken in the course of our audit, the information included in the corporate governance statement
in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap.
113, and which is included as a specific section of the consolidated management report, have been prepared in accordance with the
requirements of the Cyprus Companies Law, Cap, 113, and is consistent with the consolidated financial statements.

In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement includes all information
referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.

In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required
to report if we have identified material misstatements in the corporate governance statement in relation to the information
disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to report
in this respect.

Other Matter

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article
10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 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.

The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas.

Tasos Nolas

Certified Public Accountant and Registered Auditor

for and on behalf of

PricewaterhouseCoopers Limited

Certified Public Accountants and Registered Auditors

City House, 6 Karaiskakis Street,

CY-3032 Limassol, Cyprus

Limassol, 27 March 2019

Annual Report 2018

102

Global Ports Investments PLC

Parent Company Financial Statements 
Board of Directors and other officers / Management report / Directors’ Responsibility Statement / Statement of comprehensive income for the year ended 31 December 2018 /
Balance sheet as at 31 December 2018 / Statement of changes in equity for the year ended 31 December 2018 / Statement of cash flows for the year ended 31
December 2018 / Notes to the financial statements / Independent auditor’s report

Parent Company
Financial
Statements

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Financial Statements

Parent Company
Financial Statements

Additional
Information

Parent Company

Financial

Statements

Annual Report 2018

Global Ports Investments PLC

Table of Contents

Board of Directors and other officers

Management report

Directors’ Responsibility Statement

Statement of comprehensive income for the year ended 31 December 2018

Balance sheet as at 31 December 2018

Statement of changes in equity for the year ended 31 December 2018

Statement of cash flows for the year ended 31 December 2018

Notes to the financial statements

1. General information

Summary of significant accounting policies

Financial risk management

4. Critical accounting estimates and judgments

Finance income – net

6. Administrative expenses

7. Other gains/(losses) – net

Staff costs

Finance costs

10.

Income tax expense

11. Financial instruments by category

12. Credit quality of financial assets

13. Property, plant and equipment

14.

Investments in subsidiaries

15.

Investments in joint ventures

16. Loans receivable

17. Trade and other receivables

18. Cash and bank balances

19. Share capital, share premium and dividends

20. Trade and other payables

21. Contingencies and commitments

22. Related party transactions

23. Events after the balance sheet date

Independent auditor’s report

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Corporate
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Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

Board of Directors
and other officers

Board of Directors

Mr. Morten Henrick Engelstoft (appointed 31 October 2016)
(Mrs. Olga Gorbarenko is the alternate to Morten Henrick Engelstoft)
Chairman of the Board of Directors
Non-Executive Director
Member of Remuneration and Nomination Committees

Mrs. Iana Penkova Boyd (appointed 29 January 2018)
Non-Executive Director

Mr. Anton Chertkov (appointed 14 May 2018)
(Mr. Alexander Iodchin is the alternate to Mr. Anton Chertkov)
Non-Executive Director
Member of Remuneration and Nomination Committees

Mr. Michalakis Christofides (appointed 30 July 2014)
Non-Executive Director

Mrs. Britta Dalunde (appointed 12 May 2017)
Senior Independent Non-Executive Director
Chairman of Audit and Risk Committee

Mr. Alexander Iodchin (appointed 15 August 2008)
Executive Director

Mr. Soren Jakobsen (appointed 02 March 2018)
(Mrs. Olga Gorbarenko is the alternate to Mr. Soren Jakobsen)
Non-Executive Director
Member of Remuneration, Nomination and Audit and Risk Committees

Mr. Demos Katsis (appointed 14 May 2018)
Non-Executive Director

Mrs. Inna Kuznetsova (appointed 01 January 2018)
Independent Non-Executive Director
Chairman of Remuneration and Nomination Committees
Member of Audit and Risk Committee

Mrs. Laura Michael (appointed 23 January 2013)
(Mr. Nicholas Charles Terry is the alternate to Mrs. Laura Michael)
Non-Executive Director

Mr. Lampros Papadopoulos (appointed 01 January 2018)
Independent Non-Executive Director
Member of Audit and Risk Committee

Mr. Stavros Pavlou (appointed 14 May 2018)
Non-Executive Director
Member of Remuneration and Nomination Committees

Annual Report 2018

Global Ports Investments PLC

Board of Directors
and other officers (continued)

Mr. Sergey Shishkarev (appointed 14 May 2018)
(Mr. Anton Chertkov and Mr. Stavros Pavlou are the alternates to Mr. Sergey Shishkarev)
Non-executive Director

Mr. Nicholas Charles Terry (appointed 31 October 2016)
(Mrs. Laoura Michael is the alternate to Mr. Nicholas Charles Terry)
Non-executive Director

Mr. George Yiallourides (appointed 14 May 2018)
Non-Executive Director
Member of Audit and Risk Committee

Mr. Gerard Jan van Spall (resigned on 29 January 2018)

Mr. Peder Sondergaard (resigned on 01 February 2018)

Mr. Mikhail Loganov (resigned on 12 April 2018)

Mr. Nikita Mishin (resigned on 12 April 2018)

Mrs. Elia Nicolaou (resigned on 12 April 2018)

Mr. Konstantin Shirokov (resigned on 12 April 2018)

Mr. Vadim Kryukov (resigned on 14 May 2018)

Capt. Bryan Smith (resigned on 14 May 2018)

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

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Parent Company
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Management report

The Board of Directors presents its report together with the audited financial statements of Global Ports Investments Plc (hereafter
also referred to as “GPI” or the “Company”) for the year ended 31 December 2018. The Company’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 and nature of operations of the Company

The principal activities of the Company, which are unchanged from the previous year, is the holding of investments including any inter-
est earning activities. The subsidiaries and joint-ventures of the Company (together with the Company the “Group”) are engaged in 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.

Changes in group structure

3. During the year ended 31 December 2018 the management of the Group continued its efforts in optimisation of the Group structure.
LLC ZASM was merged with LLC Farwater. The management finalised the liquidation of LLC Container-Depot East and LLC Cargo
Connexion East.

5. During the year ended 31 December 2018 the Group disposed its two subsidiaries – LLC PLP Mineral (owner of handling equipment)
and LLC Porttransservis (freight forwarding services in Saint-Petersburg). The Group acquired a 100% stake in LLC Transportmecanisa-
tion, a company rendering equipment repair and maintenance services in Saint-Petersburg.

There were no other material changes in the group structure.

Review of Developments, Position and Performance of the Group’s Business

The Group’s Consolidated Marine Container Throughput increased 12.2% to 1,352 thousand TEU in 2018 compared to 1,205 thou-
sand TEU in 2017. The growth rate of the Group’s Consolidated Marine Container Throughput therefore outpaced that of the Russian
container market.

The Group focused on increasing bulk cargo volumes to improve the utilisation of its terminals. As a result, Consolidated Marine Bulk
Throughput increased by 15.9% to 3.12 million tonnes in 2018, a record level for the Group, driven by growth in bulk cargoes at PLP
and ULCT.

10. As a part of its strategy to focus on developing additional revenue streams and optimising its existing terminal infrastructure, the Group

commissioned a new coal handling facility at Ust-Luga Container Terminal in December 2018. ULCT has excellent rail connectivity and
the capability to support up to 1.0 million tonnes of coal shipments per year.

11. Revenue in 2018 increased by 4.0% to USD 343.6 million compared to USD 330.5 million in 2017. This was mainly driven

by 16.8% growth in Consolidated Non-Container Revenue. Consolidated Container Revenue was broadly flat in 2018 at USD
255.2 million, growth of 0.1% compared to 2017, as 12.2% growth in Consolidated Marine Container Throughput was partially offset
by an 10.1% decline in Revenue per TEU. Only a low single digit percentage of the reduction in Revenue per TEU was attributable
to change in tariffs, with the majority of the decline largely attributable to lower share of imports and the change in customer and
service mix.

12. The Group continued to exert strict control over costs. Total Operating Cash Costs decreased by 2.0% during the reporting period despite
double digit growth in throughput of both container and non-container cargoes. FX adjusted Total Operating Cash Costs1 increased
by around 5.8%.

1. Management estimate calculated as if effective USD/RUB exchange rate in 2018 was the same as in 2017.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Review of Developments, Position and Performance of the Group’s Business (continued)

13. Gross profit in 2018 increased 14.0% to USD 207.6 million or by 7.3% adjusted for impairments that took place in 2017.

14. Adjusted EBITDA in 2018 increased 7.8% to USD 217.3 million* mainly due to the growth in throughput and strict control over costs.

15. Adjusted EBITDA margin expanded by 224 basis points from 61.0% in 2017 to 63.2%* in 2018.

16. Operating profit in 2018 was USD 131.6 million compared to USD 5.3 million Operating loss in 2017. This substantial increase was driven

both by the growth in Gross profit and the fact that 2017 was negatively impacted by non-monetary items such as impairment, loss from
the Group’s share of the result in joint ventures, and recycling of derivative losses previously recognised through other comprehensive
income. Loss before income tax increased from USD 24.1 million in 2017 to USD 53.6 million in 2018. This change was predominantly
driven by the depreciation of the Russian rouble which resulted in mainly unrealised loss on revaluation of US dollar-denominated borrow-
ings (from Group and non Group entities) in the Group’s Russian subsidiaries using Russian rouble as their functional currency.

17. The Group’s capital expenditure on a cash basis was USD 40.8 million in 2018. Maintenance capital expenditure focused on planned
maintenance projects, scheduled upgrades of existing container handling equipment and coal handling equipment at VSC as well
as the implementation of environmental protection measures related to coal handling. Maintenance capex remained in line with the
Group’s mid-term guidance of USD 25-35 million per annum with the remainder accounting for development of a new coal handling
facility at ULCT.

18. Net cash from operating activities increased by USD 0.4 million, or 0.2%, from USD 173.9 million in 2017 to USD 174.3 million in 2018.

19.

In August 2018, an amendment to the Law on Seaports came into force which prescribes that all handling tariffs in Russian ports are set
in Russian roubles. While the law stipulates the mandatory currency of tariffs, it does not restrict port operators’ ability to change actual
tariff levels. Tariffs for stevedoring services in Russian ports remain unregulated and are market-driven. Since the law came into force, the
Group has retained its legal ability to revise tariff policy in response to substantial changes in the industry, currency fluctuations or macro-
economic environment. Although the share of Russian rouble nominated revenues is expected to increase in 2019, the group believes that
its FX exposure is adequately balanced by the currency composition of its debt portfolio, the currency of its cash and deposits and the use
of hedging instruments in relation to both revenue and debt.

20. The Group continued to deleverage and reduced Net Debt by a further USD 85.6 million* in 2018. The Group decreased its Total Debt

by USD 124.4 million* in 2018.

21. Net Debt to Adjusted EBITDA decreased from 4.3x* to 3.6x* during 2018.

22. The loss of the Company for the year ended 31 December 2018 was US$(84,182) thousand (2017: net profit US$1,555 thousand).

On 31 December 2017 the total assets of the Company were US$650,646 thousand (2017: US$736,092 thousand) and the net assets
were US$624,045 thousand (2017: US$708,227 thousand). The financial position, development and performance of the Group as pre-
sented in these consolidated financial statements are considered satisfactory.

Certain non-IFRS financial measures and operational information above which is derived from the management accounts is marked with
an asterisk {*}. Terms used above are defined as follows:

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, share of profit/(loss) of joint
ventures accounted for using the equity method, other gains/(losses)—net and impairment of goodwill and property, plant and equipment
and intangible assets.

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

Consolidated Container Revenue is defined as revenue generated from containerised cargo services.

Consolidated Non-Container Revenue is defined as a difference between total revenue and Consolidated Container Revenue.

Consolidated Marine Bulk Throughput is defined as combined marine bulk throughput by consolidated terminals: PLP, VSC, FCT and ULCT.

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Additional
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Consolidated Marine Container Throughput is defined as combined marine container throughput by consolidated marine terminals: PLP, VSC, FCT
and ULCT.

Free Cash Flow (a non-IFRS financial measure) is calculated as Net cash from operating activities less Purchase of property, plant and equipment.

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

Revenue per TEU is defined as the Global Ports Group’s Consolidated Container Revenue divided by total container marine throughput.

Total Debt (a non-IFRS financial measure) is defined as a sum of current borrowings, non-current borrowings and derivative financial instruments.

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

Risk Management Process, Principal Risks and Uncertainties

23. GPI is exposed to a variety of risks and opportunities that can have commercial, financial, operational and compliance impacts on its business

performance, reputation and licence to operate. The Board recognises that creating shareholder value involves the acceptance of risk. Effective
management of risk is therefore critical to achieving the corporate objective of delivering long-term growth and added value to our shareholders.

24. Global Ports bases its risk management activities on a series of well-defined risk management principles, derived from experience, leading

practice, and corporate governance regimes. Global Ports has an enterprise risk management system (the ERM) that is designed to identify,
assess, respond, monitor and, where possible, mitigate or eliminate threats to the business caused by changes in the external and internal
business, financial, regulatory and operating environment.

25. The Board has overall oversight responsibility for the GPI’s risk management and the establishment of the framework of prudent and

effective controls and it systematically monitors and assesses the risks attributable to the Group’s performance and delivery of the GPI
strategy. After identifying and assessing a risk, the Group selects and deploys the appropriate risk response aimed at reducing the likeli-
hood of its occurrence and/or potential adverse impact.

26. The Board delegates to the Chief Executive Officer of LLC Global Ports Management responsibility for effective and efficient implementa-
tion and maintenance of the risk management system. Day-to-day responsibility for the risk management lies with the management team.
The Audit and Risk Committee is authorized by the Board to monitor, review and report on the organization, functionality and effective-
ness of the Group’s ERM system

27. Global Ports is exposed to a variety of risks which are listed below. The order in which the risks are presented is not intended to be an indi-

cation of the probability of their occurrence or the magnitude of their potential effects.

28. Not all of these risks are within the Company’s control, and the list cannot be considered to be exhaustive, as other risks and uncertainties
may emerge in a changing external and internal environment that could have a material adverse effect on the Group’s ability to achieve its
business objectives and deliver its overall strategy.

29. Further information on our risk management system including a detailed description of identified risk factors is contained in the notes

to the Financial Statements attached to this report.

30. The Company’s financial risk management and critical accounting estimates and judgments are disclosed in Notes 3 and 4 to the

financial statements.

31. The Company’s contingencies are disclosed in Note 21 to the financial statements.

Annual Report 2018

06
5

Global Ports Investments PLC
Global Ports Investments PLC

Management report
(continued)

Risk Management Process, Principal Risks and Uncertainties (continued)

Risk factor

Strategic risks

Risk management approach

Market conditions:
Global Ports’ operations are dependent on the global
macroeconomic environment and resulting trade flows, including
in particular container volumes.

Container market throughput is closely correlated to the volume of
predominantly imported goods, which in turn is driven by domestic
consumer demand, combined with volatility of the Russian rouble
against USD/Euro.

Competition:
Barriers to entry are typically high in the container terminal
industry due to the capital-intensive nature of the business.
However, challenging market trading conditions mean that
competition from other container terminals continues to be
a significant factor. Further consolidation between container
terminal operators and container shipping companies, introduction
of new/upgraded capacity and carrier consolidation could result
in greater price competition, lower utilisation, and a potential
deterioration in profitability.

Given the historically high margins in the Russian container
handling industry, this trend may continue.

The Group has reacted to the volatility of throughput in the
container market by:

Focusing on quality and value-driven services (getting closer to
the customer);

> Greater focus on export container flows;

> Offering operational flexibility to all clients;

Effective cost containment;

Adopting new revenue streams and attracting new cargo.

The Group’s focus on service quality is a key differentiator from
its competition and the Group believes this is one of its key
competitive advantages.

The Group has made long-term investments in its terminals
and modern equipment to ensure competitive levels of service.
It operates on a long-term horizon and its terminals represent
core infrastructure in Russia that will continue to operate for
the next 10-20 years or beyond. Because the Group possesses
well-invested facilities with available berth capacity and sufficient
land plots it has flexibility to balance minimal capital expenditure
to maintain capacity at the existing level and its efficient
development should market require it.

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Risk factor

Risk management approach

Political, economic and social stability:
Instability in the Russian economy as well as social and political
instability could create an uncertain operating environment and
affect the Group’s ability to sell its services due to significant
economic, political, legal and legislative risks.

Certain government policies or the selective and arbitrary
enforcement of such policies could make it more difficult for the
Group to compete effectively and/or impact its profitability.

In light of the macroeconomic challenges faced by the ports industry
in recent years, the Group has focused on improving its resilience,
in particular its ability to withstand short-term economic shocks/
fluctuations in Russia, as well as the wider regional and global
environment. This has included a strong focus on cost containment
measures, and strengthening its financial position through a series
of measures designed to derisk the Group’s balance sheet, including
refinancing all its debt switching to longer maturities at fixed rates.
In addition, the Group has broadened its growth strategy to include
exports as well as new revenue streams to counteract any lows in
consumer sentiment and any macro-economic downturn.

The Group has developed a system to monitor compliance with
restrictions posed by international sanctions and fend off the risk
of secondary sanctions.

The Group continues to maintain an international base of
shareholders, bondholders and business partners.

The Group is not aware of any specific sanctions risks related
to its ownership or operations.

Operational risks

Leases of terminal land:
The Group leases a significant amount of the land and quays
required to operate its terminals from government agencies.
Any revision or alteration of the terms of these leases or the
termination of these leases, or changes to the underlying property
rights under these leases, could adversely affect the Group’s
business.

The Group believes it has a stable situation at present regarding its
land leases and its terminals have been in operation for a number
of years. The Group owns the freehold on 66% of the total land
of its terminals and 70% of the land of its container and inland
terminals in Russia. The remainder is held under long-term leases
(up-to 54 years and usually renewable at immaterial costs).

Customer Profile and Concentration:
The Group is dependent on a relatively limited number of major
customers (shipping lines, etc.) for a significant portion of its
business.

The Group conducts extensive and regular dialogue with key
customers and actively monitors changes that might affect our
customers’ demand for our services.

Reliance on third parties:
The Group is dependent on the performance of services by third
parties outside its control, including the performance by all other
participants in the logistics chain, such as customs inspectors,
supervisory authorities and others, and the performance of
security procedures carried out at other port facilities and by its
shipping line customers.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Risk Management Process, Principal Risks and Uncertainties (continued)

Risk factor

Risk management approach

Oil products:
The Group’s oil products business was significantly affected in
the past and could be affected by changes in Russia’s exports of
oil products and the 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.

The Group recognises, that global demand for oil products
is cyclical in nature and might grow again over the medium term.

Focus on storage and accumulation of large shipments, utilising
the unique features of the tank farm consisting of 78 tanks
of different sizes. This allows the Group’s oil product business
to decrease its dependency on changes in Russia’s exports
of oil products.

Tariff regulation:

Tariffs for certain services at certain of the Group’s terminals have
been in the past regulated by the Russian Federal Antimonopoly
Service (FAS). As a result, the tariffs charged for such services
were, and may potentially in the future be, subject to a maximum
tariff rate and/or fixed in Russian roubles as PLP, VSC, and FCT,
like many other Russian seaport operators, are classified as natural
monopolies under Russian law.

Human resources management:
The Group’s competitive position and prospects depend on
the expertise and experience of its key management team and
its ability to continue to attract, retain and motivate qualified
personnel.

Industrial action or adverse labour relations could disrupt the
Group’s operating activities and have an adverse effect on
performance results.

Health, safety, security and environment:
Accidents involving the handling of 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.

The risk of safety incidents is inherent in the Group’s businesses.

The Group’s operations could be adversely affected by terrorist
attacks, natural disasters or other catastrophic events beyond its
control.

Changes to tariff legislation (as of 14 August 2018) now require
all tariffs to be set in Russian roubles. The Group believes it is
in full compliance with the new legislation.

The Group offers competitive salaries and benefits to employees
at all levels to foster and retain skilled labour and provide yearly
indications or revision of salaries.

The Group invests in the professional development of its staff,
including international best practices implementation and internal
“learning effect” programmes realization.

The Group engages in socially responsible business practices and
support of local communities.

The Group has implemented clear environmental and safety
policies designed around international best practices and
benchmark using such measures as GPI Global Minimum
Requirements.

Safety is one of the Group’s top priorities. A safety strategy and
annual action plan have been developed, to build a sustainable
safety culture across the whole Group. The detailed roadmap is
designed to ensure sustainable implementation of safety culture
over the medium term.

Similarly, GPI works with all its stakeholders to maintain high
levels of security around port facilities and vessel operations
to minimise the risk of terrorist attack.

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Risk factor

Regulatory risks

Regulatory compliance:

Risk management approach

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

The Group strives to be in compliance at all times with all
regulations governing its activities and devotes considerable
management and financial resources to ensure compliance.

Changes in regulations:

Changes to existing regulations or the introduction of new
regulations, procedures or licensing requirements are beyond
the Group’s control and may be influenced by political or
commercial considerations not aligned with the Group’s interests.
Any expansion of the scope of the regulations governing the
Group’s environmental obligations, in particular, would likely
involve substantial additional costs, including costs relating to
maintenance and inspection, development and implementation
of emergency procedures and insurance coverage or other
financial assurance of its ability to address environmental
incidents or external threats.

Compliance and shareholder risk

Conflict of interests:
The Group’s controlling beneficial shareholders may have interests
that conflict with those of the holders of the GDRs or notes.

The major implications of this risk are that (i) co-controlling
shareholders pursue other businesses not related to GPI and
hence may not be deeply involved with developing GPI and (ii) one
of the major shareholders is also a major customer of the Group.

Legal and tax risks:
Adverse determination of pending and potential legal actions
involving the Group’s subsidiaries could have an adverse
effect on the Group’s business, revenues and cash flows and
the price of the GDRs. Weaknesses relating to the Russian
legal and tax system and appropriate Russian law create an
uncertain environment for investment and business activity and
legislation may not adequately protect against expropriation and
nationalisation. The lack of independence of certain members
of the judiciary, the difficulty of enforcing court decisions and
governmental discretion claims could prevent the Group from
obtaining effective redress in court proceedings.

The Group maintains a constructive dialogue with relevant federal,
regional and local authorities regarding existing and planned
regulations. The Group does not have the power to block any
or all regulations it may judge to be harmful, but this dialogue
should ensure it has time to react to changes in the regulatory
environment.

The Group’s corporate governance system is designed to maximise
the company’s value for all shareholders and ensure the interests
of all stakeholders are taken into account. The Group’s LSE listing
ensures our compliance with the highest international standards.
In addition, the Board has highly experienced members, including
strong independent directors.

The Group maintains a strong and professional legal function
designed to monitor legal risks, avoid legal actions where possible
and carefully oversee any legal actions that may occur.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Risk Management Process, Principal Risks and Uncertainties (continued)

Risk factor

Financial risks

FOREX risks:

Risk management approach

Starting from 2019, a significant part of the Group’s revenue will
be denominated in Russian rouble as the Group has switched
the currency of its tariffs to RUR, and a major part of the Group’s
debt is denominated in U.S. dollars, whereas most of the Group’s
operating expenses are and will continue to be denominated
and settled in Russian roubles. In order to mitigate the risk of FX
mismatch between the currency of revenue and the currency of
debt, the Group has begun to convert its existing US$ debt into
the currency of revenue to avoid significant foreign exchange risks
arising from such a mismatch, i.e. in 2018 the Group cancelled
cross-currency swaps on the RUB denominated bonds issued by
the First Container Terminal Inc. The Group also plans to employ
various different instruments and strategies to minimise future
risks that may arise from volatility in the value of the Russian
rouble and US dollar. Although the Group has negotiated with its
customers the right to change its Russian rouble tariffs should
the exchange rate move by 5, 10 or 15%, the risk above the levels
of these currency moves remains.

Credit risk:

The Group may be subject to credit risk due to its dependence on
key customers and suppliers.

The Group closely tracks its accounts receivables overall and the
creditworthiness of key customers and suppliers.

Debt, leverage and liquidity:

The Group’s indebtedness or the enforcement of certain
provisions of its financing arrangements could affect its business
or growth prospects.

Failure to promptly monitor and forecast compliance with loan
covenants both at the Group and individual terminal levels may
result in covenant breaches and technical defaults.

If the Group is unable to access funds (liquidity) it may be unable
to meet financial obligations when they fall due, or on an ongoing
basis, to borrow funds in the market at an acceptable price to fund
its commitments.

The Group has been able to reduce its total debt level, as planned,
in 2018 and continued reduction of the debt above and beyond
minimum repayment requirements remains a management priority
in 2019.

Liquidity risk is carefully monitored, with regular forecasts
prepared for the Group and its operating entities.

Although the risk of liquidity shortfalls within the following 18-24
months has been significantly reduced via extensions of debt
maturities through public debt issuances in 2016, the liquidity
position is carefully monitored in case of further deterioration
of financial performance.

The Group regularly stress tests scenarios when different negative
trends that could affect cash flows are identified.

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Information technology and security:

The Group’s container terminals rely on IT and technology systems
to keep their operations running efficiently, prevent disruptions to
logistic supply chains, and monitor and control all aspects of their
operations.

Any IT glitches can create major disruptions for complex logistic
supply chains.

Any prolonged failure or disruption of these IT systems, whether
a result of a human error, a deliberate data breech or an external
cyber threat could create major disruptions in terminal operations.
This could dramatically affect the Group’s ability to render its services
to customers, leading to reputational damage, disruption to business
operations and an inability to meet its contractual obligations.

The Group has centralised its IT function in recent years and
believes this is an important step in ensuring both the efficiency
and consistency of the Group’s security protocols implementation.
We are in the process of alignment of our IT strategy with the
business objectives.

We regularly review, update and evaluate all software,
applications, systems, infrastructure and security.

All software and systems are upgraded or patched regularly to
ensure that we have minimised our vulnerabilities.

Each of our business units has an IT disaster recovery plan.

Our security policies and infrastructure tools are updated or
replaced regularly to keep pace with changing and growing threats.

Our security infrastructure is updated regularly and employs
multiple layers of defence.

Connectivity to our partners’ systems is controlled, monitored and
logged.

Internal control and risk management systems in relation to the financial reporting process

32. The internal control and risk management systems relating to financial reporting are designed to provide reasonable assurance regarding

the reliability of financial reporting and to ensure compliance with applicable laws and regulations.

33. Financial reporting and supervision are based on approved budgets and on monthly performance reporting.

34. The Audit and Risk Committee of the Board of directors of the Company reviews certain high-risk areas at least once a year, including the

following:
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> Material changes to the accounting policies;

Significant accounting estimates;

35. Reporting from various Group entities to the centralised unit is supervised on an ongoing basis and procedures have been established for

Use of financial instruments by the Group

36. The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Future Developments of the Company

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

Results

38. The Company’s results for the year are set out on page 24.

Dividends

39. Pursuant to the Articles of Association the Company may pay dividends out of its profits. To the extent that the Company declares and

40. 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 (shareholder agreements, bank
borrowings covenants, and terms of the issuance of the public debt instruments). 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.

41. The Company has a Dividend Policy in place which provides for the payment of not less than 30% of any imputed consolidated net

42.

In 2015 following the revision of current market situation, market prospects and prioritising the deleveraging strategy over dividend
distribution, which should ensure the long-term robustness of the Group’s finances, the Board suspended the payment of the dividends in
the mid-term. The Board continues to monitor the market for recovery as well as for levels of volatility in order to identify the appropriate
timing for a resumption of the payment of a dividend, subject to maintaining conservative leverage ratios.

43. During the years 2017 and 2018 the Company did not declare or pay any dividends.

44. The Board of Directors of the Company does not recommend the payment of a final dividend for the year 2018.

Share Capital

Authorised share capital

45. The authorised share capital of the Company amounts to US$175,000,000.00 divided into 750,000,000 ordinary shares and

1,000,000,000 ordinary non-voting shares with a par value of US$0.10 each.

Issued share capital

46. 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.

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47. 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.

Rules for Amending Articles

48. The Articles of association of the Company may be amended from time to time by the special resolution of the General Meeting of the

shareholders.

Corporate Governance

49. The Group has a diverse set of stakeholders, from international institutions holding our shares and bonds, to our customers, employees,
regulators and communities. Made up of seasoned industry professionals, the Board of Directors is committed to acting in the best
interest of all stakeholders. The Company is not subject to the provisions of UK Corporate Governance Code, but follows internationally
recognised best practices customary to the public companies having GDRs with standard listing and admitted to trading at London Stock
Exchange.

50.

51. 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:
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Appointment policy;
Terms of reference of the Board of Directors;
Terms of reference of the Audit and Risk, Nomination and Remuneration Committees;
Code of Ethics and Conduct;
Antifraud policy*;
Policy on Reporting of Improper Activities*;
Investigation policy;
Anti-Corruption Policy*;
Foreign Trade Controls Policy*;
Insurance Standard;
Charity and Sponsorship Policy; and
Group Securities Dealing Code.

52.

In order to further strengthen the corporate governance and clearly set the management authority limits within the Group the Board
of Directors approved the Authority Matrix framework at the end of the year 2016. This framework is based on the Board of Directors
reserved matters, which are set in the Terms of reference of the Board of Directors and Shareholder`s reserved matters as set out in
Company`s Charter. All other matters are reserved for the management. The implementation of this framework within the Group started
in the year 2017, continued in 2018 and will finalise in the year 2019. Currently the key operating assets of the Group have implemented
this framework.

53.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Code of ethics and conduct

54. Global Ports’ code of ethics and conduct outlines the general business ethics and acceptable standards of professional behaviour that we

55. The code is available to all staff on Global Ports’ website (in the Corporate Governance section) and in the HR department at every

operating facility. There are also other more detailed rules concerning our anti-fraud and whistleblowing policies.

56. The Board is updated on a regular basis on any breaches various policies with the specific focus on the fraud incidents and resulting

actions, although significant breaches have to be reported to the Board immediately.

The Role of the Board of Directors

57. The Company is governed by its Board of Directors (also referred as “the Board”) which is collectively responsible to the shareholders for
the short- and long-term sustainable success of the Group, generating value to shareholders and contributing to wider society as a whole.
Its responsibility is to promote adherence to best-in-class corporate governance.

58. The Board of Directors’ role is to provide entrepreneurial leadership to the Group through establishing the Group’s purpose, values and

59. The roles and responsibilities of the Chairman, Senior Independent Director, board and committees’ members are set out in writing in the
Terms of Reference of the Board and committees. 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 on the Company`s website.

Members of the Board of Directors

60. The Board of Directors leads the process in making new Board member appointments and makes recommendations on appointments

61. The Board currently has 15 members and they were appointed as shown on pages 2 and 3.

62. On 29 January 2018 Mr. Gerard Jan Van Spall resigned from the Board and Mrs. Iana Boyd replaced him on the same day. On 01 February
2018 Mr. Peder Sondergaard resigned from the Board and Mr. Soren Jakobsen replaced him on 02 March 2018. On 12 April 2018 Mr.
Mikhail Loganov, Mr. Nikita Mishin, Mrs. Elia Nicolaou and Mr. Konstantin Shirokov resigned from the Board. They were replaced by Mr.
Anton Chertkov, Mr. Stavros Pavlou, Mr. Sergey Shishkarev and Mr. George Yiallourides on 14 May 2018. On 14 May 2018 Mr. Vadim
Kryukov resigned from the Board and Mr. Demos Katsis replaced him on the same day. Capt. Bryan Smith resigned from the Board on
14 May 2018. All new Board members were reviewed and recommended for appointment by Nominations Committee.

63. All other Directors were members of the Board throughout the year ended 31 December 2018.

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64. 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 held on
14 May 2018 all present directors are subject to re-election at the next Annual General Meeting of the Shareholders of the Company.
An EGM was called for 19 April 2019 to consider the resignation of Mrs. Iana Boyd and appointment of Mr. Tom Hyldelund to the Board.

65. The changes in the composition of the committees of the Board of Directors are described below.

66. Mr. Peder Sondergaard was the Chairman of the Board until 01 February 2018. Mr. Morten Henrick Engelstoft was elected the Chairman
of the Board of Directors on 26 February 2018. Mrs. Britta Dalunde was elected the Senior Independent Director on 31 May 2018
following the resignation of Capt. Bryan Smith. There were no other significant changes in the responsibilities of the Directors during 2018
except for membership in the committees as described below.

Directors’ Interests

67. The interests in the share capital of Global Ports Investments Plc, both direct and indirect, of those who were Directors as at 31 December

2018 and 31 December 2017 are shown below:

Name

Type of holding

Nikita Mishin

Through shareholding in Transportation
Investments Holding Limited and other
related entities

Shares held at
31 December 2018

NOT APPLICABLE

Britta Dalunde

Through holding of the GDRs

7,000 GDRs representing 21,000 ordinary shares

Shares held at
31 December 2017

42,267,114 ordinary shares

16,477,011 ordinary non-voting shares

7,000 GDRs representing 21,000 ordinary
shares

Sergey Shishkarev Through shareholding in LLC Management
Company “Delo” and other related entities

126,814,024 ordinary shares

NOT APPLICABLE

49,435,976 ordinary non-voting shares

Chairman of the Board of Directors

68. Mr. Morten Engelstoft was appointed Chairman of the Board in February 2018.

69. The role of the Chairman of the Board of Directors is to ensure that Board meetings are held as and when necessary, lead the directors,

70. The Chairman monitors communications and relations between the Group and its shareholders, the Board and management, and

71. The Group separates the positions of the chairman and CEO to ensure an appropriate segregation of roles and duties.

Non-executive and Independent Directors

72. There are fourteen non-executive directors (including the chairman).

73. Mrs. Britta Dalunde, Mrs. Inna Kuznetsova and Mr. Lampros Papadopoulos are independent directors, and have no relationship with the Group,

its related companies or their officers. This means they can exercise objective judgment on corporate affairs independently from management.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Non-executive and Independent Directors (continued)

74. Although all directors have an equal responsibility for the Group’s operations, the role of the independent non-executive directors

75. Mrs. Britta Dalunde was appointed as the Senior Independent Director on 31 May 2018 replacing Capt. Bryan Smith, who stepped down

The Board Committees

76. 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

77. The Audit and Risk Committee comprises of five Non-Executive Directors, three of whom are independent, and meets at least four times
a year. The Audit and Risk Committee is chaired by Mrs. Britta Dalunde (an Independent Non-Executive Director) and its other members
are Mrs. Inna Kuznetsova (an Independent Non-Executive Director appointed as of 01 January 2018), Mr. Lampros Papadopoulos
(an Independent Non-Executive Director appointed as of 01 January 2018), Mr. Soren Jakobsen (appointed as of 02 March 2018) and
Mr. George Yiallourides (appointed as of 14 May 2018). Mr. Morten Henrick Engelstoft and Mr. Konstantin Shirokov resigned from the
Audit and Risk Committee on 26 February 2018 and 12 April 2018 respectively.

78. The Committee is responsible for:

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monitoring the integrity of the financial statements of the company and any formal announcements relating to the company’s
financial performance, and reviewing significant financial reporting judgements contained in them;
providing advice (where requested by the board) on whether the annual report and accounts, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for shareholders to assess the company’s position and performance, business
model and strategy;
reviewing the company’s internal financial controls and internal control and risk management systems;
monitoring and reviewing the effectiveness of the company’s internal audit function;
making recommendations to the board, about the appointment, reappointment and removal of the external auditor, and giving the
recommendations in relation to remuneration and terms of engagement of the external auditor for audit and non-audit services;
reviewing and monitoring the external auditor’s independence and objectivity;
reviewing the effectiveness of the external audit process;
developing and implementing policy on the engagement of the external auditor to supply non-audit services; and
reporting to the Board on how it has discharged its responsibilities.

79.

In 2018 the Audit and Risk Committee met 17 times to review and discuss inter alia the following significant issues and matters in addition
and on top of those listed above:
a.

Review of the press releases containing financial information and rating agencies` presentations in relation to compliance with
the financial statements, the disclosure and transparency requirements and Board`s view on mid and long-term development
of the Group;
Discussion of the level of clarity and completeness of disclosures in financial statements with the management and external auditors
and making the recommendations;
Consideration and approval of audit schedules and review of the impairment models and the impact of the new IFRS standards on
the Company`s financial statements. The Committee`s task was to align the impairment models with the short-, mid- and long-term
forecasts and to understand what impact the new standards would have on the financial statements and Group`s compliance with the
covenants. The Committee also discussed, how to incorporate the new requirements of the standards into the budgeting process;

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g.
h.

Review of the major risks, including but not limited to strategic, fraud and compliance, commercial, operational, financial, human
resources, environmental and other risks. The Committee discussed the approach to establishment and monitoring of the risk appetite
of the Group;
Review of internal control framework and its deficiencies, consideration of management proposals on its further development and
improvement. The Committee concentrated on the integration of automatic controls into the ERP system and on further development
and integration of authority matrix framework into day-to-day processes;
Discussing the level of Corporate governance in the Group and making the recommendations to the Board and the management
on how further to improve it;
Consideration of various reports from the management;
Meetings with external and internal auditors to discuss the matters related to the audit work done by them and any issues arising
from their audits;
Consideration of various updated and restated Group Policies and making the recommendations to the Board on their approval.
In particular, the Committee reviewed the Policy on Assessment of Independence and Objectivity of External Auditor and the
Accounting Policy of the Group;
Consideration and approval of the engagement of external auditors for rendering of non-audit services. In each particular case
the Committee was assessing the impact of non-audit services on the independence and objectivity of the external auditor.
The Committee reviewed the scope of services on compliance with the list of permitted non-audit services, the potential impact
of the services on the audit work and financial statements and discussed with the external auditor how their internal compliance
procedures were performed and whether all internal compliance requirements were met. The Committee monitors the share of
non-audit service in relation to its compliance with the standards. During the year 2018 the share of fees for non-audit services was
significantly below the 70% of the last three years average audit fees;
Assessment of efficiency of external auditor by discussing the audit approach and audit plan, monitoring of compliance with the plan,
receiving the feedback from the members of the management team, involved in the audit process, assessing the internal resources
allocated by the external auditor, the key risks to the audit process and their mitigation measures, review of the auditor`s management
letter, consideration of the level and quality of communication between the external auditor and Committee during the audit process;
Discussion of the term of tenure of the current audit partner – Mr. Tasos Nolas and making the recommendations to extend it from
five to six years;
Conducting the executive search for the new Head of Internal Audit function and discussing and giving the recommendations on the
strengthening of Internal Audit function and extending its scope to joint-venture companies of the Group;
Review of IT security setup, corporate social responsibility report, legal matters report, differences between Russian GAAP and IFRS,
site visits to the Group terminals located in Saint-Petersburg area and Far-East of Russia, discussion with the Board of the results
of these site-visits;
Discussion of the training requirements of the Committee members.

The Nomination Committee

80. 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 Mrs. Inna Kuznetsova (an Independent Non-Executive Director
appointed as a member of Committee as of 01.01.2018 and as a Chairman as of 14 May 2018). Mrs. Inna Kuznetsova replaced Capt.
Bryan Smith who stepped down from the Board. The other members are Mr. Anton Chertkov (appointed on 14 May 2018), Mr. Morten
Henrick Engelstoft, Mr. Soren Jakobsen (appointed on 02 March 2018) and Mr. Stavros Pavlou (appointed on 14 May 2018). Mr. Peder
Sondergaard resigned from his position as a member of the Nomination Committee in February 2018 and Mr. Nikita Mishin and Mrs. Elia
Nicolaou resigned from their positions as members in April 2018.

81. The Committee’s role is to prepare selection criteria and appointment procedures for members of the Board of Directors as well as the Key
Management of the companies of the Group and to review on a regular basis the structure, size, diversity and composition of the Board of
Directors of the Company. In undertaking this role, the Committee refers to the skills, knowledge and experience required of the Board and
Key Management given the Company’s and Group’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 and Key Management as well as
making recommendations regarding the membership of the Audit and Risk Committee and the Remuneration Committee. The Committee
monitors the compliance of the appointment procedures with the corporate governance standards and makes the recommendations to the
Board and the management on changes to these procedures. The Committee develops plans for orderly succession to both the Board and
Key Management positions and oversees the development of a diverse pipeline for succession. The Committee relies on both independent
search consultancy and internal sources in making the proposals for the Board and Key Management appointments.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

The Nomination Committee (continued)

82.

The Remuneration Committee

83. The Remuneration 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 Remuneration Committee is chaired by Mrs. Inna Kuznetsova (an Independent Non-Executive
Director appointed as a member of Committee as of 01 January 2018 and as a Chairman as of 14 May 2018). Mrs. Inna Kuznetsova
replaced Capt. Bryan Smith who stepped down from the Board. The other members are Mr. Anton Chertkov (appointed on 14 May 2018),
Mr. Morten Henrick Engelstoft, Mr. Soren Jakobsen (appointed on 02 March 2018) and Mr. Stavros Pavlou (appointed on 14 May 2018)
Mr. Peder Sondergaard resigned from his position as a member of the Remuneration Committee in February 2018 and Mr. Nikita Mishin
and Mrs. Elia Nicolaou resigned from their positions as members in April 2018.

84. The Committee is responsible for determining and reviewing the remuneration of the executive directors, Chairman and the Key

85.

Board Performance

86. The Board meets at least five 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.

87.

In 2018 the Board met formally 21 (2017: 25) times to review current performance and to discuss and approve important business decisions.

88.

FY2017 financial statements, 1H2018 interim financial statements and Annual Report;

In 2018 the Board met to discuss and approve important business decisions:
a.
b. Review of segments financial and operational performance;
c.

Consideration of 2019 financial budget, major risks and uncertainties, commercial strategy, corporate social responsibility matters,
internal control framework;

Consideration of various compliance matters;

Consideration and approval of various resolutions related to the operations of the Company`s subsidiaries and joint ventures.

89. The number of Board and Board Committee meetings held in the year 2018 and the attendance of directors during these meetings

was as follows:

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Iana Boyd
Anton Chertkov
Michalakis Christofides
Britta Dalunde
Morten Henrick Engelstoft
Alexander Iodchin
Soren Jakobsen
Demos Katsis
Vadim Kryukov
Inna Kuznetsova
Mikhail Loganov
Laura Michael
Nikita Mishin
Elia Nicolaou
Lampros Papadopoulos
Stavros Pavlou
Konstantin Shirokov
Sergey Shishkarev
Bryan Smith
Peder Sondergaard
Nicholas Charles Terry
George Yiallourides

Board of Directors
B
21
14
21
21
21
21
18
14
7
21
6
21
6
6
21
14
6
14
7
2
21
14

A
18
12
21
20
20
19
18
14
7
21
3
20
4
6
21
12
6
12
7
2
20
12

Nomination Committee
B
-
6
-
-
11
-
8
-
-
11
-
-
4
4
-
6
-
-
5
1
-
-

A
-
6
-
-
11
-
8
-
-
11
-
-
2
4
-
6
-
-
5
1
-
-

Remuneration Committee
B
-
9
-
-
13
-
12
-
-
13
-
-
3
3
-
9
-
-
4
-
-
-

A
-
8
-
-
13
-
12
-
-
13
-
-
3
3
-
9
-
-
4
-
-
-

Audit and Risk Committee
B
-
-
-
17
1
-
16
-
-
17
-
-
-
-
17
-
3
-
-
-
-
12

A
-
-
-
17
1
-
16
-
-
16
-
-
-
-
17
-
3
-
-
-
-
12

A = Number of meetings attended

B = Number of meetings eligible to attend during the year

90. The operation of the Board, its Committees and individual Directors is subject to regular evaluation. The evaluation of the Board and

Board Diversity

91. The Company does not have a formal Board diversity policy with regard to matters such as age, gender or educational and professional
backgrounds, but following the best practice while making the new appointments and considering the current composition of the Board
of Directors, these aspects are taken into account.

92. As of the date of publication of these financial statements the Board has 3 females representing 20% from the total number of directors.
The average age of directors is 49 years ranging from 33 to 71 years. The Board has a necessary balance of skills and expertise to run the
Company and the Group. The Board members have the following educational backgrounds: port and transportation industry, accounting
and financial, banking sector and legal. There are 6 nationalities present in the Board. The Board members reside in 6 countries with the
majority of the Board members being the tax residents of Cyprus.

Board and Management Remuneration

93. 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.

94. 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. Non-executive
Directors are not eligible for bonuses, retirement benefits or to participate in any incentive plans operated by the Group. The Chairmen
of the committees receive additional remuneration.

95. The shareholders of the Company approved the remuneration of the members of the Board on 12 May 2017, 11 December 2017,

29 January 2018, 2 March 2018 14 May 2018 and 29 June 2018.

Annual Report 2018

Global Ports Investments PLC

Management report
(continued)

Board and Management Remuneration (continued)

96. The Directors did not waive or agreed to waive any emoluments from the company or any company of the Group during the period under

review or future emoluments.

97. The performance based part of the remuneration of the Key Management is based on the Key Rules of Awarding and Payment of
Performance Based Bonuses of GPI Group adopted by the Board on 15 June 2016 and regularly updated with the last update on
18 October 2018. The Remuneration Committee monitors the efficiency of the Rules and makes the recommendations to the Board on
their amendment and revision.

98. Neither the Board members, nor the management have long-term incentive schemes.

99. Refer to Note 22(g) to the financial statements for details of the remuneration paid to the members of the Board and key management.

Managing director

100. Mr. Alexander Iodchin occupies the position of managing director and the Board granted him the powers to carry out all business related
to the Group’s business up to a total value per transaction of US$500,000. It has also granted him powers to discharge other managerial
duties related to the ordinary course of business of the Group, including representing the Group before any government or government-
backed authority.

101. 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.

102. Mr Iodchin is also acting as the Board Secretary since December 2008.

Company Secretary

103. The Group maintains a company secretary, who is responsible for safeguarding the rights and interests of shareholders, including the

establishment of effective and transparent arrangements for securing the rights of shareholders.

104. Team Nominees Limited has been acting as the company secretary since the Group’s incorporation in February 2008.

105. The company secretary’s responsibilities include ensuring compliance by the Group, its management bodies and officers with the law

and the Group’s charter and internal documents. The company secretary organises 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 Group; and review of communications from shareholders.

Corporate Social Responsibility Report

106. The Corporate Social Responsibility Report is drawn up as a separate report and will be made public at the Company`s website

(the address of which, at the date of publication of this report, is www.globalports.com) within six months from the balance sheet date.

Events after the balance sheet date

107. The events after the balance sheet date are disclosed in Note 23 to the financial statements.

Research and development activities

108. The Group is not engaged in research and development activities.

Branches

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

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Treasury shares

110. 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

111. Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going concern basis in

preparing the parent company financial statements based on the fact that, after making enquiries and following a review of the Group’s
principle risks and uncertainties, budget for 2019 and the latest forecasts over a period of 5-7 years reflecting its business and investment
cycles, including cash flows and borrowing facilities, the Directors consider that the Group has adequate resources to meet its liabilities
as they fall due and to continue in operation for the foreseeable future.

Internal audit

112. The internal audit function is carried out by Group’s Internal Audit Service (IAS). It 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:
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risks are appropriately identified, assessed, responded to and managed;
there is interaction with the various governance groups occurs as needed;
significant financial, managerial, and operating information is accurate, reliable, and timely;
employee’s actions are in compliance with policies, standards, procedures, and applicable laws and regulations;
resources are acquired economically, used efficiently and adequately protected;
programs, plans and objectives are achieved;
quality and continuous improvement are fostered in the Group’s control process; and
significant legislative or regulatory issues impacting the Group are recognised and addressed properly.

113. The Head of the IAS, Mr. Ilya Kotlov, reports directly to the Audit and Risk Committee.

External auditors

114. At the Global Ports AGM, an external auditor is appointed on an annual basis to review the Group’s financial and operating performance.

115. This follows proposals drafted by the Audit and Risk Committee for the Board of Directors regarding the reappointment of the external

auditor of the Group.

116. In 2018, the shareholders of Global Ports re-appointed the Independent Auditors, PricewaterhouseCoopers as the external auditor for the

purposes of auditing the Group’s IFRS financial statements for 2018.

117. 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

Morten Engelstoft
Chairman of the Board

27 March 2019

Alexander Iodchin
Secretary of the Board

Annual Report 2018

Global Ports Investments PLC

Directors’ 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.

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 these parent company financial statements which are presented
on pages 24 to 53 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

Morten Engelstoft
Chairman of the Board

Limassol
27 March 2019

Alexander Iodchin
Secretary of the Board

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Statement of comprehensive income

for the year ended 31 December 2018

(in thousands of US dollars)

Revenue

Dividend income

Finance income – net

Administrative expenses

Other gains/(losses) – net

Impairment of investments in subsidiaries and joint ventures

Operating profit/(loss)

Finance costs

Profit/(loss) before income tax

Income tax expense

Profit/(loss) for the year

Other comprehensive income

Note

22(a)

22(b)

For the year ended 31 December

2018

110

3,892

(13)

(5,506)

2,245

(83,713)

(82,985)

(1,197)

(84,182)

2017

7,494

401

(5,427)

1,226

(961)

2,753

(1,197)

1,556

(1)

1,555

Total comprehensive income/(loss) for the year

(84,182)

1,555

The notes on pages 28 to 53 are an integral part of these financial statements.

Annual Report 2018

24
23

Global Ports Investments PLC
Global Ports Investments PLC

Balance sheet

as at 31 December 2018

(in thousands of US dollars)

ASSETS

Property, plant and equipment

Investments in subsidiaries

Investments in joint ventures

Non-current assets

Loans receivable

Trade and other receivables

Cash and cash equivalents

Current assets

TOTAL ASSETS

EQUITY AND LIABILITIES

Share capital

Share premium

Capital contribution

Accumulated losses

Total equity

Borrowings

Non-current liabilities

Trade and other payables

Current liabilities

Total liabilities

TOTAL EQUITY AND LIABILITIES

At 31 December

Note

2018

2017

22(i)

117

624,638

24,838

649,593

309

744

1,053

650,646

57,317

923,511

101,300

(458,083)

624,045

22,197

4,404

26,601

650,646

638,899

94,978

733,943

251

259

1,639

2,149

736,092

57,317

923,511

101,300

(373,901)

708,227

21,000

6,865

27,865

736,092

On 27 March 2019 the Board of Directors of Global Ports Investments Plc authorised these financial statements for issue.

Morten Engelstoft, Director

Alexander Iodchin, Director

The notes on pages 28 to 53 are an integral part of these financial statements.

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Statement of changes in equity

for the year ended 31 December 2018

(in thousands of US dollars)

Balance at 1 January 2017

Comprehensive income

Profit for the year

Share capital

Share premium

Capital
contribution

Retained
earnings*

57,317

923,511

101,300

(375,456)

1,555

Balance at 31 December 2017 / 1 January 2018

57,317

923,511

101,300

(373,901)

Comprehensive loss

Loss for the year

Balance at 31 December 2018

–

57,317

–

923,511

101,300

(84,182)

(458,083)

(*) Retained earnings is the only reserve that is available for distribution.

Total

706,672

1,555

708,227

(84,182)

624,045

The notes on pages 28 to 53 are an integral part of these financial statements.

Annual Report 2018

26
25

Global Ports Investments PLC
Global Ports Investments PLC

Statement of cash flows

for the year ended 31 December 2018

(in thousands of US dollars)

Cash flows from operating activities

Profit/(loss) before tax

Adjustments for:

Depreciation of property, plant and equipment

Impairment of investments in subsidiaries and joint ventures

Dividend income

Finance income

Finance costs

Amortisation and derecognition of financial guarantee

Foreign exchange (gains)/losses and other non-monetary items

Operating cash flows before working capital changes

Changes in working capital:

Trade and other receivables

Trade and other payables

Cash used in operating activities

Tax paid

Net cash used in operating activities

Cash flows from investing activities

Investments in subsidiaries

Repayment of original cost of subsidiaries

Purchase of investments in joint ventures

Purchase of property, plant and equipment

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

Interest paid

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Exchange gains/(losses) on cash and cash equivalents

Cash and cash equivalents at end of the year

For the year ended 31 December

2018

2017

(84,182)

1,556

83,713

(3,892)

(7)

1,197

(2,369)

211

(5,316)

(50)

(90)

(5,456)

696

(8)

(64)

3,892

4,573

(883)

1,639

(12)

744

961

(7,494)

(328)

1,197

(1,300)

(158)

(5,565)

306

(5,202)

(9,713)

35,

(9)

(67)

(7,500)

13,433

415

11,445

8,356

(2,394)

760

876

1,639

Note

6.13

14.15

22(b)

22(h)

22(i)

The notes on pages 28 to 53 are an integral part of these financial statements.

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Notes 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.

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”.

Until April 2018 the Company was 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.
In April 2018 TIHL has completed the sale of its 30.75% stake in Global Ports to LLC Management Company “Delo” (“Delo Group”).
The Company has been informed that in connection with the transaction, Delo Group has acceded to the shareholder agreement with
APM Terminals B.V. and that TIHL has been released from its obligations under such agreement. Since April 2018 the Company is jointly
controlled by Delo Group and APM Terminals.

Approval of the parent company financial statements
These parent company financial statements were authorized for issue by the Board of Directors on 27 March 2019.

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 2018 have been adopted by the EU through the endorsement
procedure established by the European Commission.

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.

Annual Report 2018

Global Ports Investments PLC

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
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 2018 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 2018:

>
>
>
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IFRS 9 Financial Instruments;
IFRS 15 Revenue from Contracts with Customers;
Classification and Measurement of Share-based Payment Transactions – Amendments to IFRS 2;
Annual Improvements 2014-2016 cycle;
Transfers to Investment Property – Amendments to IAS40;
Interpretation 22 Foreign Currency Transactions and Advance Consideration.

Apart from the accounting policy changes resulting from the adoption of IFRS 9 that is effective from 1 January 2018, the adoption
of the remaining standards and amendments listed above did not have a material effect on the accounting policies of the Company.

IFRS 9 and IFRS 15 were adopted using the simplified transition method without restating the comparative information, with any impact
on adoption to be recognised in the opening retained earnings and other components of equity as appropriate.

On 1 January 2018, the date of initial application of IFRS 9, the Company has assessed which business models apply to the financial
assets held by the Company and has classified its financial instruments into the appropriate IFRS 9 categories. Based on the analysis
performed, the financial assets previously classified into ‘loans and receivables’ category were reclassified into those measured
subsequently at amortized cost, with no impact on their measurement. The Company did not have any financial assets in other than
the ‘loans and receivables’ category as at the date of transition. The changes in the classification category did not result in changes of
presentation in the balance sheet. Classification and measurement of the Company’s financial liabilities at amortized cost under IFRS 9
remained consistent with IAS 39, since the new requirements mainly affect the accounting for financial liabilities measured at fair value
through profit or loss and the Company does not have any such financial liabilities. No adjustments to the opening retained earnings were
required in relation to the Company’s loans and borrowings, as none of the loans receivable outstanding on 1 January 2018 had been
refinanced in prior periods and the assessed impact from the modification of borrowings in prior years was not significant to adjust the
borrowings balance as at 1 January 2018.

From 1 January 2018, the Company assessed on a forward looking basis the expected credit losses associated with its debt financial
assets carried at amortised cost, cash and cash equivalents and financial guarantees. After taking into consideration the risk profile of
the Company’s trade and loan receivables, financial guarantees, their repayment terms, the history and probability of default (including
assessment of the debtors’ capability to meet their obligations) and the expected loss in case of default, the Company did not identify
any material expected credit losses as a result of the application of the new impairment model and therefore no adjustments were made
in opening balances for the impact of expected credit losses.

The adoption of IFRS 9 Financial Instruments did not have a material impact on the amounts recognized in these financial statements,
however the accounting policies of the Company for financial instruments have been amended to be consistent to the requirements of
the new standard as detailed below. The comparatives are stated based on the previous accounting policies of the Company for financial
instruments, which are also presented below to the extent that these are different from the new accounting policies.

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New standards and interpretations not yet adopted by the Company

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 2018 and have not been applied in preparing these financial statements. None
of these is expected to have a significant effect on these financial statements, except the following set out below:

(a) Adopted by the European Union

IFRS 16 Leases

The new standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. All leases result in the
lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also obtaining financing.
Accordingly, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and,
instead, introduces a single lessee accounting model. Lessees will be required to recognise: (a) assets and liabilities for all leases with
a term of more than 12 months, unless the underlying asset is of low value; and (b) depreciation of lease assets separately from
interest on lease liabilities in the income statement. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17.
Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases
differently.

While the Company has not yet finalised a detailed assessment of the potential impact of this standard, the Company does not expect
any material effect on its financial statements.

There are no other standards that are not yet effective and that would be expected to have a material impact on the Company in the
current or future reporting periods and on foreseeable future transactions.

(b) Other accounting standards that have not been endorsed by EU

Amendments to References to the Conceptual Framework in IFRS Standards (issued on 29 March 2018 and effective for annual periods
beginning on or after 1 January 2020). The revised Conceptual Framework includes: a new chapter on measurement; guidance on reporting
financial performance; improved definitions and guidance – in particular the definition of a liability; and clarifications in important areas,
such as the roles of stewardship, prudence and measurement uncertainty in financial reporting.

Amendments to IAS 1 and IAS 8: Definition of materiality (issued on 31 October 2018 and effective for annual periods beginning on
or after 1 January 2020). The amendments clarify the definition of material and how it should be applied by including in the definition
guidance that until now has featured elsewhere in IFRS. In addition, the explanations accompanying the definition have been improved.
Finally, the amendments ensure that the definition of material is consistent across all IFRS Standards. Information is material if omitting,
misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial
statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

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.

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

2. Summary of significant accounting policies (continued)

Revenue recognition

Revenues earned by the Company are recognised on the following bases:

(i) Interest income

Accounting policies applied from 1 January 2018:
Interest income on financial assets at amortised cost is calculated by applying the effective interest rate to the gross carrying amount
of a financial asset except for financial assets that subsequently become credit impaired (Stage 3 financial assets – see below). For credit –
impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss
allowance).

Accounting policies applied until 31 December 2017:
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 time proportion 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 the statement of comprehensive
income.

Foreign exchange gains and losses that relate to borrowings are presented in the statement of comprehensive income 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 “finance income-net”. All other foreign exchange gains and losses are presented in the statement of comprehensive income within
“other gains/(losses) – net”.

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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.

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.

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

2. Summary of significant accounting policies (continued)

Investments in subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Company has control. The Company controls an entity
whom the Company is exposed to, or has the rights to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. In its parent company financial statements, the Company carries the investments in
subsidiaries at cost less any impairment.

The Company recognizes dividend income from investments in subsidiaries to the extent that the Company receives distributions from
subsidiaries which constitute return on the cost of investment. Capital reductions and dividend distributions by subsidiaries which
constitute return of cost of investment as opposed to return on cost of investment are recognised as a reduction in the cost of investment
in subsidiary.

Investments in joint arrangements

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
obligations each investor has rather than the legal structure of the joint arrangements. The Company has assessed the nature of its joint
arrangements and determined them to be joint ventures. In its parent company financial statements the Company carries its investments
in joint ventures at cost less any impairment.

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.

Financial assets

Accounting policies applied from 1 January 2018:

(a) Classification

From 1 January 2018, the Company classifies its financial assets into those to be measured at amortised cost.

The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash
flows.

(b) Recognition and measurement

Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument Financial assets are
derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has
transferred substantially all the risks and rewards of ownership.

At initial recognition, the Company measures a financial asset at its fair value plus transaction costs that are directly attributable to
the acquisition of the financial asset. For loans provided to related parties other than the Company’s direct subsidiaries, the difference
between the fair value of the loans and their carrying amount on inception is recognized in profit or loss. For loans provided to direct
subsidiaries the difference is included in the cost of the investment.

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Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest
are measured at amortised cost. Interest income from these financial assets is calculated using the effective interest rate method. Any
gain or loss arising on derecognition is recognised directly in profit or loss and presented in ‘other gains/(losses)-net’, together with foreign
exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss. Financial assets
measured at amortised cost comprise cash and cash equivalents, loans receivable and trade and other receivables.

From 1 January 2018, the Company assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortised cost and cash and cash equivalents. The Company measures expected credit losses (‘ECL’) and recognises credit
loss allowance at each reporting date. The impairment methodology applied depends on whether there has been a significant increase
in credit risk.

The Company applies a general approach – three stage model for recognizing and measuring expected losses based on changes in credit
quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial
assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible
within the next 12 months or until contractual maturity, if shorter (‘12 Months ECL’). If the Company identifies a significant increase in
credit risk (‘SICR’) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis,
that is, up until contractual maturity but considering expected prepayments, if any (‘Lifetime ECL’).

Accounting policies applied until 31 December 2017:

The Company 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 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.

Loans and receivables are initially recognised at fair value plus transaction costs. For loans provided to related parties other than its direct
subsidiaries, the difference between the fair value of the loans and their carrying amount on inception is recognized in profit or loss. For
loans provided to direct subsidiaries the difference is included in the cost of the investment. 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 Company has
transferred substantially all risks and rewards of ownership. Loans and receivables are carried at amortised cost using the effective
interest method.

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 statement of comprehensive income against “other gains/(losses) – net”.

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

2. Summary of significant accounting policies (continued)

Share capital, share premium and capital contribution

Ordinary shares are classified as equity.

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.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

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.

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.

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.

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 and contingent liabilities

Provisions are recognised when the Company 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.

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.

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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 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.

Accounting policies applied from 1 January 2018:

Financial guarantees are recognised as a financial liability at the time the guarantee is issued. Financial guarantees are initially recognised
at their fair value, which is normally evidenced by the amount of fees received. This amount is amortised on a straight-line basis over the
life of the guarantee in “other gains/(losses) – net” in profit or loss.

At the end of each reporting period, the guarantee is subsequently measured at the higher of:
>
>

the amount of the loss allowance determined in accordance with the expected credit loss model under IFRS 9 Financial Instruments; and
the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles
of IFRS 15 “Revenue from Contracts with Customers”.

The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual
payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount
that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables
of subsidiaries are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost
of the investment.

Accounting policies applied until 31 December 2017:

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 and indirect 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”.

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

2. Summary of significant accounting policies (continued)

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 they are presented as current assets or liabilities if they are expected to be settled within 12 months after the
end of the reporting period. The resulting gain or loss is recorded in the income statement within “other gains/(losses) – 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.

Trade and other payables

Trade and other 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 and other 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

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.

(a) Market risk

(i) 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% (2017: 15%) against the US dollar and all other variables remained unchanged,
the posttax loss of the Company for the year ended 31 December 2018, would have decreased/increased by US$16 thousand (2017:
profit for the year would have increased/decreased by US$23 thousand). This is mainly due to foreign exchange gains and losses arising
upon retranslation of loans receivable, cash in bank and payables denominated in Euros.

Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.

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(ii) 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 (loss)/profit of the Company would not significantly change for
the years ended 31 December 2018 and 31 December 2017. 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 2017 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.

(b) Credit risk

Financial assets, which potentially subject the Company to credit risk, consist principally of loans receivable, trade and other receivables
and cash and cash equivalents.

At 31 December 2018 and 2017, the Company did not identify any material expected credit losses with respect to the Company’s
financial assets and issued guarantees that are subject to IFRS 9 impairment model.

At 31 December 2018, issued financial guarantee liabilities with carrying amount of US$2,668 thousand are within Stage 1 of IFRS 9
general impairment model (2017: US$5,038 thousand).

Financial assets are written-off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment
plan with the Company.

Finally, see Note 12 for credit quality of cash and cash equivalents.

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.

(in thousands of US dollars)

As of 31 December 2018

Trade and other payables

Financial guarantee *

Borrowings

Total

As of 31 December 2017

Trade and other payables

Financial guarantee *

Borrowings

Total

Less than 1 year

1-2 years

2-5 years

Over 5 years

Total

1,736

869,013

870,749

1,827

1,070,525

–

1,072,352

–

24,591

–

24,591

–

1,736

869,013

24,591

895,340

1,827

1,070,525

24,591

1,096,943

* Full amount payable if the loans and bonds guaranteed are non-performing (Note 22(k)).

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

3. Financial risk management (continued)

Financial risk factors (continued)

Management controls current liquidity based on expected cash outflows and expected receipts from dividends and interest.

(d) 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.

(e) Fair value estimation

The fair value of financial liabilities and assets 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 estimated fair values of financial instruments have been determined by the Company, 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 Company has used all
available market information in estimating the fair value of financial instruments.

The disclosure of the fair value of financial instruments carried at amortised cost is determined by using 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 Company’s specific
estimates.

Level 3 – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

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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.

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 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.

The recoverable amounts of Arytano Holdings Limited (FCT, PLP and ULCT CGUs) and NCC Pacific Investments Limited (VSC CGU) were
determined based on value in use derived from discounted future cash flows models (refer to notes 14 and 15 for the definition of the CGUs
of the Company). Cash flow projections cover a period of five years based on the assumptions of the next 12 months. 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 Russian CGUs a terminal growth rate of 3% has been
applied (2017: 3%). The discount rate applied for Russian CGUs in projections prepared as at 31 December 2018 is 10.6% (2017: 10.4%).

Key assumptions for all the above CGUs are throughput volume, price per unit, growth rates, and discount rates. The projected volumes
reflect past experience adjusted by the management view on the prospective market developments. For Russian 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, the long-term average
throughput growth rate for the Russian container market is higher than in developed markets.

Based on the results of the impairment testing for all CGUs mentioned above no impairment was recognised in 2018.

For MD CGU (part of the investment in Multi Link Terminals Limited) following the substantial reduction of cargo volumes the recoverable
amount was determined based on the expected fair value less cost to sell of those assets which have active market and their value could
be reliably determined. As a result the investment in Multi Link Terminals Limited was impaired by US$70,148 thousand (see Note 15).
In the prior year, the recoverable amount of MD was determined based on value-in-use model using terminal growth rate for Russian
CGUs of 3% and a discount rate of 10.4%. No impairment was identified in 2017.

The recoverable amount of NCC Group Limited (ex-parent holding of NCC Group acquired by the Company in 2013) was determined
based on its net asset value which approximates its fair value less cost to sell. Based on the results of the impairment testing, an
impairment amounting to US$13,565 thousand (2017: US$961 thousand) was recognised with respect to investment in NCC Group
Limited (see Note 14).

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. Finally, the Board of Directors believes that there are no indications for reversal of
impairments recognised in previous periods.

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

4. Critical accounting estimates and judgments (continued)

Critical judgments in applying the Company’s accounting policies

There were no critical judgments in applying the Company’s accounting policies.

5. Finance income – net

(in thousands of US dollars)

Interest income on cash balances

Interest income on loans to related parties (Note 22(c))

Total interest income calculated using effective interest rate method

Net foreign exchange gains/(losses) on cash and cash equivalents and loans
receivable*

Total

For the year ended 31 December

2018

(20)

(13)

2017

325

328

401

* The total net foreign exchange gain recognised in the statement of comprehensive income amounted to US$19 thousand (2017: losses US$1 thousand). Refer also

to Note 7.

6. Administrative expenses

(in thousands of US dollars)

Legal, consulting and other professional services

Staff costs (Note 8)

Travelling expenses

Taxes other than on income

Auditors’ remuneration

Advertising and promotion

Insurance

Bank charges

Depreciation of property, plant and equipment (Note 13)

Operating lease rentals

Other expenses

Total

For the year ended 31 December

2018

2,032

1,608

532

272

584

246

5,506

2017

2,185

1,325

630

443

477

202

5,427

The auditors’ remuneration stated above include fees of US$254 thousand (2017: US$249 thousand) for statutory audit services and
US$63 thousand (2017: US$60 thousand) for other assurance services charged by the Company’s statutory audit firm.

The legal and consulting fees stated above include fees of US$1 thousand (2017: US$4 thousand) for tax consultancy services charged by
the Company’s statutory audit firm.

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7. Other gains/(losses) – net

(in thousands of US dollars)

Net foreign exchange transaction losses on non-financing activities

Derecognition of financial guarantee (Note 22(k))

Amortisation of financial guarantee (Note 22(k))

Other gains/(losses) – net

Total

8. Staff costs

(in thousands of US dollars)

Salaries

Social insurance costs

Other staff costs

Total

Average number of staff employed during the year

9. Finance costs

(in thousands of US dollars)

Interest expense on loans from related parties (Note 22(c))

Total

10. Income tax expense

(in thousands of US dollars)

Defence contribution

Total income tax

For the year ended 31 December

2018

1,180

1,189

(163)

2 245

2017

(74)

1,300

–

1,226

For the year ended 31 December

2018

1,514

1,608

2017

1,274

1,325

For the year ended 31 December

2018

1,197

2017

1,197

For the year ended 31 December

2018

2017

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the applicable tax rate as follows:

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

10. Income tax expense (continued)

(in thousands of US dollars)

Profit/(loss) before tax

Tax calculated at the applicable corporation tax rate of 12.5%

Tax effect of expenses not deductible for tax purposes

Tax effect of allowances and income not subject to tax

Group relief

Tax effect of tax losses for which no deferred tax assets were recognised

Defence contribution

Tax charge

For the year ended 31 December

2018

(84,182)

(10,523)

11,303

(786)

2017

1,556

194

931

(1,105)

(20)

The Company is subject to corporation tax on taxable profits at the rate of 12.5%.

Brought forward losses of only five years may be utilized.

Under certain conditions, interest may be exempt from income tax and only subject to defence contribution at the rate of 30%.

In certain cases dividends received from abroad may be subject to defence contribution at the rate of 17%. In certain cases dividends
received from other Cyprus tax resident Companies may also be subject to special contribution for defence.

Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon, etc) are exempt from Cyprus income tax.

11. Financial instruments by category

(in thousands of US dollars)

Financial assets at amortised cost (Loans and receivables at 31 December 2017)

Financial assets as per balance sheet

Current loan receivables

Cash and bank balances

Total

Financial liabilities measured at amortised cost

Financial liabilities as per balance sheet

Trade and other payables

Borrowings (Note 22(i))

Total

As at 31 December

2018

2017

744

4,127

22,197

26,324

251

1,639

1,890

6,718

21,000

27,718

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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:

(in thousands of US dollars)

Counterparties without external rating

Group 1

Group 2

Total

Group 1 – Loans receivable from related parties with no defaults in the past.

Group 2 – Loans receivable from third parties with no defaults in the past.

(in thousands of US dollars)

Cash and bank

A3 (Moody’s)

Aa3 (Moody’s)

Caa1 (Moody’s)

Total

As at 31 December

2018

2017

As at 31 December

2018

696

744

192

251

2017

1,612

1,639

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

13. Property, plant and equipment

(in thousands of US dollars)

At 1 January 2017

Cost

Accumulated depreciation

Net book amount

Additions

Depreciation charge for 2017

Closing net book amount at 31 December 2017

At 31 December 2017/1 January 2018

Cost

Accumulated depreciation

Net book amount

Additions

Depreciation charge for 2018

Closing net book amount at 31 December 2018

At 31 December 2018

Cost

Accumulated depreciation

Net book amount

14. Investments in subsidiaries

(in thousands of US dollars)

At beginning of year

Additions

Dividends set off against cost of investment *

Impairment charge (Note 4)

At end of year

Motor vehicles and other equipment

110

(110)

–

(1)

(13)

117

131

(14)

117

For the year ended 31 December

2018

638,899

(696)

(13,565)

624,638

2017

630,499

9,713

(352)

(961)

638,899

* Dividends received by a subsidiary of the Company have been recognised by the Company as a reduction of the cost of investment because the Company has
asserted that those amounts constitute a return of the original cost of the Company in this subsidiary.

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The Company’s direct interests in subsidiaries, all of which are unlisted, were as follows:

Name

Arytano Holdings Limited

Intercross Investments B.V.

NCC Pacific Investments Limited

NCC Group Limited

Global Ports Advisory Eesti OU

Global Ports Management LLC

Principal activity

Holding company

Consulting company

Management and consulting
company

National Container Holding Company Limited*

Holding company

Country of
incorporation

2018
% holding

2017
% holding

Cyprus

Netherlands

Cyprus

Estonia

Russia

Cyprus

100

0.005

* National Container Holding Company Limited is accounted for as a subsidiary because the Company has indirect control, since its subsidiaries hold the remaining
shareholding.

The principal activities of the indirect subsidiaries and joint ventures held by the direct subsidiaries listed above, which represent separate
CGUs, are the operation of four container terminals in Russia (Petrolesport (PLP), First Container Terminal (FCT), Ust-Luga Container
Terminal (ULCT) and Vostochnaya Stevedoring Company (VSC)); and an oil product terminal AS Vopak E.O.S (VEOS) (classified as assets
held for sale in the consolidated financial statements of the Group). All of the above terminals are 100% subsidiaries except ULCT
(a subsidiary which the Group controls 80%) and VEOS (a 50% joint venture).

15. Investments in joint ventures

(in thousands of US dollars)

At beginning of year

Additions

Impairment charge (Note 4)

At end of year

For the year ended 31 December

2018

94,978

(70,148)

24,838

2017

94,969

94,978

The Company’s interests in joint ventures, all of which are unlisted, are as follows:

Name

CD Holding OY

Multi-Link Terminals Limited

M.L.T Container Logistics Ltd

Principal activity

Country of incorporation

Holding company

Finland

Ireland

Cyprus

2018
% holding

2017
% holding

The principal activities of the joint ventures listed above are the operation of two container terminals in Finland (MLT OY CGU),
a container terminal in Russia (Moby Dik CGU) and an inland container terminal in Russia (Yanino Logistics Park CGU (YLP)).

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

16. Loans receivable

(in thousands of US dollars)

Loans to related parties (Note 22(h))

Loans to third parties

Total current

Total loans receivable

As at 31 December

2018

2017

192

251

2017

3.8

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:

(in thousands of US dollars)

Currency:

Euro

Total

As at 31 December

2018

2017

251

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

(in thousands of US dollars)

Prepayments

Total trade and other receivables

As at 31 December

2018

309

2017

259

The fair values of trade and other receivables approximate their carrying amounts. The carrying amount of the Company’s trade and other
receivables are denominated in Euros.

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18. Cash and bank balances

(in thousands of US dollars)

Cash at bank

Total

Cash and cash equivalents are denominated in the following currencies:

(in thousands of US dollars)

Currency:

US dollar

Euro

Total

Non-cash transaction

There were no principal non-cash transactions during 2018 and 2017.

19. Share capital, share premium and dividends

(in thousands of US dollars)

As at 31 December

2018

744

2017

1,639

As at 31 December

2018

697

744

2017

1,619

1,639

At 1 January 2017/31 December 2017/31 December 2018

57,317

923,511

980,828

Share capital

Share premium

Total

Authorised share capital

The authorised share capital of the Company amounts to US$175,000,000.00 divided into 750,000,000 ordinary shares and
1,000,000,000 ordinary non-voting shares with a par value of US$0.10 each.

Issued 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. All issued shares are fully paid.

Dividends

There were no dividends declared or paid in 2018 and 2017.

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

20. Trade and other payables

(in thousands of US dollars)

Financial guarantee (Note 22(k))

Other payables

Other payables to related parties (Note 22(j))

Accrued expenses

Payroll payable

Total trade and other payables

As at 31 December

2018

2,668

438

620

277

401

4,404

2017

5,038

580

681

147

419

6,865

The fair value of trade and other payables which are due within one year approximates their carrying amount at the balance sheet date.
The carrying amount of the Company’s trade and other payables are denominated in Euros.

21. Contingencies and commitments

Operating environment
Most of investments of the Company are related to the operations in Russia. 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 frameworks continue to
develop and are subject to frequent changes and varying interpretations. The Russian economy continues to be negatively impacted by
ongoing political tension in the region and international sanctions against certain Russian companies and individuals. Firm oil prices, low
unemployment and rising wages supported a modest growth of the economy in 2018. The operating environment has a significant impact
on the Company’s operations and financial position. Management is taking necessary measures to ensure sustainability of the Company’s
operations. However, the future effects of the current economic situation are difficult to predict and management’s current expectations
and estimates could differ from actual results.

Estonia and Finland represent established market economies with more stable political systems and developed legislation based on EU
directives and regulations. However, the situation with the operations in Estonia remained challenging and is characterised by a structural
deterioration of the business environment in which the Company’s joint venture operates, which is heavily dependent on the flows
of Russian oil products.

Guarantees granted to subsidiaries
Refer to Note 22(k) for details of guarantees granted to direct and indirect subsidiaries.

Commitments
There were no material commitments as of 31 December 2018.

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22. Related party transactions

Until April 2018 the Company was 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.
In April 2018 TIHL has completed the sale of its 30.75% stake in Global Ports to LLC Management Company “Delo” (“Delo Group”).
The Company has been informed that in connection with the transaction, Delo Group has acceded to the shareholder agreement with
APM Terminals B.V. and that TIHL has been released from its obligations under such agreement. Since April 2018 the Company is jointly
controlled by Delo Group and APM Terminals.

The following transactions were carried out with related parties:

(a) Revenue

(in thousands of US dollars)

Management fees from:

Subsidiaries

Total

(b) Dividend income

(in thousands of US dollars)

Subsidiaries

Joint ventures

Total

(in thousands of US dollars)

Interest income:

Subsidiaries

Joint ventures

Total interest income

Interest expense:

Subsidiaries

Total interest expenses

For the year ended 31 December

2018

2017

110

For the year ended 31 December

2018

2,167

1,725

3,892

2017

630

6,864

7,494

For the year ended 31 December

2018

2017

1,197

260

325

1,197

Annual Report 2018

Global Ports Investments PLC

Notes to the financial statements
(continued)

22. Related party transactions (continued)

(d) Other gains/(losses) – net

(in thousands of US dollars)

Subsidiaries (Note 22(k))

Total

(e) Purchases of services

(in thousands of US dollars)

Subsidiaries

Total

(f) Acquisitions/disposals of subsidiaries/joint ventures

(in thousands of US dollars)

Additions/contributions:

Subsidiaries

Joint ventures

Total

Disposals/distributions of equity:

Subsidiaries

Total

For the year ended 31 December

2018

2,369

2017

1,300

For the year ended 31 December

2018

227

2017

218

For the year ended 31 December

2018

696

2017

9,713

9,722

352

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(g) Key management personnel compensation

The compensation of key management personnel and the total remuneration of the Directors (included in key management personnel
compensation above) were as follows:

(in thousands of US dollars)

Key management compensation:

For the year ended 31 December

2018

2017

Salaries, fees, payroll taxes and other short term employee benefits

1,188

1,085

Directors’ remuneration:

Fees

Emoluments in their executive capacity

Total

(h) Loans to related parties

Loans to subsidiaries:

(in thousands of US dollars)

At beginning of year

Loans advanced during the year

Interest charged

Loan and interest repaid during the year

At end of year

Loans to joint ventures:

(in thousands of US dollars)

At beginning of year

Interest charged

Loan and interest repaid during the year

Foreign exchange differences

At end of year

The loan to joint ventures beared interest at the rate of 3.8%, was unsecured and was repaid in 2018.

(i) Borrowings from related parties

Loans from subsidiaries:

(in thousands of US dollars)

At beginning of year

Loan and interest repaid during the year

Interest charged

At end of year

375

813

1,188

408

677

1,085

For the year ended 31 December

2018

2017

4,882

7,500

260

(12,642)

–

For the year ended 31 December

2018

(50)

(9)

2017

1,154

(1,204)

For the year ended 31 December

2018

21,000

1,197

22,197

2017

22,197

(2,394)

1,197

21,000

The borrowings from related parties are USD-denominated, bear effective interest at the rate of 5.7%, are unsecured and repayable by
January 2021. The fair value of borrowings as at 31 December 2018 approximates to their carrying value.

Annual Report 2018

52
51

Global Ports Investments PLC
Global Ports Investments PLC

Notes to the financial statements
(continued)

22. Related party transactions (continued)

(j) Other payables

(in thousands of US dollars)

Payroll payable (Note 20)

Entities under control of owners of controlling entities (Note 20)

Total

(k) Guarantees granted to subsidiaries

As at 31 December

2018

325

620

945

2017

332

681

1,013

During 2015 and 2016 the Company granted an irrevocable public offer to purchase bonds issued by an indirect subsidiary of the
Company, in the event a default occurs in respect of those bonds. These bonds had a balance of US$222,134 thousand (including interest
accrued) as at 31 December 2018 (31 December 2017: US$267,820 thousand). At inception the fair value of these guarantees was
US$2,575 thousand. As at 31 December 2018 the unamortised balance of these guarantees was US$1,098 thousand.

During 2016 the Company granted a corporate guarantee covering the non – performance by an indirect subsidiary of the Company in
respect of a bank loan, which was repaid in October 2018 (31 December 2017 had a balance of US$86,156 thousand (including interest
accrued)). The guarantee was provided free of charge and was valid until December 2020. At inception the fair value of the guarantee
was US$1,011 thousand. As at 31 December 2018 following the early repayment of the loan there were no unamortised balance of these
guarantees (31 December 2017: US$673 thousand).

During 2016 the Company and its indirect subsidiaries granted guarantee to an indirect subsidiary of the Company, which issued the
Eurobonds in the event of default in respect of those bonds with a balance of US$646,879 thousand (including interest accrued) as
at 31 December 2018 (31 December 2017: US$716,549 thousand). At inception the fair value of the guarantee was US$3,588 thousand.
As at 31 December 2018 the unamortised balance of this guarantee was US$1,570 thousand.

The probability of default by the debtors in relation to the guaranteed loans is considered low.

23. Events after the balance sheet date

There were no material post balance sheet events which have a bearing on the understanding of these consolidated financial statements.

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Independent Auditor’s Report
To the Members of Global Ports Investments Plc

Report on the Audit of the Financial Statements

Our opinion

In our opinion, the accompanying parent company financial statements (the “financial statements”) of Global Ports Investments Plc (the
“Company”) give a true and fair view of the financial position of the Company as at 31 December 2018, and of its financial performance
and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union and the requirements of the Cyprus Companies Law, Cap. 113.

What we have audited
We have audited the financial statements which are presented in pages 24 to 53 and comprise:

the balance sheet as at 31 December 2018;

the statement of comprehensive income for the year then ended;

the statement of changes in equity for the year then ended;

the statement of cash flows for the year then ended; and

the notes to the financial statements, which include a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is International Financial Reporting
Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.

Basis for opinion

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

Independence
We remained independent of the Company throughout the period of our appointment in accordance with the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are
relevant to our audit of the financial statements in Cyprus and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.

Our audit approach

Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
In particular, we considered where the Board of Directors made subjective judgements; for example, in respect of significant accounting
estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also
addressed the risk of management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.

PricewaterhouseCoopers Ltd, City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus
P O Box 53034, CY-3300 Limassol, Cyprus
T: +357 25 – 555 000, F:+357 – 25 555 001, www.pwc.com.cy

PricewaterhouseCoopers Ltd is a private company registered in Cyprus (Reg. No.143594). Its registered office is at 3 Themistocles Dervis Street, CY-1066, Nicosia.
A list of the company’s directors, including for individuals the present and former (if any) name and surname and nationality, if not Cypriot and for legal entities
the corporate name, is kept by the Secretary of the company at its registered office. PwC refers to the Cyprus member firm, PricewaterhouseCoopers Ltd and may
sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

Annual Report 2018

Global Ports Investments PLC

Materiality

Overall materiality: US$6,5 million, which represents 1% of total assets.

Audit scope

Key audit
matters

We audited the complete financial statements of the Company.

We have identified the impairment assessment of investments in subsidiaries
and joint ventures as the key audit matter.

Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the
financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material
if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the
financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for
the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.

Overall group materiality US$6,5 million

How we determined it

1% of total assets

Rationale for the
materiality benchmark
applied

We chose total assets as the benchmark, because, in our view:

it is the benchmark against which the performance of the Company (the principal activity of the
Company is the holding of investments) is commonly measured by the users; and

it is a generally accepted benchmark.

We chose 1% which is within the range of acceptable quantitative materiality thresholds in auditing standards.

How we tailored our audit scope

Global Ports Investments Plc controls or has joint control over a number of entities situated in a number of territories namely Russia,
Estonia, Finland and Cyprus. In establishing the overall approach to the audit, we determined the scope of work that needed to be
performed taking into consideration the Company’s financial information, its activities and the industry in which the Company operates
to ensure that we perform sufficient work to enable us to provide an opinion on the financial statements as a whole.

Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of material
misstatements due to fraud

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.

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Key Audit Matter

How our audit addressed the Key Audit Matter

The Company performed an impairment test for all the cash
generating units (“CGUs”). We focused on this area due to:

the size of investments in subsidiaries and joint ventures;

the assessment of the recoverable amount of the CGUs
involves complex and subjective judgements about the future
results of the business and the applicable discount rates to be
used and the estimation of the fair value less costs of disposal
of the CGUs; and

the results of the impairment test may indicate a higher
recoverable amount than the carrying amount of assets
previously impaired and an assessment should be made
whether reversal of impairment may be necessary, which
involves subjective judgements.

In particular, we focused our audit effort on the Board
of Directors’ assessment of impairment of the following
investments:

Investments in Multi Link Terminals Limited and NCC Group
Limited due to the fact that there were material impairment
losses recognised with respect to these investments during
the period; and

Investment in Arytano Holdings Limited as for certain of its
CGUs a reasonably possible change in the key assumptions
would cause the carrying amount of the CGUs to exceed its
recoverable amounts.

The recoverable amount of the investment in NCC Group Limited
was determined by the Board of Directors based on the fair value
less costs of disposal approach. The recoverable amount of the
investment in Multi Link Terminals Limited was determined based
on the recoverable amounts of Mobi Dik (MD) CGU and Multi
Link Terminals Limited Oy (MLT Oy) CGU.

For MD CGU, following a substantial reduction in cargo volumes
during the year, the fair value less costs of disposal approach
was considered to give rise to higher recoverable amount than
value in use approach. In determining the fair value of MD
CGU, management involved an independent appraiser (the
management’s expert). The recoverable amount of MLT Oy CGU
was based on value in use calculations.

For NCC Group Limited, the recoverable amount was based on
the net assets of the subsidiary which approximate its fair value
less costs of disposal.

We evaluated the valuation inputs and assumptions,
methodologies and calculations adopted by the Board
of Directors in determining the CGUs’ recoverable amounts.
In order to assist us in our audit we involved PwC valuation
experts that have the knowledge and experience in the industry
and country of operation to assist us in evaluating methodology,
models and assumptions used in value in use calculations as well
as evaluating the fair value less costs to sell.

We further evaluated the work of the management’s expert
involved for the valuation of MD CGU’s assets by assessing the
competence, capabilities and objectivity of the independent
appraiser and by also engaging PwC valuation experts to assess
the methodology, models and inputs used by the management’s
expert.

With respect to the value in use models used for the CGUs
of Arytano Holdings Limited and MLT Oy, we challenged and
evaluated the composition of the future cash flow forecasts
in the model including comparing them to the latest budgets
approved by the Board of Directors.

We challenged and evaluated:

the Board of Directors’ key assumptions for the long term
growth rates of key inputs, such as volume and price and
compared them to historical results, economic and industry
forecasts;

the discount rate applied to these cash flows, by assessing the
weighted average cost of capital, cost of debt and considering
territory specific factors; and

the macroeconomic assumptions used by the Board of
Directors, by comparing them to market benchmarks and
publicly available information.

For the investment in Arytano Holdings Limited, we have also
challenged and evaluated the Board of Directors on the no
reversal of previously recognised impairment.

Annual Report 2018

Global Ports Investments PLC

Key Audit Matter

How our audit addressed the Key Audit Matter

The recoverable amount of the investment in Arytano Holdings
Limited (FCT, PLP and ULCT CGUs) was determined based on
value in use calculations for each CGU.

The expected cash flows (budgets) for the year 2019 and
the remaining assumptions used for the CGUs’ value in
use calculations have been approved by the Company’s Board
of Directors. Certain assumptions made by the Board of Directors
in the determination of the CGUs’ value in use calculation were
considered to be key estimates.

Based on the results of the impairment tests the Company
recognised an impairment charge amounting to US$13,565
thousand and US$70,148 thousand in relation to the investment
in subsidiary NCC Group Limited and the investment in joint
venture Multi Link Terminals Limited respectively.

For the investment in Arytano Holdings Limited, it was
determined that despite the fact that the impairment test has
shown an overall recoverable amount higher than the carrying
amount of the investment, no reversal of previously recognised
impairment was necessary because there is no observable
external or internal information to support reversal as required
by IAS 36 “Impairment of Assets”.

Refer to Notes 4, 14 and 15 to the financial statements for
the related disclosures.

Reporting on other information

We lastly evaluated the adequacy of the disclosures made
in Notes 4, 14 and 15 of the financial statements, including those
regarding the key assumptions as required.

Based on the evidence obtained, we found that the
methodologies, assumptions and data used within the models
and disclosures are appropriate.

The Board of Directors is responsible for the other information. The other information comprises the information included in the
Management Report, including the Corporate Governance Statement, and the Directors’ responsibility statement which we obtained prior
to the date of this auditor’s report and the Annual Report, which is expected to be made available to us after that date. Other information
does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.

When we read the Company’s complete Annual Report, if we conclude that there is a material misstatement therein, we are required
to communicate the matter to those charged with governance and if not corrected, we will bring the matter to the attention of the
members of the Company at the Company’s Annual General Meeting and we will take such other action as may be required.

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Responsibilities of the Board of Directors and those charged with governance for the Financial Statements

The Board of Directors is responsible for the preparation of the 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.

In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board
of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the
audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.

> Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
the Board of Directors.

Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company
to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves a true and fair view.

Annual Report 2018

Global Ports Investments PLC

From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters.

Report on Other Legal and Regulatory Requirements

Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent
Auditor’s Report, which is required in addition to the requirements of International Standards on Auditing.

Appointment of the Auditor and Period of Engagement

We were first appointed as auditors of the Company in 2008 by the members of the Company for the audit of the financial statements
for the year ended 31 December 2008. Our appointment has been renewed annually, since then, by shareholder resolution. In 2011 the
Company was listed in the Main Market of the London Stock Exchange and accordingly the first financial year after the Company qualified
as an EU PIE was the year ended 31 December 2012. Since then, the total period of uninterrupted engagement appointment was 7 years.

Consistency of the Additional Report to the Audit Committee

We confirm that our audit opinion on the financial statements expressed in this report is consistent with the additional report to the
Audit and Risk Committee of the Company, which we issued on 26 March 2019 in accordance with Article 11 of the EU Regulation
537/2014.

Provision of Non-audit Services

We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors
Law of 2017 were provided. In addition, there are no non-audit services which were provided by us to the Company and which have not
been disclosed in the financial statements or the management report.

Other Legal Requirements

Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

In our opinion, based on the work undertaken in the course of our audit, the management report has been prepared in accordance with the
requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the financial statements.

In our opinion, based on the work undertaken in the course of our audit, the information included in the corporate governance statement
in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113,
and which is included as a specific section of the management report, have been prepared in accordance with the requirements of the
Cyprus Companies Law, Cap, 113, and is consistent with the financial statements.

In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement includes all information
referred to in subparagraphs (i), (ii), (iii), (vi)

and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.

In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we are required
to report if we have identified material misstatements in the corporate governance statement in relation to the information disclosed for
items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect.

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Other Matter

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article 10(1)
of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 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.

The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas.

Tasos Nolas
Certified Public Accountant and Registered Auditor for and on behalf of

PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors

City House, 6 Karaiskakis Street,
CY-3032 Limassol, Cyprus

Limassol, 27 March 2019

Annual Report 2018

Global Ports Investments PLC

Strategic Report 
Additional Information 
Chairman’s Statement / Chief Executive Officer’s Statement / Market Overview / Strategy / Business Review / Corporate Social Responsibility
Directors’ Responsibility Statement / Definitions / Shareholder Information and Key Contacts

Additional
Information

/ Directors’ Responsibility Statement /

/ Definitions /

/ Shareholder Information and Key Contacts /

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Overview
Overview

Strategic
Strategic
Report
Report

Corporate
Corporate
Governance
Governance

Consolidated
Consolidated
Financial Statements
Financial Statements

Parent Company
Parent Company
Financial Statements
Financial Statements

Additional
Additional
Information
Information

Annual Report 2018
Annual Report 2018

Global Ports Investments PLC
Global Ports Investments PLC

Additional Information 
Directors’ Responsibility Statement / Definitions / Shareholder Information and Key Contacts

Directors’ Responsibility
Statement

We confirm that to the best of our knowledge:

This Annual Report includes a fair review of the development and performance of the business
and the position of the Group and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face.

Board of Directors of Global Ports Investments Plc

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Definitions

Terms that require definitions are marked
with capital letters and the 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, share of profit/(loss) of joint
ventures accounted for using the equity method, other gains/(losses)–net and impairment of goodwill and property, plant and equipment
and intangible assets.

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

ASOP is Association of Sea Commercial Ports (www.morport.com).

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

Cash Administrative, Selling and Marketing Expenses (a non-IFRS financial measure) are defined as administrative, selling and marketing
expenses, adjusted for depreciation and impairment of property, plant and equipment, amortisation and impairment of intangible assets.

Cash Costs of Sales (a non-IFRS financial measure) are defined as cost of sales, adjusted for depreciation and impairment of property,
plant and equipment, amortisation and impairment of intangible assets.

CD Holding group consists of Yanino Logistics Park (an inland terminal in the vicinity of St. Petersburg) and CD Holding. The results of
CD Holding group are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net
profit shown below Adjusted EBITDA).

Consolidated Container Revenue is defined as revenue generated from containerised cargo services.

Consolidated Inland Bulk Throughput is defined as combined bulk throughput by consolidated inland terminals: LT.

Consolidated Inland Container Throughput is defined as combined container throughput by consolidated inland terminals: LT.

Consolidated Marine Bulk Throughput is defined as combined marine bulk throughput by consolidated terminals: PLP, VSC, FCT and ULCT.

Consolidated Marine Container Throughput is defined as combined marine container throughput by consolidated marine terminals: PLP,
VSC, FCT and ULCT.

Consolidated Non-Container Revenue is defined as a difference between total revenue and Consolidated Container Revenue.

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).

Far East Basin is 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.

First Container Terminal (FCT) is located in the St. Petersburg harbour, Russia’s primary gateway for container cargo and is one of the
first specialised container terminals to be established in the USSR. The Global Ports Group owns a 100% effective ownership interest in
FCT. The results of FCT are fully consolidated.

Annual Report 2018

Global Ports Investments PLC

Additional Information 
Directors’ Responsibility Statement / Definitions / Shareholder Information and Key Contacts

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 results of the Finnish Ports segment are accounted in the Global
Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

Free Cash Flow (a non-IFRS financial measure) is calculated as Net cash from operating activities less Purchases of PPE.

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 for the Finnish Ports segment, the Euro.

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

Group is Global Ports Investments Plc and its subsidiaries and joint ventures. In April 2019 the Group sold its effective share ownership
in AS Vopak E.O.S. (VEOS).

Logistika Terminal (LT) is an inland container terminal providing a comprehensive range of container freight station and dry port services
at one location. The terminal is located to the side of the St. Petersburg – Moscow road, approximately 17 kilometres from FCT and
operates in the Shushary industrial cluster. In September 2018 the Group completed the previously announced1 sale of its holding in JSC
Logistika-Terminal, one of the Group’s two inland terminals, to PJSC TransContainer for a consideration of 1.9 billion Russian roubles.

MLT Group consists of Moby Dik (a terminal in the vicinity of St. Petersburg) and Multi-Link Terminals Oy (terminal operator in Vuosaari
(near Helsinki, Finland) and Kotka, Finland), MLT-Ireland and some other entities. The results of MLT group are accounted in the Global
Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

Moby Dik (MD) is located on the St. Petersburg ring road, approximately 30 kilometers from St. Petersburg, at the entry point of the
St. Petersburg channel. It is the only container terminal in Kronstadt. The Global Ports Group owns a 75% effective ownership interest
in MD, Container Finance LTD currently has a 25% effective ownership interest. The results of MD are accounted in the Global Ports’
financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

Oil Products Terminal segment consists of the Group’s 50% 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 consolidated in the Global Ports’ financial information
using equity method of accounting (proportionate share of net profit shown below EBITDA). In April 2019 the Group sold its effective
share ownership in AS Vopak E.O.S. (VEOS).

Petrolesport (PLP) is located in the St. Petersburg harbour, Russia’s primary gateway for container cargo. The Group owns a 100%
effective ownership interest in PLP. The results of PLP are fully consolidated.

Revenue per TEU is defined as the Global Ports Group’s Consolidated Container Revenue divided by total Consolidated Container Marine
Throughput.

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

Russian Ports segment consists of the Global Ports Group’s interests in PLP (100%), VSC (100%), FCT (100%), Logistika Terminal (100%)
(prior to its disposal), ULCT (80%) (in which Eurogate currently has a 20% effective ownership interest), Moby Dik (75%), Yanino (75%) (in
each of Moby Dik and Yanino Container Finance currently has a 25% effective ownership interest), as well as certain other entities. The
results of Moby Dik and Yanino are accounted in the Global Ports’ consolidated financial information using equity method of accounting
(proportionate share of net profit shown below EBITDA).

1. See Group’s release dated 16 August 2017.

Regaining forward momentum

Global Ports Investments PLC

Overview

Strategic
Report

Corporate
Governance

Consolidated
Financial Statements

Parent Company
Financial Statements

Additional
Information

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 Debt (a non-IFRS financial measure) is defined as a sum of current borrowings, non-current borrowings and derivative financial
instruments related to borrowings.

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

Ust Luga Container Terminal (ULCT) is located in the large multi-purpose Ust-Luga port cluster on the Baltic Sea, approximately 100
kilometres westwards from St. Petersburg city ring road. ULCT began operations in December 2011. The Global Ports Group owns
an 80% effective ownership interest in ULCT, Eurogate, the international container terminal operator, currently has a 20% effective
ownership interest. The results of ULCT are fully consolidated.

Vopak E.O.S. includes AS V.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 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. are accounted in the Global Ports’ financial information using
equity method of accounting (proportionate share of net profit shown below EBITDA). In April 2019 the Group sold its effective share
ownership in AS Vopak E.O.S. (VEOS).

Vostochnaya Stevedoring Company (VSC) is located in the deep-water port of Vostochny near Nakhodka on the Russian Pacific coast,
approximately eight kilometers from the Nakhodka-Vostochnaya railway station, which is connected to the Trans-Siberian Railway. The
Group owns a 100% effective ownership interest in VSC. The results of VSC are fully consolidated.

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

Yanino Logistics Park (YLP) is the first terminal in the Group’s inland terminal business and is one of only a few multi-purpose
container logistics complexes in Russia providing a comprehensive range of container and logistics services at one location. It is located
approximately 70 kilometres from the Moby Dik terminal in Kronstadt and approximately 50 kilometres from PLP. The Global Ports Group
owns a 75% effective ownership interest in YLP, Container Finance LTD currently has a 25% effective ownership interest. The results of
YLP are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown
below EBITDA).

Annual Report 2018

Global Ports Investments PLC

Additional Information 
Directors’ Responsibility Statement / Definitions / Shareholder Information and Key Contacts

Shareholder Information
and key Contacts

Global Ports Investments PLC

Postal Address
BG WAYWIN PLAZA, Office 302
62 Agiou Athanasiou Avenue
Limassol 4102, Cyprus

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

Legal Address
Omirou 20
Agios Nikolaos
CY-3095
Limassol, Cyprus

Investor Relations
Mikhail Grigoriev
Head of Capital Markets
and Investor Relations
Phone +357 25 313 475
GSM: +7 916 991 7396

Tatiana Khansuvarova
Investor Relations Analyst
Email: ir@globalports.com

Media Relations
Russian Media
Anna Vostrukhova
Head of Media Relations
Phone: +357 25 313 475
E-mail: media@globalports.com

International Media
Teneo
Zoë Watt
Doug Campbell
+44 20 7260 2700
E-mail: globalports@teneo.com

Regaining forward momentum

Global Ports Investments PLC