Global Ports Holding Plc Annual Report 2019

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FY2019 Annual Report · Global Ports Holding Plc

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Delivering
Quality
& Leadership

Global Ports Investments PLC

Annual Report

2019

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Global Ports Today

In 2019, the Group strengthened its leadership position in the Russian
container market, posting solid growth in its non-container business,
achieving double-digit growth in Free Cash Flow and success in further
deleveraging, and making tangible progress in laying the foundations
to ensure its leading status going forward.

The Group outperformed the container market for the second
year in a row, with consolidated marine container throughput up
6.5% to 1,439 thousand TEU, against 4.5% growth in the Russian
container market over the same period.

For more information, please,
visit our corporate website:

www.globalports.com

The Group continued to deliver impressive growth in bulk
throughput, posting a 17.1 % year-on-year increase.

In 2019, the Group achieved 4.0% growth in like-for-like
revenue and 4.4 % growth of Adjusted EBITDA compared
to 2018. Net Debt to Adjusted EBITDA decreased to 3.3x
as of 31 December 2019. Improved Free Cash Flow generation
and a continued focus on deleveraging led to upgraded credit
ratings while all debt maturities in 2020-22 were fully hedged
into local currency.

KEY STRENGTHS

No.1

Container Terminal Operator in Russia

Industry leader in Russia, in terms of
container throughput and capacity,
handling almost one in every three
containers coming in and out of Russia

Management
Report and
Consolidated
Financial
Statements

Management
Report and Parent
Company Financial
Statements

Additional
Information

12
Chairman’s
Statement

54
Corporate
Governance

60
Board of Directors

66
Executive
Management

67
Terminal Directors

69
Risk Management

15
Chief Executive
Officer’s
Statement

20
Delivering Quality
and Leadership

21
Strategy

22
Business Model

24
Business Review

42
Corporate Social
Responsibility

04
About us
Performance

06
Key Milestones

08
Strong Presence
in Russia’s Key
Container and Bulk
Gateways

2019 RESULTS

323hectares of land

7marine container

1.44mln TEU

(equivalent to
more than 450
football fields) and
5 km of quay wall
in key sea basins
with nearly 75% of
land in ownership

and multipurpose
terminals in Russia
and Finland,
covering the two
main sea basins

Consolidated
Marine Container
Throughput
in 2019

3.7mln tonnes

Consolidated
Marine Bulk
Throughput —
a record result
for the Group

4.4%

Growth in
Adjusted
EBITDA

18.9%

Growth in
Free Cash Flow

6.5%

Growth in
Consolidated
Marine Container
Throughput

17.1%

Growth in
Consolidated
Marine Bulk
Throughput

0.55

LTIFR, the lowest
on record for
Global Ports1.

3.3x

Net Debt/
Adjusted EBITDA,
the lowest level
achieved in last
5 years

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

1. While our LTIF for 2019 is the lowest on record for GPI, we unfortunately suffered a fatality at PLP. We strengthened focus on hierarchy of controls to reduce risks

across our processes LTIFR started to be measured in 2014.

Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Global Ports
Investments PLC

Annual Report 2019

Global Ports
at a Glance

Global Ports is the leading container terminal operator serving
Russian cargo flows.1. The Group’s main business is container handling.
In addition, the Group handles a number of other types of cargo,
including cars and other types of roll-on roll-off cargo and bulk
cargoes.

No.1

Container Terminal Operator in Russia1.

7marine container

and multipurpose
terminals

in Russia and
Finland

1.44mln TEU

3.7mln tonnes

Consolidated
Marine Container
Throughput in 2019

Consolideted
Marine Bulk
Throughput in 2019

1. Based on throughput and containers capacity. Source: company estimates based on ASOP data and public sources.

Global Ports
Investments PLC

Annual Report 2019

About us
Performance

In 2019, Global Ports
Delivered Quality and Leadership
Our share on the container market in Russia continued to grow as
the non-container segment produced a solid performance enabling
Adjusted EBITDA growth of 4.4% and double-digit growth in
Free Cash Flow. As a Group, we continued to increase the quality
and efficiency of our operations and launched new value-adding
services for our clients.

[Ownership Structure]
%

20.5%

30.75%

APM Terminals

Delo Group

Ilibrinio Establishment Limited

Polozio Enterprises Limited

Free float (LSE listing)

APM Terminals operates a global terminal
network of 78 operating port facilities,
giving the company a global presence
in 58 countries. APM Terminals is a part
of A.P. Moller-Maersk, the world’s largest
integrator of container and ports logistics.

Delo Group is the largest Russian
transportation and logistics holding
company.1. The Group’s stevedore
business includes DeloPorts stevedore
holding and the leading operator of
port container terminals Global Ports.
The transportation and logistics business
of Delo Group includes TransContainer —
intermodal operator with the largest
fleet of flat cars and multimodal operator
Ruscon Group.

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

Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

[Revenue]
USD million

| Consolidated financial and operational data |

343.6

361.9

5.3%

Selected IFRS Financial Information, USD million

Revenue

343.6

361.9

18.3

5.3%

2018

2019

Change Change, %

2018

2019

[Operating profit]
USD million

144.8

10.0%

131.6

2018

2019

[Adjusted EBITDA]
USD million

217.3

226.9

4.4%

Cost of sales and administrative,
selling and marketing expenses

Gross profit

Operating profit

Net profit / (loss)

Selected operational information

Consolidated Marine Container
throughput, mln TEU

Consolidated Marine Bulk
throughput, mln TEU

Ro-Ro, thousand unit

Cars, thousand unit

-174.9

-187.3

207.6

131.6

-58.3

210.1

144.8

67.7

-12.4

2.5

13.2

7.1%

1.2%

10.0%

126.0

-216.0%

1.35

1.44

0.1

6.5%

3.1

20.3

121.1

3.7

20.0

103.3

Balance sheet and cash statement, USD million

Total assets

Cash and cash equivalents

Net cash from operating activities

1,288.3

1,454.3

91.6

174.3

124.4

185.4

Selected non-IFRS financial information, USD million

Total Operating Cash Costs

Free Cash Flow

Like-for-like Revenue2.

Like-for-like Total Operating Cash
Costs2.

Adjusted EBITDA

Adjusted EBITDA Margin

Net Debt

-126.3

133.6

336.9

-119.7

217.3

63.2%

780.3

3.6x

-136.7

158.8

350.5

-125.3

226.9

62.7%

747.0

3.3x

0.5

-0.3

-17.7

165.9

32.7

11.1

-10.4

25.3

13.6

-5.6

9.6

-33.3

-0.3x

17.1%

-1.3%

-14.7%

12.9%

35.7%

6.4%

8.3%

18.9%

4.0%

4.7%

4.4%

-4.3%

-8.3%

2018

2019

Net Debt to Adjusted EBITDA

1. According to Delo Group.

2. As a result of new terms of certain sales agreement, in 2019, VSC acted as a principal vs as an agent in 2018: previously, the net result of revenue from transportation

services and associated cost was included in the consolidated revenue, in 2019, full revenue and associated cost are recognised in consolidated revenue and
transportation expenses accordingly. This Adjusted EBITDA neutral change resulted in additional USD 11.4 million to consolidated revenue and USD 11.4 million to
Cost of sales.

Global Ports
Investments PLC

Annual Report 2019

Key Milestones

2019

Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

APRIL

Charity fund
“Atmosphere”
created to
finance social and
environmental
projects in
Nakhodka area.

The Group sold
its effective share
ownership in
AS Vopak E.O.S.
(VEOS).

JANUARY

By the end of January, 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.

ULCT coal handling facility completes
first full month of operations. Project
closes out its first year with 90%
utilisation rate, generating healthy
returns.

Unified customer care and call-centers
created, to provide customer service
and support with the aim of delivering
the best possible experience to each
customer.

JUNE

Key step
towards further
improvement
in governance
at all levels as
the number of
directors on the
Board was reduced
to 11. Share of
INEDs in the
board therefore
increased from
3/15 to 3/11.
Additionally,
the Strategy
committee was
formed to create
a swifter strategic
planning process
and enhanced
oversight over
strategy execution.

MAY

As part of the ongoing strategy to
prioritise operating efficiency and
optimise the Group’s asset base, the
management teams of Petrolesport and
First Container Terminal were unified.
This development is the latest step in
the integration of the Group’s container
terminal operations in the Port of
St. Petersburg. Over the last few years the
Group has centralised its commercial,
legal, financial and other team functions
in order to effectively manage the Group’s
resources.

The merger of the two management teams
further aligned the strategic focus across
the two key terminals (Superterminal),
improved clarity and speed of decision-
making and brought tangible benefits to
customers in terms of planning capability
and distribution of services as Group
resources were allocated more efficiently
and effectively to client requirements.

AUGUST

Alexey Pavlenko appointed as the
Managing Director of VSC. Mr. Pavlenko
has almost 25 years of experience in
transportation and worked all of his career
at the Port Vostochny and VSC.

Tapped into growing Asia-Europe transit
via Russia — launching a new multimodal
service, offered jointly by Maersk Line
(shipping), Modul (railway) and Global
Ports terminals (stevedoring).

The Group’s FX risk exposure decreased
substantially due to entering into
several hedging transactions with highly
reputable banks. As a result of these
operations as well as other hedging
transactions in the second half of the
year all debt maturities for 2020–2022
are either in local currency or hedged
into RUB.

The Group continued to upgrade
terminals and equipment to provide
customers with best quality services and
drive efficiency: 2 STS crane booms
were extended at FCT to increase
productivity when servicing bigger
vessels. An additional area for empty
container storage was created at FCT.
4 RTG relocated from PLP to VSC via
northern sea route earlier in the year
to increase storage capacity of the
terminal, supporting full export growth.
Mobile harbour crane was procured for
PLP to increase capability for project
cargo handling.

DECEMBER

A mobile app for
clients launched
to drive growth
in customer
experience and
increase standards
of service.

Launched

additional
bond buyback
to decrease FX
exposure, increase
yield on cash
balance and
smooth 2022–
2023 maturities.

SEPTEMBER

Increased number
of regular container
block trains to/
from Global Ports
terminals in both
Baltic Basin and Far
East Basin.

OCTOBER

Unified client web-
portal launched
to improve service
levels.

NOVEMBER

PLP inaugurated
its 2nd generation
cross-dock
facility, offering
market leading
cross-docking
services under
temperature-
controlled
conditions.

Global Ports
Investments PLC

Annual Report 2019

Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

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

Gulf of Finland

5
2
61

Baltic Sea

Estonia

Russia

Sweden

Lithuania

2.0 mln TEU2.

Global Ports marine
terminal capacity

Latvia

51%

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

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.

1
First Container
Terminal (FCT)
Location:
St. Petersburg
Cargo handled:
Containers
Container throughput
berth/yard capacity3.:
1.25 mln/0.95 mln TEU
per year
Land total 88.6 ha
Ownership: 100%

2
Petrolesport (PLP)
Location:
St. Petersburg
Cargo handled:
Containers, Ro-Ro,
bulk cargo
Container throughput
berth/yard capacity3.:
1 mln/0.35 mln TEU
per year
Land total 119.0 ha
Ownership: 100%

3
Vostochnaya
Stevedoring
Company (VSC)
Location:
Vrangel, Nakhodka
Cargo handled:
Containers, Ro-Ro,
bulk cargo
Container throughput
berth/yard capacity3.
0.65 mln/0.65 mln TEU
per year
Land total 76.6 ha
Ownership: 100%

4
UST-LUGA
Container Terminal
(ULCT)
Location:
Ust-Luga port
cluster
Cargo handled:
Containers,
bulk cargo
Container throughput
berth/yard capacity3.:
0.44 mln/0.23 mln TEU
per year
Land total 38.9 ha
Ownership: 80%

5
Moby Dik (MD)
Location:
Kronstadt
(St. Petersburg)
Cargo handled:
Containers, Ro-Ro,
bulk and general
cargo
Container throughput
berth/yard capacity3.:

0.4 mln/0.28 mln TEU
per year
Land total 12.9 ha
Ownership: 75%

6
Yanino (YLP)
Location:
St. Petersburg
Cargo handled:
Containers,
bulk cargo
Container throughput
yard capacity3.:

0.2 mln TEU per year
Land total 51.2 ha
Ownership: 75%

[Fully consolidated in IFRS]

[JV accounting]

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.

Murmansk

St. Petersburg

Moscow

Ekaterinburg

Novorossiysk

| Far East Basin |

Nakhodka

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

Sea of Japan

0.65 mln TEU

Global Ports marine
terminal capacity

30%

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

7
MLT Kotka
Location:
Kotka, Finland
Cargo handled:
Containers, Ro-Ro,
bulk cargo
Container throughput
berth/yard capacity3.:

8
MLT Helsinki
Location:
Helsinki, Finland
Cargo handled:
Containers, Ro-Ro,
bulk cargo
Container throughput
berth/yard capacity3.:

Russian Ports segment:
PLP, VSC, FCT, ULCT, Yanino, MD

Finnish Ports segment:
MLT Kotka and MLT Helsinki

Our Partners:
Entity: Moby Dik, Finnish Ports, Yanino
Partner: CMA Terminals S.A.S.
Share: 25% in each

0.15 mln TEU per year
Land total 0.5 ha
Ownership: 75%

0.27 mln TEU per year
Land total 7.0 ha
Ownership: 75%

Entity: ULCT
Partner: Eurogate
Share: 20%

Global Ports owns 323 ha of land
and 5 km of quay wall in the key
marine gateways of Russia.

The Group’s modern fleet of
equipment, advanced rail and road
connections, skilled personnel,
and advanced client-focused IT
solutions underpin its strong
market position in container
handling and provide a solid
platform for the non-container
businesses.

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.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Strategic
Report

We maintained our focus and delivered a solid operational
performance against plan in 2019. We outperformed the Russian
container market, growing our Consolidated Marine Container
Throughput by 6.5% to 1.44 million TEU. Our financial results
benefitted from the strong market conditions and the self-help
measures we put in place during the year.

Strong financial
performance

Operational
Record

USD 226.9 mln

Adjusted
EBITDA

3.7 mln tonnes

Consolidated Marine
Bulk Throughput

4.4%

17.1%

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Chairman’s Statement

Our 2019 results continued to benefit from prior year decisions
to invest in our terminals, develop new revenue streams, improve
operational efficiency, and focus on cash generation.

Morten Engelstoft
Chairman of the Board

USD 361.9 mln

Revenue

5.3%

USD 226.9 mln

Adjusted EBITDA

4.4%

2019 was a year of growth, change and
successful strategic execution for Global
Ports. In my Chairman’s statement last
year, I highlighted the growing momentum
within our business, so it is pleasing
that upswing in activity was maintained
through our 2019 financial year.
We continued our run of good financial
results, executed well against our strategic
priorities, and met our operational goals.
In doing so, we made further progress
towards fulfilling our Group long-term
vision, of being the partner of choice for
our customers as Russia’s best-connected
independent container terminals operator.

Our 2019 results continued to benefit
from prior year decisions to invest in our
terminals, develop new revenue streams,
improve operational efficiency, and focus
on cash generation. More immediately,
and encouragingly, the operational
changes made over the last year by the
CEO and the management team, with
the Board’s backing, have begun to yield
positive results. These changes involved
improving our operational excellence,
streamlining our decision-making and
management structures and above all,
getting closer to our customers.

Our operational performance strengthened,
reinforcing our leadership position
in the sector. We outpaced a strong
Russian container market, increasing
our marine container volumes by 6.5%,
against a market that grew at 4.5%.
Our consolidated bulk cargo activities
also advanced strongly, with throughput
volumes increasing by 17.1% driven by the
successful launch of our coal handling
activities at our Ust-Luga terminal.

Markets however seldom stand still and
the environment in which we operate
continues to change rapidly and become
more competitive. As an ambitious
company, we cannot afford to stand still
either, so it is imperative — if we are to
maintain our industry leadership — that
we increase our agility as an organisation.
That way, we can drive higher levels of
profitable organic growth and create
sustained value for all our stakeholders.

Our financial results attest to the
robustness of our operational delivery
in 2019. We made progress in all our key
metrics: revenue of USD 361.9 mln, up by
5.3%; Adjusted EBITDA of USD 226.9 mln,
up by 4.4%; and Free Cash Flow up by
almost 19%.

Our Vision and Strategy

Global Ports is a core infrastructure
business; we own essential physical
assets — our ports — that are capable of
delivering resilient cash flows based on
our market position as the only operator
with a network of terminals in Russia’s
key container gateways. This position
gives us a sustainable competitive
advantage and makes us strategically well
placed to deliver long-term value to our
shareholders, partners and customers.

In recognition of this, the Board and
management spent a lot of time last
year reviewing our strategy and business
model. We concluded that fundamentally
we were well-positioned, but that we
needed to become a more customer-
focused, more efficient organisation.
At the heart of this are our customers,
and this is where much of the effort was
expended, on sharpening our customer
focus. In this vein, we took several crucial
steps, including decisions to reorganise
the Board, simplify our management
structures, reconfigure our facilities,
and introduce new customer-oriented
initiatives, aimed at optimising our
business.

The full impact of these decisions is not
yet apparent, but we are confident that our
actions will empower Global Ports and make
it a much more agile organisation which in
turn will increase long-term value for all our
stakeholders.

Governance and the Board

Our corporate governance framework
continues to evolve, and in 2019 we took
further positive steps to improve the
effectiveness of our Board and support
our belief that strong governance is a vital
component in the long-term success of
Global Ports.

One of my principal tasks as Chairman is
to ensure that the Board maintains the
necessary mix of skills and experience to
provide the appropriate level of oversight
and to work effectively with the executive
team to deliver the Group’s strategy.
Having reviewed our existing corporate
governance arrangements, we decided that
a simpler structure was needed and that
the membership of the Board also needed
refreshing to ensure that we continued to
operate as a dynamic, efficient and well-
balanced board.

Accordingly, there were a number of
changes made to the Board in 2019. Firstly,
we refined its size from 15 to 11 members.

Secondly, we made some important
changes to our board committees, merging
the Nominations and Remuneration
Committees, and establishing a new
Strategy Committee in June to accelerate
the planning and execution of the Group’s
strategy. Finally, we appointed a number
of new directors, who are expected to
contribute valuable, fresh insights to
our Board deliberations. I believe that
these measures combined will create
more effective lines of authority and
accountability, freeing up the Board’s time
to focus on priority areas. More details of
the changes and the Board’s activities can
be found in the Governance section of
this Report.

I would like to thank those directors who
left the Board during the year. They have
all played their part and contributed to
the growth of our Company, and I want
to offer my appreciation for their work.
Equally, I extend a warm welcome to those
who have joined the Board in 2019, and
I look forward to working together over
the coming year. I should also add that as
a Board, we continue to benefit from the
presence of two highly supportive co-
controlling shareholders, APM Terminals
and Delo Group. The Board’s relationship
with these two companies continues to
progress, and we look forward to their
continued support as we embark on the
next stage of the Group’s development.

Strong corporate governance is not just
about a set of rules, it is also about having
the right values and culture in place in
the organisation, such that they resonate
with employees and stakeholders alike.
And this is particularly the case in how
we, as a company, are seen to behave in
terms of our environmental activities and
providing safe working conditions for our
staff.

Sustainability

As a Board, we understand that issues
around sustainability have never been
higher on stakeholders’ agendas.
Our industry, like many others, is under
pressure to develop more sustainable
practices and reduce the impact on the
environment. As a core infrastructure
business, the Board recognises that
Global Ports has a commitment to
society at large, the environment and
the communities we serve, to behave
responsibly. We continue to increase our
engagement in this area, with the aim of
becoming a more socially responsible
business. Sustainability is now an area
of focus for investors, partners and
customers, and I am pleased to report that
in 2019 we were assigned our first ESG
rating (BBB) as a company by MSCI.

Global Ports
Investments PLC

Annual Report 2019

19%

Free Cash Flow growth

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

11 members

of the Board of Directors

Chief Executive Officer’s Statement

We outperformed the buoyant Russian container sector,
delivering strong operational performance. We increased our
overall marine throughput volumes, won a share in the container
market, and also posted double-digit volume increases in our
non-container business

Vladimir Bychkov
CEO

Safety

As I clarified before, the Board is
committed to embedding a safety-led
culture at Global Ports. Over the past
year, the Board has paid very close
attention to the issue of risk reduction
within our business operations, with
a particular emphasis on the Group’s risk
controls and processes. In this regard, it is
encouraging to report that 2019 saw the
Group recording its lowest ever incidence
of injuries as measured by our Lost
Time Frequency Rate. However, there is
absolutely no room for complacency, and
we have to remain ever vigilant about the
safety of our staff, a position reinforced
by the tragic loss of one of our colleagues
working at PLP last year. His passing is
a strong reminder that nothing is more
important than the health and safety of
our people. There is no finish line when it
comes to safety and both the Board and
management aare completely committed
to further improve our safety performance
and culture to ensure all our staff, and
others that work on our terminals, can
return home safely every day.

Part of our job as a Board is to assess and
monitor new risks to the organisation, and
I would like to share with you our views
on the emerging threat of COVID-19.

We are closely monitoring developments
in what is a fast-moving situation which is
impacting the whole world. Our priority is
our employees, and we have put in place
measures to ensure their health and safety.
We have also taken action to minimise
ongoing disruption to our operations and
will take further action as appropriate to
protect our people and business.

Looking Forward/Outlook

Global Ports made substantial progress
this year on many fronts. The Board
is confident that the Group has the
right strategy, leadership and culture to
continue delivering on its full potential.

Short term, our immediate focus is
to evaluate and prepare for the full
consequences of COVID-19. The global
economy and global trade will be
negatively affected and Global Ports is not
immune to these effects. Though difficult
to predict the consequences, Global
Ports is preparing for the expected market
fluctuations. Consequently, it has made
predicting the outcome for this year more
challenging. However, Global Ports has
a resilient business model and a strong
and experienced executive team and
remains well placed to continue to create
value for shareholders, partners, customers
and employees.

While preparing for the consequences of
COVID-19 we also need to maintain our
momentum and continue to execute the
strategy.

Though the short-term outlook is
negatively affected by the COVID-19
situation, our medium-term opportunities
remain strong, and the long-term
growth prospects remain compelling
as Russia’s container market continues
to grow. With a network of high-quality
terminals in key gateway locations, the
Group is well placed to capitalise on the
growth in containerised exports, which is
transforming the industry model from one
reliant on imports towards one which is
close to achieving equilibrium between
imports and exports. Global Ports is well
placed to deliver to its customers.

Finally, the strength of our Company is
built on the hard work and dedication
of all our colleagues who work at
Global Ports. Our strong results in 2019
stand testament to their hard work and
determination, and I want to thank them
all for their contribution to our success.

Morten Engelstoft
Chairman of the Board of Directors

23 April 2020

I have now completed my first full year as
CEO of Global Ports, and I am encouraged
by the progress we have made. It has
been a year of intense activity geared
to unlocking the enormous potential of
this business, something I highlighted in
my review last year. Creating a logistics
business is a matter of having great assets,
a clear strategy, and the right people ready
to implement it. Maintaining leadership
and sustaining competitive advantage,
however, requires much more. It involves
the combination of world-class operating
excellence, innovation and people
development. It requires a different mindset,
one that puts the customer first, that
challenges the status quo, and understands
that operating excellence is above all about
continuous improvement.

Our 2019 results reflect the progress we
have made in introducing this performance
ethos into the Group. We outperformed
the buoyant Russian container sector,
delivering a strong operational performance.
We increased our overall marine throughput
volumes, won market share in the container
market, and also posted double-digit volume
increases in our non-container business.
Our financial results were equally solid,
with good like-for-like revenue and profits
growth, healthy cash flows, and further
reductions in borrowings and leverage.

Our markets

The container market in Russia performed
well in 2019, exhibiting growth of 4.5%
year-on-year, resulting in total container
market throughput of 5.1 million TEU.
Full container exports grew by a healthy
6%, supported by growth of 3.9% in full
container imports. Substantial container
volumes kept ports busy through the
period, squeezing utilisation sharply higher.
Average capacity utilisation climbed 7%
year on year, to a robust 76%, helping to
maintain a strong pricing environment.

The rebound in the container market
over the last two years, with volumes
surging 15%, has been caused by the
rapid expansion of container exports
underpinned by continued growth in
container imports. The Russian container
market is being reshaped as it moves
away from an import-driven model, built
around the consumer, towards a more
balanced industry model, driven by the
acceleration in full exports which is also
driving greater containerisation. Over the
last six years, total container exports have
grown exponentially, up by 86%, and at the
Port of St Petersburg exports of dry full
containers now exceed those of dry full
imports, and the gap between the two is
continuing to widen.

This shift in the underlying economics
of the sector explains why we are so
confident in our long-term prospects.
For the industry, as the market reaches
equilibrium, it should create a more stable
business environment, as export volumes
balance out imports and reduce volatility,
a feature of the industry in prior periods.
There should also be beneficial effects
on both revenue per TEU and utilisation
levels as full exports require greater yard
capacity and attract more additional
services. For Global Ports, the implications
are clear; the industrial cargoes that
Russia is increasingly exporting globally
use greater terminal capacity, require
larger vessels to ship them, and typically
spend more time quayside. As a result,
clients will increasingly gravitate toward
those marine terminal operators that
have large, well-equipped, efficient
terminals and good access to road and rail
connections. Global Ports is uniquely well
placed to serve these clients and capture
an increasing share of these container
flows. First, we are the only operator with
the networks of terminals in key container
gateways; and second, our asset base gives
us the ability to scale up our operations
to match the growth in demand from
customers very effectively.

Global Ports
Investments PLC

Annual Report 2019

1.44

million TEU

Consolidated
Marine Container
Throughput

17.1%

Consolidated
Marine Bulk
Throughput growth

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

9.5%

Non-container
revenue growth

3.3 x

Net Debt
to Adjusted EBITDA ratio

Operating performance

Operational excellence is the essence of
our business. Running container terminals
is a service industry, involving logistical
challenges, and we are the critical link
in key production supply chains. High
productivity — operational excellence — is
therefore vital to us winning new business
and to continuing to produce above-
market growth and profitability.

To achieve high productivity requires us
to be hyper-efficient in our day to day
operations; to invest in our facilities; to
have the best systems and technology
in place and; to invest in our people.
With this in mind, management took time
in 2019 to refine our strategy and business
model, to understand our customers
better, and to improve our operational
performance. Our 2019 results provided
the first evidence that the operational
changes we made had started to impact
our performance and filter down to the
bottom line.

Our operations review split into three
broad categories: organisational structure;
the customer; and productivity. As well
as streamlining our leadership structure,
which the Chairman covers in his review,
we simplified our operational command
structure, integrating FCT and PLP into
a single operating unit, eliminating

duplication of functions, and centralising
decision-making under one management.
As part of our decision to concentrate just
on our marine container business, VEOS,
the oil products terminal in Estonia was
disposed of in April 2019 as this was no
longer a core part of our business.

We have begun redesigning our business
processes with our customers firmly
front of mind. We unified our customer
service operations, creating a 24/7 call
centre, and launching a proper customer
relationship management programme.
We upgraded our digital capabilities,
including launching a mobile app for
customers, as part of a drive to harness
technology more effectively. And we
launched several new services including,
in conjunction with a number of partners,
a multimodal service designed to tap
into the growing Asia-Europe transit
trade. We also increased the number of
container block trains we run to and from
our terminals in the Baltic and Far East
basins. And finally, we focused on driving
productivity: improving berth productivity
and undertaking activity analyses in
areas like customs inspection and train
dispatch to identify bottlenecks and
improve response time. And over the past
12 months, we continued to invest in new
infrastructure, facilities and equipment
to support our customers’ needs.

These initiatives included new facilities
such as our new cross-deck facility at PLP
for handling refrigerated cargo.

Despite all this activity, we kept our
operational focus and delivered
a strong operational performance
against plan in 2019. We outperformed
the Russian container market, growing
our Consolidated Marine Container
Throughput by 6.5% to 1.44 million TEU.
Consolidated Marine Bulk Throughput
hit a record 3.7 million tonnes in 2019, up
17.1%, despite second-half year volume
weakness in certain cargoes. Our strong
bulk throughput result was driven by
a first full-year contribution from our
coal-handling operations at ULCT, which
performed very strongly.

Financial results

Our financial results benefitted from
solid market conditions and the self-
help measures we put in place during
the year. Consolidated revenue grew
by 5.3% to USD 361.9 million, driven
by strong growth in both container and
non-container revenue. Container revenue
was up by 2.2% as solid growth in
container throughput, was partially offset
by a reduction in like for like revenue
per TEU, primarily caused by changes
in headline pricing, services mix and
throughput by terminals.

Non-container revenue increased sharply,
up by 9.5%, the result of significant
growth in coal volumes at ULCT.

Management continued to be very
focused on cash, tightly managing our
costs and driving cash flow. We reduced
cash overhead expenses by 10.3%, while
our Like-for-like Total Operating Cash
Costs increased by a creditable 4.7%, on
the back of strong growth in container
throughput. Adjusted EBITDA increased
by 4.4% to USD 226.9 million, and
the Group’s Adjusted EBITDA margin
was a healthy 62.7% (2018: 63.2%).
Cash generation was an especially strong
feature of our results, with the Group
generating USD 158.8 million of Free Cash
Flow, an increase of almost 19% compared
to the prior year.

The Group continued to prioritise balance
sheet improvement, and Net Debt fell
by USD 33.3 million. Our consistent
efforts to reduce our borrowings has
resulted in a USD 603 million reduction
in Net Debt since the transformational
acquisition of NCC in 2013. Our ongoing
deleveraging reduced Net Debt to
Adjusted EBITDA ratio to 3.3x from
3.6x at the prior year-end. Part of this
involved a USD 124.3 million bond
buyback, to mitigate our FX exposure and
optimise our short-term maturity profile.

Our strengthening financial position was
rewarded by the credit markets in 2019,
with the three leading credit agencies
that follow us all upgrading the Group’s
creditworthiness throughout 2019.

Outlook

Short term, the Company is mobilising
to counter the potential threat posed
by COVID-19. Global Ports, as Russia’s
leading ports operator, is a critical part
of the nation’s infrastructure supporting
the nation’s supply chains. In this regard,
our actions are focused on three clear
objectives: protecting the health and
safety of our staff and their families;
preserving the continuity of our
operations and minimising disruption to
customers’ supply chains; and managing
our costs. We have activated business
continuity plans at our terminals and are
liaising closely with the authorities, our
partners and our customers. We continue
to monitor developments closely but,
at this stage, it is difficult to predict the
likely commercial impact of COVID-19 on
the Group. The virus has, however, already
caused a downdraft in global economic
activity, which makes forecasting
this year’s performance particularly
challenging.

Notwithstanding COVID-19 and its
effects, our priorities for 2020 remain
unchanged. We must focus on our
operational effectiveness and improve
those areas of the business that require
it. We need to advance our customer
service offering so that we are delivering
a consistent, high quality, and responsive
service to customers across the Group.
We need to maintain our strict cost
discipline and continue to drive cash
generation and deleverage. Finally, we
need to continue to focus on investing in
our employees and ensuring they are safe.

It has been a strong year for Global
Ports, and we have successfully laid the
groundwork to deliver more progress
over the coming year. Global Ports has
entered 2020 as a simpler, more agile and
more customer-oriented business. I am
confident we have the best strategy, the
best assets, and the best people to deliver
sustainable value for our stakeholders
in 2020 and beyond.

Vladimir Bychkov
CEO

23 April 2020

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Global Ports
outperformed
the market for
the second year
in a row with
container volumes

up 6.5%

76%

Average container
handling capacity
utilisation
for the Russian
market

86%

Growth of full
container export
since 2013

Global Ports
Investments PLC

Annual Report 2019

Global Ports handles
close to

every
second

full export container
that leave Russia’s key
Far East and Baltic Basins

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Delivering Quality and Leadership

Strategy

OUR MISSION

To increase long-term value for all our
stakeholders by shaping and determining
the trends in the container segment of
the Russian transportation and logistics
market, thereby driving international trade.

Strategically we remain
focused on expanding
our business through
both organic growth
and investment
projects that offer
tangible opportunities
to the Group.

Using
technology
effectively

Maintaining
operational
excellence

We will achieve our fundamental
strategic goal by:

Providing
the best services
to our clients

Attracting and retaining
a workforce with
the right skills

OUR VALUES

OUR VISION

Professionalism
(expertise)

Respect

Cooperation
(collaboration,
partnership)

To be the partner of choice
for shipping lines and freight
forwarders in our role as
Russia's best-connected
independent container
terminal operator offering
unparalleled access to
international and domestic
trade flows.

Our strategy aims to produce value growth by offering unparalleled
access to international and domestic trade flows through our network
of terminals sited at Russian key marine locations.

Preferred port
in every location,
partner of choice
for all parties
involved

W e have the strong kno wledge and ability
to add value to R ussian container m arket
O ur key m arket:

R ussia

e e

y c

b
l
e

c
ti

r c

r k

d fr

h
i
p

e
i
g

p
i
n

y c
li

t f

g li

s
:

g a

r
s

lif
n g
r

y
i
n

g s

i
n

g t

p
l
y c

ir b

Integral part
of import/export and
transit logistics chains

Assured healthy,
safe and effective
organisation

v
i
d

e
l
a

r c
li

t
s

g
is

ti
c

h fi
r

s s

t c
l
a

v
i
c

s
s

r
t

r k

i
n

y s

l o

v
i
c

a
ti

To succeed,
we remain
focused on:

O ur business focus:
O ur non-container operations diversify our revenues
containers
and increase our terminals’ utlisation rates

Solid business profile
and prudent capital
allocation

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Business Model

INPUT

Only player
with network
of terminals
in key Russian
container
gateways

7 marine container

and multipurpose
terminals in Russia
and Finland

Unique asset base:

323 ha

of land

5 km

of quay wall

Port
infrastructure
and perfect
multimodal
hinterland
connections

Advanced
IT system

>2,800 professionals1.

trained staff

Robust operational and
financial performance,
strong cash flow
generation, high EBITDA
margin

Unique partnership
of strategic shareholders:
global player, APMT
Terminals, and local leader,
Delo Group

Access
to local and
international
capital
markets

HOW WE CREATE VALUE

We create
value

by providing our clients (shipping lines
and freight forwarders) with first class
port and related logistics services and
ensuring efficient interaction with
our partners, by forming an integral part
of import/export and transit logistics
chains

Services



Handling of containerised
cargo | bulk | Ro-Ro



Cargo storage



Additional services:
customs inspection, dispatch of container trains, depot of empty containers,
tracking of cargo, cargo documentation, stuffing and unstuffing, container repair
and other services

When
providing

services and interacting with clients
we aim to be:
ޭ Preferred port in every location, partner

of choice for all parties involved

ޭ Healthy, safe and effective organisation

Our port is a platform of efficient
interaction between all parties

Shipping
lines

Freight
forwarders

Cargo
owners

Federal
authorities

Truckers

Railway
operators

Russian
Railways

СLIENTS

OUTPUT

EMPLOYEES

COMMUNITY

SHAREHOLDERS

 Smart, swift,
efficient
logistics hub

 Efficient

 Infrastructure

and effective
services

to facilitate import/ export
and transit flows

 Reliable

 Opportunities

and safe work
environment

for professional
growth and
development

 Competitive salaries

 One of the biggest employers
in the region and sizable
contributor to local economy

 Satisfied

 Sustainable business

customers
and
communities

that limits environmental
impact & delivers positive
change

 Shareholder
value

 Sustainable high
free cash flow
generation and
dividend capability

OUTCOME | GLOBAL PORTS RESULTS IN 2019

Full export
containers
throughput

Full import
containers
throughput

6.5%

Consolidated
Marine Container
Throughput

17.1%

Consolidated
Marine Bulk
Throughput

Total

USD 71.4 mln

paid to
all employees
in 2019

LTIFR

0.55

down to the
lowest level
in 6 years

Total

>2.8 K1.

employed

RUB 2 bln2.

of tax paid

RUB37mln2.

spent
on charity

RUB101 mln2.

spent on environment
protective measures

71%

Share price
in 2019

3.3 x

Net Debt /
Adjusted EBITDA

1. As at 31 December 2019.
2. USD equivalents of figures:Total USD 32 mln of tax paid, Total USD 0.6 mln spent on charity, Total USD 1.6 mln spent on environment protective measures.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Business Review

| FY 2019 Results Summary |

Improved
Revenue up

delivering
Adjusted EBITDA

and
Adjusted EBITDA margin

5.3%

to USD 361.9 million
(+4.0% like-for-like.)

USD 226.9 million
4.4% y-o-y

62.7%

Return to Profit
for the year of

Enhanced Free Cash Flow
generation

Net Debt to Adjusted EBITDA
decreased slightly to

USD 67.7 million

(compared to a loss
of USD 58.3 million in 2018)

up 18.9%

to USD 158.8 million

3.3 x

-0.3x compared to 31 December 2018

Vladimir Bychkov
CEO of Global Ports Management LLC

18.9%

Free Cash Flow growth

In 2019, Global Ports strengthened
its leadership position in the
growing Russian container market
delivering market outperformance
for the second consecutive year,
notably in the Baltic Basin where
our consolidated container
throughput grew 12% against 5.1%
growth of the Russian market.

This success was driven by our ongoing
efforts to deliver leadership — not only
in size — but also in the quality of our
services across every aspect of our activity:
from berth productivity for shipping
lines to the efficiency of railway and
customs operations at our terminals and
to advanced and innovative IT solutions.
Our journey to become a more efficient
logistics hub with a wide range of value-

added services is an ongoing process and
there is still much to be done, especially in
the Far East. We believe that our dedication
and commitment alongside our clear
approach will achieve the required results.

Financially we performed very well over
the year, achieving 4.4% Adjusted EBITDA
growth and an 18.9% increase in Free
Cash Flow.

| Operational Highlights |

| Financial Highlights |

The Russian container market grew 4.5%
in 2019 driven by the 6.0% growth of
full container export and supported by
3.9% growth in full container import,
resulting in total Russian container market
throughput of 5.1 million TEU.

Consolidated revenue increased by 5.3%
to USD 361.9 million; excluding the
impact of LT and VSC transportation
services2., like-for-like revenue grew
by 4.0% driven by an increase in both
container and non-container revenue.

driven by the depreciation of the Russian
rouble in 2018, which resulted in a loss
on revaluation of US dollar-denominated
borrowings (from Group and non-Group
entities) due to the Group’s Russian
subsidiaries having the Russian rouble as
their functional currency.

The Group’s capital expenditure in 2019
was USD 26.6 million. It was focused
on planned maintenance projects,
scheduled upgrades of existing container
handling equipment and customer service
improvement initiatives.

Like-for-like Revenue per TEU decreased
by 4.0% to USD 178.4.

Gross profit increased 1.2%
to USD 210.1 million.

Adjusted EBITDA increased by 4.4% to
USD 226.9 million mainly due to the
growth in throughput and strict cost
control.

Profit before income tax for the twelve-
month period was USD 96.6 million
compared to a loss before income tax of
USD 53.6 million in 2018. This was mainly

The Group generated USD 158.8 million
of Free Cash Flow, an increase of 18.9%
compared to 2018.

The Group reduced Net Debt by
USD 33.3 million over the twelve-
month period despite IFRS16 impact
of USD 24.9 million3. and FX impact of
USD 28.9 million.

Consolidated Marine Container
Throughput

Consolidated Marine Bulk
Throughput

1,439 thousand TEU
6.5%

3.7 million tonnes
17.1% y-o-y

against 4.5% growth in the
Russian container market
over the same period

Leading
credit
agencies
upgraded
Group credit
rating in 2019

BB+

Fitch Ratings

Ba2Moody’s

Investors Service

RuA+

Expert RA

Outperforming the market, the Group’s
Consolidated Marine Container
Throughput increased 6.5% to
1,439 thousand TEU.

Consolidated Marine Bulk Throughput
increased by 17.1% to 3.7 million tonnes
driven by the growth in bulk cargoes
at ULCT, which was partially offset by
a decline in scrap metal at PLP following
the introduction of state export quotas
in the third quarter of 2019.

1. Like-for-like is adjusted growth metric calculated on comparable data: revenue of 2019 compared to 2018 revenue an adjusted for JSC Logistika-Terminal (LT)

3. As a result of the adoption of IFRS 16 standards, the Group recognised USD 24.9 million of lease liabilities into Total Debt and Net Debt as at 31 December 2019.

revenue and revenue from VSC railway services.

This amount includes FX impact on lease liabilities recognised according to IFRS 16.

2. As a result of new terms of certain sales agreement, in 2019, VSC acted as a principal vs as an agent in 2018: previously the net result of revenue from transportation

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

To adjust for this IFRS 16 effect, Net Debt
decreased by USD 58.2 million to
USD 722.1 million. The Group continues
to prioritise deleveraging over dividend
distribution.

[Russian container market volumes]
by basin, 2019

Baltic Basin

51.1%

Northern Ports Basin

3.1%

Black Sea Basin

15.4%

[Russian container market dynamics]
mln TEU

CAGR 20.0%

3.7

3.5

3.0

2.4

2.0

1.5

1.1

0.9

0.7

0.5

Far East Basin

30.4%

5.2

5.1

4.9

4.5

4.9

4.4

5.1

4.5%

3.8

Net Debt to Adjusted EBITDA decreased
from 3.6x in 2018 to 3.3x in 2019. Net Debt
to Adjusted EBITDA adjusted for IFRS 16
was 3.2x as of 31 December 2019.

The company’s outlook for 2020 may be
impacted by the Coronavirus (COVID-19)
outbreak in a number of countries,
including Russia, which has lowered
visibility on what to expect in 2020.
The Management is closely monitoring the
situation with the outbreak of Coronavirus
(COVID-19) and is ready to act depending
on the development of the situation.

| Market Overview and Operating
Information |

The Russian container market grew
4.5% in 2019 driven by 6.0% growth of
full container export and supported by
3.9% growth in full container import,
resulting in total Russian container market
throughput of 5.1 million TEU.

After a strong double-digit recovery
in 2017–2018, the growth of containerised
import returned to normalised GDP-driven
growth rate of 3.9%.

Throughput of full export containers
at Russian terminals continued its rapid
growth (+6.0% year-on-year), mainly
due to increased exports and the wider
use of containers in Russia. Full exports
increased by 86% between 2013–2019,
supported by increased exports and the
containerisation of export supply chains.

As a result of this export growth, the
gap between full dry container import
and full dry container export is rapidly
narrowing, thereby shifting the market
towards an import-export balance. In 2019,
the ratio between full dry container
export and full dry container import
in Russia was 78%, while the Baltic Basin
has already become export driven: dry full
container export exceeded dry container
import by 11% in 2019.

The rapid growth of full container export
over the past six years, has supported
the increase of capacity utilisation in
the industry, due to the higher capacity
requirements on container yards
and berths. A key impact for terminal
operators has been an overall reduction in
the yard capacity of container terminals, as
full export containers require significantly
longer dwell time, compared to both
full import containers and empty export
containers, which in turn lengthens
the turnover time of the container storage
yard. Currently, the Group estimates, that
the average container handling capacity
utilisation in 2019 was approximately
76%2. for the Russian market and 67%
for Global Ports on consolidated basis
(excluding joint ventures).

In addition, the growth of full container
export, combined with the ongoing growth
in vessel sizes is driving client preference
for large well-equipped and efficient
terminals and is withdrawing excess
capacity from the market.

[Full Import / export gap is narrowing
in Russian container market]
mln TEU

[Export exceeds import in the Big Port of
Saint-Petersburg. for dry full containerst]
mln TEU

10%

86%

2.32

2.10

0.81

0.77

1.4

0.88

0.80

0.8

2013

2019

2018

2019

Import of full containers

Export of full containers

Import of dry containers

Export of dry containers

[Market share gain
accelerated in 2h2019]
%

8.0%

4.7%

4.9%

4.3%

4.5%

[Consolidated Marine Bulk Throughput
and share of Non-container Revenue]
mln tonnes

26% 26%

23%

6.5%

19%

16% 16%

3.7

3.1

2.7

2.2

0.7

1.3

1H19

2H19

2019

2014

2015

2016

2017

2018

2019

‘00

‘01

‘02

‘03

‘04

‘05

‘06

‘07

‘08

‘09

‘10

‘11

‘12

‘13

‘14

‘15

‘16

‘17

‘18

2019

Source: Company estimates based on market data by ASOP.

Growth of containerised export is also
driving demand for empty containers.
As a result, empty containers import grew
by 35% in 2019, to 149 thousand TEU.

Market

Global Ports

Share of non-container revenue, %

4.5%

Russian container
market growth

5.1million TEU

Total Russian
container market
throughput

76%

Average container
handling capacity
utilisation for the
Russian market

149thousand TEU

Empty containers
import

1. Excluding export and import to reefer containers.

2. Company estimates throughput based on ASOP. Capacity estimated on сompanies’ 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.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

FY 2019

FY 2018

Change, Abs

Change, %

Brian Bitsch

CCO of Global Ports Management LLC 6.5%

Сonsolidated marine container
throughput growth

As a company, we continued
to outperform the growth on
the Russian container market,
delivering consolidated marine
container throughput increase of
6.5% to nearly 1,500 thousand TEU.

Such continued volume growth —
noticeable in the full export segment —
generates not only increased capacity
utilisations across container terminals
in Russia, but tangibly demonstrates our

strong value propositions offered to the
shipping lines and forwarders, facilitating
the market to become more resilient to
future macroeconomy fluctuations.

[Container/thousand capita in 2019]
TEU/thousand people

[Consolidated Marine Container
Throughput] thousand TEU

[Consolidated Marine Bulk Throughput]
thousand tonnes

139

135

140

1,352

1,439

6.5%

3,658

17.1%

3,123

106

North
America

Europe

Turkey

World

Russia

2018

2019

2018

2019

Marine terminals

Containerised cargo (thousand TEU)

PLP

VSC

FCT

ULCT

Non-containerised cargo

Ro-Ro (thousand units)

Cars (thousand units)

Consolidated Marine Container Throughput
(thousand TEU)

Consolidated Marine Bulk Throughput
(thousand tonnes)

Operational statistics of Joint Ventures

Containerised cargo (thousand TEU)

Moby Dik

Finnish Ports

Inland terminal

Yanino

328.1

394.8

654.0

62.1

20.0

103.3

246.4

419.2

617.0

68.9

20.3

121.1

81.7

(24.4)

37.0

(6.8)

(0.3)

(17.7)

33.1%

(5.8%)

6.0%

(9.9%)

(1.3%)

(14.7%)

1,439.0

1,351.6

87.4

6.5%

3,657.9

3,122.8

535.1

17.1%

11.3

110.9

81.7

107.1

(70.5)

3.8

(86.2%)

3.6%

17.1%

Consolidated
Marine Bulk
Throughput growth

90%

The new coal
handling capacity
at ULCT had a high
level of utilisation
in 2019

Containerised cargo (thousand TEU)

Bulk cargo throughput (thousand tonnes)

119.6

376.4

122.8

542.8

(3.2)

(166.4)

(2.6%)

(30.7%)

Source: Drewry; some 2019 numbers are estimated.

The table opposite 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.

The Group’s Consolidated Marine
Container Throughput increased
6.5% to 1,439 thousand TEU in 2019
compared to 1,352 thousand TEU in
the same period of 2018. The growth
rate of the Group’s Consolidated Marine
Container Throughput increased to 8.0%
in the second half of 2019 compared
to 4.9% in the first half of 2019 as a result
of the Group’s efforts to increase
of productivity and customer service
standards.

As a result of the market trends
mentioned above, Moby Dik no longer
meets the market requirements
of a modern container terminal, such
as absence of a railway access and
insufficient vessel handling equipment.
Nonetheless, Moby Dik remains
a business unit of the Group with further
opportunities in bulk handling and
additional services. Moby Dik handled
170 thousand tonnes of bulk cargo in 2019
generating growth of 4.4x compared
to 2018.

In 2019, the Group continued to focus on
building a strong value proposition to its
clients, while maintaining the competitive
pricing, in order to take advantage of the
opportunities offered by the growing
market. Even though capacity utilisation
continues to increase, competition in the
industry remains strong with headline
pricing and mix of services and terminals
driving a 4.0% decrease in like-for-like
Revenue per TEU at the Group’s terminals.

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 17.1% to
3,658 thousand tonnes. This growth in
Consolidated Marine Bulk Throughput
was primarily driven by the start of coal
handling at ULCT in December 2018.
The new coal handling capacity at ULCT
had a high level of utilisation of 90%
in 2019.

Since 1 September 2019, the Russian
Government introduced quotas on export
of scrap metal. As a result, handling
volumes of this type of bulk cargo at
PLP decreased in the second half of
2019 compared to the first half of 2019.
This development, combined with
scheduled maintenance works at Russian
Railways in the Far East, which limited
the ability of VSC to accept railway
delivery of coal in August 2019, led to
13.7% decrease in Group’s consolidated
bulk throughput in the second half of
2019, compared to the first six months of
the year.

Furthermore, the Government is said to
be considering the introduction of a new
exchange driven mechanism of scrap
metal export over the course of 2020,
which therefore increases the uncertainty
of potential handling volumes of this
cargo during the year that lies ahead.

The Group’s passenger car handling
volumes and high and heavy Ro-Ro
handling decreased by 14.7% and 1.3%
in 2019 respectively, reflecting the
slowdown in Russian consumer demand
for imported cars.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

| Results of operations of Global Ports for the twelve-month period ended 31 December 2019 and 2018 |

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-month period ended 31 December 2019 and 2018.

FY 2019,
USD mln

FY 2018,
USD mln

Change,
USD mln

Change,
%

Selected consolidated financial information

Revenue

Cost of sales

Gross profit

Administrative, selling and marketing
expenses

Other income

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

343.6

18.3

(136.0)

(15.8)

361.9

(151.8)

210.1

(35.5)

1.8

207.6

(38.9)

—

1.9

(12.4)

Other gains/(losses) — net

(33.4)

(24.6)

Operating profit

Finance income

Finance costs

144.8

131.7

2.5

2.6

(85.2)

(85.1)

Change in fair value of derivative

(9.3)

(27.5)

Net foreign exchange gains/(losses)
on financial activities

43.8

(75.2)

119.0

Finance income/(costs) — net

(48.2)

(185.3)

137.1

2.5

3.4

1.8

14.3

(8.9)

13.2

(0.0)

(0.1)

18.2

5.3%

Revenue growth

8.8%

decrease of
Administrative,
selling and marketing
expenses

5.3%

11.6%

1.2%

(8.8%)

—

(115.5%)

36.1%

10.0%

(1.4%)

0.1%

(66.0%)

(158.3%)

(74.0%)

Profit/(Loss) before income tax

96.6

(53.6)

150.3

(280.2%)

Income tax expense

(29.0)

(4.7)

(24.3)

Profit/(Loss) for the period

67.7

(58.3)

126.0

Attributable to:

Owners of the Company

Non-controlling interest

Key non-IFRS financial information

Like-for-like revenue

Adjusted EBITDA

Adjusted EBITDA Margin

66.6

1.1

(59.3)

1.0

125.9

0.1

350.5

336.9

13.6

226.9

217.3

9.6

62.7%

63.2%

Like-for-like Cash Cost of Sales

(91.7)

(82.3)

(9.4)

Like-for-like Total Operating Cash costs

(125.3)

(119.7)

(5.6)

Free Cash Flow

158.8

133.6

25.3

517.3%

(216.0%)

(212.3%)

10.0%

4.0%

4.4%

11.5%

4.7%

18.9%

Free Cash Flow growth

Alexander Roslavtsev

CFO of Global Ports Management LLC 4.4%

Adjusted EBITDA
growth

Over the year, we saw robust
financial performance, where
increased revenues and disciplined
cash control drove a 4.4% rise in
Adjusted EBITDA, high margins,
and generated 18.9% growth in free
cash flow in Free Cash Flow.

This performance, our continued focus
on reducing net debt position and our
hedging strategy not only puts us on
a stronger financial footing to weather the
current global challenges, but also brings
the day of dividend payment resumption
closer.

| Revenue |

The following table sets out the components of the consolidated revenue for 2018 and 2019.

Container handling excluding LT
and VSC transportation services

Other revenue excluding LT

VSC transportation services

Like-for-like revenue

Total revenue

Like-for-like revenue per TEU, USD

FY 2019,
USD mln

FY 2018,
USD mln

Change,
USD mln

Change,
%

256.7

93.8

—

11.4

350.5

361.9

178.4

251.2

85.6

6.7

—

336.9

343.6

185.9

5.4

8.1

(6.7)

11.4

13.6

18.3

(7.5)

2.2%

9.5%

(100.0%)

—

4.0%

5.3%

(4.0%)

In 2019, like-for-like revenue increased
by 4.0% to USD 350.5 million from
USD 336.9 million in 2018 driven by
higher revenue from container handling
and strong growth in other revenue (both
adjusted for LT).

Revenue from container handling
(adjusted for LT and VSC transportation
services) increased by 2.2%, or
USD 5.4 million, to USD 256.7 million.
This change was driven by an increase in
Consolidated Container Throughput of
6.5% which was partially offset by a 4.0%
decrease in like-for-like consolidated

Revenue per TEU driven by a low single-
digit change in tariffs, as well as a change
in service and terminals mix.

Other revenue (adjusted for LT)
increased by 9.5%, or USD 8.1 million, to
USD 93.8 million, driven by growth in coal
handling revenue. Other revenue in the
second half of 2019 decreased by 14.4% or
USD 7.3 million compared to the first half
of 2019. This decrease was driven by the
h-o-h decline in throughput described
above as well as by discounts given by
the Group to its clients in response to the
decline of coal prices in the global market.

As a result of new terms of certain
sales agreements, in 2019, VSC acted
as a principal vs as an agent in 2018:
previously the net result of revenue
from transportation services and
associated cost was included in the
consolidated revenue, in 2019 full
revenue and associated cost are
recognised in consolidated revenue and
transportation expenses accordingly.
This Adjusted EBITDA neutral change
resulted in additional USD 11.4 million
to consolidated revenue and
USD 11.4 million to Cost of sales.

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Global Ports
Investments PLC

Annual Report 2019

[Revenue]
USD mln

5.3%

343.6

-6.7

4.0%

5.4

336.9

11.4

361.9

8.1

350.5

2018

LT
Deconsolidation

FY2018
Like-
for-like

Container
revenue

Non-container
revenue

FY2019
Like-
for-like

VSC
transportation
services

2019

In September 2018, the Group sold
Logistika-Terminal (LT). As a result of the
transaction, the Group’s consolidated
revenue of 2019 does not include LT
revenue (USD 6.7 million in 2018).

The share of Consolidated Non-Container
Revenue in consolidated revenue of
the Group remained broadly flat in
2019 (25.9% in 2019 compared to 25.7%
in 2018).

Cost of sales

The following table sets out a breakdown by expense of the Cost of sales for 2019 and 2018:

Depreciation of property,
plant and equipment

Amortisation of intangible assets

Depreciation of right-of-use assets

Staff costs

Transportation expenses

— including VSC rail transportation costs

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

Like-for-like Cash Cost of Sales

FY 2019,
USD mln

FY 2018,
USD mln

Change,
USD mln

Change,
%

35.2

1.1

12.4

45.3

15.7

11.4

9.5

6.3

14.3

2.5

9.6

151.8

103.1

91.7

34.3

12.9

—

42.1

6.9

—

8.8

7.4

8.3

5.0

10.4

136.0

88.9

82.3

0.9

(11.8)

12.4

3.1

8.8

11.4

0.8

(1.1)

6.0

(2.5)

(0.8)

15.8

14.3

9.4

2.6%

(91.4%)

—

7.4%

128.4%

—

8.8%

(14.5%)

72.1%

(50.4%)

(8.1%)

11.6%

16.1%

11.5%

62.7%

Adjusted EBITDA
Margin

Cost of sales increased by USD 15.8
million, or 11.6%, from USD 136.0 million
in 2018 to USD 151.8 million in 2019.
The change was primarily driven by the
appreciation of the Russian rouble against
the USD dollar, deconsolidation of LT
and the change in accounting policies

as a result of adopting IFRS 16 Leases
(resulted in decrease of lease expenses),
which were offset by growth in certain
cost items (primarily Purchased services)
related to the start of coal handling at
ULCT in December 2018, and growth in
throughput and inflation.

The growth in transportation expenses
from USD 6.9 million to USD 15.7 million
in 2019 or USD 8.8 million (128.4%) was
driven by new terms of certain agreements
impacted on recognition of revenue and
costs generated by VSC from railway
services for clients described above.

Like-for-like Cash Cost of Sales
increases by 11.5% or USD 9.4 million
from USD 82.3 million in 2018 to
USD 91.7 million in 2019. This growth was
mainly driven by the growth in container
and bulk throughput as well as inflation
and appreciation of Russian rouble against
US dollar.

[Operating Cash Costs]
USD mln

8.3%

4.7%

11.4

136.7

Gross profit

126.3

-6.6

125.3

Gross profit increased by USD 2.5 million,
or 1.2%, from USD 207.6 million in 2018 to
USD 210.1 million in 2019. This increase
was due to the factors described above
under Revenue and Cost of sales.

Administrative, selling
and marketing expenses

Administrative, selling and marketing
expenses decreased by USD 3.4 million,
or 8.8%, from USD 38.9 million in
2018 to USD 35.5 million in 2019.
This was primarily due to a decrease
by USD 1.2 million, or 90.5%, in lease
expenses as a result of adopting IFRS 16
Leases, USD 0.1 million or 3.7% decrease
in Legal, consulting and other professional
services, and a USD 2.0 million or 42.6%
decrease in other administrative and
selling expenses mainly.

Adjusted EBITDA
and Adjusted EBITDA Margin

Adjusted EBITDA in 2019 increased
by 4.4% or USD 9.6 million to
USD 226.9 million from USD 217.3 million
in 2018 mainly due to the growth in
throughput and strict control over cash
costs. In addition, the adoption of IFRS
16 Leases resulted in higher Adjusted
EBITDA as the new treatment of leases
resulted in a decrease in lease expenses.
The Group estimated the impact of IFRS
16 on Adjusted EBITDA in 2019 to be
approximately USD 3.7 million.

Adjusted EBITDA Margin was 62.7%
in 2019.

2018

LT
Deconsolidation

119.7

FY2018
Like-
for-like

FY2019
Like-
for-like

VSC
transportation
services

2019

USD 35.5 mln

Administrative, selling
and marketing expenses

8.8%

[Continuing growth in Adjusted EBITDA]
USD mln

[Healthy Free Cash Flow generation]
USD mln

217.3

226.9

4.4%

158.8

18.9%

133.6

2018

2019

2018

2019

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

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

| Liquidity and capital resources |

The Group’s share of profit from joint ventures changed from a loss of USD 12.4 million in 2018 to a profit of USD 1.9 million in 2019.

General

VEOS

MLT

CD Holding

Total share of profit/(loss) of joint ventures

In April 2019, the Group completed the
disposal of its 50% holding in VEOS,
one of the Group’s joint ventures
and operating segments, to Liwathon.
As previously announced, the proceeds
from the sale went towards further
deleveraging. As a result, there was no
contribution to the Share of profit/(loss)
of joint ventures from VEOS in 2019
compared to USD 5.0 million 2018.

The share of profit from MLT changed
from a loss of USD 14.3 million to a profit
of USD 0.7 million. The result of 2018
was primarily driven by an impairment
of USD 14 million of MLT Ltd (being
the parent of Moby Dik) due to
the reduction of cargo volumes at this
terminal by the reasons described above.

The change in the share of result from
CD Holding, from a loss of USD 3.1 million
in 2018 to a profit of USD 1.2 million, was
mainly driven by the appreciation of the
Russian rouble against US Dollar in 2019.
This resulted in a revaluation of the
US Dollar nominated borrowings of YLP.

Other gains/(losses) — net

Other gains/(losses) amounted to a net
loss of USD 33.4 million 2019, compared
to a loss of USD 24.6 million in 2018.

As a result of the disposal of VEOS,
a USD 50,000 loss is reflected
within Other gains/(losses) — net.

FY 2019,
USD mln

FY 2018,
USD mln

Change,
USD mln

—

0.7

1.2

1.9

5.0

(14.3)

(3.1)

(12.4)

(5.0)

15.0

4.3

14.3

Change,
%

(100.0%)

(104.7%)

(137.2%)

(115.5%)

In addition, USD 33.5 million loss was
recycled to Other gains/(losses) — net
from the currency translation reserve.
This is the amount related to VEOS
that was previously recognised in other
comprehensive income and accumulated
in the equity.

Operating profit/(loss)

The Group’s operating profit increased
from USD 131.6 million in 2018 to
USD 144.8 million in 2019 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 decreased
from a cost of USD 185.3 USD million in
2018 to a cost of USD 48.2 million in 2019.
This move was primarily due to a foreign
exchange loss from financing activities
of USD 75.2 million in 2018 transferring
to a profit of USD 43.8 million in 2019.
This was a result of the appreciation
of the Russian rouble., which in turn
changed from a loss to a gain on the
revaluation of US dollar-denominated
borrowings in the Group’s Russian
subsidiaries. In addition, the fair value
of derivative instruments2. reduced from
loss of USD 27.5 million 2018 to a loss
of USD 9.3 million in 2019.

In the second half of 2018, the Group
cancelled a swap arrangement in relation
to its Russian rouble bonds. In 2019, Group
entered into several RUB/USD currency
forward and option contracts.

Profit/(loss) before income tax

Profit before income tax amounted to
USD 96.6 million in 2019 compared
to a loss of USD 53.6 million in 2018.
This change is due to the factors
described above under Operating profit/
(loss) and Finance income/(costs)—net.

Income tax expense

In 2019, income tax expense was
USD 29.0 million compared to
USD 4.7 million in 2018. 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 as well as the tax
effect of a disposal of assets held for sale.

Profit/(loss) for the period

The company reported a profit of
USD 67.7 million 2019 compared to a loss
of USD 58.3 million in the 2018 due to
the factors described above.

1. During 2019, the exchange rate of US Dollar decreased from 69.47 RUB as of 31 December 2018 to 61.91 RUB as of 31 December 2019 that represents the weakening

of US Dollar against Russian Rouble by 10.9%.

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.

As at 31 December 2019, the Group
had USD 124.4 million in cash and cash
equivalents.

The Group’s liquidity requirements arise
primarily in connection with repayments
of principal and interest payments, capital
investment programmes and ongoing
operating costs of its operations. In 2019
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 and
borrowings.

As a result of the shareholding or joint
venture agreements at Moby Dik, the
Finnish Ports and Yanino, 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 2019, the Group had
USD 871.4 million of total borrowings
(including lease liabilities), of which
USD 100.3 million comprised current
borrowings and USD 771.1 million
comprised noncurrent borrowings.

As a result of adoption of IFRS 16, the
lease liabilities increased to the total
amount of USD 34.2 million, which were
recognised in the balance sheet as of
31 December 2019.

As at 31 December 2019, the Group had
no material undrawn borrowing facilities.

USD 124.4 mln

Cash and cash equivalents

[Consistent Net Debt reduction]
USD mln

USD 603 mln

1,350

1,208

1,048

947

866

780

747

33.3

2013

2014

2015

2016

2017

2018

2019

[Debt maturity profile as at 31 December 2019]
USD mln

307.9

Cash and cash
equivalents as at
31 December 2019

124.4

203.0

162.5

100.3

97.7

2020

2021

2022

2023

2024

RUB

USD

USD covered by derivatives

Global Ports
Investments PLC

Annual Report 2019

Cash flow

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

The following table sets out the principal components of the Group’s consolidated cash flow statement for 2019 and 2018:

FY 2019,
USD mln

FY 2018,
USD mln

Change,
USD mln

Net cash from operating activities

Cash generated from operations

Tax paid

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

Dividends received from joint ventures

Net cash used in investing activities

Purchases of intangible assets

Purchases of property, plant and equipment

Proceeds from sale of property, plant and equipment

Loans granted to related parties

Loan repayments received from related parties

Disposal of asset held for sale
(2018: subsidiary and assets held for sale)

Interest received

Net cash used in financing activities

Repayments of borrowings

Proceeds from borrowings

Interest paid on borrowings
(2018: Interest paid on borrowings and finance leases)

Interest paid on leases liabilities

Proceeds from/(settlement of) derivative financial instruments

Principal elements of lease payments
(2018: Finance lease principal payments to third parties)

Free Cash Flow (Net cash from operating activities —
Purchase of PPE)

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the period

185.4

217.4

(32.0)

185.4

—

(13.4)

(1.0)

(26.6)

0.5

—

0.3

11.8

1.6

(140.2)

(131.4)

70.9

(74.4)

(4.3)

(0.2)

(0.9)

158.8

31.8

91.6

174.3

208.0

(35.4)

172.6

1.7

(13.5)

(2.6)

(40.8)

0.5

(1.4)

0.3

28.8

1.6

(196.2)

(155.5)

0.1

(83.0)

—

43.1

(0.8)

133.6

(35.3)

130.4

Change,
%

6.3%

4.5%

(9.7%)

7.4%

(100.0%)

(0.7%)

(62.3%)

(34.7%)

5.8%

(100.0%)

23.1%

(59.0%)

0.0%

(28.5%)

(15.5%)

70793.0%

(10.3%)

—

(100.5%)

11.0

9.3

3.4

12.8

(1.7)

0.1

1.6

14.1

0.0

1.4

0.1

(17.1)

(0.0)

55.9

24.1

70.8

8.6

(4.3)

(43.3)

(0.1)

12.4%

25.2

67.1

(38.8)

18.9%

(190.0%)

(29.8%)

Net cash from operating activities

Net cash from operating activities
increased by USD 11.0 million, or
6.3%, from USD 174.3 million in 2018
to USD 185.4 million 2019. Growth in
Net cash from operating activities was
primarily due to a USD 9.3 million, or
4.5%, increase in Cash generated from
operations due to the growth of financial
result from operations as described above,
and USD 3.4 million dollars, or 9.7%
decrease in tax paid.

There were no Dividend payments
received from joint ventures due to
a decline in throughput at Moby Dik,
which partially offset growth in Cash from
operations.

Net cash used in investing activities

Net cash used in investing activities
decreased from USD 13.5 million 2018
to USD 13.4 million in 2019. This change
was driven by a decrease in Purchases
of property, plant and equipment by

USD 14.1 million from USD 40.8 million
in 2018 to USD 26.6 million in 2019.
This decrease was primarily driven by
the completion of the majority of the
investment at the coal handling facility
in ULCT that commenced operations in
December 2018.

Disposal of asset held for sale mainly
reflects the proceeds from the sale of
VEOS in the amount of USD 11.8 million
in April 2019.

Net cash used in financing activities

[Net Debt]
USD mln

Net cash used in financing activities
decreased by USD 55.9 million, or
28.5%, from USD 196.2 million 2018 to
USD 140.2 million in 2019 due to the
reduction in the repayment of borrowings
by USD 24.2 million as there were
less early voluntary repayment and no
borrowings due in the reporting period.

In 2019, the Group bought back some
of its own Eurobonds. In August 2019,
financial arrangements were made to
purchase an aggregate principal amount of
USD 52.8 million of Global Ports (Finance)
PLC’s USD 350 million of 6.872 per cent
notes due 2022, which were issued on
18 April 2016. The purchase was funded by
the Group’s cash flow from operations.

In December 2019, financial arrangements
have been made to purchase additional
2022 notes for an aggregate principal
amount of USD 69.48 million. The
purchase was funded by a bilateral
fixed rate amortising Russian rouble
nominated loan with final maturity at
60 months in the amount equivalent to
USD 70.84 million at the exchange rate at
the date of borrowing.

The 2022 notes purchased by the Group
will be held, and there is no current
intention for them to be reissued, resold
or cancelled. The aggregate principal
amount of the 2022 Notes outstanding
after the purchases is USD 203.6 million.

Capital resources

The Group’s financial indebtedness
consists of bank borrowings, bonds
and lease liabilities and amounted to
USD 871.4 million as at 31 December
2019. 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

5.8

28.9

-32.7

780.3

3.6x

31.12.18

-60.1

Net Debt/Adjusted EBITDA

3.2x

Net Debt Adjusted
for IFRS 16 / Adjusted
EBITDA 31.12.19

24.9

747.0

3.3x

31.12.19

2018

Interest charged/
paid (net)

Exchange
difference

Cash &
equivalents

Bonds buyback
and repayments

IFRS 16
impact

2019

the effect of restricting the ability of the
borrower to transfer assets, make loans and
pay dividends to other members of the
Group. The Group is in full compliance in
the reporting period.

3.3 x

Net Debt /
Adjusted EBITDA

As a result of the adoption of IFRS 16,
lease liabilities for the total amount of
USD 34.2 million were recognised in the
balance sheet as of 31 December 2019.

As at 31 December 2019, the carrying
amounts of the Group’s borrowings
(including lease liabilities) were
denominated in the following currencies:

The weighted average effective interest
rate of the Group’s debt portfolio is 6.65%*
for USD nominated borrowings and 12.18%*
for Russian Rouble nominated borrowings.

Rouble

US dollar

Total

USD mln

354.6

516.8

871.4

As 31 December 2019, the Group had
leverage of Net Debt to Adjusted EBITDA
ratio of 3.3x (compared to a ratio of 3.6x
as at 31 December 2018). The Group’s
Net Debt to Adjusted EBITDA adjusted
for adoption of IFRS 16 would be
approximately 3.2x as of 31 December 2019.

The following table sets out the maturity
profile of the Group’s total borrowings
(including lease liabilities) as at
31 December 2019.

1H 2020

2H 2020

2021

2022

2023

2024 and after

Total

USD mln

18.7

81.6

162.5

203.0

307.9

97.7

871.4

During the 12-month period ended
31 December 2019, the Group entered
into several RUB/USD currency forward
contracts to acquire USD dollars in the
period 2019–2022 in order to hedge part
of foreign exchange risk associated with
its USD denominated non-convertible
unsecured bonds (which have been
provided as loans to the Russian operating
subsidiaries).

The Group bought several options to
buy USD 87 million in 2022 in the range
RUB 80–100 per US dollar.

As of 31 December 2019, there are
outstanding forward contracts to acquire
USD 130 million and USD 87 million
covered by option contracts.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

| Reconciliation of additional data (non-IFRS) to the consolidated financial information

for the twelve-month period ended 31 December 2019 |

Reconciliation of Adjusted EBITDA to profit for the period

Reconciliation of Cash Costs of Sales to Cost of Sales

FY 2018,
USD mln

(58.3)

Change,
USD mln

126.0

Change,
%

(216.0%)

Profit for the year

Adjusted for

Income tax expense

Finance costs—net

Amortisation of intangible assets

Depreciation of property, plant
and equipment

Depreciation of right-of-use assets

Other gains/(losses)—net

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

Adjusted EBITDA

FY 2019,
USD mln

67.7

29.0

48.2

1.3

37.0

12.4

33.4

(1.9)

226.9

4.7

185.3

12.9

35.8

24.6

12.4

217.3

24.3

(137.1)

(11.7)

1.2

8.9

(14.3)

9.6

Reconciliation of Adjusted EBITDA to Adjusted EBITDA Margin for the period

Revenue

Adjusted EBITDA

Adjusted EBITDA Margin

FY 2019,
USD mln

FY 2018,
USD mln

Change,
USD mln

361.9

226.9

62.7%

343.6

217.3

63.2%

18.3

7.9

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

FY 2019,
USD mln

FY 2018,
USD mln

Change,
USD mln

Cost of sales

Administrative, selling and marketing expenses

Total

Adjusted for

Depreciation of property, plant and equipment

Amortisation of intangible assets

Depreciation of right-of-use assets

Total Operating Cash Costs

151.8

35.5

187.3

(37.0)

(1.3)

(12.4)

136.7

136.0

38.9

174.9

(35.8)

(12.9)

—

126.3

15.8

(3.4)

12.4

(1.2)

11.7

(12.4)

10.4

517.3%

(74.0%)

(90.3%)

3.3%

36.1%

(115.5%)

4.4%

Change,
%

5.3%

3.6%

Change,
%

11.6%

(8.8%)

7.1%

3.3%

(90.3%)

—

8.3%

Change,
%

11.6%

2.6%

(91.4%)

—

16.1%

Change,
%

(8.8%)

20.3%

185.2%

Cost of Sales

Adjusted for

FY 2019,
USD mln

151.8

FY 2018,
USD mln

136.0

Change,
USD mln

15.8

Depreciation of property, plant and equipment

Amortisation of intangible assets

Depreciation of right-of-use assets

Cash Cost of Sales

(35.2)

(1.1)

(12.4)

103.1

(34.3)

(12.9)

—

88.9

(0.9)

11.8

(12.4)

14.3

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

FY 2019,
USD mln

Administrative, selling and marketing expenses

35.5

Adjusted for

Depreciation of property, plant and equipment

Amortisation of intangible assets

Cash Administrative, Selling
and Marketing Expenses

(1.7)

(0.15)

33.6

FY 2018,
USD mln

38.9

Change,
USD mln

(3.4)

(1.5)

(0.05)

(0.3)

(0.10)

37.4

(3.8)

(10.3%)

Reconciliation of Net Debt and Total Debt to borrowings and lease liabilities

As at
31.12.2019,
USD mln

As at
31.12.2018,
USD mln

Change,
USD mln

Change,
%

Non-current borrowings

Current borrowings

Non-current lease liabilities

Current lease liabilities

Total Debt

Adjusted for

Cash and cash equivalents

Net Debt

738.1

99.1

33.0

1.2

871.4

(124.4)

747.0

850.8

21.2

—

871.9

(91.6)

780.3

(112.7)

77.9

33.0

1.2

(0.6)

(32.7)

(33.3)

Reconciliation of Free Cash Flow to net cash from operating activities

Net cash from operating activities

Adjusted for

Purchases of property, plant and equipment

Free Cash Flow

FY 2019,
USD mln

185.4

FY 2018,
USD mln

174.3

(26.6)

158.8

(40.8)

133.6

Change,
USD mln

11.0

14.1

25.2

(13.2%)

367.8%

(0.1%)

35.7%

(4.3%)

Change,
%

6.3%

(34.7%)

18.9%

Global Ports
Investments PLC

Annual Report 2019

Sustainable
and Safe Business

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

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

5key objectives

THAT SUPPORT THE DELIVERY
OF THE GROUP’S OVERALL
COMMERCIAL STRATEGY

Operate
with
integrity

Deliver economic
and social benefits
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

Communicate
our commitment
to corporate responsibility
openly and transparently

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Corporate Social Responsibility

The long-term success of Global Ports is inextricably linked to our
responsibility towards our people, our communities, the society and
environment in which we operate. As a core infrastructure business,
being a sustainable and responsible organisation is a critical component
of Global Ports’ strategy and value proposition. To be a sustainable
organisation means we have to manage our impact on stakeholders,
by which we mean the environment, our people, the communities in
which we operate, and our clients. We must ensure that we do all this
to the highest standards of integrity and honesty possible.

Our approach to Corporate Responsibility
(CR) underpins our long-term vision to be
the partner of choice for our customers
in our role as Russia’s best connected
independent container terminal operator
and is supported by our values and
behaviours as an organisation.

Sustainability approach

We are deeply committed to being
a responsible organisation and
an active participant in the community,
which means ensuring responsible
environmental stewardship, promoting
safe working conditions for our employees,
supporting our local communities and
creating long-term economic value for all
our stakeholders.

The sustainability reporting landscape
is evolving rapidly, and we recognise
that as far as reporting is concerned
we, like other companies, are on a long
journey. Our intention is to ensure that
our reporting is kept at a level which we
believe is appropriate for the Group and
also helpful for our stakeholders.

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

In a time of such unprecedented change and disruption, responsible
business practices have never been more important and the core pillars
of governance, safety and social responsibility continue to drive our
performance and our approach with our stakeholders and the wider
communities in which we operate.

SOCIETY

Our role in society

Global Ports is a core infrastructure
business that connects Russia’s economy to
international markets and global trade flows.
We play a positive role in society, with our
seven marine container terminals handling
millions of tonnes of cargo every year,
supporting more than 2,800. jobs directly
and many more indirectly. We believe our
efforts are helping to widen prosperity,
linking Russian companies to global
customers, linking Russian consumers to
global markets, providing employment and
supporting local communities. We aim
to be the best at what we do, acting
responsibly at all times to ensure delivery
of sustainable services to our customers,
protection of the environment, support and
safe working conditions for our employees,
and social wellbeing.

Our business ethics

Our culture is one of honesty, integrity,
transparency and accountability. We expect
our employees to behave fairly and
ethically at all times in their dealings
with fellow employees, customers,
contractors, suppliers, authorities and
other stakeholders. Upholding high ethical
standards is fundamental to maintaining
our reputation. Everyone at Global Ports has

1. As at 31 December 2019.

a responsibility to understand and fulfil
the ethical behaviours and standards of
conduct set out in our Code of Ethics and
Conduct. Every officer of the Group and
employee who joins the Group is required
to acknowledge that they have read the
Code and understood its importance.
The Group also expects its business
partners and suppliers to be aware of our
Code of Ethics and Conduct and to apply
similar ethical standards to their own
business operations.

Anti-bribery and anti-corruption

The Code of Ethics and Conduct is
supported by detailed policies on related
areas, including anti-bribery and corruption.
Our Anti-Corruption Policy sets out our
zero-tolerance policy on bribery and
corruption in whatever form, and the
Group’s anti-corruption framework is
an important part of our risk management
arrangements. This policy is there for any
person working at or with Global Ports
if they face a situation that they are
concerned about or which contradicts the
Code. Employees are encouraged to seek
help from line managers and our legal
team if they are concerned about what to
do in difficult situations. Issues to do with

known breaches of our anti-bribery policy
are dealt with in accordance with our
Investigation Policy that defines thorough
process either performed or overseen
by our internal audit team.

Whistleblowing

Global Ports has a group-wide
whistleblowing policy that applies to
all employees, contractors, suppliers
and clients. The whistleblowing service
which was established in 2017 enables
people to report any suspected breaches
of our Code of Ethics and Conduct or
any other improper activities through
our confidential hotline that delivers
the message directly to the Audit &
Risk Committee as well as the Head of
Internal Audit. All reports are treated
confidentially, and appropriately
investigated and concluded. The Company
maintains a non-retaliation policy that
allows every employee to freely report
their concerns.

Human rights

As a large company with international
clients, we recognise our responsibility
for upholding and protecting the human
rights of our employees and other
individuals with whom we deal in our
business.

We believe that all people are entitled
to fundamental rights and freedoms,
including those that relate to forced
labour, child labour, freedom of
association and the right to collective
bargaining. Compliance with and respect
for human rights are integrated throughout
the Group. We support standards of fair
treatment and non-discrimination, and we
promote the importance of human rights
throughout our operations and strive to
prevent non-compliance and protect our
employees’ rights.

Our approach to human rights is based
upon our Code of Ethics and Conduct
and underpinned by our values and
being in strict accordance with local and
international human rights law.

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

3. VSC has established the public support

ޭ the purchase of educational

Under the theme of Health, the Group
provides support for a number of
community-based sports programmes.
The Group’s education and welfare
programmes are aimed principally at
supporting projects that help vulnerable
adults and children. Under the Culture
banner, Global Ports prioritises social
infrastructure projects in the communities
where it operates, including funding
heritage restoration projects.

In 2019, the Group committed over
RUB 37 mln supporting social programmes
and local communities, including:

1. VSC, FCT, ULCT and PLP supported
the Life Line Charitable Foundation
which helps to support severely ill
children;

ޭ PLP helped to refurbish and equip

the facility "Charity Hospice" in Saint
Petersburg;

ޭ ULCT also contributed to the
renovation and modernisation
of the playing park with a ground
for skateboarders and improvement
of the pedestrian area and construction
of a new “Dockworkers Alley”
in the same city;

initiatives fund "Atmosphere" to
implement environmental, social, and
cultural programmes on the territory of
the Nakhodka city district and Vrangel
village. In 2019, the fund sponsored:

ޭ the creation of a public gardens in

ޭ MD provided financial aid to the

Vrangel village;

Centre for rehabilitation of disabled
children in Kronstadt district,
Saint Petersburg;

ޭ the renovation of premises in nursery

school No. 65;

Total

RUB37mln

spent on charity.

ޭ ULCT supported various groups

2. VSC sponsored the purchase of

ޭ local football club Okean, Nakhodka;

including a children’s football club,
a singing team and the Kingisepp
orphanage;

medical equipment for Vostochny
Hospital in the city of Nakhodka;

equipment and literature for Nakhodka
branch of Maritime State University;

ޭ New Year decoration of Vrangel and

the purchase of New Year's gifts to the
socially vulnerable residents of the
village;

ޭ renovation of the premises for various
sports and other activities` clubs;

4. MLT donated to a charity for

supporting fight against cancer
of children.

On October 20, Global Ports held a Family Day
for our employees and their children to visit
FCT and PLP terminals. After the tour, our young
guests participated in a drawing competition at our
headquarters — this picture is one of their creations.

Global Ports
Investments PLC

Annual Report 2019

Our communities

Global Ports is committed to supporting
the local communities where we operate
and to improving the quality of life for
our employees and their communities
by supporting community-driven social
investment. This is the philosophy that
underpins the Group’s approach to social
investment.

Through our community and social
investment schemes, we invest in
our communities and encourage our
employees to get involved in order to
make a bigger societal impact. The causes
we focus our funding and support on, all
under the themes of Health, Education,
Culture, and Welfare.

1. Equivalent of USD 0.6 mln.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Our suppliers

We enjoy good relations with our
suppliers and we encourage them to
operate with the high ethical standards
that are set out in our Code of Ethics
and Conduct.

We also work closely with them to
establish high operating standards
and proper accountability through
the supply chain. The guidelines are
covered in the Group’s Procurement
Policy.

The Procurement Department of Global
Ports Management LLC has purchasing
responsibility for the terminals of the
Group based on the following principles:

ޭ Full compliance with the legislation
of the Russian Federation, and in
particular 223-FZ;

ޭ Competitiveness and transparency;

ޭ Supplier selection based on price,

quality and timeliness;

ޭ Total cost of ownership.

All procurement information is placed on

http://eng.etprf.ru and

www.fabrikant.ru

electronic marketplaces. All necessary
information is also shared on the EIS
(Electronic Information System) website

www.zakupki.gov.ru

We publish all requests for tenders on
websites mentioned above in order
to ensure fairness and transparency
in the tendering process. The Group’s
procurement team monitors global best
practice closely drawing on its relationship
with APM Terminals.

0.55

LTIFR, the lowest on
record for Global Ports

ޭ Regular safety audits that benchmark

Performance in 2019

HEALTH & SAFETY

Nothing is more important to us than
the safety and wellbeing of our people.
Safety is our number one goal and
part of the culture of who we are and
how we work. We are committed to
zero fatalities and a zero harm work
environment meaning that all of our
employees and visitors return home safely
every day. Our aim is to build and embed
a sustainable safety culture based on three
core principles:

our facilities’ compliance in
implementing our GMRs.

ޭ Regular safety and risk awareness

briefings and information updates for
our staff and contractors.

ޭ Regular health and safety training for
line management and employees.

ޭ Regular training sessions covering

ޭ Providing a safe working environment;

general safety issues.

ޭ Providing comprehensive

implementation of plans built around
best practice safety and compliance
standards;

ޭ Specialised training programmes for
employees that need it, for instance,
for those involved in handling
hazardous materials.

ޭ Offering comprehensive training
focused on risk awareness and
reduction.

Our approach

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

Our working environments by their nature
expose our employees and contractors to
risk. This is why our objective is to identify
those risks and implement controls.
We constantly review and update our
working practices and controls to ensure
that they are the safest they can be.
We believe having the right practices and
controls in place to effectively manage
those risks that have safety impacts leads
to improved safety outcomes.

We have an established safety
management framework that covers all
aspects of safety compliance, monitoring,
and training. Our safety management
system is focused on ensuring compliance
with our safety standards to provide a safe
work environment. It is built on:

ޭ Critical minimum safety standards
which are aligned with industry
best practices (Global Minimum
Requirements).

Governance

We continually look to improve our
safety culture, and key to this is improving
leadership, as well as monitoring and
simplifying our safety systems. The Board
has overall responsibility for health and
safety at the Group, including setting
policy, agreeing safety standards and
reviewing performance. The Chief
Operating Officer is the top-manager
responsible for Global Ports’s health
and safety compliance and performance
monitoring.

The Chief Operating Officer regularly
reviews commentary and performance
reports supplied by the individual
business units and the Board receives
quarterly performance reports.
Regular reviews of the Group’s safety
performance are conducted by the Board,
with the resulting actions discussed and
agreed with the executive team.

In 2019, we continued our efforts to
safeguard the health and safety of our
employees. We focused on continuing
to provide strong visible leadership, to
drive compliance, tighten our risk controls
and improve communication. The Board
conducted a thorough review of our safety
management systems and risk controls
and processes in order to reduce the
overall risk profile of the Group.

We use the Lost Time Injury Frequency
Rate (LTIFR) to measure our safety
performance. It is pleasing to report
that, despite the introduction of new
services for example at ULCT, our LTIFR
performance was the lowest on record at
0.55 (2018: 1.28). Sadly, however, we had
a fatal incident at our PLP terminal early
in the year, which underlines the critical
importance of always safeguarding our
people and providing the safest possible
working conditions. Safety continues to be
a core value for the Group and a focus for
the Board as we redouble our efforts to
achieve a zero-harm environment.

[LTIFR]

2.30

1.51

1.28

1.10

0.55

2015

2016

2017

2018

2019

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

OUR PEOPLE

ENVIRONMENT

Global Ports employs a workforce of more
than 2,800 people.. Having a professional,
motivated, well-managed, and supported
workforce is critical to our success and
to delivering value for all stakeholders in
the business. We aspire to be a culture
where professionals of all backgrounds are
welcomed and encouraged to give their
best and develop their full potential.

ޭ Improving information-sharing about

the Company’s strategy and priorities;

ޭ Building a shared sense of unity and

teamwork among employees;

ޭ Building cross-functional working and

reducing complexity;

ޭ Reviewing rewards and benefit

Employee engagement

packages;

The Board takes its responsibilities
for workforce engagement seriously.
We believe that an engaged workforce
is a source of competitive advantage
in a service-led industry. We place
considerable value on transparency
with our employees, and keeping them
informed on matters affecting them and
the performance of the Group. This is
achieved through a variety of means
including: formal and informal briefings,
internal communications, strategy
workshops, training courses, via our new
intranet platform and our Annual Report.

Employees and their representatives
are consulted regularly on a variety
of matters affecting their interests.
We also conduct regular staff surveys
and feedback sessions. The results of
our most recent staff survey show that
levels of satisfaction among our staff are
high. Building on the positive response of
employees, this year we have focused on:

[Length of average service]
%

12%

40%

28%

19%

less than 5 years

5–10 years

11–20 years

more than 20 years

ޭ Improving human resource
management processes via
implementing best practices and
automating routine processes;

ޭ Our new intranet communications
platform provides a space for
employees across the Group to
connect, build networks, and share best
working practices.

Performance and development

To underpin and sustain our long-term
growth, we must ensure that we have the
right people to deliver for our customers,
both today and in the future. This means
that the recruitment and development
of our people is a critical part of our
business strategy. We want to provide
a dynamic and exciting workplace that is
attractive to both existing employees and
new recruits.

We are committed to providing
opportunities for personal growth and
career development to all our employees.
We offer fast-track development
opportunities to our high potential
employees. At the same time, we
continue to work on developing our next

Diversity data

Diversity of staff

Administration staff

Production staff

1. As at 31 December 2019.

generation of leaders, empowering and
involving them into business issues and
supporting them with coaching, mentoring
and development programmes.

We offer a fair and competitive reward
package which ensures our people feel
incentivised to succeed, encourages high
individual and team performance and
helps the Group to attract and retain new
talent. We have detailed performance
management systems in place across the
Group to ensure that our rewards packages
are aligned and clearly linked to our
corporate goals.

Diversity & inclusion

We see diversity as a positive advantage.
As a business, it is imperative that we
ensure access to the widest pool of
talent available, selecting the best
candidates based on their ability to
do the job. Our approach is set out in
our Code of Ethics and Conduct and
underpinned by our values. Global Ports
operates in a sector that has traditionally
employed many more men than women.
At Global Ports we continue to work to
change this. Women are well represented
at all levels in the business including in
senior management and on the Board.
As at the year end, 32% of our total
workforce was female, including 27% of
production staff and 65% of administrative
staff. Out of our eleven-strong Board,
women represent 27% of its membership
and two out of the three independent
directors. At senior and upper
management levels a quarter is female.
We continue to examine ways to increase
the diversity of our organisation both at
the group level and at the operating level.

male

68%

35%

73%

female

32%

65%

27%

Protecting the environment

The nature of the logistics industry means
that it can have a substantial impact on
the environment. At Global Ports, we are
committed to doing everything we can to
minimise our impact.

Our first priority is to minimise the
environmental impact of our activities.
Key environmental impacts have been
identified as energy consumption, CO2
emissions, water consumption and waste
management. Hence our key priorities
are to reduce our energy consumption,
optimise our water usage, and improve
our waste management and recycling
performance. Key themes include
investing in energy efficiency schemes;
providing environmentally beneficial
waste management solutions and
investing in environmental protection.
Over the last year this has involved
projects to upgrade waste water treatment
facilities; install more energy-efficient
lighting; install energy-efficient heating
systems; upgrade our storm water
drainage systems; and construct pollution
monitoring systems. In 2019, we spent
over RUB 100 mln on environmental
protection measures mainly at VSC,
our terminal in the Far East Basin is
in the midst of a major environmental
investment programme (2018–2021) in
conjunction with regional administrations,
and at ULCT.

Our second priority is to be fully
accountable, transparent and compliant
with regard to the Group’s environmental
activities. The Group aims to comply

Energy usage

strictly with all applicable requirements of
environmental laws in the regions where it
operates. Compliance with environmental
rules and regulations at our terminals is an
ongoing operational focus for the business.
Compliance protects the business legally,
reassures our customers, and protects our
reputation as an environmentally friendly
and sustainable business. Comprehensive
sustainability plans are in place at all our
terminals and are embedded in all of
Global Ports’ investment programmes.

Carbon footprint

The Group is committed to reducing its
carbon footprint but we recognise the
challenge of reducing energy consumption
while at the same time growing our
business operations. We are examining
ways to increase our energy efficiency and
also reduce air emissions.

We comply with all mandatory energy
and CO2 compliance, and reporting
requirements. In terms of carbon
reporting, our environment management
system tracks our operational emissions
performance and that data is captured
annually for the purposes of reporting our
greenhouse gas emissions.

We have successfully reduced our
electricity consumption per tonne of cargo
handled in the last three years. We are
targeting a further reduction in electricity
consumption in the year 2020. We also
continue to collaborate with our customers
to try to find ways to reduce the impact
that visiting vessels have on the ports’ air
quality.

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)

Units

2017

2018

2019

kWh

2.15

2.14

2.08

l/t

0.44

0.45

0.67

USD

117

119

120

Water usage

Global Ports also makes strenuous efforts
to manage water resources effectively
and minimise the impact of negative
water quality on the environment. As part
of our natural resource management,
all accumulated rainwater and waste
water is treated before being returned to
waterways.

Waste management

Global Ports aims to minimise the amount
of waste that its terminals produce,
re-use resources where possible and
dispose of waste in a way that minimises
the environmental impact, while also
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 continuing to work
with its industry partners to reduce the
impact of shipping and port operations on
water quality at its port terminals.

All non-recyclable waste such as waste
oil is carefully stored in ways designed to
prevent any harmful substances escaping
into the environment.

Future priorities

We will continue to focus strongly on
environmental compliance. We will
continue to focus on improving the
environmental sustainability of our
operations, focusing on training and best
practices development in areas such as
compliance, energy usage, recycling and
waste management.

Global Ports
Investments PLC

Annual Report 2019

| Environment |

Electricity used

Fuel used (diesel, petrol)

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)

Units

Thousand MWh

Thousand m3

kWh

l/t

USD

2018

41.9

9.1

2.14

0.45

119

| Social |

Diversity

Diversity of staff

male

female

Administration staff

male

female

Production staff

male

female

Executive management

male

female

Health and Safety

LTIFR

Fatalities

Fatalities / Thousand employees

Sustainability Governance

Business Ethics Policy

Anti-Bribery Ethics Policy

Number of employees — CSR

Number of part-time employees

Employee turnover %

Employee voluntary turnover %

Employee involuntary turnover %

Employee training cost

Units

2018

Units

number

Units

yes / no

number

USD mln

67%

33%

35%

65%

73%

27%

87%

13%

2018

1.28

2018

yes

2,700

2019

42.0

13.9

2.08

0.67

120

2019

68%

32%

35%

65%

73%

27%

87%

13%

2019

0.55

0.35

2019

yes

2,870

12%

0.1

01
Global Ports
at a Glance

Strategic
Report

03
Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

| Governance |

Board of Directors

The Board of Directors size

Number of independent directors

Independent directors %

Number of executive directors

Number of non-executive directors

Percentage of non-executive directors on Board

Tenure of Board

< 1 year

1–4 year

> 4 years

Number of Board meetings for the year

Board meetings attendance %

Independent Directors Board meetings attendance %

Diversity

Board diversity

male

female

Independent directors diversity

male

female

Number of women on Board

Age of the youngest director

Age of the oldest director

Board of Directors age range

Board average age

Board Committee

Number of Board committees

Other

Director average compensation

Total Board of Director compensation paid

Total salaries and bonuses paid to executives

Auditor ratification

Source: Company data.

Units

number

2018

20%

2019

27%

93.3%

100.0%

47%

33%

20%

92.4%

98.40%

36%

64%

96.0%

98.10%

Units

2018

2019

number

Units

number

Units

USD thou.

yes / no

73%

27%

33%

67%

2018

79.2

1,188

10,041

yes

73%

27%

33%

67%

2019

74.4

818

8,311

yes

Global Ports
Investments PLC

Annual Report 2019

Corporate
Governance

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

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

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

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.

USD 74.4 thousand

Director average compensation

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 the 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.

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

52 years

Director average age

31— 66

Board age ranges

[Board independence]
%

[Tenure of Board]
%

27%

36%

73%

64%

Non-Executive Director

Independent Non-Executive Director

1–4 year

< 1 years

[Superior mix of knowledge and experience]
members

Transport & Logistics

International Business

Finance

Business Administration

| Role of the Board of Directors |

| Code of Ethics and Conduct |

| Members of the Board
of Directors |

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, and
management resources are in place
to deliver its objectives. The Board
recognises that strong governance
supports a healthy 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 compositions ensure
the right blend of skills, experience,
industry knowledge and independence
of judgement appropriate to the Group’s
needs and its ongoing progress. The Board
ensures that the Group 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 18 June
2019 and came into force on the same day.
It is available on the Company’s website.

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
was approved by the Board of Directors
on 8 December 2016 and introduced
throughout the Group companies during
2017. The Code, handed 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, covers fraud and corruption
(including approaches on acceptance of
gifts and benefits), ethics and conflicts
of interest. Employees and third parties
are encouraged to report any suspected
breaches using various channels including
the Group’s dedicated confidential
hotline service which was established in
2017. During 2019, management continued
to promote awareness of the service to
employees as an appropriate mechanism
for voicing any concerns around violations
of the Group’s Code of Ethics and
Conduct or suspected fraud.

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

The Board is regularly updated regarding
any breach of policies with a specific
focus on incidents involving fraud
and resulting actions. Significant
breaches must be reported to the Board
immediately.

The Board of Directors leads the
process in making new Board
member appointments and makes
recommendations on new appointments
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
one year. 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.

The Board currently has 11 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.

11 members

of the Board of Directors

[Board diversity — whole Board]
%

[Board diversity Independent Directors]
%

2Law

The latest version of the Terms of Reference
of the Board of Directors is available

on the Company’s

website

27%

33%

73%

67%

Male

Female

Male

Female

2Investment Banking

Technologies

1International Taxation

Audit & Accounting

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

The composition of the Board changed
during the year, with a reduction in the
size of the Board from 15 to 11 directors
and the appointment of a number of new
directors. The purpose of the changes was
to refresh the composition of the Board
and increase its effectiveness.

Mr. Mogens Petersen, Ms. Alexandra
Fomenko and Mr. Shavkat Kary Niyazov
were appointed as directors on 18 June
2019, replacing Mr. Michalakis Christofides,
Mr. Alexander Iodchin, Ms. Laoura
Michael, Mr. Stavros Pavlou, Mr. Nicholas
Charles Terry and Mr. George Yiallourides
who resigned from the Board on the same
day. Mr. Anton Chertkov resigned from
the Board on 11 November 2019 and was
replaced by Mr. Ivan Besedin who joined
the Board on 16 December 2019.

There were no significant changes in
the responsibilities of the Directors
during 2019 except for the establishment
and membership of the committees as
described in the Management Report in
the Consolidated Financial Statement.

| Chairman of the Board
of Directors |

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. 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 the
management, and independent and non-
independent directors, with a view to
encouraging 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.

The purpose of the changes
was to refresh the composition
of the Board and increase its
effectiveness.

Further details on the Board committees can
be found in the Management Report

see

| Board committees |

[CORPORATE GOVERNANCE STRUCTURE]

Reporting lines

There are three committees: the Audit
and Risk Committee; the Nomination
and Remuneration Committee; and the
Strategy Committee. The composition
of the Board committees was changed
by the Board of Directors in June 2019:
the Nomination Committee and the
Remuneration Committee were merged
into a single committee, and a new
Strategy Committee was established.

| Non-executive and independent
directors |

There are eleven 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.

Board of Directors

members,
including

Independent
Directors

Chairman
Morten Engelstoft

Leads the Board and ensures its
effectiveness

Chaired by Independent Directors

Chaired by Non-Executive Director

AUDIT AND RISK COMMITTEE

NOMINATION AND
REMUNERATION COMMITTEE

STRATEGY COMMITTEE

5members,

including

Independent
Directors

3members,

including

Independent
Director

4members,

including

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

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

| General Manager |

| Shareholder engagement |

Alexander Iodchin occupies the position
of General Manager and the Board
granted him the powers to carry out all
business related to the Group’s business
up to a total value as established by the
Authority Matrix. The Board has also
granted him powers to discharge other
managerial duties related to the ordinary
course of business of the Company,
including representing the Company
before any government or government-
backed authority.

The decisions for all other matters are
reserved for the Board. The Authority
Matrix contains the list of such reserved
matters. In addition, Mr. Iodchin also acts
as the Board Secretary and has done since
December 2008.

| Board remuneration |

Non-executive 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 Chairwomen
of the Audit and Risk and Nomination
and Renumeration 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, 29 June 2018,
18 June 2019, 16 December 2019 and
30 December 2019.

The total remuneration of the members of
the Board of Directors paid by the Group
and its subsidiaries in 2019 amounted
to USD 818 thousand (2018: USD 1,188
thousand).

| Internal audit |

The internal audit function is carried out
by Group’s centralised Internal Audit
Service (IAS). Its mission is to enhance
and protect organisational value by
providing risk-based, independent and
objective assurance, advice and insight.
Independence and objectivity of IAS are
carefully safeguarded and monitored by
the Audit and Risk Committee.

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

| External auditors |

An external auditor is appointed at the
Global Ports Annual General Meeting
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 reappointment
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;

ޭ Compliance with requirements for
external auditor independence.

In 2019, 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 2019.

The Group’s shares are listed on the
London Stock Exchange (LSE) in the
form of Global Depository Receipts
(GDRs), and the Group’s communications
with shareholders are consistent with
international best practice in line with the
information disclosure standards set out
by the London Stock Exchange.

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

There is an active engagement programme
with the Company’s shareholders.
The members of the executive
management team meet regularly with
institutional investors and analysts to
discuss and obtain feedback on a range
of issues including strategy, performance,
management, and governance. This is
undertaken through a combination
of roadshows, group or one-on-one
meetings, attendance at industry and
investor conferences and by hosting
site-visits at the Company’s facilities.

In 2019, the executive management
attended investor meetings in Boston,
Frankfurt, Helsinki, London, Los Angeles,
Moscow, New York, Stockholm, Tallinn
and other locations. In all, Global Ports
held over 150 investor meetings during
2019.

Shareholders can access up-to-date
information on Global Ports through
website, which has
the Company’s
been recently relaunched and updated.
All material information on the Company
can be found there, together with copies
of annual and interim results, company
presentations, press releases, annual
reports, and webcasts.

The Investor Relations team has day
to day responsibility for managing
investor communications acting in
close consultation with the Board
and the executive management team.
The Board is kept informed of significant
discussions with shareholders and
changes in the shareholder register and
investor relations reports are regularly
circulated to the members of the Board
of Directors.

USD 818 thousand

The total remuneration
of the members
of the Board of Directors

A resolution approving the reappointment
of PricewaterhouseCoopers Limited as
the auditor for 2020 will be proposed at
the next Annual General Meeting. As of
2021, the Board will propose, subject to
shareholders’ approval, the replacement
of PricewaterhouseCoopers Limited by
KPMG Limited.

THE MAIN PRINCIPLES

OF THE GROUP’S INFORMATION

AND DISCLOSURE POLICY:

 regularity

 reliability

 equality

 efficiency

 completeness

 availability

 balance

and safety of
information
resources

>150

investor meetings
during 2019

All material information on the Company
can be found there, together with copies
of annual and interim results, company
presentations, press releases, annual reports,
and webcasts is available

on the Company’s

website

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

COMMITTEES MEMBERS

Board of Directors

Audit and Risk
Committee

Nomination
and Remuneration Committe

Strategy
Committee

Chairman
of a Committee

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

Skills and Experience
Mr. Engelstoft was appointed as CEO of APM Terminals in November 2016 and to the Executive
Board of A.P. Moller-Maersk A/S on 1 December 2017. In addition, he was appointed as Head
of Maersk Safety, Security and Crisis Management as of 1 January 2020. 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.

Year of Appointment
Mr. Engelstoft was appointed as a non-executive
member of the Board of Directors of Global
Ports in October 2016.

External Appointments
Chief Executive Officer of APM Terminals, The Hague, the Netherlands.
Executive Board member of A.P. Moller-Maersk A/S, Copenhagen,
Denmark. Chairman of Svitzer, Copenhagen, Denmark. Chairman of
Maersk Training, Svendborg, Denmark. Board member of TT Club Mutual
Insurance Ltd (Director).

Meeting Participation

94%

.

Ivan Besedin
Member of the Board of Directors,
Non-Executive Director

Skills and Experience
Ivan Besedin has extensive experience in the Russian railway industry where he worked for more
than 35 years. He held a number of high-level managerial positions at the Russian Railways and
within the Ministry of the Railway Transport and was Head of the Moscow Metro between 2011 and
2014. Today Mr. Besedin holds the position of adviser to the President of Delo Group, a role that
he has fulfilled since April 2019.

Mr. Besedin has served on several Boards, most notably having been Chairman of the Board
of Directors of PJSC Transcontainer and Chairman of the rail freight operator OJSC Railtransavto.

He is a graduate of Moscow Institute of Engineers of Railway Transport and holds a PhD in
Technical Science. Adding to his distinguished academic career, he was Head of the All-Russia
Research Institute of Railway Transport of the Ministry of Railways between 2003 and 2006. He has
received multiple awards for his contribution to the railways industry of the USSR and the Russian
Federation.

Year of Appointment
Mr. Ivan Besedin was appointed as a non-
executive member of the Board of Directors
of Global Ports in December 2019.

External Appointments
Adviser to the President of Delo Group.

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

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).

Year of Appointment
Mrs. Dalunde was appointed as an Independent
non-executive member of the Board of Directors
of the Company in May 2017.

External Appointments
Mrs. Dalunde currently also serves an Independent Non-Executive
Director of Projektengagemang Sweden AB, which is listed on NASDAQ
Stockholm Stock Exchange. She also serves as an Independent
Non-Executive Director of ForSea Ferries AB, Nordion Energy AB,
Arlandabanan Infrastructure AB and as Chairman of Chorus AB.

Meeting Participation

94%

1. On 16th of April 2020 Mr. Besedin stepped down from the Board and Mr. Yashchenko was elected.

Board of Directors

Alexandra Fomenko
Member of the Board of Directors,
Non-Executive Director

A N

Year of Appointment
Ms. Alexandra Fomenko was appointed
as a non-executive member of the Board
of Directors of Global Ports in June 2019.

Soren Sjostrand Jakobsen
Member of the Board of Directors,
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.

Audit and Risk
Committee

Nomination
and Remuneration Committe

Strategy
Committee

Chairman
of a Committee

Skills and Experience
Ms. Alexandra Fomenko has undertaken a number of commercial and managerial roles in
Ukraine, France, the UAE and Russia. Her international career commenced in 2014 at Vermillon
SARL (France) where she held the position of assistant export manager. She then moved on to
Solaris Commodity DMCC (Dubai, UAE) to become the commercial and later general manager of
the company between 2015 and 2018. Ms. Fomenko joined Delo Group in September 2018 where
she currently holds a position of Head of Portfolio Investments.

Ms. Alexandra Fomenko graduated with both bachelor’s and master’s degrees in International
Economics from Donetsk National Technical University in Donetsk, Ukraine. She also holds
an MSc (Management) from IAE Aix Graduate School of Management, France, with a specialisation
in Management of International Business.

External Appointments
Head of Portfolio Investments in Delo Group.

Meeting Participation

100%

Skills and Experience
Mr. Jakobsen brings extensive international experience in the maritime industry as well as port
development and operation due to his 39-year career in A.P. Moller – Maersk Group, having spent
the last 14 years with APM Terminals. Since 2013, Mr. Jakobsen has been based in Dubai, United
Arab Emirates, until 2019 as Portfolio Manager for APM Terminal’s Africa, Middle East and South
Asia joint venture portfolio. Since early 2019 Mr. Jakobsen has focussed on APM Terminal’s Russia
portfolio as well as Joint Venture management globally for APM Terminals. Mr. Jakobsen also
serves on the board of various APM Terminals joint venture companies including 2 other stock
listed entities. 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.

Meeting Participation

100%

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

COMMITTEES MEMBERS

Board of Directors

Audit and Risk
Committee

Nomination
and Remuneration Committe

Strategy
Committee

Chairman
of a Committee

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

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, Nicosia Athens and Malta 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 mergers and acquisitions 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 Master’s degree in Human Rights & Democratisation at the University
of Malta.

During the period 2006 to 2008 Mr Katsis was a rapporteur of the European Union in the Republic
of Cyprus in respect of issues related to consumer protection.

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.

Year of Appointment
Mr. Katsis was appointed as a non-executive
member of the Board of Directors of the
Company in May 2018.

External Appointments
Partner and managing director of Katsis LLC.

Meeting Participation

100%

Shavkat Kary-Niyazov
Member of the Board of Directors,
Non-Executive Director

Skills and Experience
A mathematician and academician, Mr. Kary-Niyazov began his corporate career in 1995 as CFO
of Academservice Ltd, the Russian tour operator, before moving to Sovlink LLC, the boutique
investment-banking firm, in 1997. After the merger of Sovlink with Aljba Alliance Bank in 2000,
he then became Managing Director of SL Capital Services Ltd (Cyprus), an international financial
company and portfolio company of the merged group from 2002–2005.

Mr. Kary-Niyazov has 14 years of experience in the transport industry, becoming President of Marine
Façade, St. Petersburg, member of First Quantum Group in 2005. This project is focused on land
reclamation and development in Saint Petersburg, Russia and has so far reclaimed more than 250 ha.
of land and completed the construction of the Passenger Port “Marine Façade of St. Petersburg”.
In addition to his role as President of Marine Façade, he served as President of the National
Container Company in 2006 before taking on his current role as President of First Quantum Group
which he has held since 2011.

Mr. Kary-Niyazov graduated from Moscow M.V.Lomonosov State University with Masters
in Mathematics (with honours), which he followed up with a Ph.D in topology and geometry
at the same institution.

Year of Appointment
Mr. Shavkat Kary-Niyazov was appointed
as a non-executive member of the Board
of Directors of Global Ports in June 2019.

External Appointments
President of First Quantum Group

Meeting Participation

100%

Board of Directors

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

Audit and Risk
Committee

Nomination
and Remuneration Committe

Strategy
Committee

Chairman
of a Committee

Skills and Experience
Inna Kuznetsova is the interim CEO of 1010data, the leading provider of cross-enterprise data
analytics tools. Until its recent acquisition by E2open, Mrs Kuznetsova was the President and Chief
Operating Officer of INTTRA, the largest digital network for ocean shipping industry, processing
over a quarter of 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, starting in Russia and later in the US headquarters in a variety of global roles,
primarily focused on fast growth opportunities and business transformation. In her last role she was
global VP, Marketing & Sales, IBM Systems Software.

Mrs Kuznetsova’s prior board engagements include Sage Plc (LSE: SGE), a FTSE100 software
company where she served as Independent Non-Executive Director, and Avantida, a privately-
owned SaaS company in Belgium in container repositioning space. Mrs. Kuznetsova completed her
MS and PhD. study at Moscow State University and later earned an Executive MBA from Columbia
Business School.

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.

External Appointments
Interim CEO, 1010data

Meeting Participation

100%

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

Skills and Experience
Mr. Papadopoulos has over 26 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 with
Citigroup (London), where as a Managing Director was Head of Greece/ Cyprus Equity Research and
Head of Continental European Country and 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.

A S

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.

External Appointments
Mr. Papadopoulos currently also serves as the Chairman of the Board of
Directors at KEDIPES, the Cyprus Asset Management Company and the
Chairman of the Board of Directors at 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).

Meeting Participation

100%

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Board of Directors

Audit and Risk Committee

Nomination Committe

Remuneration Committee

Chairman of a Committee

COMMITTEES MEMBERS

The following persons served as members of the Board of Directors during the reporting year but are resigned
as of the date of this report publication:

Mogens Petersen
Member of the Board of Directors,
Non-Executive Director

A S

Skills and Experience
Mr. Petersen has over 12 years of experience in the transport industry, sea ports and shipping. He has
held the position of APM Terminals’ Portfolio Manager, Russia and the Baltics since November 2018.
He joined the company in 2007 and held various finance roles globally before becoming Senior
Advisor in Finance, Strategy, Audit & Risk at Global Ports Investments Plc from 2014–2017, following
APM Terminals’ acquisition of its shareholding in the company. Between 2017 and 2018 he managed
the Capital Investments Program at APM Terminals focusing on improving customer relations, cost
leadership and portfolio management. He began his career in 1996 at Energinet, a Danish energy
company, before spending seven years at utility Hofor, where he focused on renewable energy.

Mr. Petersen has an MBA from Henley Business School, UK as well as an MSc. (Economics) from the
University of Aarhus, Denmark and a degree in Finance and Economics (DEA) from the Université
Louis Pasteur, Strasbourg.

Year of Appointment
Mr. Mogens Petersen was appointed
as an Independent non-executive member of the
Board of Directors of Global Ports in June 2019.

External Appointments
Portfolio Manager in APM Terminals Russia and the Baltics,
Member of the Board of Directors at APM Terminals — Aarhus A/S.

Meeting Participation

100%

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

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.

Year of Appointment
Mr. Shishkarev was appointed as a non-executive
member of the Board of Directors of the
Company in May 2018.

External Appointments
Mr. Shishkarev is the President of Delo Group and the President
of the Handball Federation of Russia.

Meeting Participation

100%

Iana Boyd

Alexander Iodchin

Nicholas Charles Terry

Mr. Terry was appointed as a non-
executive member of the Board of
Directors of the Company in October
2016, resigned on 18 June 2019.

George Yiallourides

Mr. Yiallourides was appointed as
a non-executive member of the Board
of Directors of the Company in May 2018,
resigned on 18 June 2019.

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.

Anton Chertkov

Mr. Chertkov was appointed as a non-
executive member of the Board of
Directors of the Company in May
2018, he steped down from his role on
11 November 2019.

Michalakis Christofides

Mr. Christofides was appointed as
a non-executive member of the Board of
Directors of the Company in July 2014,
resigned on 18 June 2019.

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, resigned
on 18 June 2019. On the same day
Mr. Iodchin was appointed as the General
Manager of the Company and continued
in his role as the Secretary of the Board
of Directors.

Laura Michael

Mrs. Michael was appointed as a non-
executive member of the Board of
Directors of the Company in January 2013,
resigned on 18 June 2019.

Stavros Pavlou

Mr. Pavlou was appointed as a non-
executive member of the Board of
Directors of the Company in May 2018,
resigned on 18 June 2019.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Executive Management

Terminal Directors

Vladimir Bychkov
Chief Executive Officer
of Global Ports Management LLC

Year of Appointment
Mr. Bychkov was appointed as Chief Executive Officer of Global Ports Management LLC
in July 2018.

Andrey Bogdanov
Managing Director
of Ust-Luga Container Terminal

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
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 programme of the School of Business of Moscow State University.

Year of Appointment
Mr. Bitsch was appointed as Chief Commercial Officer of Global Ports Management LLC in July 2017.

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
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.

Albert Likholet
Managing Director
of Petrolesport and First Container Terminal

Year of Appointment
Mr. Likholet was appointed as Managing Director of Petrolesport in August 2018 and First Container
Terminal in May 2019.

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.

Brian Bitsch
Chief Commercial Officer
of Global Ports Management LLC

Alexander Roslavtsev
Chief Financial 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.

Vitaly Mishin
General Manager of Moby Dik

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
Mr. Roslavtsev has over fourteen 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. in Economics and Engineering and has also attended a number of business courses
at Wharton Business School, Philadelphia, Pennsylvania.

.

Douglas Smith
Chief Operational Officer
of Global Ports Management LLC

Year of Appointment
Mr. Smith was appointed as Chief Operational Officer of Global Ports Management LLC in March
2016.

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.

1. On 17th of April 2020 Mr. Douglas Smith stepped down the position of the CCO Group to persuade leading opportunities outside the Group.

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.

Global Ports
Investments PLC

Annual Report 2019

Terminal Directors

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Risk Management

Alexey Pavlenko
Managing Director of VSC

Year of Appointment
Mr. Alexey Pavlenko was appointed as the Managing Director of VSC in September 2019.

| Risk management process, principal risks and uncertainties |

Ivan Radchenko
General Manager
of Yanino Logistic Park

Skills and Experience
Mr. Pavlenko has almost 25 years’ experience in marine terminal management. His career started
in 1995 at Vostochny Port. In 1998 he was appointed Deputy Head for Commercial Operations
of Handling Complex No. 2 of Vostochny Port JSC before proceeding to head up the Complex
in 2001. In 2004 he joined VSC, where he held a number of managerial positions, most recently
as the Director of Operations from 2013 to 2019.

Mr. Pavlenko graduated from Far East State Maritime Academy, faculty of marine transport
management.

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.

Dirk van Assendelft
General Manager
of Multi-Link Terminals

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.

1. 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.

2. Global Ports bases its risk management

activities on a series of well-
defined risk management principles,
derived from experience, best
practice, and corporate governance
regimes. The Group’s enterprise risk
management processes (ERM) is
designed to identify, assess, respond,
monitor and, where possible, mitigate
or eliminate threats to the business
caused by changes in the business,
financial, regulatory and operating
environment.

3. The Board has overall oversight
responsibility for GPI’s risk
management and for the establishment
of the framework of prudent and
effective controls. As such it
systematically monitors and assesses
the risks attributable to the Group’s
performance and delivery of the GPI’s
strategy. Where a risk has been
identified and assessed, the Group
selects the most appropriate risk
measure available in order to reduce
the likelihood of its occurrence and
mitigate any potential adverse impact.

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

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

6. 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.

7. 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.

8. The Group’s financial risk

management and critical accounting
estimates and judgments are disclosed
in Notes 3 and 4 to the consolidated
financial statements.

9. The Group’s contingencies
are disclosed in Note 29 to
the consolidated financial statements.

Global Ports
Investments PLC

Annual Report 2019

Risk factor

Strategic risks

Market conditions:

01
Global Ports
at a Glance

02
Strategic
Report

Corporate
Governance

04
Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Risk management approach

Risk factor

Risk management approach

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
imported goods, which in turn is driven by domestic consumer demand,
and influenced by RUB currency fluctuations against USD/EUR, and
exported goods, which in their turn correlate with the Russian rouble
exchange rate fluctuations and global commodity markets` trends.

The Group remains exposed to the risk of contraction in the Russian
and world 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.

The Group has responded 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 balancing export and import container flows;

ޭ Offering operational flexibility to all clients;

ޭ Effective cost containment;

ޭ Adopting new revenue streams and attracting new cargoes.

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, the creation of new strategic alliances,
the introduction of new/upgraded capacity and carrier consolidation
could result in greater price competition, lower utilisation, and
a potential deterioration in profitability.

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 actively monitors the competitive landscape and adjusts its
strategy accordingly, i.e. the Group prioritises building close long-term
relationships with its leading customers (locally, regionally and with
headquarters) based on a global approach to account management and
contractual agreements incentivising 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 and continues to make 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 a healthy land bank it has
flexibility to balance capital expenditure to at minimum maintain capacity
at the existing level and support its efficient development should markets
require it. The Group and its terminals have developed long-term operating
masterplans that enable it to react quickly in the case of additional market
demands being placed on its facilities’ infrastructure and equipment.
The Group’s healthy cash flow generation and decreasing leverage allow
financial flexibility in terms of timing and size of the required capital
expenditure programme.

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
jurisdictions sanctions against Russian businesses/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.

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 fluctuations in Russia, as well as
the wider regional and global environment. This has included a strong focus
on cost containment measures, and on strengthening its financial position
by refinancing all its debt switching to longer maturities at fixed rates. In
addition, the Group has developed its growth strategy to embrace exports
and new revenue streams to counteract the impact of any fall in consumer
sentiment or any macro-economic downturn.

The Group has strengthened its 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.

Coronavirus (COVID-19):

The company’s outlook for 2020 may be impacted by the Coronavirus
(COVID-19) outbreak in a number of countries, including Russia, which
has significantly lowered visibility on what to expect in 2020.

The Management is closely monitoring the situation with the outbreak of
Coronavirus (COVID-19) and is ready to act depending on the development
of the situation.

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 and to a lesser
extent from private entities. Any revision or alteration to 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 short and long-term leases routinely renewable
at immaterial costs.

Customer Profile and Concentration:

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

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

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

The Group is also relying on the contribution from non-container revenues
through building its presence in marine bulk cargoes like coal and scrap
metal (share of non-container revenue was 26% and 26% in 2018 and 2019
respectively).

Global Ports
Investments PLC

Annual Report 2019

Risk factor

Reliance on third parties:

The Group is dependent on the performance of services by third
parties outside its control, including all those other participants
in the logistics chain, such as customs inspectors, supervisory
authorities, railway 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 in the past been 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.

01
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02
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04
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Financial
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Parent Company
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Statements

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Additional
Information

Risk management approach

Risk factor

Risk management approach

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.

Accidents involving the handling of hazardous materials 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.

Health, safety, security and environment:

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.

Changes to tariff legislation (as of 14 August 2018) now require all tariffs in the new
contracts to be entered into after this date to be set in Russian roubles. To the best
of the knowledge of the Group’s management, 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 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 annually reviews labour market and aligns salaries and benefits to
employees at all levels to foster and retain skilled labour.

The Group invests in the professional development of its staff, including
international best practices implementation and internal development/training
programmes.

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.

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 or incidents 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 breach 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.

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.

The Group has centralised its IT function in recent years which is an
important step in ensuring both the efficiency and consistency of
the Group’s security protocols implementation. We are continuing to align
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 minimise 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.

Regulatory and compliance 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.

Global Ports
Investments PLC

Annual Report 2019

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Financial
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Parent Company
Financial
Statements

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Additional
Information

Risk factor

Changes in regulations:

Risk management approach

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.

Conflict of interests:

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 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.

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 consists of highly experienced individuals including strong
independent directors.

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 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.

Risk factor

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.

Risk management approach

As of 2019, the biggest proportion of the Group’s revenue is denominated
in RUB as the Group has switched the currency of its tariffs to RUB, and
part of the Group’s debt is denominated in USD. Most of the Group’s
operating expenses, on the other hand are and will continue to be
denominated and settled in RUB.

In order to mitigate the possibility of foreign exchange risks arising from
a significant mismatch between the currency of revenue and the currency
of debt (‘open FX position’), the Group began converting its existing USD
debt into RUB, the currency of revenue. In 2018, the Group cancelled
cross-currency swaps on the RUB denominated bonds issued by the First
Container Terminal Inc. These swaps were converting RUB debt into USD.
In order to further mitigate FOREX risk between June and September
2019 the Group put in place forward hedges and currency options
totalling USD 231.4 million to convert part of USD denominated debt
into RUB. During 2018–2019 the Group also repurchased its Eurobonds,
including USD 69.5 million of Eurobonds due to mature in 2022 which
were replaced at the end of 2019 with a new 5 year/60 months RUB
bank loan. This action has further reduced FOREX risk converting USD
debt into RUB debt. Currently the Group owns ~27% of the total issued
Eurobonds. In addition, the Group has negotiated with some of its
customers the right to change its RUB tariffs should the exchange rate
move by 5, 10 or 15%, however, 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.

The Group has been able to reduce its total debt level, as planned. In
2018 and 2019 the Group repurchased USD 192.5 million nominal value of
2022 and 2023 Eurobonds of which USD 69.5 million were refinanced via
a new 5 year/60 month RUB bank loan. Debt reduction beyond minimum
repayment requirements remains a management priority in 2020.

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.

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

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.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Consolidated

Financial
Statements

Global Ports
Investments PLC

Annual Report 2019

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Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Table of Contents

Board of Directors and Other Officers
Management Report
Directors’ Responsibility Statement
Consolidated Income Statement for the year ended 31 December 2019
Consolidated Statement of Comprehensive Income for the year ended 31 December 2019
Consolidated Balance Sheet as at 31 December 2019
Consolidated Statement of Changes in Equity for the year ended 31 December 2019
Consolidated Statement of Cash Flows for the year ended 31 December 2019
Notes to the Consolidated Financial Statements

General information

Basis of preparation and summary of significant accounting policies

Financial risk management

Critical accounting estimates and judgements

Segmental information

Expenses by nature

Other gains/(losses) — net

Employee benefit expense

Finance income/(costs) - net

10 Net foreign exchange gains/(losses)

Income tax expense

Basic and diluted earnings per share

13 Dividend distribution

Property, plant and equipment

Intangible assets

Financial instruments by category

Credit quality of financial assets

Inventories

Trade and other receivables

20 Cash and cash equivalents

Share capital, share premium

22 Borrowings

Lease liabilities and right-of-use assets

24 Derivative financial instruments

25 Deferred income tax liabilities

26 Trade and other payables

27 Assets held for sale

Joint ventures and non-controlling interests

29 Contingencies

30 Commitments

Related party transactions

Events after the balance sheet date

Independent Auditor’s Report

02
04
25
26
27
28
29
30
31

Global Ports
Investments PLC

Annual Report 2019

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Global Ports
at a Glance

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Strategic
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Corporate
Governance

Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Mr. Nicholas Charles Terry (resigned on 18 June 2019)

Mr. George Yiallourides (resigned on 18 June 2019)

Mr. Anton Chertkov (resigned on 11 November 2019)

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

Board of Directors and Other Officers

| Board of Directors |

Mr. Morten Henrick Engelstoft (appointed 31 October 2016)
(Mr. Soren Jakobsen and Mr. Mogens Petersen are the alternates to Morten Henrick Engelstoft)
Chairman of the Board of Directors, Non-Executive Director, Member of Remuneration and Nomination Committee

Mr. Ivan Besedin (appointed 16 December 2019)
(Ms. Alexandra Fomenko is the alternate to Mr. Ivan Besedin)
Non-Executive Director

Mrs. Britta Dalunde (appointed 12 May 2017)
Senior Independent Non-Executive Director, Chairwoman of Audit and Risk Committee

Ms. Alexandra Fomenko (appointed 18 June 2019)
Non-Executive Director, Member of Audit and Risk and Nomination and Remuneration Committees

Mr. Soren Jakobsen (appointed 02 March 2018)
(Mr. Mogens Petersen and Mrs. Olga Gorbarenko are the alternates to Mr. Soren Jakobsen)
Non-Executive Director, Member of Strategy Committee

Mr. Shavkat Kary-Niyazov (appointed 18 June 2019)
Non-Executive Director

Mr. Demos Katsis (appointed 14 May 2018)
Non-Executive Director

Mrs. Inna Kuznetsova (appointed 01 January 2018)
Independent Non-Executive Director, Chairwoman of Remuneration and Nomination Committee,
Member of Audit and Risk Committee

Mr. Lambros Papadopoulos (appointed 01 January 2018)
Independent Non-Executive Director, Member of Audit and Risk and Strategy Committees

Mr. Mogens Petersen (appointed 18 June 2019)
(Mr. Soren Jakobsen is the alternate to Mr. Mogens Petersen)
Non-Executive Director, Member of Audit and Risk and Strategy Committees

Mr. Sergey Shishkarev (appointed 14 May 2018)
(Ms. Alexandra Fomenko is the alternate to Mr. Sergey Shishkarev)
Non-executive Director, Chairman of Strategy Committee

Mrs. Iana Penkova Boyd (resigned on 19 April 2019)

Mr. Michalakis Christofides (resigned on 18 June 2019)

Mr. Alexander Iodchin (resigned on 18 June 2019)

Mrs. Laura Michael (resigned on 18 June 2019)

Mr. Stavros Pavlou (resigned on 18 June 2019)

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Management Report

Management Report (continued)

1. 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 2019. 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 |

2. The principal activities of the Group are the operation of container and general cargo terminals in Russia and Finland. The Group
offers its customers a wide range of services for their import and export logistics operations. There was a change in principal
activities of the Group in current year as a result of sale of oil products terminal in Estonia.

| Results |

14. Profit before income tax for the twelve-month period was USD 96.6 million compared to a Loss before income tax of

USD 53.6 million in 2018. This was mainly driven by the depreciation of the Russian rouble in 2018, which resulted in a loss on
revaluation of US dollar-denominated borrowings (from Group and non-Group entities) due to the Group’s Russian subsidiaries
having the Russian rouble as their functional currency.

15. The Group’s capital expenditure in 2019 was USD 26.6 million. It was focused on planned maintenance projects, scheduled

upgrades of existing container handling equipment and customer service improvement initiatives.

16. The Group generated USD 158.8 million* of Free Cash Flow, an increase of 18.9% compared to 2018.

17. The Group reduced Net Debt by USD 33.3 million* over the twelve-month period despite IFRS 16 impact of USD 24.9 million* and
FX impact of USD 28.9 million*. If to adjust for this IFRS 16 effect, Net Debt decreased by USD 58.2 million* to USD 722.1 million*.
The Group continues to prioritise deleveraging over dividend distribution.

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

18. Net Debt to Adjusted EBITDA decreased from 3.6x* in 2018 to 3.3x* in 2019. Net Debt to Adjusted EBITDA adjusted for IFRS 16

| Changes in group structure |

In April 2019 the Group completed the sale of its holding in 50% of AS Vopak E.O.S. and its subsidiaries, the Group’s oil products
terminal in Estonia.

In May 2019 the Group established “Atmosphere” charitable fund to support social and environmental initiatives in Nakhodka area
in the Russian Far East.

6. There were no other material changes in the group structure. However the Board of Directors is regularly reviewing the Group
structure and the possibilities to optimize it, i.e. in the second quarter of 2019 following the merger of the management teams
of JSC Petrolesport and First Container Terminal Inc both terminals started to work as one unit from commercial and operational
points of view, without being legally merged together and remaining the two separate legal entities.

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

7. The Russian container market grew 4.5% in 2019 driven by the 6% growth of full container export and supported by 3.9% growth in

full container import, resulting in total Russian container market throughput of 5.1 million TEU.

8. Outperforming the market, the Group’s Consolidated Marine Container Throughput increased 6.5% to 1,439 thousand TEU.

9. Consolidated Marine Bulk Throughput increased by 17.1% to 3.7 million tonnes driven by the growth in bulk cargoes at ULCT, which
was partially offset by a decline in scrap metal at PLP following the introduction of state export quotas in the third quarter of 2019.

was 3.2x* as of 31 December 2019.

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, depreciation and impairment of right-of-use
assets, 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.

Net Debt (a non-IFRS financial measure) is defined as the sum of current borrowings, non-current borrowings, current and non-
current lease liabilities (following adoption of IFRS 16) and swap derivatives 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 Consolidated Container
Marine Throughput.

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.

10. Consolidated revenue increased by 5.3% to USD 361.9 million; excluding the impact of LT and VSC transportation services, like-

for-like revenue grew by 4.0% driven by an increase in both container and non-container revenue.

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

11. Like-for-like Revenue per TEU decreased by 4.0% to USD 178.4*.

12. Gross profit increased 1.2% to USD 210.1 million.

13. Adjusted EBITDA increased by 4.4% to USD 226.9 million* mainly due to the growth in throughput and strict cost control.

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.

Total Debt (a non-IFRS financial measure) is defined as a sum of current borrowings, non-current borrowings, current and non-
current lease liabilities (following adoption of IFRS 16) and swap derivatives.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Management Report (continued)

| Future Developments of the Group |

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

| Risk Management Process, Principal Risks and Uncertainties |

20. 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.

21. Global Ports bases its risk management activities on a series of well-defined risk management principles, derived from experience,
best practice, and corporate governance regimes. The Group’s enterprise risk management processes (ERM) is designed to identify,
assess, respond, monitor and, where possible, mitigate or eliminate threats to the business caused by changes in the business,
financial, regulatory and operating environment.

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

and effective controls. As such it systematically monitors and assesses the risks attributable to the Group’s performance and delivery
of the GPI’s strategy. Where a risk has been identified and assessed, the Group selects the most appropriate risk measure available
in order to reduce the likelihood of its occurrence and mitigate any potential adverse impact.

23. The Board delegates to the Chief Executive Officer of LLC Global Ports Management responsibility for the effective implementation
and maintenance of the risk management system. Day-to-day responsibility for 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.

24. Global Ports is exposed to a variety of risks which are listed below. The order in which these risks are presented is not intended to

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

25. 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.

26. 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.

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

the consolidated financial statements.

28. The Group’s contingencies are disclosed in Note 29 to the consolidated financial statements.

Management Report (continued)

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 to the volume of
imported goods, which in turn is driven by domestic consumer demand,
and influenced by RUB currency fluctuations against USD/Euro, and
exported goods, which in their turn correlate with the Russian rouble
exchange rate fluctuations and global commodity markets` trends.

Competition:

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

Risk management approach

The Group has responded 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 balancing export and import container flows;
ޭ Offering operational flexibility to all clients;
ޭ Effective cost containment;
ޭ Adopting new revenue streams and attracting new cargoes.

The Group actively monitors the competitive landscape and adjusts its
strategy accordingly, i.e. the Group prioritises building close long-term
relationships with its 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 and continues to make 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 a healthy land bank it has
flexibility to balance capital expenditure to at minimum maintain capacity
at the existing level and support its efficient development should markets
require it. The Group and its terminals have developed long-term operating
masterplans that enable it to react quickly in the case of additional market
demands being placed on its facilities’ infrastructure and equipment.
The Group’s healthy cash flow generation and decreasing leverage
allows financial flexibility in terms of timing and size of required capital
expenditure program.

Global Ports
Investments PLC

Annual Report 2019

01
Global Ports
at a Glance

02
Strategic
Report

03
Corporate
Governance

Consolidated
Financial
Statements

05
Parent Company
Financial
Statements

06
Additional
Information

Management Report (continued)

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.

The Group may also be adversely affected by US, EU and other
jurisdictions 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.

The Group has strengthened its 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.

Coronavirus (COVID-19):

The company’s outlook for 2020 may be impacted by the Coronavirus
(COVID-19) outbreak in China, which has significantly lowered visibility
on what to expect in 2020.

The Management is closely monitoring the situation with the outbreak of
Coronavirus (COVID-19) and is ready to act depending on the development
of the situation.

Operational risks

Leases of terminal land:

Customer Profile and Concentration:

The Group is dependent on a relatively limited number of major
customers (shipping lines, freight forwarders 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.

Risk factor

Reliance on third parties:

Tariff regulation:

Tariffs for certain services at certain of the Group’s terminals
have,in the past, been 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 annually reviews labour market and aligns salaries and benefits to
employees at all levels to foster and retain skilled labour.

The Group invests in the professional development of its staff, including
international best practices implementation and internal development/ training
programmes.