Global Ports Holding Plc Annual Report 2020

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FY2020 Annual Report · Global Ports Holding Plc

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Annual Report 2020

DEMONSTRATING RESILIENCE,
ACHIEVING RESULTS

Global Ports Investments PLC

KEY STRENGTHS

No.

container terminal operator in Russia1

and multipurpose terminals in Russia

marine
container

and Finland

The only player with a network
of terminals in key container
gateways of Russia

Unique partnership of strategic shareholders:
a global leader and a strong local player, APM
Terminals and Delo Group each with

of total share capital

GDR listed on the Main Market
of the LSE (free-float of 20.5%)

Sustainable and responsible
business: MSCI ESG rating
at BB level, Sustainalytics
estimated Global Ports' risk
of material financial impacts
driven by ESG factors
at medium level

1 In terms of container throughput and container handling
capacity, based on ASOP data for 2020.

GLOBAL PORTS
TODAY

Despite the unparalleled challenges that both
Russia and the world faced in 2020, Global Ports
proved that its business is fundamentally stable,
sustainable and cash generative.

Over the year the Group continued to deliver
excellent quality of operations, launching a range
of new services and supporting its clients in this
uncertain time, increased its market share and
decreased leverage level.

In 2020 the Group outperformed the Russian
container market for the third year in a row with
outstanding growth of 6.6% against a market
decline of 0.8%.

The Group demonstrated strong financial results
in 2020 achieving like-for-like2 Adjusted EBITDA
Margin growth of 65.2% and stable high Free
Cash Flow at USD 157.1 million.

The Group continued its deleveraging strategy
and decreased Net Debt / EBITDA by 0.4 to 2.9x
supporting its eventual path towards resumption
of dividends once targets have been achieved.

Credit ratings by all rating agencies that rate
the Group and its financial instruments with stable
outlook were reaffirmed in 2020: Fitch Ratings
at BB+, Moody’s at Ba2, RA Expert at RuA+.

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.
Certain financial information is derived from
the management accounts.

2020 RESULTS

The lowest on record for the Group

LTIFR

Consolidated Marine Container Throughput
vs –0.8% Russian container market in 2020

Consolidated Marine Bulk Throughput
increased to 5.1 million tonnes

Adjusted EBITDA

mln

The lowest level of Net Debt
to Adjusted EBITDA in 8 years

Like-for-like2 Adjusted EBITDA Margin

Free Cash Flow

mln

2 Like-for-like is an adjusted growth metric calculated on management accounts:
cash cost and revenue for 2020 and 2019 adjusted for VSC transportation
services. As a result of the new terms of certain sales agreements, in 2020 VSC
acted as a principal vs as an agent at the beginning of 2019: previously the net
result of revenue from transportation services and associated costs was included
in the consolidated revenue. Since the middle of 1H 2019 full revenue and
associated costs have been recognized in consolidated revenue and transportation
expenses accordingly. This Adjusted EBITDA neutral change resulted in additional
USD 62.8 million to consolidated revenue (USD 11.4 million in 2019) and USD
62.8 million (USD 11.4 million in 2019) to cost of sales in 2020.

Global Ports Investments PLC Annual Report 2020

globalports.com

08
About Us. Performance

10
Key Milestones

12
Strong Presence
in Russia’s Key
Container and Bulk
Gateways

16
Chairman’s Statement

20
Chief Executive Officer’s
Statement

24
Delivering Quality
and Leadership

25
Strategy

26
Business Model

28
Business Review

52
Environmental, Social
and Governance

66
Corporate Governance

72
Board of Directors

78
Executive Management

81
Terminal Directors

85
Risk Management

Management Report and Consolidated
Financial Statements

Management Report and Parent
Company Financial Statements

Global Ports Investments PLC Annual Report 2020

globalports.com

GLOBAL PORTS
AT A GLANCE

About Us.
Performance

Key
Milestones

Strong
Presence
in Russia’s Key
Container and
Bulk Gateways

Global Ports Investments PLC Annual Report 2020
Global Ports Investments PLC Annual Report 2020

globalports.com
globalports.com

Global Ports
at a Glance

Strategic
Report

Corporate
Governance

Consolidated
Financial
Statements

Parent
Company
Financial
Statements

Additional
Information

Ownership Structure, %

Consolidated Marine Container
Throughput, mln TEU

Consolidated Marine Bulk
Throughput, mln tonnes

+6.6%

1.53

1.44

+38.7%

5.1

3.7

2019

2020

2019

2020

Net Debt / Adjusted EBITDA

2020

2.9X
3.3X

2019

ABOUT US.
PERFORMANCE

In a very challenging 2020, the Group’s clear
strategy proved to be the right one enabling
Global Ports, with its well equipped terminals
and ready infrastructure for handling full export
containers, to take advantage of its strategic
position in the two key marine gateways
of Russia.

A continued focus on driving efficiency,
productivity, and innovation across all operations
was matched by a relentless focus on clients’
needs through providing technological solutions
and the highest service standards in the industry.

Supported by our co-controlling shareholders,
a unique partnership of an international industry
leader and a strong domestic player: APM
Terminals and Delo Group each with 30.75%
of total share capital.

These attributes and strategic decisions enabled
the Group to demonstrate resilience, increase
container and bulk throughput to protect market
share as well as increase like-for-like Adjusted
EBITDA Margin and continue deleveraging.

Delo Group 30.75%

APM Terminals 30.75%

Ilibrinio Establishment Limited 9%

Polozio Enterprises Limited 9%

Free float (LSE listing) 20.5%

Delo Group is one of the largest transportation and
logistics holding companies in Russia1. The Group’s
stevedore business includes DeloPorts stevedore
holding, the leading operator of port container
terminals Global Ports and TransContainer,
leading rail operator in Russia, owner of 38 railway
container terminals, more than 32,000 containers
and 86,000 flatcars.

APM Terminals operate a global terminal network
of 20,000 professionals with 75 operating port
facilities. APM Terminals is a part of A.P. Moller-
Maersk, the world’s largest integrator of container
and ports logistics.

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

Free Cash Flow,
USD mln

–1.1%

Like-for-like Adjusted EBITDA Margin,2
%

158.8

157.1

64.8%

65.2%

Key consolidated financial and operational data

Selected IFRS financial information, USD mln

Revenue

384.4

361.9

22.6

6.2%

2020

2019

Change

Change, %

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 units

Cars, thousand units

Balance sheet and cash statement, USD mln

Total assets

Cash and cash equivalents

Net cash from operating activities

Selected non-IFRS financial information, USD mln

Like-for-like Revenue

Total Operating Cash Costs

Like-for-like Total Operating Cash costs

Adjusted EBITDA

Like-for-like Adjusted EBITDA Margin

Free Cash Flow

Net Debt

Net Debt to Adjusted EBITDA

-225.0

184.1

157.4

50.0

1.53

5.1

20.3

82.0

1,327.2

207.0

190.9

321.7

-176.0

-113.2

209.7

65.2%

157.1

612.1

2.9x

-187.3

210.1

144.8

67.7

1.44

3.7

20.0

103.3

1,454.3

124.4

185.4

350.5

-136.7

-125.3

226.9

64.8%

158.8

747.0

3.3x

-37.7

-25.9

12.6

-17.7

0.1

1.4

0.3

20.1%

-12.4%

8.7%

-26.1%

6.6%

38.7%

1.3%

-21.3

-20.6%

-127.1

82.6

5.5

-28.8

-39.3

12.1

-17.2

-1.8

-134.9

-0.4

-8.7%

66.4%

3.0%

-8.2%

28.7%

-9.7%

-7.6%

-1.1%

-18.1%

-11.3%

2019

2020

2019

2020

1 According to Delo Group data.
2 As a result of the new terms of certain sales agreements, in 2020 VSC acted as a principal vs as an agent at the beginning of 2019: previously the net
result of revenue from transportation services and associated cost was included in the consolidated revenue. Since the middle of 1H2019 full revenue and
associated costs have been recognized in consolidated revenue and transportation expenses accordingly. This Adjusted EBITDA neutral change resulted
in additional USD 62.8 million to consolidated revenue (USD 11.4 million in 2019) and USD 62.8 million (USD 11.4 million in 2019) to cost of sales in 2020.

Global Ports Investments PLC Annual Report 2020
Global Ports Investments PLC Annual Report 2020

globalports.com
globalports.com

KEY MILESTONES

March

Global Ports launched its
updated corporate website,
which combines the key
digital resources of the
holding company and the
terminals of the Group and
aims to optimise interaction
with all stakeholders.

In order to prevent the spread
of COVID-19, Global Ports
took all necessary measures
to ensure the absolute safety
of personnel and maintain all
terminals, as a part of "critical
infrastructure" to the
Russian Federation, at 100%
operability to deliver high-
quality service.

FCT and VSC began
servicing an АЕ19 Eastbound
transit intermodal service
to deliver containers from
Europe to Asia via Russia.
The АЕ19 Eastbound service
was launched by Maersk
to extend its АЕ19 service
from Asia to Europe that was
launched in August 2019.

January

VSC launched a service
to form and ship container
trains bound to the Elektrougli
Station of the Moscow
Railways. The new service
is available both for the cargo
shipped from ports in the
South-Eastern Asia via VSC,
and cargo originating in the
Russian Far East.

February

ULCT introduced a regular
fast container service bound
to Vorsino (Tascom terminal)
into its timetable. The service
is focused on conventional
container cargo, with
the cargo mix to include
consumer goods and
construction materials.

April

Global Ports started the
reporting of quarterly
operational trading
on an ongoing basis.
An important step in keeping
with the Group’s continuing
focus on increasing
transparency with the market
and aiming to achieve best
practice communication
and engagement with all
stakeholders.

May

Global Ports joined a pilot
project by the Russian Ministry
of Transport to control
the multi-modal transit of goods
banned for import using
electronic navigation seals
that work on the basis
of the GLONASS system.
This was the first test for
using electronic navigation
seals in Russia for the
transportation of containers
carrying sanctioned goods
in sea ports.

PLP handled the first batch
of BMWs under a contract
entered into with the logistics
operator ROLF SCS (a NYK
Group company). The
contract for handling, storage
and maintenance of cars
shipped for BMW Group
Russia is for a term of three
years.

A new LIEBHERR LHM 550
mobile harbour crane was put
into operation at PLP
as part of the Global Ports
facility development and
upgrade programme in Russia.

Global Ports Investments PLC Annual Report 2020

globalports.com

June

Global Ports launched
a service for the digital
issuance of orders for the
loading of export containers
at FCT, making FCT the first
Russian terminal to transfer
to a fully paperless export
management system.

Four new TOYOTA forklifts
were added to the equipment
fleet at VSC as part of its
handling equipment and
operating facility upgrade
programme, designed
to increase efficiency and
speed of cargo handling.

July

Mr. Albert Likholet, Managing
Director of PLP and FCT, was
appointed as CEO of Global
Ports Management LLC.

VSC upgraded a storage
yard of more than
18,000 sq. m in the
area of berth 6, to mark
an achievement of another
milestone of its container
terminal reconstruction
programme.

August

The Group relocated six
rubber-tyred gantry cranes
(E-RTG) from ULCT to FCT.
The redistribution ensured
optimal use and flex of the
Group’s equipment, taking
into account the volume and
direction of freight traffic
at specific terminals, while
providing a consistent high
quality of service.

September

VSC and TransContainer
launched regular
weekly container train
shipments from Nakhodka
Vostochnaya station bound
for Malaszevicze station
in Poland via Brest (Belarus).

VSC partnered with the
Golden Horn service of MSC
Mediterranean Shipping
Company, increasing the
number of serviced regular
sea lines.

October

VSC received two new rail
mounted gantry cranes (RMG)
with a capacity of 50 tonnes
and a span of 32 metres
each. They are capable
of operating 14 rows and six
tiers of containers, doubling
VSC’s container storage
capacity.

VSC started working with
Japanese container line
operator, OCEAN NETWORK
EXPRESS (ONE), providing
a new Korea Russia Express
service, a weekly cargo
transportation service
between Nakhodka and
Pousan.

Mr. Marc Niederer joined the
Group as Chief Operational
Officer of Global Ports
Management LLC.

November

VSC handled 44.6 thousand
TEU, marking the terminal’s
historical record in container
volume over one calendar
month, surpassing the
previous highest result of 43.5
thousand TEU that was set
in April 2014.

Global Ports launched
a regular container train
service from VSC in the
Primoriye Region to Yanino
in the Leningrad Region
as part of the development
of the Group’s railway
transportation service
offering. The trains depart
from Nakhodka-Vostochnaya
station on a weekly basis with
a travel time of 11 days.

December

The second LIEBHERR LHM
550 mobile harbour crane
was put into operation
at PLP. Part of the Group’s
development and upgrade
programme, this equipment
has expanded the operating
capabilities and cargo handling
efficiency of the terminal.

VSC successfully priced
a 5-year RUB 5 billion non-
convertible interest-bearing
bond with a fixed interest rate
of 6.55% per annum.

FCT bought 88% of the
RUB 5 billion bond issue
(FCT 01). Following the issue
of VSC’s RUB bond, Global
Ports reduced its average
interest rate for issued rouble
bonds and continued
to optimise its debt portfolio
in 2021.

STRONG PRESENCE
IN RUSSIA’S KEY CONTAINER
AND BULK GATEWAYS1

By Sea

By Rail

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.

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.

BALTIC SEA BASIN

Finland

Sweden

Baltic Sea

5
4 1

Gulf of Finland

Estonia

Latvia

Russia

Murmansk

St. Petersburg

FAR EAST BASIN

China

Russia

Sea of Japan

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.

Moscow

Ekaterinburg

Novorossiysk

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.

Baltic basin share
of Russia’s marine
container traffic

Far East share
of Russia’s marine
container traffic

Location

1. First Container Terminal (FCT)

2. Petrolesport (PLP)

5. Moby Dik (MD)

6. Yanino (YLP)

Cargo handled

Container throughput

berth/yard capacity2

Land total

Ownership

St. Petersburg
Containers

1.25 mln/0.9 mln TEU per year

88.6 ha

100%

St. Petersburg
Containers, Ro-Ro, bulk cargo
1 mln/0.35 mln TEU per year
120.7 ha

100%

Kronstadt, St. Petersburg

Ro-Ro, bulk and general

cargo

13.0 ha

75%

St. Petersburg
Containers, bulk cargo
0.2 mln TEU per year
51.3 ha

75%

3. Vostochnaya Stevedorings
Company (VSC)

4. UST-LUGA Container
Terminal (ULCT)

Vrangel, Nakhodka
Containers, bulk cargo
0.65 mln/0.65 mln TEU per year
76.6 ha

100%

Ust-Luga port cluster
Containers, bulk cargo
0.44 mln/0.24 mln TEU per year
54.0 ha

80%

7. MLT Kotka

8. MLT Helsinki

Kotka, Finland
Containers, Ro-Ro, bulk cargo
0.15 mln TEU per year
4.3 ha

75%

Helsinki, Finland
Containers, Ro-Ro, bulk cargo
0.27 mln TEU per year
7.0 ha

75%

JV accounting

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
Entity: ULCT
Partner: Eurogate
Share: 20%

Fully consolidated in IFRS

1 Numbers for the Group are presented on a consolidated basis. 2 Company estimates based on annual potential berth and yard throughput capacity.

Global Ports Investments PLC Annual Report 2020

globalports.com

STRATEGIC
REPORT

Global Ports
at a Glance

Strategic
Report

Corporate
Governance

Consolidated
Financial
Statements

Parent
Company
Financial
Statements

Additional
Information

Chairman’s
Statement

CEO’s
Statement

Delivering
Quality
and
Leadership

Strategy

Business
Model

Business
Review

Environmental,
Social and
Governance

14
14

Global Ports Investments PLC Annual Report 2020
Global Ports Investments PLC Annual Report 2020

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globalports.com

15
15

CHAIRMAN’S
STATEMENT

SOREN SJOSTRAND JAKOBSEN
Chariman of the Board of Directors

Global Ports Investments PLC Annual Report 2020

globalports.com

2020 was a challenging year for the company, its clients,
staff and other stakeholders. Global restrictions to control
the spread of COVID-19 severely disrupted the global
economy, creating continued challenges for the maritime
logistics industry throughout the year. However, the
Group showed great resilience and weathered the crisis
well. As a result, Global Ports outperformed the Russian
container sector for a third straight year and maintained
its strong run of financial results, underlining its position
as Russia’s leading independent container terminals group.

When COVID-19 first hit last March, the Board’s goals
were clear. They were to protect the health and safety
of employees, maintain operational continuity and
preserve financial stability. While it was a testing period
for the organisation, everyone rallied together to keep
our people safe, our terminals open and our customers’
supply chains moving. None of this would have been
possible if not for the extraordinary efforts of the Global
Ports team. On behalf of the Board, I would like to thank all
of our employees for their important contributions to our
performance in 2020.

In 2020 7% of the company’s staff contracted the virus and
unfortunately one member of staff succumbed to the virus.

Operationally, much of last year’s focus concerned
our response to the pandemic: how to make the rapid
adjustments needed to optimise business performance
and how to steer the company safely through the crisis.
In this respect, we benefitted from our work over the past
few years to make Global Ports more agile and resilient.
The investments in new facilities, service offerings
and business systems combined with great execution
in the fundamentals of our business, reduced the impact
of the pandemic on our operations.

Our strong financial results reflect the strength of the
Group’s business fundamentals and its business
model, with the Group making good progress in terms
of profitability, cash flow, cost control and balance sheet
improvement. I would like to point out that the Group’s
cash-generating qualities and the progress made
in deleveraging merit particular mention. In challenging
markets, the Group generated USD 157 million in Free
Cash Flow, demonstrating the resilience of the Global
Ports business. There has also been excellent progress
in reducing leverage, a key priority for the Board and
shareholders, with the Group reporting it had fallen to its
lowest level since 2012.

Adjusted EBITDA

USD209.7mln

Strategy

The Board

Outlook

Whilst the long term societal impact of the pandemic
is impossible to determine at this stage, it has already provoked
structural changes for many industries. While the events
of 2020 certainly tested the container ports sector in Russia,
what transpired was a very positive sector story that has
reinforced the Board’s confidence in our company’s long term
prospects. The crisis has highlighted the strategic importance
of the industry and its growing economic resilience, a result
of a profound shift in the industry’s underlying dynamics. Global
Ports’ prospects as a critical national infrastructure business
have also never been clearer. As the most diverse operator
of terminals in Russia, we own a portfolio of infrastructure
assets capable of delivering sustainable value to our customers
and stable long-term cashflows to our shareholders.

Given how 2020 unfolded, the strategic actions we took
to make the Group more efficient and customer-focused
coupled with our ongoing focus on debt reduction were
well timed in the context of COVID-19 and its aftermath.
The lessons of the pandemic for the ports industry are
likely similar to those we had already absorbed and begun
to act on: focusing more acutely on the customer; investing
in digitalisation; automating processes; improving asset
utilisation; and investing in inland logistics. We entered
the pandemic already well-positioned with a clear strategy,
a strong management team and a world-class terminal
assets portfolio. I believe we have come out of the crisis
better and stronger and that bodes well for our ability
to generate greater long term value for our stakeholders.

Last year was a busy year for Board succession. Having
joined the Board as a Non-Executive Director in March
2018, I was appointed Chairman in April 2020 following
Morten Engelstoft’s decision to step down as Chairman
to concentrate full time on his executive duties at A.P.Moller-
Maersk. Andrey Yashchenko joined the Board as a Non-
Executive Director following the AGM in April 2020.
Andrey is Senior Vice President, Strategy and Finance
of Delo Group. In May 2020, Kristian Bai Hollund was
appointed as a Non-Executive Director to the Board. Kristian
is Operations CFO of APM Terminals. Andrey and Kristian
have already made a significant positive impact on the Board
work with their insights and industry experience.

In June 2020, we announced that Vladimir Bychkov would
be stepping down after two years as CEO. On behalf
of the Board, I would like to thank Vladimir for his contribution
to the Group’s development. He has done an outstanding
job in transforming Global Ports, streamlining its operations,
rebuilding the culture and re-establishing our leadership
position, and we wish him well for the future. The Board
conducted a thorough process to find the best possible
successor and, as a result, appointed Albert Likholet as CEO
in July 2020.

As Managing Director of Petrolesport and First Container
Terminal and with 20 years of experience in the industry,
Albert has a deep understanding of our company and its
culture, proven leadership in terminal operations, a strategic
mindset and a strong commercial track record. The Board
considers Albert is the right person to lead the Group
through the next stage of its development and we look
forward to working with him in the coming years.

My focus as Chairman is on building a strong and
collaborative Board that can provide the leadership and
experience needed to drive the next stage of the Group’s
development. The pandemic was, in many ways, a real-
life test of Board effectiveness in a crisis. In our case,
after simplifying our decision-making and governance
mechanisms in 2019, the Board was able to react in a much
more effective and decisive manner when the crisis hit.
Even though proceedings faced inevitable disruption, the
Board quickly adapted to the new conditions and continued
to function well throughout the period. We increased the
frequency of meetings both on an informal and formal basis,
largely by remote means, to supervise and support the
leadership team. While Board meetings inevitably focused
on the impact of COVID-19, we did not lose sight of other
critical areas like ESG and corporate strategy.

More generally, the Board continued its commitment
to an open and transparent dialogue with stakeholders with
whom we maintained regular contact throughout the year.

My experiences of the last twelve months as a Non-Executive
director and now as Chairman have reinforced my belief
that we have the right people in place to lead the Group,
from our Board of Directors through to the executive team.
I also wish to express the Board’s appreciation to our co-
controlling shareholders, APM Terminals and Delo Group,
for their unstinting support over the past year.

There is no question that Global Ports has emerged from last
year’s unique circumstances a stronger and more resilient
enterprise. Throughout 2020, the Group consistently
demonstrated its adaptability and resilience, attributes
that will see the business through the transition to a «new
normal» business environment. In the immediate term, given
the uncertainty around the macro outlook, we expect greater
short-term volatility in our markets. However, I am confident
that longer term, our prospects remain very promising,
as continued growth in containerisation in Russia should
create solid demand for our terminals and the services
we provide.

ESG

Global Ports is committed to being an industry leader
when it comes to environmental, social and governance
matters. The Board recognises that as a company that
provides critical infrastructure, the development of socially
responsible business practices is critical to our long term
success. Our ESG strategy focuses on maximising our
positive social and environmental impact to deliver tangible
outcomes that make a real difference to our stakeholders.

Notwithstanding the challenging circumstances, the Group
has made good progress towards its ESG goals.
We continued to engage with leading ratings agencies
on our ESG strategy and the improvements we have made.
Our progress in this important area was recognised by
Sustainalytics as medium and MSCI reaffirmed its ESG rating
of BBB for the second consecutive year.

Safety, which continues to be the Board’s number one
priority, took on even greater urgency last year due
to the rapid spread of COVID-19. The Board placed greater
emphasis on our controls framework to reduce risks across
our operations. I am pleased to report that we maintained
our strong safety record, with the Group recording its lowest
ever Lost Time Frequency Rate in 2020 and we also had
no major environmental incidents in 2020.

We also made improvements to the Group’s governance
regime. The Board enhanced its disclosure practices
by introducing the publication of quarterly operating results
and accelerating disclosure under IFRS reporting. As well,
a revised version of the Group’s Code of Ethics was
approved by the Board, as well as the first-time introduced
Conflict of Interest Policy. These incremental measures will
ensure the Group continues to comply with the highest
standards of corporate governance.

Global Ports Investments PLC Annual Report 2020

globalports.com

CHIEF
EXECUTIVE
OFFICER’S
STATEMENT

ALBERT LIKHOLET
CEO

Consolidated Marine
Container Throughput

Global Ports Investments PLC Annual Report 2020

globalports.com

I am very proud to report that Global Ports delivered
an outstanding performance in 2020. We faced huge
challenges as commercial operations and supply chains
were disrupted and daily work routines interrupted.
However, we remained focused, and achieved outstanding
results, demonstrating the resilience of our business
model and showing that our strategy can deliver results
for stakeholders under any conditions. None of this would
have been possible without the dedicated contributions
of our employees, all of whom deserve our thanks for their
part in helping the Group through this challenging period.

While COVID-19 will inevitably dominate any 2020 review,
it should not detract from the Group’s accomplishments
last year. Our results show that despite the pandemic, the
business did not lose momentum, and our transformation
strategy has continued to deliver positive results. For
the third year in a row, we outperformed the Russian
container sector while recording double-digit growth in our
non-container bulk operations. The outperformance was
recorded in both import and export segments and was not
limited to a single region, as we saw above-market growth
in the Baltic and Far East basins. I am also very pleased
with last year’s financial result, which I believe sums
up the core strengths of Global Ports. While comparable
revenue reduced, our focus on cost discipline contributed
to increased like-for-like Adjusted EBITDA Margin, strong
Free Cash Flow and significantly reduced Net Debt and
leverage.

Our COVID Response

Beyond the practical response to COVID-19, the pandemic
served as a catalyst for the Group to embrace new ways
of working, very much in keeping with our emphasis
on greater agility, responsiveness, and resilience.

As a critical national infrastructure provider we recognised
early in the pandemic that we had to act decisively. We set
up a COVID-19 response team to coordinate our response
and ensure that appropriate measures were taken to protect
colleagues, clients and the community at large.
We introduced new work-from-home solutions for office-based
staff to ensure that the Group continued to provide
the same high-quality service. For colleagues with on-site
operational duties, we introduced strict social distancing
protocols and enhanced hygiene measures. And we made
communicating with staff a priority, making greater use
of our online channels. We also worked with our customers
who faced their own challenges, providing 24-hour terminal
access and support, and being as flexible as possible
in our commercial arrangements.

We also took measures to protect the Group’s financial
health, which are discussed elsewhere, but which focused
on cost management and improving cash generation.

Consolidated Marine Bulk
Throughput growth

+38.7%

Our Markets

Our Operating Performance

The story of the global container ports industry
in 2020 is one of resiliency. The onset of COVID-19 led
to a sharp decline in maritime container traffic which, at its
peak in the second quarter, had analysts predicting double-
digit falls in global throughput. Yet by the end of the year,
the sector had recovered almost all of the lost ground,
wrapping up the year with global throughput down just one
percent in 2019.

Our 2020 operating performance was one of our strongest
to date, given the challenges posed by COVID-19.
Consolidated Marine Container Throughput increased
by 6.6% to 1.53 million TEU in 2020, compared to a market
that declined by 0.8% over the same period. We saw
a 17% growth in full export containers, three times that
of the market, and a 4% growth in full import containers.

This theme of resilience was also applicable to the Russian
market. It has undergone a radical transformation over
the past decade, transitioning from an import-dominated
container market model to one driven by the export
requirements of Russian industry. This trend has made
the sector much more resilient, significantly reducing
volatility, a defining characteristic of earlier crises. Whereas
in the crises of 2009 and 2015, container volumes
contracted substantially, this time, with a full export to full
import container ratio of 83%, double that of a decade ago,
container market volumes barely budged. Throughput
volumes ended the year fractionally down on 2019,
at 5.05 million TEU, following a strong second half rally.
Industrial cargo exports led the way, with full container
exports growing by more than 5%, while container imports
declined by about 2% partially recovering in the last quarter.
Contrary to previous crisis periods, average capacity
utilisation rates in the main container gateway basins
remained firmly above 70%.

During 2020, major terminal port operators like Global Ports
continued to consolidate their position, taking market share
from smaller terminal operators. Export cargoes require
larger vessels and more terminal capacity, boosting demand
for large, well-equipped and efficient terminals connected
to inland road and rail systems. The pandemic will accelerate
other industry trends, like the adoption of digital platforms
and a move to greater automation as ports seek to improve
productivity and reduce costs and avoid the sort of supply
chain congestion the industry suffered in the first half
of last year. We expect these market trends to accelerate
in the years ahead, benefiting Global Ports with our network
of large terminals key access locations.

We delivered a record performance in the bulk cargo
segment, driven by strong growth in coal export volumes
at UCLT in the Baltic Basin and VSC in the Far East,
supported by growth in newer cargo segments at PLP.
Consolidated Marine Bulk Throughput rose 39% to 5.1 million
tonnes, up from 3.7 million tonnes in 2019. Our car-handling
volumes dropped 20% due to COVID-19, although Ro-Ro
performed better than the previous year.

Consistent with our strategy, we placed strong emphasis
on the Group’s customer value proposition. We created
a unified customer service center and call centers
providing our customers with 24/7 access to our service
teams. We continued to invest in our digital platform,
including in a new customer-focused website, and digital
documentation service for export containers at FCT and
ULCT as part of a bigger initiative to digitise and standardise
our documentation. We added new services including one
with Maersk to tap into the growing Asia-Europe transit
trade, and a joint venture with Transcontainer to export fuel
pellets from Siberia. The number of block trains we operate
between our terminals in the Baltic and the Far East
catchments also continued to expand in 2020.

We maintained our commitment to enhancing productivity
by further optimising our asset base and investing
in infrastructure. In 2020 the integration of FCT and PLP
within a single business unit was completed and resulted
in solid market share gains. We continued to invest in CAPEX
projects, including new RMG cranes for our terminal
in the Far East, VSC, which is seeing demand for container
handling grow strongly.

Financial Results

Our strong financial performance reflected the resiliency
of the market, our superior operating performance and
our strict focus on cost containment and cash generation.
We also benefitted from the efficiency measures
we introduced in recent times.

Consolidated revenue grew by 6.2% to USD 384.4 million,
although like-for-like revenue declined by 8.2% as growth
in throughput volumes was offset by a 13% decline in revenue
per TEU due to changes in cargo mix, the cost of support
measures we put in place for clients and the impact of rouble
depreciation. Non-container revenue also decreased
by 10.6% year-on-year, despite strong growth in bulk cargo
volumes.

Due to COVID-19, we took action to maintain cash liquidity
and financial discipline, to ensure we achieved our strategic
objective of further reducing leverage. The business delivered
a robust cash performance, with Net Debt reducing
by USD 135 million and with Net Debt to Adjusted EBITDA
of 2.9x. We implemented strict cash control measures,
successfully reducing Like-for-like Total Operating Cash
Costs by 9.7% despite healthy growth in our overall throughput
volumes. Although Adjusted EBITDA declined by 7.6%
to USD 209.7 million, we maintained strong profitability
and Adjusted EBITDA Margin of 65.2% was 40 basis
points higher than the previous year. Our cash generation
was exceptionally strong, with the Group generating
USD 157 million of Free Cash Flow, allowing us to continue
to prioritise reducing the balance sheet.

Having upgraded the Group’s creditworthiness in 2019,
we are pleased that in the tough trading of 2020 all three
leading ratings agencies that rate us chose to affirm
the Group’s credit status.

Outlook

Two years ago, the Board set Global Ports on the path
to simplification, prioritisation and innovation. The strategic
foundations we laid then meant when COVID-19 struck
that we were largely able to contain any disruption and
support our people and customers, without it affecting
the underlying momentum of the business. The result
was that we increased market share, upheld profitability,
and delivered strong cash flows leading to a substantial
reduction in borrowings and leverage, which keeps us firmly
on the deleveraging path and a future resumption
of dividends.

1 In terms of container throughput and container handling capacity, based on ASOP data
for FY 2020.

As the number one terminal operator in Russia1, we hold
market leadership positions in an industry with positive
structural growth. While it will be a changed world after
the pandemic, I believe that how our business model creates
value will remain unchanged. We take advantage of our
scale and best-in-class operational execution to generate
organic revenue and profits growth. This is supported
by strong financial discipline and rigorous capital allocation
that supports investment in the business and creates long
term sustainable value for our stakeholders.

For this year, while economies are re-opening and global
trade is picking up, uncertainties related to COVID-19 remain.
While we are seeing encouraging signs of growth in our
business, the market remains highly competitive and we are
taking a prudent approach to 2021.

In the medium and long term, we remain positive about
the structural trends in the sector and believe there are
significant opportunities for Global Ports to accelerate its
growth and create greater value for all our stakeholders.

Global Ports Investments PLC Annual Report 2020

globalports.com

DELIVERING
QUALITY
AND LEADERSHIP

GLOBAL PORTS 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.

WE WILL ACHIEVE OUR FUNDAMENTAL
STRATEGIC GOAL BY:

providing the best
services to our clients

maintaining
operational excellence

using technology
effectively

attracting and retaining a workforce
with the right skills

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

GLOBAL PORTS VISION

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.

Global ports values

Professionalism

Respect

Cooperation

STRATEGY

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.

TO SUCCEED, WE REMAIN FOCUSED ON:

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

Assured healthy, safe
and effective organisation

Our key market: Russia.
We have the strong knowledge and ability
to add value to Russian container market.

Our key services: terminal operations.
We provide our clients with first class port
and related logistics services.

Integral part of import/export
and transit logistics chains

Our key clients: shipping lines
and freight forwarders.
By connecting and simplifying supply
chains, we enable our customers
to grow their businesses.

Solid business profile
and prudent capital allocation

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

Global Ports Investments PLC Annual Report 2020

globalports.com

BUSINESS
MODEL

INPUT

HOW WE CREATE VALUE

The only player with a network
of terminals in key Russian
container gateways

marine container
and multipurpose terminals
in Russia and Finland

Unique asset base

323 ha of land

km of quay wall

Port infrastructure
and perfect multimodal
hinterland connections

2,800

professionals*
Trained staff

Advanced IT system

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

We create value

When providing

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 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.

Services

1. Handling of containerised

2. Cargo storage

cargo | bulk | Ro-Ro
Shipping lines

Freight forwarders
Cargo owners

Our port is a platform
of efficient interaction between
all parties

3. 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

Federal authorities
Truckers

Railway operators
Russian Railways

OUTPUT

Clients

Employees

Community

Shareholders

› Smart, swift, efficient
logistics hub
› Efficient and effective
services
› Infrastructure
to facilitate
import/export
and transit flows

› Reliable and safe
work environment
› Competitive salaries
› Opportunities for
professional growth
and development

› One of the biggest
employers in the region
and sizeable contributor
to local economy
› Satisfied customers
and communities
› Sustainable business
that limits environmental
impact & delivers
positive change

OUTCOME | GLOBAL PORTS RESULTS IN 2020

› Shareholder value
› Sustainable high Free
Cash Flow generation
and dividend capability

Total

USD 61.9 mln
paid to all employees
in 2020

LTIFR 0.54
down to the lowest
level in 7 years

+16.8%
Full export containers
throughput

+3.6%
Full import containers
throughput

+6.6%
Consolidated Marine
Container Throughput

+38.7 %
Consolidated Marine
Bulk Throughput

2.9 x
Net Debt / Adjusted
EBITDA

–0.4 x
Decrease in Net Debt
to Adjusted EBITDA
supporting the path towards
resumption of dividends
once deleveraging targets
achieved

2.8 thou.
employed*

RUB 400 mln
of tax paid
(Equivalent of 5.7 USD million)

RUB 32 mln
spent on charity
(Equivalent of 0.4 USD million)

RUB 91 mln
spent on environment
protective measures
(Equivalent of 1.3 USD million)

*As of 31 December 2020

26
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BUSINESS
REVIEW

2020 RESULTS SUMMARY

Further deleverage success with Net Debt by

USD 134.9 mln

and Net Debt to Adjusted EBITDA reduced to 2.9x
(-0.4x compared to 31 December 2019)

Operational outperformance of the market
continued with 2020 Consolidated Marine
Container Throughput up 6.6% year-on-year to

Stable credit outlook reaffirmed by all
rating agencies that rate the Group and
its financial instruments

1.53 mln TEU

against a 0.8% year-on-year decline in the Russian
container market over the same period

Consolidated Marine Bulk
Throughput of

5.1mln tonnes

(+38.7% y-o-y)

Moody’s at

Ba2

Fitch Ratings at

BB+

Expert RA at

RuA+

1 Like-for-like is adjusted growth metric calculated on management
accounts: cash cost and revenue for 2020 and 2019 adjusted for
VSC transportation services. As a result of the new terms of certain
sales agreements, in 2020 VSC acted as a principal vs as an agent
at the beginning of 2019: previously the net result of revenue from
transportation services and associated cost was included in the
consolidated revenue. Since the middle of 1H 2019 full revenue and
associated costs have been recognized in consolidated revenue
and transportation expenses accordingly. This Adjusted EBITDA
neutral change resulted in additional USD 62.8 million to consolidated
revenue (USD 11.4 million in 2019) and USD 62.8 million (USD
11.4 million in 2019) to cost of sales in 2020.

ALBERT LIKHOLET
CEO of Global Ports Management LLC

Global Ports’ 2020 results prove that
we are on the right track with our strategy
implementation. We outperformed the Russian
container market for the third year in a row
and achieved double digit growth in bulk
cargo handling. We also ensured strong cost
control, resulting in consistent Free Cash Flow
generation and further strong deleverage.
Net Debt was reduced by almost USD 135 million,
while Net Debt to Adjusted EBITDA declined
to the lowest level in 8 years, proving the resilience
of the business and supporting the path towards
resumption of dividends once deleveraging
targets achieved.

Strong Free Cash Flow of

USD 157.1 mln

Revenue increased by 6.2% to

USD 384.4 mln

(-8.2% like-for-like)1

Like-for-like Total Operating Cash Costs were
successfully and safely reduced by 9.7% to

USD 113.2 mln

despite the healthy growth in both container
and non-container throughput

Adjusted EBITDA of

USD 209.7 mln

(2019: USD 226.9 million), like-for-like Adjusted
EBITDA Margin increased by 40 basis points to 65.2%

Operating profit growth of 8.7% to

USD 157.4 mln

Profit for the period of

USD 50.0 mln

(2019: USD 67.7 million)

Global Ports Investments PLC Annual Report 2020

globalports.com

+6.6%

Consolidated Marine
Container Throughput

+38.7%

Consolidated Marine
Bulk Throughput

Operational Highlights

Financial Highlights

› The Russian container market demonstrated
resilience in 2020 declining by only 0.8% y-o-y
supported by continuing growth in containerised
export (+5.2%), which was however insufficient
to offset the decline of containerised import by
a moderate 1.8%, due to the global and local
macroeconomic impact of COVID-19.

› Outperforming the market in both export
and import, the Group’s Consolidated Marine
Container Throughput increased by 6.6%
to 1,553 thousand TEU with growth of full export
containers of 16.8% and full import containers
of 3.6%. As a result, share of full export containers
in the Group's Consolidated Marine Container
Throughput increased from 40% in 2019 to 44%
in 2020.

› Consolidated Marine Bulk Throughput
increased by 38.7% y-o-y, driven by strong
growth in coal handling at VSC and ULCT as well
as growth of fertilisers and steel handling at PLP.

MARC NIEDERER
COO of Global Ports Management LLC

This year we succeeded in achieving the right
balance between taking the necessary
measures to ensure the absolute safety of our
personnel to prevent the spread of COVID-19
and maintaining a strong operational capability
at all our terminals. This was crucial to handle
for example the booming transsiberian rail traffic.
We also delivered a strong safety performance
with our lowest LTIFR ever recorded (0.54 in 2020).
We will continue to build on this achievement.

Market demonstrates
resilience with a decline
of only

0.8%

y-o-y

30
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› Consolidated revenue increased by 6.2%
to USD 384.4 million; excluding the impact of VSC
transportation services1 , like-for-like revenue
declined by 8.2% driven by a decrease in both
Consolidated Container and Non-Container
Revenue.

› Like-for-like Revenue per TEU decreased by 13%
to USD 155.1 as a result of depreciation of the
Russian rouble against the US dollar, the growing
share of full export containers in Group throughput,
and additional free storage days and other
incentives provided by the Group to its clients
in order to support them on the back of the global
and local macroeconomic turmoil following
the COVID-19 outbreak. Like-for-like Revenue per
TEU adjusted for FX decreased by 2.7%.

maintenance projects, scheduled upgrades
of existing container handling equipment
and customer service improvement initiatives.

› The Group generated a healthy USD 157.1 million
of Free Cash Flow (-1.1% compared to 2019)
demonstrating the resilience of the business model.

› The Group reduced Net Debt by USD 134.9 million
over the year and continues to prioritise
deleveraging over dividend distribution.

› In line with the Group’s focus on deleveraging,
Net Debt to Adjusted EBITDA decreased from 3.3x
as of 31 December 2019 to 2.9x as at the end
of the reporting period, achieving the lowest level
since 2012.

› Operating profit increased by 8.7%
to USD 157.4 million.

› In response to COVID-19 conditions, cost
control measures were implemented to manage
and reduce the Group’s cost base. Like-for-like
Total Operating Cash Costs were successfully
and safely reduced by 9.7% to USD 113.2 million
despite the healthy growth in both container and
non-container throughput.

› Adjusted EBITDA decreased by 7.6%
to USD 209.7 million as cost control
improvements and volume growth could not
offset the decline in Revenue per TEU and US
dollar equivalent of Russian rouble nominated
bulk handling tariffs due to the depreciation of
the Russian rouble as the result of, i.a. COVID-19.
Profitability was nonetheless maintained with like-
for-like Adjusted EBITDA Margin of 65.2%.

› The Group’s capital expenditure in 2020
was USD 33.9 million and focused on planned

1 As a result of the new terms of certain sales agreements, in 2020 VSC
acted as a principal vs as an agent at the beginning of 2019: previously
the net result of revenue from transportation services and associated cost
was included in the consolidated revenue. Since the middle of 1H2019
full revenue and associated costs have been recognized in consolidated
revenue and transportation expenses accordingly. This Adjusted EBITDA
neutral change resulted in additional USD 62.8 million to consolidated
revenue (USD 11.4 million in 2019) and USD 62.8 million (USD 11.4 million in
2019) to cost of sales in 2020.

Market data used in this report, as well as certain statistics, including
statistics in respect of market growth, volumes of third parties and market
share, have been extracted from official and industry sources and other
third-party sources, such as the Association of Sea Commercial Ports
(ASOP) the Central Bank of the Russian Federation and the Russian
Federal State Statistics Service, among others.

Russian container market in 2020,
full export and import dynamics, %

Full export

Full import

20%

15%

10%

-5%

-10%

-15%

-20%

Russian container market volumes, mln TEU

–26%

-0.8%

5.2

5.11

4.9

5.1

4.9

-34%

4.5

3.7

3.5

4.4

3.78

3.82

3.0

2.4

2.0

1.5

1.1

0.9

0.7

0.5

Jan-20

Feb-20 Mar-20

Apr-20 May-20

Jun-20

Jul-20

Aug-20

Sep-20

Oct-20

Nov-20

Dec-20

‘01

‘03

‘04

‘05

‘06

‘07

‘08

‘09

‘10

‘11

‘12

‘13

‘14

‘15

‘16

‘17

‘18

‘19

‘20

Market Overview and Operating
Information

Russian container market volumes,
by basin in 2020, %

100

In 2020 the Russian container market
demonstrated strong resilience and ability
to adapt swiftly to challenges by declining only
by 0.8%. The market was supported by continuing
structural growth of containerised export (year-
on-year growth of 5%) and slight recovery
of containerised import in 4Q20 (year-on-year
decline of 1.8% in 2020 compared to 2019)
following the decline in the first half of the year
as a result of the global and local macroeconomic
impact of the COVID-19 outbreak.

Throughput of full export containers at the
Russian terminals continued its rapid growth
(5.2% year-on-year), mainly due to increased
exports and the wider use of containers in Russia.
Full exports have almost doubled (growth of 1.96x)
between 2013–2020, showing a long-term
trend 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 2020, the ratio between full dry container
export and full dry container import in Russia
was 83%, while the Big Port of Saint Petersburg
has already become export driven: dry full
container export exceeded dry container import
by 15% in 2020. 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 removing excess capacity from the market.

Total Russian container
market throughput

Full containers
import

Full containers
export

5.1mln TEU

-0.8% year-on-year

–2%

+5%

Export exceeds import in the Big Port of Saint-
Petersburg for dry full containers, mln TEU

Dry full import / export gap is narrowing in
Russian container market, mln TEU

Dry import

Dry export

Dry import

Dry export

0.88

0.80

0.74

0.85

1.72

1.71

1.35

1.42

2019

2020

2019

2020

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

Containerisation in Russia remains low, TEU/thousand people

Far East basin 33%

Black Sea basin 16%

Northern Ports 3%

Baltic basin 48%

North America
135

Europe
131

Turkey
134

World
104

Russia
36

Global Ports Investments PLC Annual Report 2020

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Source: Drewry; some 2020 numbers are estimated.

In 2020 the Group continued to outperform
the market, with Consolidated Marine
Container Throughput up 6.6% year-on-year
to 1,553 thousand TEU against the container
market decline of 0.8% year-on-year.

As a result of the Group’s efforts to increase
productivity and customer service standards,
the Group outperformed the market in both
key basins where its terminals are located.
Consolidated Marine Container Throughput
of the Group’s terminals located in the Baltic
Basin increased by 3.5% year-on-year in 2020
against a market decline of 6.6% in the same
region, while Consolidated Marine Container
Throughput of the Group’s terminal located
in the Far Eastern Basin increased by 14.7% year-
on-year in 2020 against a market growth of 7.6%.

The Group also outperformed the market in both
full import and full export. Consolidated Marine
Container Throughput of full export containers
in 2020 increased by 16.8% year-on-year and its
share in Groups’ Consolidated Marine Container
Throughput increased to 44% compared
to 40% in 2019. Consolidated Marine Container
Throughput of full import containers in 2020
increased by 3.6% year-on-year.

Consolidated Marine Bulk Throughput increased
by 38.7% year-on-year to 5.1 million tonnes
in 2020, driven by strong growth in coal handling
at VSC and ULCT as well and growth of fertilisers
and steel handling at PLP.

The table on the next page 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.

BRIAN BITSCH
CCO of Global Ports Management LLC

In a year of unprecedented uncertainty, I have
been encouraged not only by the resilience of the
Russian market, demonstrating its developmental
transformation over time, but also by Global
Ports’ own outperformance of that market, which
was driven by our committed and relentless focus
on our clients and our unrivalled level of service.

Global Ports significantly outperformed the market
Global Ports Consolidated Marine Container
Throughput vs Russian container market dynamic
in 2020

6.5%

6.6%

4.5%

Consolidated Marine Bulk
Throughput growth

+38.7%

Market

Global Ports

Market

Global Ports

Marine terminals

Containerised cargo (thousand TEUs)

PLP1

VSC

FCT

ULCT

Non-containerised cargo

Ro-Ro (thousand units)

Cars (thousand units)

Other bulk cargo (thousand tonnes)

Consolidated Marine Container Throughput

Consolidated Marine Bulk Throughput

Operational statistics of joint ventures

Containerised cargo (thousand TEUs)

Moby Dik

Finnish Ports

Inland terminals

Yanino

Containerised cargo (thousand TEUs)

Bulk cargo throughput (thousand tonnes)

Total marine container throughput (thousand
TEUs)

Total marine container throughput in Russia
(thousand TEUs)

2020

2019

Change

Change, %

377

453

654

20.3

82.0

5,074

1,533

5,074

—

261

1,631

1,533

328

395

654

20.0

103.3

3,658

1,439

3,658

(12)

0.3

(21.3)

1,416

14.9%

14.7%

0.0%

(19.8%)

1.3%

(20.6%)

38.7%

6.6%

38.7%

111

(11.3)

(12.9)

(100.0%)

(11.7%)

120

376

1,561

1,450

(33.5)

(115.1)

(28.0%)

(30.6%)

4.5%

5.7%

Strong performance in both core basins
Global Ports and Russian container market dynamics
for 2020 by basin, %

Consolidated Marine Bulk Throughput, mln tonnes

+39%

5.1

15%

Baltic basin

7.6%

3.5%

2.0

3.7

+12%

2.2

–6.6%

Far East basin

1H 19

1H 20

2019

2020

1 As a part of strategy to prioritise operating efficiency and optimise the Group’s asset base, the management teams of Petrolesport (PLP) and First Container
Terminal (FCT) were unified in 2019. The merging of the two management teams aligns the strategic focus across the two terminals based at the Port
of St. Petersburg, improving clarity and speed of decision-making to bring tangible benefits to customers in terms of planning capability and distribution
of services as Group resources will be allocated more efficiently and effectively to client requirements.

–0.8%

2019

2020

Global Ports Investments PLC Annual Report 2020

globalports.com

Revenue growth

+6.2%

Like-for-like revenue
decreased by 8.2%

Global Ports Investments PLC Annual Report 2020

globalports.com

Cars, thousand units

103.3

–20.6%

82.0

2019

2020

Ro-Ro, thousand units

20.0

+1.3%

20.3

2019

2020

Heavy Ro-Ro handling demonstrated a continued
recovery in Q4 2020 with 3.1% growth in Q4 2020
against Q4 2019, resulting in a 1.3% growth in volumes
of this cargo handling for the full year 2020.

Car handling was also strong in Q4 2020 with
41.1% growth but this was unfortunately not
sufficient to offset the overall 20.6% decline
in 2020, reflecting the slowdown in Russian
consumer demand and closure of car dealers
in Q2 2020 due to lockdown.

As a result of the market trends mentioned
above, Moby Dik no longer meets the market
requirements of a modern container terminal,
given the absence of a rail connection and
its insufficient vessel handling equipment.
Nonetheless, Moby Dik remains a business unit
of the Group that offers further opportunities
in bulk handling and additional services. Moby Dik
handled 227 thousand tonnes of bulk cargo
in 2020, generating growth of 34% compared
to the 2019.

Results of operations of Global Ports for the year ended
31 December 2020 and 31 December 2019

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 2020 and 31 December 2019.

Selected consolidated financial information

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Revenue

Cost of sales

Gross profit

Administrative, selling and marketing
expenses

Other income

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

Other gains/(losses) — net

Operating profit

Finance income

Finance costs

Change in fair value of derivative
instruments

Net foreign exchange gains/(losses)
on financial activities

Finance income/(costs) — net

Profit before income tax

Income tax expense

Profit for the period

Attributable to:

Owners of the Company

Non-controlling interest

Key non-IFRS financial information

Like-for-like revenue

Adjusted EBITDA

Like-for-like Adjusted EBITDA margin

Like-for-like Cash Cost of Sales

Like-for-like Total Operating Cash
Costs

Free Cash Flow

384.4

(200.3)

184.1

(24.7)

1.3

(3.0)

(0.3)

157.4

2.4

(71.8)

18.4

(41.8)

(92.8)

64.6

(14.6)

50.0

48.4

1.6

321.7

209.7

65.2%

(90.2)

(113.2)

157.1

361.9

(151.8)

210.1

(35.5)

1.8

1.9

(33.4)

144.8

2.5

(85.2)

(9.3)

43.8

(48.2)

96.6

(29.0)

67.7

66.6

1.1

350.5

226.9

64.8%

(91.7)

(125.3)

158.8

22.6

(48.5)

(25.9)

10.8

(0.5)

(4.9)

33.1

12.6

(0.2)

13.5

27.7

6.2%

32.0%

(12.4%)

(30.4%)

(26.7%)

(254.9%)

(99.0%)

8.7%

(6.6%)

(15.8%)

(296.8%)

(85.6)

(195.2%)

(44.6)

(32.0)

14.3

(17.7)

(18.2)

0.5

(28.8)

(17.2)

1.5

12.0

(1.8)

92.5%

(33.1%)

(49.5%)

(26.1%)

(27.3%)

45.7%

(8.2%)

(7.6%)

(1.7%)

(9.7%)

(1.1%)

Revenue

Cost of sales

The following table sets forth the components of the consolidated revenue for 2020 and 2019.

The following table sets out a breakdown by expenses of the cost of sales for 2020 and 2019:

Container revenue as reported

300.6

268.1

32.5

12.1%

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Adjusted for

VCS transportation services

Like-for-like container revenue

Non-container Revenue

Consolidated Revenue

Like-for-like Revenue per TEU

Like-for-like Revenue per TEU
Adjusted for FX

62.8

237.8

83.8

384.4

155.1

173.6

11.4

256.7

93.8

361.9

178.4

51.4

(18.8)

(10.0)

22.6

(23.3)

(4.8)

450.6%

(7.4%)

(10.6%)

6.2%

(13.0%)

(2.7%)

In 2020 like-for-like consolidated revenue
decreased by 8.2% to USD 321.7 million from
USD 350.5 million in 2019, driven by the decline
in both revenue from container operations
and other revenue.

Like-for-like Consolidated Container Revenue
decreased by 7.4%, or USD 18.8 million,
to USD 237.8 million. This change was driven
by an increase in Consolidated Marine Container
Throughput of 6.6% which was offset by
a 13.0% decrease in like-for-like consolidated
Revenue per TEU. Decline in like-for-like
consolidated Revenue per TEU was driven
by the depreciation of the Russian rouble as well
as a change in cargo and service mix (primarily
through growth of full export containers and
decline in full import containers) and measures
taken by the Group in order to support our
clients (additional free storage days for export
containers and other incentives were provided)
during the macro turmoil caused by COVID-19.

Consolidated Non-Container Revenue decreased
by 10.6%, or USD 10.0 million, to USD 83.8 million,
as growth in throughput was offset by discounts
given by the Group to its clients in the second
half of 2019 and the first half of 2020 in response
to the decline of coal prices in the global market
as well as the depreciation of the Russian rouble.

As a result of new terms agreed on certain sales
agreements, in 2020 VSC acted as a principal
versus as an agent at the beginning of 2019:
previously the net result of revenue from
transportation services and associated cost was
included in the consolidated revenue. Since
the middle of the first half of 2019 full revenue
and associated cost have been recognised
in consolidated revenue and transportation
expenses accordingly. This Adjusted EBITDA neutral
change resulted in an additional USD 62.8 million
attributed to consolidated revenue (USD 11.4 million
in 2019) and USD 62.8 million (USD 11.4 million in
2019) to cost of sales in 2020.

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Depreciation of property, plant
and equipment

Amortisation of intangible assets

Depreciation of right-of-use assets

Write-off of property, plant and
equipment

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

34.1

0.6

11.8

0.9

45.1

67.7

62.8

8.5

5.3

16.2

2.4

7.9

200.3

153.0

90.2

35.2

1.1

12.4

—

45.3

15.7

11.4

9.5

6.3

14.3

2.5

9.5

151.8

103.1

91.7

(1.1)

(0.5)

(0.6)

0.9

(0.2)

52.0

51.4

(1.0)

1.9

(0.1)

(1.7)

48.5

49.9

(1.5)

(3.2%)

(46.0%)

(4.6%)

—

(0.4%)

332.0%

450.6%

(10.7%)

(16.4%)

13.0%

(3.2%)

(18.0%)

32.0%

48.3%

(1.7%)

Cost of sales increased by USD 48.5 million,
or 32.0%, from USD 151.8 million in 2019 to
USD 200.3 million in 2020. The change was
primarily driven by growth in transportation
expenses at VSC, certain cost items related
to the growth of coal handling at ULCT and VSC
and growth in throughput and inflation.

The growth in transportation expenses from
USD 15.7 million to USD 67.7 million in 2020

or USD 52.0 million was driven by new
terms of certain agreements that changed
the recognition of revenue and costs generated
by VSC from railway services for clients as
described above.

Like-for-like Cash Cost of Sales decreased
by USD 1.5 million, or 1.7%, from USD 91.7 million
in 2019 to USD 90.2 million in 2020 despite
healthy growth of container and bulk throughput.

Revenue, USD mln

Operating Cash Costs, USD mln

VSC
transportation
services
–11.4

361.9

350.5

Container
revenue
–18.8

Non-container
revenue
–10.0

–8.2%

321.7

VSC
transportation
services
62.8

+6.2%

384.4

+28.7%

VSC
transportation
services
62.8

176.0

VSC
transportation
services
–11.4

136.7

–9.7%

125.3

113.2

2019

Like-for-like
2019

Like-for-like
2020

2020

2019

Like-for-like
2019

Like-for-like
2020

2020

Global Ports Investments PLC Annual Report 2020

globalports.com

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

MLT Group

CD Holding Group

Total share of profit/(loss) of joint
ventures

2020, USD mln

2019, USD mln Change, USD mln

Change, %

(2.0)

(1.0)

(3.0)

0.8

1.2

1.9

(2.8)

(2.1)

(4.9)

(363.3%)

(184.3%)

(254.9%)

The Group’s share of profit/(loss) from joint
ventures changed from a profit of USD 1.9 million
in 2019 to a loss of USD 3.0 million in 2020.

under Gross profit, Share of profit/(loss) of joint
ventures accounted for using the equity method
and Other gains/(losses) — net.

The share of profit from MLT Group changed
from a profit of USD 0.8 million in 2019 to a loss
of USD 2.0 million. This result was primarily driven
by the decline of container throughput of Moby
Dik due to the reasons described above.

The change in the share of result from
CD Holding Group, from a profit of USD 1.2 million
in 2019 to a loss of USD 1.0 million, was mainly
driven by the appreciation of the Russian rouble
against the US dollar in 2019 that resulted in a gain
from revaluation of the US dollar nominated
borrowings of YLP. Whereas in 2020 YLP had
most of its borrowings denominated in roubles.

Other gains/(losses) — net

Other gains/(losses) changed from a net
loss of USD 33.4 million in 2019 to a net loss
of USD 339 thousand in 2020.

As a result of the disposal of VEOS in
the first half of 2019, a USD 50 thousand loss
is reflected within ‘other gains/(losses) – net’
in the corresponding period. 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.

Finance income/(costs) — net

Finance income/(costs) — net increased from
a cost of USD 48.2 million in 2019 to a cost
of USD 92.8 million in 2020. This move was
primarily due to a foreign exchange loss from
financing activities of USD 41.8 million in 2020
compared to a profit of USD 43.8 million
in 2019. This was a result of the depreciation
of the Russian rouble1, which in turn changed from
a gain to a loss on the revaluation of intra-group
US dollar-denominated borrowings in the Group’s
Russian subsidiaries. This was partially offset
by a change of the fair value of derivative
instruments2 from a loss of USD 9.3 million 2019
to a profit of USD 18.4 million in 2020.

Profit/(loss) before income tax

Profit before income tax decreased
to USD 64.6 million in 2020 from
USD 96.6 million in 2019. This change is due
to the factors described above under operating
profit/(loss) and finance income/(costs) — net.

Income tax expense

In 2020, income tax expense was USD 14.6
million compared to USD 29.0 million 2019.

Profit/(loss) for the period

Operating profit/(loss)

The Group’s operating profit increased from
USD 144.8 million in 2019 to USD 157.4 million
in 2020 due to the factors described above

The Group reported a profit of USD 50.0 million
in 2020, a decrease of USD 17.7 million
or 26.1% compared to the profit for the period
of USD 67.7 million in 2019 due to the factors
described above.

1 During 2020 the exchange rate of the US dollar increased from 61.91 RUB as of 31 December 2019 to 73.88 RUB as of 31 December 2020 that
represents the strengthening of the US dollar against Russian rouble by 19.3%.
2 In 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 risks associated with its USD denominated non-convertible unsecured bonds. The Group also bought several options to buy
USD 87 million in 2022 in the range RUB 80-100 per US dollar.

Adjusted EBITDA,
USD mln

226.9

–7.6%

209.7

2019

2020

65.2%

Like-for-like Adjusted
EBITDA Margin in 2020

Global Ports Investments PLC Annual Report 2020

globalports.com

Gross profit

Gross profit decreased by USD 25.9 million,
or 12.4%, from USD 210.1 million in 2019
to USD 184.1 million in 2020. This decrease
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 10.8 million, or 30.4%, from
USD 35.5 million in 2019 to USD 24.7 million
in 2020. This was primarily due to a decrease
of USD 9.3 million, or 35.6%, in staff costs as
a result of measures to increase efficiency and
the depreciation of the Russian rouble.

Adjusted EBITDA and Adjusted
EBITDA Margin

Adjusted EBITDA in 2020 decreased by 7.6%,
or USD 17.2 million to USD 209.7 million from
USD 226.9 million in 2019. Like-for-like Adjusted
EBITDA Margin was 65.2%, broadly the same
as in 2019 (64.8%).

Liquidity and Capital Resources

Cash flow

General

As of 31 December 2020, the Group had
USD 207.0 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 costs of its operations.
In the first half of 2020 the Group’s liquidity needs
were met primarily by cash flows generated from
its operational activities as well as borrowings.
The Group expects to fund its liquidity requirements
in both the short and medium term with cash
generated from operational activities and
borrowings.

As a result of the shareholding and joint
venture agreements of Moby Dik, the Finnish
Ports and Yanino, the cash generated from
the operational 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 2020, the Group had
USD 819.1 million of total borrowings (including
lease liabilities), of which USD 155.1 million
comprised current borrowings and
USD 664.0 million comprised non current
borrowings. See also “Capital resources”.

ALEXANDER ROSLAVTSEV
CFO of Global Ports Management LLC

2020 has shown how our long-term focus on strong
cost control and deleveraging continues
to generate stable high EBITDA margin, even
in today’s volatile climate. Our timely approach
to hedging and refinancing has decreased our
effective interest rate and reduced FX fluctuations
giving us further stability and ensuring that all
the rating agencies affirmed the Group’s credit
ratings this year.

Adjusted EBITDA

USD209.7mln

Free Cash Flow

USD157.1mln

The following table sets out the principal components of the Group’s consolidated cash flow statement
for 2020 and 2019:

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Net cash from operating activities

Cash generated from operations

Tax paid

Net cash used in investing
activities

Purchases of intangible assets

Purchases of property, plant and
equipment

Proceeds from sale of property,
plant and equipment

Disposal of asset held for sale

Interest and loans repayments
received

Net cash used in financing
activities

Repayments of borrowings

Proceeds from borrowings

Interest paid on borrowings

Interest paid on leases

Settlements of and premiums paid
on derivative financial instruments

Principal elements of lease
payments

Free Cash Flow (net cash from
operating activities —
purchase of PPE)

Net increase/(decrease) in cash
and cash equivalents

Cash and cash equivalents
at the beginning of the period

Exchange gains/(losses) on cash
and cash equivalents

Cash and cash equivalents
at the end of the period

190.9

196.6

(5.7)

(32.5)

(0.9)

(33.9)

0.4

—

1.9

(74.3)

(73.0)

72.1

(66.4)

(4.2)

(0.8)

(2.0)

185.4

217.4

(32.0)

(13.4)

(1.0)

(26.6)

0.5

11.8

1.9

(140.2)

(131.4)

70.9

(74.4)

(4.3)

(0.2)

(0.9)

157.1

158.8

84.2

124.4

(1.5)

31.8

91.6

0.9

207.0

124.4

5.5

(20.8)

26.3

(19.1)

0.1

(7.3)

(0.1)

(11.8)

(0.039)

66.0

58.4

1.2

8.0

0.1

(0.6)

(1.1)

(1.8)

52.3

32.7

(2.5)

82.6

3.0%

(9.6%)

(82.3%)

143.1%

(7.6%)

27.3%

(11.0%)

(100.0%)

(2.1%)

(47.0%)

(44.8%)

1.7%

(10.8%)

(1.8%)

302.4%

125.1%

(1.1%)

164.6%

35.7%

(266.2%)

66.4%

Net cash from operating activities

Free Cash Flow, USD mln

Net cash from operating activities
increased by USD 5.5 million, or 3.0%, from
USD 185.4 million in 2019 to USD 190.9 million
in 2020. Growth in net cash from operating
activities was primarily due to decrease in tax
paid by USD 26.3 million, or 82.3%, partially offset
by USD 20.8 million, or 9.6%, decrease in cash
generated from operations due to the financial
result from operations as described above.

158.8

–1.1%

157.1

2019

2020

Global Ports Investments PLC Annual Report 2020

globalports.com

Net cash from/(used in) investing
activities

Net Debt/Adjusted EBITDA

4.2

4.3

The following table sets out the maturity profile of the Group’s total borrowings (including lease
liabilities) as of 31 December 2020.

3.7

3.6

3.2

3.6

3.3

2.9

2013

2014

2015

2016

2017

2018

2019

2020

1H 2021

2H 2021

2022

2023

2024

2025 and after

Total

USD mln

153.8

1.3

200.2

303.1

57.4

103.4

819.1

Net cash used in investing activities increased
from USD 13.4 million in 2019 to USD 32.5 million
in 2020. This change was primarily driven
by proceeds from the sale of VEOS in the amount
of USD 11.8 million in April 2019 being reflected
as a disposal of asset held for sale in 2019.
The change in net cash used in investing activities
was also driven by an increase in purchases
of property, plant and equipment from
USD 26.6 million in 2019 to USD 33.9 million
in 2020 due to the increased investment into
upgrade of equipment in order to improve
productivity and level of service of the Group’s
terminals and in response to growing throughput.

Net cash used in financing activities

Net cash used in financing activities
decreased by USD 66.0 million, or 47.0%, from
USD 140.2 million in 2019 to USD 74.3 million
in 2020 due to decrease in the repayment
of borrowings by USD 58.4 million because
of voluntary decline in the buy-back of the
Global Ports (Finance) PLC Eurobonds in 2020
compared to 2019.

In 2020, the Group cancelled previously
purchased Global Ports (Finance) PLC's USD
350 million of 6.872 per cent notes due in 2022
(the “2022 Notes”) and Global Ports (Finance)
PLC's USD 350 million of 6.5 per cent notes due
in 2023 (the “2023 Notes”) which were held by
the Group. The 2022 Notes for a total principal
amount of USD 151.4 million and the 2023 Notes
for a total principal amount of USD 52.0 million
were purchased by the Group between 2018 and
2020 through both the tender offer and the open
market.

Consistent Net Debt reduction, USD mln

Capital resources

The Group’s financial indebtedness consists
of bank borrowings, bonds and lease liabilities
and amounted to USD 819.1 million
as of 31 December 2020. As of that date,
all of the Group’s borrowings were secured
by guarantees and suretyships granted by certain
Group members. Certain of these borrowings
contain covenants requiring the Group and
the borrower to maintain specific indebtedness
to Adjusted EBITDA and other ratios, as well
as covenants having the effect of restricting
the ability of the borrower to transfer assets,
make loans and pay dividends to other members
of the Group.

The Weighted Average Effective Interest Rate
of the Group’s debt portfolio is 6.7% for USD
nominated borrowings and 10.5% for Russian
rouble nominated borrowings.

As of 31 December 2020, the Group had
the leverage of Net Debt to Adjusted EBITDA
ratio of 2.9x (compared to a ratio of 3.3x
as of 31 December 2019).

1,350.2

1,207.7

1,047.6

947.3

865.9

–USD 738 mln

–USD 134.9 mln

780.3

747.0

612.1

2013

2014

2015

2016

2017

2018

2019

2020

As of 31 December 2020, the carrying amounts of the Group’s borrowings (including lease liabilities)
were denominated in the following currencies:

US dollar

Rouble

Total

Net Debt/Adjusted
EBITDA

2.9X

Almost

RUB 10bln

of bonds were successfully repaid by cash
available in February and March 2021

506.4

312.7

819.1

During the 12 month-period ended 31 December
2019 the Group entered into several RUB/USD
currency forward contracts to acquire US 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 2020, there are outstanding
forward contracts to acquire USD 122.4 million
and USD 87 million covered by option
contracts.

Debt maturity profile, USD mln

RUB
USD
USD covered by derivatives

303.1

207.0

200.2

155.1

Cash
31 Dec 2020

2021

2022

2023

2024

57.4

103.4

2025
and after

Global Ports Investments PLC Annual Report 2020

globalports.com

Reconciliation of Additional data (Non-IFRS) to the Consolidated Financial
Information for the Year Ended 31 December 2020

Reconciliation of Adjusted EBITDA to profit for the period

Reconciliation of Cash Cost of Sales to cost of sales

Profit for the year

Adjusted for

Income tax expense

Finance costs — net

Depreciation of property, plant and
equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Write-off of property, plant
and equipment

Other (gains)/losses — net

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

FY 2020,
USD mln

50.0

FY 2019,
USD mln

67.7

Change,
USD mln

(17.7)

Change,
%

(26.1%)

14.6

92.8

35.6

11.8

0.8

0.9

0.3

3.0

29.0

48.2

37.0

12.4

1.3

—

33.4

(1.9)

(14.3)

44.6

(1.4)

(0.6)

(0.5)

0.9

(49.5%)

92.5%

(3.8%)

4.6%

(38.7%)

—

(33.2)

(99.0%)

4.9

(254.9%)

Adjusted EBITDA

209.7

226.9

(17.2)

(7.6%)

Reconciliation of Adjusted EBITDA Margin

Revenue

Adjusted EBITDA

Adjusted EBITDA Margin

FY 2020,
USD mln

384.4

209.7

54.6%

FY 2019,
USD mln

361.9

226.9

62.7%

Change,
USD mln

22.6

(17.2)

Change,
%

6.2%

(7.6%)

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

FY 2019,
USD mln

Change,
USD mln

Cost of sales

Administrative, selling
and marketing expenses

Total

Adjusted for

Depreciation of property, plant
and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Write-off of property, plant and
equipment

FY 2020,
USD mln

200.3

24.7

225.0

(35.6)

(11.8)

(0.8)

(0.9)

151.8

35.5

187.3

(37.0)

(12.4)

(1.3)

—

Total Operating Cash Costs

176.0

136.7

Change,
%

32.0%

(30.4%)

20.1%

(3.8%)

(4.6%)

(38.7%)

—

28.7%

48.5

(10.8)

37.7

1.4

0.6

0.5

(0.9)

39.3

Cost of sales

Adjusted for

Depreciation of property, plant
and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Write-off of property, plant
and equipment

Cash Cost of Sales

FY 2020,
USD mln

200.3

FY 2019,
USD mln

151.8

Change,
USD mln

48.5

Change,
%

32.0%

(34.1)

(11.8)

(0.6)

(0.9)

(35.2)

(12.4)

(1.1)

—

153.0

103.1

2.0

0.6

0.5

(0.9)

49.9

(3.2%)

(4.6%)

(46.0%)

—

48.4%

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

Administrative, selling and
marketing expenses

Adjusted for

Depreciation of property, plant and
equipment

Amortisation of intangible assets

Cash Administrative, Selling and
Marketing expenses

FY 2020,
USD mln

FY 2019,
USD mln

Change,
USD mln

Change,
%

24.7

35.5

(10.8)

(30.4%)

(1.5)

(0.18)

23.0

(1.7)

(0.15)

33.6

0.3

(0.02)

(10.5)

(15.0%)

13.6%

(31.4%)

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

Non-current borrowings

Current borrowings

Non-current lease liabilities

Current lease liabilities

Total Debt

Adjusted for

Cash and cash equivalents

Net Debt

As at 31.12.2020

As at 31.12.2019

USD mln

632.9

153.3

31.1

1.8

819.1

(207.0)

612.1

738.1

99.1

33.0

1.2

871.4

(124.4)

747.0

Change,
USD mln

(105.2)

54.2

(1.9)

0.6

(52.3)

(82.6)

(134.9)

Change,
%

(14.3%)

54.7%

(5.8%)

51.6%

(6.0%)

66.4%

(18.1%)

Global Ports Investments PLC Annual Report 2020

globalports.com

Reconciliation of Free Cash Flow to net cash from operating activities

Net cash from operating activities

190.9

185.4

5.5

3.0%

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Adjusted for

Purchases of property, plant
and equipment

Free Cash Flow

(33.9)

157.1

(26.6)

158.8

(7.3)

(1.8)

27.3%

(1.1%)

Reconciliation of like-for-like revenue to consolidated revenue

Consolidated revenue

384.4

361.9

22.6

6.2%

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Adjusted for

VSC transportation services

Like-for-like consolidated revenue

62.8

321.7

11.4

350.5

51.4

(28.8)

450.6%

(8.2%)

Reconciliation of like-for-like Consolidated Container Revenue to Consolidated Container Revenue

Consolidated Container Revenue

300.6

268.1

32.5

12.1%

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Adjusted for

VSC transportation services

Like-for-like container revenue

62.8

237.8

11.4

256.7

51.4

(18.8)

450.6%

(7.3%)

Reconciliation of like-for-like Total Operating Cash Costs to Total Operating Cash Costs

Total Operating Cash Costs

176.0

136.7

39.3

28.7%

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Adjusted for

VSC transportation services

Total like-for-like Operating Cash
Costs

62.8

113.2

11.4

125.3

51.4

(12.1)

450.6%

(9.7%)

Reconciliation of like-for-like EBITDA Margin

2020, USD mln

2019, USD mln Change, USD mln

Change, %

Like-for-like consolidated revenue

Adjusted EBITDA

Like-for-like EBITDA Margin

321.7

209.7

65.2%

350.5

226.9

64.8%

(28.8)

(17.2)

(8.2%)

(7.6%)

ALEKSEY ERMOLIN
CIO of Global Ports Management LLC

2020 for Global Ports saw another step
forward in our IT development and we
continue to take advantage of technological
innovations in the industry and adapt them
to our terminals.

We achieved the important milestone
of going paperless with clients and continued
to develop new IT products to increase
speed, ease and efficiency: using electronic
orders at customs, creating mobile apps
for freight forwarders and managing safety
control at the terminals, and unifying our B2B
gateway amongst many other innovations.

Total Operating Cash Costs

USD

mln

Global Ports Investments PLC Annual Report 2020

globalports.com

SUSTAINABLE
AND
SAFE BUSINESS

SAFETY REMAINS AT THE CORE
OF THE GROUP’S VALUES AND
WE WILL CONTINUE TO STRIVE
TO ACHIEVE A ZERO-HARM
ENVIRONMENT

50
50

Global Ports Investments PLC Annual Report 2020
Global Ports Investments PLC Annual Report 2020

globalports.com
globalports.com

51
51

ENVIRONMENTAL,
SOCIAL AND GOVERNANCE

As an owner and supplier of critical infrastructure,
we believe it is our duty to make a positive
contribution to society. We recognise that to deliver
competitive returns to our shareholders, sustainable
value to our customers and opportunities for
our employees, Global Ports has to operate with
the utmost integrity and behave in a responsible
way, consistent with the broader interests of society.

We consider the core components of Corporate
Responsibility (CR) of Environment, Society and
Governance as fundamental to the Group’s future
success and not mere additions to how we operate.
As such, CR has an essential place in our strategy
and is a vital part of our value proposition.
Our CR approach aims to embed and reinforce
our industry leadership position and corporate
reputation and is in line with the Group’s values.
We believe that actively addressing ESG priorities
helps to strengthen the business and improve
corporate resilience.

The impact of the pandemic crisis has led
to a heightened focus on all aspects of Corporate
Responsibility, especially Safety. The effectiveness
of the Group’s pandemic response in 2020
in part reflects the work undertaken to improve
all aspects of our corporate responsibility agenda.

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 importance of ESG has risen dramatically
in the eyes of customers, investors, media and
markets - and rightly so given today’s climate

change challenge and the impact of the Covid
pandemic. In addition, the sustainability reporting
landscape is evolving rapidly, and we recognise
that when it comes to reporting, we, like other
companies, are on a long journey. As we develop
our Sustainability Approach, our intention
is to ensure that our reporting is kept at a level
that we deem appropriate for the Group and also
useful for our stakeholders.

Society

Our role in society

As a critical infrastructure business we help connect
Russia to the global economy and international
markets and, in doing so, help local economies,
provide employment and support local communities.
Our seven marine container terminals handle
millions of tonnes of cargo annually and employ
almost 2,800 people* directly and many more
indirectly. We aim to be the best at what we do,
which means acting responsibly, providing
sustainable services, safeguarding our employees,
supporting our communities and protecting the
environment.

Our business ethics

Our culture is built on honesty, integrity,
transparency, and accountability. We expect our
employees always to act fairly and ethically when
dealing with colleagues, customers, contractors,
suppliers, authorities and other stakeholders.
We take pride in having our name associated with
the highest ethical standards.

At Global Ports, everyone has a responsibility
to understand and abide by the ethical behaviours
and standards of conduct set out in our Code
of Ethics. Every officer of the Group and each
employee joining the Group must acknowledge

that he or she has read the Code and understood
its importance. We also expect our business partners
and suppliers to be aware of our publicly available
Code of Ethics and apply similar ethical standards
to their own business operations. The relevant
anti-corruption, сonflict of interests provisions and
representations and warranties in relation to good
standing are included in Global Ports Group
companies standard contracts.

We regularly review and update the Code of Ethics
to ensure Global Ports continues to meet the
highest ethical standards. In 2020, a new version
of the Code was approved by the Board. We believe
identifying and managing Conflicts of Interest
is fundamental to the conduct of our business,
our relationships with clients, and the markets
in which we operate. Consequently, we separately
adopted a new Conflicts of Interest policy
to provide clear guidance on this critical issue.

Anti-bribery and anti-corruption

The Group has an anti-bribery and anti-corruption
framework in place. Our zero-tolerance approach
to bribery and corruption is reflected in our Code
of Ethics and is further supported by detailed
policies on related areas.

The Group’s anti-corruption framework
is an important part of our risk management
arrangements. The policy is there for any person
working at or with Global Ports, if they face a situation
that they are concerned about or 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 by or overseen by our internal
audit team.

Global Ports Investments PLC Annual Report 2020

globalports.com

BRITTA DALUNDE
Independent Non-Executive Director

Global Ports has a rigorous approach
to governance and continues to improve its
standards. In 2020 we created a new version
of our Code of Ethics and adopted our Policy
on Conflicts of Interest — all essential or crucial
steps. Most importantly in this year where
people have been the key focus in terms of ESG,
we launched our new talent management system,
which will strengthen our ability to attract and
retain the best people in the business.

Employ

2,800people*

The updated Code of Ethics is available on our website
www.globalports.com

*As of 31 December 2020

53
53

Whistleblowing

Global Ports has a group-wide whistleblowing policy
that applies to all employees, contractors, suppliers
and clients. The whistleblowing service, established
in 2017, provides a mechanism for individuals with
serious concerns about the conduct of the Group
or its employees' conduct, to report those concerns.
Suspected improper activities or breaches of our
Code of Ethics can be reported via a confidential
hotline. All hotline messages received are conveyed
directly to the Head of Internal Audit and the
Chairman of the Audit & Risk Committee. All reports
are treated confidentially, and appropriately
investigated and concluded. The Group maintains
a non-retaliation policy that allows each employee
to freely report their concerns.

Policy on reporting allegations of suspected improper
activities (Whistleblowing policy) and Anti-Fraud
policy are available in the Corporate Governance
section of our website www.globalport.com.

Human rights

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

The Group’s approach to human rights is founded
on our values and on our belief that everyone
is entitled to fundamental rights and freedoms.
Our Code of Ethics defines our approach
which is strictly in accordance with Russian and
international human rights law.

Our Code of Ethics recognises the fundamental
civil, political, economic and social human
rights and freedoms of every individual and
strives to reflect them in our business activities.
Compliance with and respect for human rights
is promoted throughout the organisation and
reflected in our wider policies and in how
we interact with our employees, customers,
suppliers, and other stakeholders.

Our communities

Global Ports is committed to giving back to society.
Our port locations are more than sources of local
employment; they are part of the fabric of the
community and play an essential role in everyday
life. We want to support our employees and their
communities and improve their quality of life.
Our approach is based around supporting our
communities through targeted social investment.
This is the philosophy that underpins the Group’s
approach to social investment.

54
54

Total

spent on charity
(Equivalent of 0.4 USD million)

We are a significant employer in our
communities and our employees are
encouraged to volunteer and support our social
investment schemes. The Group’s social and
community investment is targeted around four
principal themes: Health, Education, Welfare
and Culture. In total, the Group contributed
RUB 32 million (0.4m USD) in 2020 to its
charitable and community support ventures.

In the Health area, the Group provides support
for a number of community-based sports
programs. The Group’s education and welfare
programs support projects that help vulnerable
adults and children. The Group’s support for
culture prioritises local social infrastructure
projects including funding heritage restoration
projects.

In 2020 Global Ports Family Day was held in an online format. The event culminated with a traditional
drawing competition among young participants.

The Group’s charitable and social activities
in 2020 included:

center for minors Albatross, schools and Society
of disabled people;

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

› MD provided financial aid to Center
of rehabilitation of disabled children in Kronstadt
district, St. Petersburg;

› VSC supported local hospital with purchase
of personal protection equipment, COVID-19
tests, medical equipment, as well as the purchase
of special cars for hospital use;

› VSC also supported local social sector including
Vrangel Cultural Centre, social rehabilitation

› FCT donated tablet computers to support local
school children with distance learning during lockdown.

› MLT Oy supported The Association of Friends
of the University Children’s hospitals in their
efforts to improve the comfort of patients during
their hospital stay.

Global Ports Investments PLC Annual Report 2020

globalports.com

In 2021, we will continue to improve the safety processes
and controls we enacted last year. In addition, we are
focused on the implementation of the Fatal 5 program,
within which we will reduce risks in essential areas:

0.54

LTIFR, the lowest on record
for Global Ports

Our suppliers

We rely on a range of suppliers to provide goods
and services linked to our commercial operations.
We aim to foster good relations with all our
suppliers. We expect our suppliers to adhere
to the Group’s policies and high ethical standards
as defined in the Code of Ethics. We also expect
our supplier and their supply chains to adhere
to high operational and ethical standards and
ensure proper accountability throughout the
supply chain. The guidelines relating to suppliers
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:

Safety under the crane

Work at height

Work with hazardous cargo

Work with contractors

Speed limit

› full compliance with the legislation of the
Russian Federation, and in particular law 223-FZ1;

In addition, we will create and develop the work of the
Safety Committees at the terminals.

› competitiveness and transparency;

› supplier selection based on price, quality and
timeliness;

› total cost of ownership.

All procurement information is placed on
www.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.

All tender requests are published on the websites
stated above to ensure fairness and transparency
in the tendering process. The Group’s
Procurement team closely monitors global best
practices, drawing on its relationship with APM
Terminals and Delo Group.

Health & Safety

We have a fundamental duty of care to ensure
the safety and wellbeing of all our people. We are
committed to achieving the highest standards
of Health & Safety, ensuring that appropriate
resources are available to meet our objectives
of a zero-harm work environment.

The paramount importance of health and safety
was a key imperative behind the measures
successfully introduced by the Group to mitigate
the risks posed by COVID-19 to our people.
These included regular medical check-ups,
restrictions on travel, social distancing protocols,

stringent hygiene measures and the provision
of personal protective equipment (PPE).

Our approach to developing a sustainable safety
culture is based on three principles:

› providing a safe working environment;

› providing comprehensive implementation plans
built around best practice safety and compliance
standards;

› offering comprehensive training focused on risk
awareness and reduction.

Our approach

The nature of our work and working environments
means that our employees and contractors are
regularly exposed to risk. We are constantly
monitoring and identifying health and safety
risks to ensure that our risk controls and working
practices are the safest they can be. We believe
our stringent approach, which involves continually
updating our work protocols and risk controls
to effectively manage safety-related risks leads
to better safety outcomes.

Our safety management framework covers
all aspects of safety compliance, monitoring,
and training. Our safety management system
focuses on ensuring compliance with our safety
standards to provide a safe work environment.

It is structured around:

Governance

› critical minimum safety standards that are
aligned with industry best practice (Global
Minimum Requirements);

› regular safety audits that benchmark our
facilities’ compliance in implementing our GMRs;

› regular safety and risk awareness briefings and
information updates for our staff and contractors;

› regular and high quality daily safety walks
organised at each terminal;

› regular health and safety training for line
management and employees staff;

› regular training drills covering general safety
issues;

› specialised training programmes for employees
that need it, for instance for those involved
in handling hazardous materials;

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

LTIFR

1.51

1.28

1.10

0.55

0.54

The Board has overall responsibility for
health and safety matters and is committed
to continuous improvement in our safety culture
and systems. The Board sets Heath and Safety
policy, agrees on safety standards and reviews
performance. The Chief Operating Officer is the
senior executive responsible for health and safety
compliance and performance monitoring.

The Chief Operating Officer regularly reviews
feedback and performance reports supplied
by the individual business units and the Board
receives quarterly performance reports.
The Group’s safety performance is regularly
reviewed by the Board and any decisions taken
are discussed and agreed with the executive
team.

Performance in 2020

The pandemic and the health risks posed
by COVID-19 made it imperative that we redouble
our efforts to safeguard the health and safety
of our employees and achieve a zero-harm
working environment. Our focus was on ensuring
compliance not just with COVID-related measures
but with our fundamental health and safety
standards and controls, so significant attention
was paid to improving all aspects of health and
safety communications.

During the year we continued to focus
on our Lost Time Injury Frequency Rate
(LTIFR) measure, a key safety metric. It is very
reassuring to report that despite the disruption
caused to our operations by the pandemic
and notwithstanding the fact that our facilities
continued to run uninterrupted throughout
2020, we achieved our best ever LTIFR at 0.54
incidents per 1 million exposure hours, making
further progress on the prior period’s strong
result. This improvement was due to ongoing
commitment from the senior leadership,
positive support from all management levels,
strong employee engagement and allocation
of appropriate resources.

1 223-FZ on Procurement of goods, works and services by certain types of legal entities

2016

2017

2018

2019

2020

Global Ports Investments PLC Annual Report 2020

globalports.com

Over the course of the year, we made significant
progress in specific focus areas:

Our People

› safety walks — we organised regular and high
quality daily safety walks. By the end of the year,
the required frequency of audits had reached
almost 100%;

› introduction of mobile safety app —
to improve the audit process and ensure that
all safety incidents are promptly processed
and recorded, we developed a unique mobile
telephone application that has been installed
on the mobile phones of the responsible
employees of the terminals;

› staff involvement — the involvement
of personnel in safety issues. In this direction,
all terminal employees have access to a light
version of the above mobile application, which
allows any employee to promptly make an appeal
on security issues;

› systemised training — in the implementation
of regular training programs at terminals on the
response and action of personnel and emergency
services in the event of a fire, incidents with
dangerous goods, people falling into the water,
etc. As a result, the personnel training processes
have been given a systemic and non-formalized
character;

› safe movement of staff — we focused
on improving the lay-out of routes and paths used
by our employees at our terminals to ensure their
safe movement;

› safety procedures — to improve how
we educate our personnel on safe working
methods, we developed and introduced a series
of short visual reminders for employees on the
main handling processes.

Safety remains at the core of the Group’s values
and we will continue to strive to achieve a zero-
harm environment.

The Group’s 2,800 employees* are fundamental
to its successful development and performance.
We believe in empowering and engaging with our
employees, promoting a positive culture where
people of all backgrounds are treated with respect
and given equal opportunity to develop. Having
a well-motivated and well-supported workforce
means that we are able to provide a better service
to our customers. We are determined to make
Global Ports an even better place to work for all
our staff and this continues to be an important
focus for the Board and senior management.

Employee engagement

The Board takes its responsibilities for workforce
engagement seriously. Our people play a key
role in the success of our business, which is why
we make it a priority to involve, consult and
inform employees. We believe that an engaged
workforce is a source of competitive advantage
in a service-led industry.

We use several of channels to interact with our
employees including: formal and informal briefings,
internal communications, strategy workshops,
training courses, via our new intranet platform and
our Annual Report. The impact of COVID-19 saw
much of our employee engagement, especially
around issues to do with health, safety and
wellbeing move to our online platform.

Employees and their representatives are
consulted regularly on a variety of matters
affecting their interests. We hold regular feedback
sessions with staff as well as periodic employee
surveys. Our most recent staff survey showed
that satisfaction levels among our staff are high.
Building on the positive response of employees,
this year we have focused on:

› building a shared sense of unity and teamwork
among employees;

› building cross-functional working and reducing
complexity;

› 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.

*As of 31 December 2020

Diversity data

Females as a percentage

of total30%

26%

of production staff

66%

of administrative staff

Length of average service (years)

Less than 5 years 44%

5–10 years 18%

11–20 years 31%

More than 20 years 7%

Performance and development

Recruitment and people development are
critical parts of our long-term growth strategy,
ensuring that we have the right people to deliver
for our customers. We recognise the need
to invest in the training and development of our
people to fill our pipeline of talent, identify high
potential candidates and provide our people with
opportunities to grow and progress their careers
within the business.

We offer fast-track development opportunities
to our high potential employees. We are also
intent on developing our next generation
of senior executives. We support them with
coaching, mentoring and development programs
alongside practical management.

In 2020, we worked hard to continue our
commitment around learning and development,
moving many of our training and development
programs online, thus ensuring that we continued
to support the development of our people.

Diversity & inclusion

We continue to focus on diversity and inclusion.
We see diversity as a positive and we value,
encourage and support difference. We want
to ensure that we have access to the broadest
pool of talent available, selecting the best
candidates based on their ability to do the job.
We aim to offer equal opportunities for all our staff
regardless of race, religious or political beliefs,
marital status, age, gender, sexual orientation
or disability. Our approach is set out in our Code
of Ethics 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.

We aim to recruit and retain the best employees
in our sector, offering a competitive benefits
package that incentivises our people to succeed
and recognises and rewards outstanding
performance and behaviours. 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.

As at the year-end, 30% of our total workforce
was female, including 26% of production
staff and 66% of administrative staff. On our
Board of Directors, women account for 27%
of the membership and two out of the three
independent directors. We continue to look
at ways further to promote diversity at all levels
of the organisation.

Global Ports Investments PLC Annual Report 2020

globalports.com

RUB91mln

on various environmental
protection measures

(Equivalent of 1.3 USD million)

Environment

Protecting the environment

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 continue to examine 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
2021. 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.

Water Usage

As a ports business, water is fundamental for
our operations and the communities around
them. We are committed to managing our water
resources more effectively. We have a particular
focus on minimising the impact of negative water
quality on the natural environment. As part of our
natural resource management, all accumulated
rainwater and wastewater is treated before being
returned to waterways.

Energy usage

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

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

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

Units

2018

2019

2020

kWh

2.14

2.08

1.69

l/t

0.45

0.46

0.44

USD

119

120

108

As the leading container ports business in Russia,
we recognise that there is a balance to be struck
between enabling trade flows whilst protecting
the environment. We consider ourselves stewards
of the places where we operate charged with
looking after the environment with diligence
and care. We aim to make sure that not only
do we minimise the environmental impact of our
activities, but that we make a positive difference
to the environmental outcomes.

Our environmental work is focused on many
priority areas: reducing energy consumption;
optimising our water usage and, improving our
waste management and recycling performance.
To address these issues the Group has invested
in installing energy efficiency schemes,
environmentally-beneficial waste management
solutions and enhanced environmental protection
measures. Over the last year this has involved
projects to upgrade wastewater treatment
facilities; install more energy efficient lighting;
install energy-efficient heating systems; upgrade
our stormwater drainage systems; and construct
pollution monitoring systems. In 2020 we spent
RUB 91 million (USD 1.3 million) on various
environmental protection measures at our
terminals, mainly at ULCT and VSC, as part of our
overall environmental investment programme
(2018–2021) in conjunction with regional
administrations.

We are also determined that our environmental
activities are transparent and accountable and
that we comply with all applicable environmental
regulations and requirements in each of the regions
where we operate. 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.

1
1

2
2

3
3

4
4

5
5

6
6

Waste Management

We aim to minimise the amount of waste our
terminals produce, reuse 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 review 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 practice development
in areas such as compliance, energy usage,
recycling and waste management.

WE AIM TO MAKE
SURE THAT NOT ONLY
DO WE MINIMISE THE
ENVIRONMENTAL
IMPACT OF OUR
ACTIVITIES, BUT THAT
WE MAKE A POSITIVE
DIFFERENCE TO THE
ENVIRONMENTAL
OUTCOMES.

Global Ports Investments PLC Annual Report 2020

globalports.com

ENVIRONMENT

Electricity used

Fuel used (diesel, petrol)

Water recycled

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)

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

Length of service (years)

Less than 5 years

5–10 years

11–20 years

More than 20 years

Number of sites

Political donations

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

Employee average age

Units

2018

2019

2020

Units

2018

2019

2020

thousand MWh

mln l

kWh

l/t

USD

number

yes / no

number

USD mln

number

41.9

9.1

2.14

0.45

119

1.28

26%

23%

30%

21%

yes

42.0

9.6

2.08

0.46

120

0.55

0.35

40%

19%

28%

12%

yes

39.8

10.6

1.69

0.44

108

100

0.54

44%

18%

31%

yes

2,700

2,870

2,7971

12%

0.1

14%

0.1

43.3

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 the Board

Tenure of the Board

< 1 year

1–4 years

> 4 years

number

Number of Board meetings for the year

number

Board meeting attendance

Board meeting attendance by Independent Directors

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

number

93.3

100.0

92.4

98.4

96.0

98.1

100.0

Total Board of Directors compensation paid

Total salaries and bonuses paid to executives

Auditor ratification

USD thou.

yes / no

1,188

10,041

yes

818

8,311

yes

245

3,743

yes

1as of the end of period
*The full list of ESG disclosure metrics can be found in our latest databook on www.globalports.com/en/investors/reports-and-results.

Global Ports Investments PLC Annual Report 2020

globalports.com

CORPORATE
GOVERNANCE

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

Global Ports
at a Glance

Strategic
Report

Corporate
Governance

Consolidated
Financial
Statements

Parent
Company
Financial
Statements

Additional
Information

64
64

Global Ports Investments PLC Annual Report 2020
Global Ports Investments PLC Annual Report 2020

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globalports.com

65
65

CORPORATE
GOVERNANCE

3Independent

directors

3Committees

50Board

average
age

30Board

of Directors
age range

members of the Board
of Directors

USD245 thou.

The total remuneration of the members
of the Board of Directors

Board independence, %

Tenure of the Board, %

Non-Executive Directors 73% 8
Independent Non-Executive
Directors 27% 3

< 1 year 18% 2
1–4 years 82% 9

Board diversity: the whole Board, %

Board diversity: Independent Directors, %

Superior mix of knowledge and experience

International business

International taxation

Business administration

Transport & logistics

Finance

Audit & accounting

Law

Technology

Investment banking

Code of Ethics

Global Ports’ Code of Ethics 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 Group is determined to adhere to the
highest standards of corporate governance;
a revised version of the Code aimed at simplifying
and updating the Group’s mission, values and
standards of corporate engagement was adopted
by the Board on 18 August 2020.

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. In 2020 all employees were tested
for knowledge of the updated Сode. 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.

The Code is accessible to all staff via the Group’s
website (under the 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.

Role 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 the value and importance of good
governance in creating and sustaining a strong
corporate culture. The Board acknowledges that
its role is to lead by example and set the right
tone in terms of the behaviours expected of the
Group. The Board’s composition ensures 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.

Male 73% 8
Female 27% 3

Male 33% 1
Female 67% 2

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.

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.

Global Ports Investments PLC Annual Report 2020

globalports.com

Members of the Board of Directors

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
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 comprises of 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.

Profiles of each Director are set out on pages
72-77 of this Annual Report.

There were some changes to the composition
of the Board during 2020. Mr Soren Sjostrand
Jakobsen was appointed as Chairman of the Board
on 24 April 2020 succeeding Mr. Morten Engelstoft.
On 16 April 2020, Mr Ivan Besedin resigned
as a Director from the Board and was replaced
by Mr Andrey Yashchenko on the same date.
Mr Kristian Bai Hollund joined the Board as a Director
on 29 May 2020 replacing Mr Morten Engelstoft who
resigned from the Board on the same date.

Both new Board members were reviewed and
recommended for appointment by the Nomination
and Remuneration Committee.

There were no significant changes in the
responsibilities of the Directors during 2020
except for membership in the committees
as described above.

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
ensure 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 management, and Independent
and Non-Independent Directors, with a view
to encourage dialogue and constructive
relations. The Chairman also works closely with
Non-Executive Directors. The Group separates
the positions of the Chairman and CEO
to ensure appropriate segregation of roles and
responsibilities.

Board Committees

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.

Further details on the Board committees can
be found in the Management Report on pages
16-23.

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.

CORPORATE GOVERNANCE
STRUCTURE

Board of Directors

members

Chairman

SOREN SJOSTRAND JAKOBSEN
Leads the Board and ensures
its effectiveness

3Independent

Directors

Chaired by Independent Director

Chaired by
Non-Executive Director

AUDIT AND RISK COMMITTEE

NOMINATION AND
REMUNERATION COMMITTEE

STRATEGY COMMITTEE

5 members, including
3 Independent Directors

3 members, including
1 Independent Director

5 members, including
1 Independent Director

Secretary of the Board of Directors

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

Executive management

Internal audit

Global Ports Investments PLC Annual Report 2020

globalports.com

General Manager

Internal audit

Shareholder Engagement

Alexander Iodchin occupies the position of General
Manager of the Company 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 and is the Chief
Strategy and Business Development Officer
at Global Ports Group pursuant to Board's decision
on 29 October 2020.

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 participating in any incentive plans
operated by the Group. The Chairwomen
of the Audit and Risk and Nomination and
Remuneration Committees receive additional
remuneration.

The shareholders of the Company approved
the remuneration of the members of the Board
on 29 June 2018, 30 December 2019, 16 April
2020 and 29 May 2020.

The total remuneration of the members of the Board
of Directors paid by the Group and its subsidiaries
in 2020 amounted to USD 245 thousand (2019:
USD 818 thousand), including EUR 75 thousand
paid to Mrs. Britta Dalunde, EUR 75 thousand
to Mrs. Inna Kuznetsova and EUR 65 thousand
to Mr. Lambros Papadopoulos1.

The Group’s centralised Internal Audit Service
(IAS) provides independent, objective assurance,
advice and insight designed to protect, add value
to and improve Global Ports’ operations.

The scope of its audit activities include reviewing
and reporting on the effectiveness of the Group’s
corporate, financial controls, and IT controls.
The independence and objectivity of IAS is 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 2020, the shareholders of Global Ports
reappointed PricewaterhouseCoopers
as the independent external auditor for
the purposes of auditing the Group’s IFRS
financial statements for 2020.

As of 2021, KPMG Ltd will be proposed to take
over from PricewaterhouseCoopers Limited
as the independent external auditor. A resolution
approving the appointment of KPMG as the external
auditor for the purposes of auditing the Group’s
IFRS financial statements for 2021 and authorising
the Board of Directors to fix their remuneration
will be proposed at the next Annual General
Meeting that will take place in 2021.

1 USD Equivalents: USD 85.5 thousand, USD 85.5 thousand and USD 74 thousand respectively.

The Company’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 rules 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.

Shareholders are a key consideration in Board
decision-making and the Group has an active
approach to shareholder engagement. Members
of the executive management team meet regularly
with investors, investment analysts, debt investors
and ESG analysts to discuss with and seek their
views on a range of issues including strategy,
business performance, corporate governance
and ESG matters. This is undertaken through
a structured programme of roadshows, meetings,
investor conferences, industry events and site-visits.
Although the pandemic meant that shareholder
meetings were largely conducted on-line
or by telephone, it did not affect the Group’s
ability to engage with shareholders. Management
conducted over 180 online meetings and
participated in 9 virtual investor conferences and
roadshows in 2020.

In 2020 the Group commenced quarterly reporting
of our operational results, increased IFRS and
management reporting speed and an updated
corporate website with a developed investor
section.

Shareholders can access up-to-date information
on Global Ports through the Company’s website,
which has 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.

1
1

2
2

3
3

4
4

5
5

6
6

MIKHAIL GRIGORIEV
Head of Capital Markets and Investor Relations
of Global Ports Management LLC

Our focus this year has been on improving
transparency for investor audiences and other
stakeholders. Our efforts have delivered quarterly
reporting of our operational results, increased
IFRS and management reporting speed and
an updated corporate website with a developed
investor section.

Global Ports Investments PLC Annual Report 2020

globalports.com

BOARD
OF DIRECTORS

100% Meeting

participation

SOREN SJOSTRAND JAKOBSEN
Chairman of the Board of Directors since 24 April 2020,
Non-Executive Director, Member of Nomination and Remuneration
and Strategy Committees

Mr. Jakobsen was appointed as a Non-Executive Member of the Board
of Directors of Global Ports in March 2018.

Mr. Jakobsen brings extensive international experience in the maritime
industry as well as port development and operation as a result of his
41- year career at A.P. Moller — Maersk Group, having spent the last
16 years with APM Terminals. Mr. Jakobsen has been based in Dubai,
UAE since 2013, and until 2019 as Portfolio Manager for APM Terminal’s
Africa, Middle East and South Asia joint venture portfolio. Since early
2019, Mr. Jakobsen focused on APM Terminal’s Russia portfolio as well its
joint venture interests globally. Mr. Jakobsen also serves on the board of
various APM Terminals joint venture companies including two 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 of executive education courses at IMD
in Lausanne, Switzerland and INSEAD Business School in Fontainebleau,
France.

External Appointments
Mr. Jakobsen holds a number of other Board positions including: Sogester
S.A., Angola; Salalah Port Services Company SOAG, Oman; APM Terminals
Bahrain B.S.C.; LCB Container Terminal 1 Ltd, Thailand; South East Asia
Gateway Terminal Pvt. Ltd, Sri Lanka; Abidjan Terminal SETV, Ivory Coast;
and Meridian Port Services, Ghana.

BRITTA DALUNDE
Senior Independent Non-Executive Director,
Chairwoman of Audit and Risk Committee

Mrs. Dalunde was appointed as an Independent Non-Executive Member
of the Board of Directors of the Company in May 2017.

Mrs. Dalunde has over 30 years’ experience as an executive and a board
member of various companies. She held the role of CFO at SJ AB,
the Swedish national rail operator, from 2009 until 2013. She has almost
25 years’ experience working as a CFO while working in different
industries including transportation, engineering and IT.

Mrs. Dalunde’s prior board engagements include Projektengagemang
Sweden AB and Boule Diagnostics AB, both listed on NASDAQ Stockholm
as well as HANZA Group AB and Oniva Online Group Europe AB both
listed on Nasdaq First North, where she served as Independent Non-
Executive Director and chairwoman of audit committees.

Mrs. Dalunde owns 21,000 ordinary shares of Global Ports Investments PLC
(7,000 GDRs)1.

External Appointments
Mrs. Dalunde currently also serves an Independent Non-Executive Director
of ForSea Ferries AB, Nordion Energy AB, Arlandabanan Infrastructure
AB and as Chairman of Chorus AB.

ALEXANDRA FOMENKO
Non-Executive Director, Member of Nomination
and Remuneration Committee

Ms. Alexandra Fomenko was appointed as a Non-Executive Member
of the Board of Directors of Global Ports in June 2019.

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 the
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.

100% Meeting

participation

100% Meeting

participation

Global Ports Investments PLC Annual Report 2020

globalports.com

In alphabetical order

1 Only direct holding of Global Ports Investments PLC is disclosed. For more details see Management report.

KRISTIAN BAI HOLLUND
Non-Executive Director

Mr. Hollund was appointed as a Non-Executive Member of the Board
of Directors of Global Ports in May 2020.

Mr. Hollund is an experienced finance leader and CFO with 16 years’
global experience in a highly international environment. He was appointed
as Operations CFO of APM Terminals in December 2018. Prior to this,
he was Commercial CFO at Maersk Line for four years and has held
a number of senior financial roles at the company since he joined in 2007
including CFO China, CFO Netherlands and Finance Manager Central
Europe, demonstrating an ability to lead large transformations in different
geographies. He first joined A.P Moller — Maersk Group in 2005 as
a financial controller.

Mr. Hollund holds an Executive MBA from IMD in Lausanne, Switzerland
as well as an MSc in Finance and BSc in International Business from
the University of Aarhus, Denmark.

External Appointments
Operations CFO of APM Terminals.

DEMOS KATSIS
Non-Executive Director

Mr. Katsis was appointed as a Non-Executive Member of the Board
of Directors of Global Ports in May 2018.

Mr. Katsis is the founder, partner and managing director of Cyprus-based
Katsis LLC law firm, 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, M&A and advanced mitigation. Prior
to founding Katsis LLC in 2010, he worked at the George Georgiou LLC firm
from 1999 to 2003 and at other international law firms between 2003 and
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.

Mr. Katsis graduated with honours from the University of Bristol with
a Bachelor of Law and a Master of Laws. Additionally, he was awarded
a full E.U. scholarship to pursue a Masters’ degree in Human Rights
& Democratisation at the University of Malta.

He is also an active author of various articles in relation to corporate and
commercial issues and is a Professor at Pericles ABLE Project in Moscow.

External Appointments
Partner and managing director of Katsis LLC.

100% Meeting

participation

100% Meeting

participation

100% Meeting

participation

100% Meeting

participation

Global Ports Investments PLC Annual Report 2020

globalports.com

SHAVKAT KARY-NIYAZOV
Non-Executive Director

Mr. Shavkat Kary-Niyazov was appointed as a Non-Executive Member
of the Board of Directors of Global Ports in June 2019.

A mathematician and academic, 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 became Managing
Director of SL Capital Services Ltd (Cyprus), an international financial company
and portfolio company of the merged group from 2002 to 2005.

Mr. Kary-Niyazov has 15 years’ experience in the transport industry, becoming
President of Marine Façade, St. Petersburg, and a 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 this role, he served as President of 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 State University with a Masters
degree in Mathematics (with honours), which he followed up with a PhD
in topology and geometry at the same university.

External Appointments
President of First Quantum Group.

INNA KUZNETSOVA
Independent Non-Executive Director, Chairwoman of Nomination
and Remuneration Committee, Member of Audit and Risk Committee

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

Mrs. Kuznetsova is the CEO and Board member 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 this, 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 FTSE 100 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.

External Appointments
CEO, 1010data.

LAMBROS PAPADOPOULOS
Independent Non-Executive Director, Member of Audit and Risk and
Strategy Committees

Mr. Papadopoulos was appointed as an Independent Non-Executive
Member of the Board of Directors of Global Ports in December 2017,
effective January 2018.

Mr. Papadopoulos has over 28 years’ experience as an executive and
a board member of various companies. In 2013, Mr. Papadopoulos founded
PenteP Advisors Ltd. Prior to this, 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.

100% Meeting

participation

Mr. Papadopoulos studied Accounting with Computing (B.A.(Hons))
at the University of Kent in Canterbury, UK. He is a Member of the Institute
of Chartered Accountants in England and Wales.

100% Meeting

participation

External Appointments
Mr. Papadopoulos also currently 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).

MOGENS PETERSEN
Non-Executive Director, Member of Audit and Risk and Strategy
Committees

Mr. Petersen was appointed as an Independent Non-Executive Member
of the Board of Directors of Global Ports in June 2019.

Mr. Petersen has over 13 years’ experience in the transport, seaports and
shipping industries. He has held the position of APM Terminals’ Portfolio
Manager, Russia and the Baltics since November 2018. He first joined
APM Terminals in 2007 and held various finance roles globally before
becoming Senior Advisor in Finance, Strategy, Audit & Risk at Global Ports
Investments Plc from 2014 to 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 in Economics from the University of Aarhus, Denmark and
a degree in Finance and Economics (DEA) from the Université Louis
Pasteur, Strasbourg.

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

100% Meeting

participation

100% Meeting

participation

Global Ports Investments PLC Annual Report 2020

globalports.com

SERGEY SHISHKAREV
Non-Executive Director, Chairman of Strategy Committee

Mr. Shishkarev was appointed as a Non- Executive Member of the Board
of Directors of Global Ports in May 2018.

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. He returned 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.

External Appointments
Mr. Shishkarev is the President of Delo Group, the Chairman of the Board
of Directors of PJSC Transcontainer and the President of the Handball
Federation of Russia.

ANDREY YASHCHENKO
Non-Executive Director, Member of Audit and Risk and Strategy
Committees

Mr. Yashchenko was appointed as a Non-Executive Member of the Board
of Directors of Global Ports in April 2020.

He serves as the Senior Vice President, Strategy and Finance of Delo
Group, having joined the group in 2018 as CEO of the Management
Company Delo, a position he held between 2018 and 2019. Between
2013 and 2018, Mr. Yashchenko held the position of the Chief Financial
Officer in En+ Group, the leading global vertically integrated producer
of aluminium and power. Prior to this, he was the First Vice President and
CFO at Russian Platinum (2011–2012), held the positions of Deputy CFO
and Corporate Finance Director at Basic Element (2006–2010) and was
Capital Markets Director at Rusal (2000–2006).

Earlier in his career, Mr. Yashchenko held various corporate finance
and strategic development positions at the Tyumen Oil Company, worked
as an auditor at Deloitte, and then as an investment analyst in MC Securities
and Montes Auri. He has wide experience of corporate activity including
equity and debt financing in international and Russian markets, financial
strategy development and capital structure optimisation, as well as international
M&A, corporate restructuring and holding structure development.

Mr. Yashchenko graduated from the Moscow State University with a degree
in Economics with honours. He is also a CFA Charterholder and a Member
of the CFA Institute.

External Appointments
Senior Vice-President on Strategy and Finance, Management Company “Delo”.

EXECUTIVE
MANAGEMENT

ALBERT LIKHOLET
CEO of Global Ports Management LLC, Managing Director
of Petrolesport and First Container Terminal

Mr. Likholet was appointed CEO of Global Ports Management LLC in July
2020. He has also held the positions of Managing Director of Petrolesport
since August 2018 and Managing Director of First Container Terminal since
May 2019.

Prior to joining Global Ports, Mr. Likholet was CEO of 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 began 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 holding a number of management positions. Under his
management, NLE was converted into a modern container terminal through
several stages of investment, while retaining historic bulk and general cargoes.

He holds a degree in Management & Economics from the Novorossiysk
State Maritime Academy.

BRIAN BITSCH
Chief Commercial Officer of Global Ports Management LLC

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

Before his appointment, he was Chief Commercial Officer at Sogester
S.A. in Angola between 2011 and 2017. Prior to this, he was a management
consultant in Denmark for several years, and between 2006 and 2008
served in various senior executive roles at MSC Scandinavia Holding A/S.

Mr. Bitsch started his career in 1990 as a trainee at Maersk and worked
there for 16 years, holding various departments and regions, progressing
to Senior General Manager. During his time at Maersk, Mr. Bitsch worked
in Denmark, the US, Bulgaria and Angola.

Mr. Bitsch has completed A.P. Møller Shipping School and holds a Graduate
Diploma in Business Administration from Copenhagen Business School
as well as a YMP from INSEAD.

In alphabetical order

Global Ports Investments PLC Annual Report 2020

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ALEKSEY ERMOLIN
Chief Information Officer, Global Ports Management LLC

Mr. Ermolin was appointed as Chief Information Officer of Global Ports
Management LLC in June 2020.

He has had a pivotal role in the technological transformation of the Group. He
began as Director of IT at First Container Terminal in 1988, contributing to the
transformation project across the business, successfully leading the project
to implement the first terminal operation system (TOS) in Russia. From 2007,
he then headed the IT department of National Container Company (NCC),
managing the development of information technology across the group and
led the digitalisation projects at NCC’s terminals. Following the merger of
Global Ports and National Container Company in 2014, Mr. Ermolin took on the
position of Chief of IT Department for the enlarged Global Ports Group.

Mr. Ermolin is a graduate of the Physics Department of St. Petersburg State
University and holds a PhD in Theoretical Physics

ALEXANDER IODCHIN
Chief Strategy and Business Development Officer of Global Ports

Mr. Iodchin was appointed Chief Strategy and Business Development
Officer of Global Ports in October 2020.

He first joined Global Ports in 2008, serving as an Executive Member
of the Board of Directors of the Company from 2008 to 2019 as well
as holding the position of Secretary of the Board of Directors of Global
Ports Investments PLC since 2008. Mr. Iodchin currently also serves as the
Chairman of the Board of Directors First Container Terminal Inc and
JSC Ust-Luga Container Terminal and other companies of the Group,
as well as the General Manager of Global Ports Investments Plc.

Mr. Iodchin is responsible for development and implementation
of the Group Strategy, business development projects as well as relations
with the joint-venture partners. Mr. Iodchin is also responsible for corporate
governance matters and supervises the activities of holding and finance
companies within the Group. He has taken an active role in all major
financing and M&A transactions of the Group during his tenure.

Mr. Iodchin obtained both a Master’s degree and a PhD in Economics from
the Moscow State University. He also completed a postgraduate programme
at the Moscow Institute for Economics and Linguistics and has a diploma
in international finance, reporting standards and corporate finance.

MARC NIEDERER
Chief Operational Officer of Global Ports Management LLC

Mr. Niederer was appointed Chief Operational Officer of Global Ports
Management LLC in October 2020.

Mr. Niederer has over 26 years of experience in infrastructure
management, most recently, as a Vice President at AP Møller Maersk.
He has also held the position of Managing Director Americas for Svitzer
(one of the largest towage companies in the world, part of AP Møller
Maersk Group) where he focused on growing the business in Latin
America.

Mr. Niederer began his career in 1993 with P&O Nedlloyd, part of Royal
Nedlloyd Group, holding various sales and trade manager roles across
Europe, Australia and Africa before becoming Managing Director of Russia,
Ukraine, Georgia and the Baltics in 2002. Once the company was
bought by Maersk in 2006, Mr. Niederer took up managing roles in the
Mediterranean, Northern Europe and North America before being based
in the UK, managing Svitzer Europe from 2012.

Educated in the Netherlands, he holds a BBA from Nyenrode and an MSc
Economics from the University of Groningen. He also holds an MBA with
High Honors from Chicago Booth Business School and continues his
management training on an ongoing basis through the Harvard & IMD
Lausanne Executive Training programme.

ALEXANDER ROSLAVTSEV
Chief Financial Officer of Global Ports Management LLC

Mr. Roslavtsev was appointed Chief Financial Officer of Global Ports
Management LLC in September 2017.

Mr. Roslavtsev has over 15 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. Prior to this,
he was CFO of Hewlett-Packard Russia and CIS from 2010 to 2016 and
CFO and Vice-President of Rosinter Restaurants Holding from 2006
to 2010. Mr. Roslavtsev also has a track record of international experience
having worked for Intel Corporation, Ford Motor Company, KPMG UK and
KPMG Russia.

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. He is a member of the
Association of Chartered Certified Accountants (ACCA).

TERMINAL
DIRECTORS

DIRK VAN ASSENDELFT
General Manager of Multi-Link Terminals

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.

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.

ANDREY BOGDANOV
Managing Director of Ust-Luga Container Terminal

Mr. Bogdanov was appointed Managing Director of the Ust-Luga Container
Terminal in 2018, where he had served as General Manager since 2012.

Prior to joining Ust-Luga, for five years Andrey Bogdanov 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, Mr. Bogdanov held the position of Chief Executive Officer of MCT
PORT. From 1993, he served as Head of Department of MCT PORT, 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.

Global Ports Investments PLC Annual Report 2020

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In alphabetical order

ILIA DOLGIY
Acting Managing Director of VSC

Mr. Dolgiy was appointed as acting Management Director of VSC
in April 2021.

Mr. Dolgiy joined Global Ports in 2019 as Head of Department for
operational efficiency and strategic projects and subsequently became
Deputy Chief Operating Officer in May 2020. In both of these roles,
Mr. Dolgiy made a significant contribution to the improvement in
operational efficiency across the Group’s terminals. Mr. Dolgiy was
appointed Executive Director of VSC in January 2021. Between 2007 and
2018, Mr. Dolgiy held various positions at Ruskon, one of Russia's leading
container rail transportation companies, commencing his career there as
Chief Engineer and last holding the position of Deputy CEO. Prior to this,
Mr Dolgiy held various positions at Novorossiysk Commercial Sea Port
between 2000 and 2007.

Mr. Dolgiy graduated with honours from the South-Russian State
Polytechnic University.

Mr. Dolgiy was appointed as acting Management Director of Vostochnaya Stevedoring Company (VSC)
after Mr. Alexey Pavlenko stepped down 6 April 2021 to pursue other opportunities outside the Group.

IVAN RADCHENKO
General Manager of Moby Dik terminal and Yanino Logistics Park

Ivan Radchenko was appointed General Manager of Yanino Logistics Park
in September 2018 and General Manager of Moby Dik in November 2020.

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 was the
manager of Global Ports’ Moby Dik container terminal, and a Senior Sales
Manager at Yanino Logistics Park between 2010 and 2011. Ivan Radchenko
began his career as Head of Analysis and Forecast Division at Commercial
Port of Vladivostok JSC in 2006.

Mr. Radchenko holds a bachelor’s degree with honors from Russia’s Far
Eastern State Technical Fisheries University.

MORTEN ENGELSTOFT
Former Chairman of the Board of Directors, Non-Executive Director

Mr. Engelstof served as the Chairman of the Board of Directors from
October 2016 until April 2020.

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.

VLADIMIR BYCHKOV
Former Chief Executive Officer of Global Ports Management LLC

Mr. Bychkov served as the Chief Executive Officer of Global Ports
Management LLC from July 2018 until July 2020.

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.

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RISK
MANAGEMENT

Risk Management Process, Principal Risks and Uncertainties

Global Ports is exposed to various 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. Therefore, effective management of risk
is critical to achieving the corporate objective
of delivering long-term growth and added value
to our shareholders.

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 (ERM)
processes are 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.

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 strategy.
Where a risk has been identified and assessed,
the Group selects the most appropriate risk
measure available to reduce the likelihood of its
occurrence and mitigate any potential adverse
impact.

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
enterprise risk management (ERM) system.

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.

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

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

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

The Board delegates to the Chief Executive
Officer of LLC Global Ports Management

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

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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/
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.

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, which
is also supported by the existing excess capacity in the market,
i.e. in the North-West of Russia. 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 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.

Also, Beneficial Cargo Owners may optimise their logistics
chains and decide to control them, which may lead to changes
in the competitive environment. Given the historically high margins
in the Russian container handling industry, this trend may continue.

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

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

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

Risk management approach

Risk factor

Risk management approach

Coronavirus (COVID-19):
The global coronavirus (COVID-19) pandemic that emerged during
2020 impacted the container ports industry and Global Ports own
operations, resulting in significant interruption to global trade,
disruption to supply chains, reshuffling of vessel calls, and high FX
volatility.

Despite the introduction of vaccination programmes, visibility
remains low and there remains a risk of future outbreaks and
disruptions to business operations. Risks include:

› personnel shortages due to COVID-19 related illness;

› inability to deliver contracted services due to regulatory or safety
requirements;

› loss of revenue due to business interruption, loss of customer
volumes or customer withdrawals;

› additional process steps or safety measures;

› liquidity issues associated with delays in customer payments,
potential customer failures or availability of financing.

There are no restrictions imposed by the governments on the
operations of ports, since they are considered being the core
transport infrastructure servicing the inbound and outbound traffic
from the country.

Group measures to mitigate risk are grouped under/focused
on four main priorities:

› protecting all employees (operations and admin) and
communities: including medical examinations, restrictions
on travelling and external/internal meetings, social distancing,
additional disinfection according to the schedule, personal
protective equipment provided for personnel, improved cleaning,
and COVID-19 tests. Administrative staff was moved to work from
home. The Group tried to establish the maximum comfort for its
employees during remote work. The IT infrastructure was adapted
to new challenges and was working without major failures. As
of the date of publication of this Annual Report, the employees
were not fully returned from working from home. The Group has
not taken a final decision, whether some of the employees shall
continue working from home going forward. Any return to the
office is and will be accompanied by following the strict safety
protocols including social distancing, disinfection, use of masks,
limitation of external contacts;

› supporting customers: uninterrupted 24/7 round the clock
operations (quay, yard and gates), to support and protect
customers’ supply chains in Russia, improved commercial and
operational flexibility;

› strengthening online channels, including maximum digitalisation
of documentation and customer integration, further development
of online-solutions to decrease the necessity of client’s presence
at the terminal, improvement of resilience of IT systems to external
shocks and cyber attacks;

› ensuring financial stability and cash preservation, including
pro-active management of costs, receivables and capacity for
effective adaptation to crisis and its consequences, stress testing
of financial performance and liquidity position, revisiting financial
plans.

All these measures implemented ensured that the terminals
of the Group (quay, yard and gates) remained 100% operational
to service vessels/handle cargoes throughout the pandemic
as well as the call and service centres of the Group were working
without interruption.

The Group has responded to throughput volatility 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;

› development of IT solutions;

› 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 strategic relationships with its leading customers
(locally, regionally and with headquarters).

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 continues to invest in its terminals and infrastructure
to ensure competitive levels of service. It takes a long-term
approach to managing its network of terminals that represent core
infrastructure assets in Russia with an expected operating lifespan
of 10 to 20 years and beyond. The Group owns a significant land
bank giving it flexibility should market conditions require it. The
Group maintains the level of capital expenditure in line with the
requirements needed to maintain effective development of its
existing capacity. The Group has developed long-term operating
masterplans for each of its terminals 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
programme.

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 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.

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Risk factor

Operational risks

Risk management approach

Risk factor

Risk management approach

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.

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

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

The Group has a clear strategy to reduce its dependence on its
major customers, by targeting new 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 by building its presence in marine bulk cargoes like
coal and scrap metal (share of non-container revenue was 26%
and 22% in 2019 and 2020 respectively).

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.

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.

Tariff regulation:
Tariffs for certain services at some 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.

All tariffs are set in Russian roubles. To the best of the knowledge
of the Group’s management, the Group is in full compliance with
the tariff legislation.

The Group continues to monitor 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 trends and aligns
employee salaries and benefits 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.

Health, safety, security and environment:
Accidents involving handling hazardous materials at the Group’s
terminals could disrupt its business and operations and/or subject
the Group to environmental and other liabilities.

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

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

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

Safety is one of the Group’s top priorities. A safety strategy and
annual action plans 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.

GPI is constantly improving its safety practices by involving the
employees in identifying and mitigating potential safety risks.

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

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 significant 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 significant disruptions in terminal
operations. This could dramatically affect the Group’s ability
to render its services to customers, leading to reputational damage,
disruption to business operations and an inability to meet its
contractual obligations.

The Group has centralised its IT function in recent years
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 comply at all times with all regulations
governing its activities and devotes considerable management
and financial resources to ensure compliance.

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

Changes in regulations:

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

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

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Risk factor

Risk management approach

Conflict of interests:

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

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

The employees of the Group may have interests in the companies,
that may or potentially may have the business with 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.

In 2020 the Group adopted the Policy on Conflicts of Interest
regulating the potential conflicts of interest by the employees
of the Group.

Legal and tax risks:

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

The UK left the EU on 31 January 2020 with the prior conclusion
of the EU — UK Trade and Cooperation Agreement. Although the
Agreement covers the financial services in general, it is expected
that the parties will further establish a framework for regulatory
cooperation on financial services.

Financial risks

Foreign exchange 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 of fluctuations in profits and cash
flows of the Group arising from movement of foreign-exchange
rates. Risk also arises from revaluation of assets and liabilities
denominated in foreign currency.

The Group maintains a solid and professional legal function
designed to monitor legal risks, avoid legal actions where
possible and carefully oversee any changes in applicable
legislation 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.

As of 2020, all Group tariffs are denominated in Russian roubles,
and part of the Group’s debt is denominated in US dollars. On the
other hand most of the Group’s operating expenses, are and will
continue to be denominated and settled in RUB.

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 is converting
part of its existing USD debt into RUB, the currency of revenue.
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 2018–2020,
the Group repurchased part of its USD denominated Eurobonds
and currently/to date around 29% of the total issued Eurobonds
have been canceled. New debt in 2020 was attracted/raised only
in Russian rouble (VSС bonds in the amount of 5 billion RUB–USD
equivalent of USD 67,681 thousand). In addition, the Group has
negotiated with some of its customers the right to change its
Russian rouble tariffs in conjunction with RUB/USD exchange rate
fluctuations within a range of +/-15% each time when average
RUB/USD exchange rate for a given month falls beyond 5% from
the base exchange rate used for translating original USD tariffs
to RUB, however the risk above the levels of these currency
moves remains.

Risk factor

Credit risk:

The Group may be subject to credit risk, arising primarily from
trade and other receivables, loans receivable and cash and cash
equivalents and derivative financial instruments.

The Group’s business is also dependent on several large key
customers.

Debt, leverage and liquidity:

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

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

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

Risk management approach

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

The Group has been able to reduce its total debt level.
During 2018–2020 the Group repurchased USD 203.5
million nominal value of 2022 and 2023 Eurobonds of which
USD 69.5 million were refinanced via a 5 year/60 month RUB
bank loan in 2019. FCT Series 1 Bonds were repaid in 2020 using
the proceeds from VSC bonds issued in December 2020 with
maturity over 5 years and lower interest rate than FCT bonds.
Debt reduction beyond minimum repayment requirements
remains a management priority in 2021.

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 issuance in 2020:

VSС issued Russian rouble bonds in the amount of 5 billion
RUB — USD equivalent of USD 67,681 thousand, which
is a part of the rouble-denominated Bond Program of VSC
with Moscow Exchange which provides VSC with the potential
to issue additional bonds of RUB 25 billion — USD equivalent
of USD 338,406 thousand over an unlimited period of time with
a maturity of up to 10 years. FCT has a similar Bond Program
for RUB 50 billion — USD equivalent of USD 676,813 thousand.
In addition the Group has over US dollars 300 million of open
uncommitted limits for credit line facilities from the banks which
in combination with VSC and FCT bonds can facilitate financial
flexibility and diversification of the debt portfolio of the Group
and the refinancing of the existing debt of the Group and ensure
all obligations of the Group falling due in the next 12 months are
met. The Group regularly stress tests scenarios when different
negative trends that could affect cash flows are identified.
The liquidity position is carefully monitored in case of further
deterioration of financial performance.

Multi-Link Terminals Ltd Oy, a Finnish joint venture of the Group,
secured a waiver from its financing bank confirming that the bank
will not exercise its right for an early prepayment of the loan due
to breach of financial covenants as of 31 December 2020.

Global Ports Investments PLC Annual Report 2020

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Global Ports
at a Glance

Strategic
Report

Corporate
Governance

Consolidated
Financial
Statements

Parent
Company
Financial
Statements

Additional
Information

CONSOLIDATED

FINANCIAL
STATEMENTS

Global Ports Investments PLC Annual Report 2020
Global Ports Investments PLC Annual Report 2020

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TABLE OF CONTENTS

Board of Directors and Other Officers

Management Report

Directors’ Responsibility Statement

Consolidated Income Statement for the year ended 31 December 2020

Consolidated Statement of Comprehensive Income for the year ended 31 December 2020

Consolidated Balance Sheet as at 31 December 2020

Consolidated Statement of Changes in Equity for the year ended 31 December 2020

Consolidated Statement of Cash Flows for the year ended 31 December 2020

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

Joint ventures and non-controlling interests

28 Contingencies

29 Commitments

30 Related party transactions

Events after the balance sheet date

Independent Auditor’s Report

Global Ports Investments PLC Annual Report 2020

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BOARD OF DIRECTORS AND OTHER OFFICERS (CONTINUED)

Registered office

20 Omirou Street
Ayios Nicolaos
CY-3095 Limassol
Cyprus

Secretary

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

BOARD OF DIRECTORS
AND OTHER OFFICERS

Board of Directors

Mr. Soren Jakobsen (appointed 02 March 2018)
(Mr. Mogens Petersen is the alternate to Mr. Soren Jakobsen)
Chairman of the Board of Directors since 24 April 2020, Non-Executive Director, Member of Nomination and Remuneration and Strategy
Committees

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

Mr. Kristian Bai Hollund (appointed 29 May 2020)
(Mr. Soren Jakobsen is the alternate to Mr. Kristian Bai Hollund)
Non-executive Director

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

Mr. Andrey Yashchenko (appointed 16 April 2020)
Non-executive Director, Member of Audit and Risk and Strategy Committees

Mr. Morten Henrick Engelstoft resigned 29 May 2020

Mr. Ivan Besedin resigned 16 April 2020

Global Ports Investments PLC Annual Report 2020

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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” or “Global Ports”) and its subsidiaries and joint ventures (hereafter collectively
referred to as the “Group”) for the year ended 31 December 2020. 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

9. Consolidated revenue increased by 6.2% to USD 384.4 million. Excluding the impact of VSC transportation services, like-for-like revenue

declined by 8.2% driven by a decrease in both Consolidated Container and Non-Container Revenue.

10. Like-for-like Revenue per TEU decreased by 13% to USD 155.1 million as a result of depreciation of the Russian rouble against US dollar,

the growing share of full export containers in Group throughput and additional free storage days and other incentives provided by the Group
to its clients in order to support them on the back of the global and local macroeconomic turmoil following the COVID-19 outbreak. Like-for-
like Revenue per TEU adjusted for FX decreased by 2.7%.

2. The principal activities of the Group are the operation of container and general cargo terminals in Russia and Finland. The Group offers

11. Operating profit increased by 8.7% to USD 157.4 million.

its customers a wide range of services for their import and export logistics operations. There were no changes in principal activities of
the Group in current year.

Results

3. The Group’s results for the year are set out on pages 28 and 29.

Changes in group structure

12. In response to COVID-19 conditions, cost control measures were implemented to manage and reduce the Group’s cost base. Like-for-like

Total Operating Cash Costs were successfully and safely reduced by 9.7% to USD 113.2 million despite the healthy growth in both container
and non-container throughput.

13. Adjusted EBITDA decreased by 7.6% to USD 209.7 million as cost control improvements and volume growth could not offset the decline in
Revenue per TEU and US dollar equivalent of Russian rouble nominated bulk handling tariffs due to the depreciation of the Russian rouble
as a result of COVID-19. Profitability was nonetheless maintained with like-for-like Adjusted EBITDA Margin of 65.2%.

4. The management continues the optimization of the Group structure and elimination of the excess companies from the Group. As a part of

14. The Group’s capital expenditure in 2020 was USD 33.9 million and focused on planned maintenance projects, scheduled upgrades of

simplification and streamlining of Group structure the following steps were implemented in 2020.
a. On 30.01.2020 NCC Pacific Investments Ltd transferred to Global Ports Investments Plc 99.98% in Global Ports (Finance) PLC and

existing container handling equipment and customer service improvement initiatives.

Intercross Investments B.V. sold one share of Global Ports (Finance) PLC to LLC Global Ports Management.

15. The Group generated a healthy USD 157.1 million of Free Cash Flow (-1.1% compared to 2019) demonstrating the resilience of the business

b. On 19.05.2020 Intercross Investments B.V. was dissolved.
c. On 10.07.2020 Arytano Holdings Limited, Cormarys Investments Ltd and NCC Group Limited transferred their shares of Global Ports
(Finance) PLC to Vostochnaya Stevedoring LLC, JSC Petrolesport and First Container Terminal Incorporated respectively (each one
share).

d. On 25.09.2020 Global Ports Investments Plc purchased 4.76% in Alocasia CO. Ltd from NCC Group Limited.
e. Container Services LLC was merged into Farvater LLC on 03.12.2020.
f. On 04.12.2020 a legal merger of Arytano Holdings Limited, Cormarys Investments Ltd and NCC Pacific Investments Ltd into National
Container Holding Company Ltd was completed. As a result of the reorganisation, National Container Holding Company Ltd directly
holds 100% in Vostochnaya Stevedoring Company LLC, JSC Petrolesport, Farvater LLC and Shakhovo-18 LLC and indirectly owns 100%
in First Container Terminal Inc and 80% in Ust-Luga Container Terminal JSC.
g. A members’ voluntary liquidation of NCC Group Limited was initiated in late 2020.

These reorganisations did not have an impact on the underlying assets/liabilities and overall activities of the Group.

5. 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 and will continue its efforts in the following years.

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

6. The Russian container market demonstrated resilience in 2020 declining by only 0.8%, supported by continuing growth in containerised
export by 5.2%. However, this growth was not sufficient to offset the decline of containerised import by a moderate 1.8% due to the global
and local macroeconomic impact of COVID-19.

7. Outperforming the market in both export and import, the Group’s Consolidated Marine Container Throughput increased by 6.6% to
1,553 thousand TEU with growth of full export containers of 16.8% and full import containers of 3.6%. As a result, share of full export
containers in the Groups’ Consolidated Marine Container Throughput increased from 40% in 2019 to 44% in 2020.

8. Consolidated Marine Bulk Throughput increased by 38.7% y-o-y, driven by strong growth in coal handling at VSC and ULCT as well as

growth of fertilisers and steel handling at PLP.

model.

16. The Group reduced Net Debt by USD 134.9 million over the year and continues to prioritise deleveraging over dividend distribution.

17.

In line with the Group’s focus on deleveraging, Net Debt to Adjusted EBITDA decreased from 3.3x as of 31 December 2019 to 2.9x as at
the end of the reporting period, achieving the lowest level since 2012.

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, write-off and impairment of property plant and equipment, depreciation and impairment of right-
of-use assets, amortisation, write-off and impairment of intangible assets, share of profit/(loss) of joint ventures accounted for using the equity
method, other gains/(losses)—net.

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.

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

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

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 the 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 2020

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MANAGEMENT REPORT (CONTINUED)

Future Developments of the Group

18. 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

19. Global Ports 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.

20. 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) are 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.

21. 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
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.

22. 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
Enterprise Risk Management (ERM) system.

23. 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.

24. 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.

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

the Consolidated Financial Statements attached to this report.

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

financial statements.

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

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.

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.

Competition:

Risk management approach

The Group has responded to throughput volatility 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;
— Development of IT solutions;
— Adopting new revenue streams and attracting new cargoes.

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, which
is also supported by the existing excess capacity in the market, i.e.
in the North-West of Russia. 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.

Also Beneficial Cargo Owners may optimise their logistics chains and
decide to control them, which may lead to changes in the competitive
environment.

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
strategic relationships with its leading customers (locally, regionally and
with headquarters).

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 continues to invest in its terminals and infrastructure to ensure
competitive levels of service. It takes a long-term approach to managing its
network of terminals that represent core infrastructure assets in Russia with
an expected operating lifespan of 10 to 20 years and beyond. The Group
owns a significant land bank giving it flexibility should market conditions
require it. The Group maintains level of capital expenditure in line with
the requirements needed to maintain effective development of its existing
capacity. The Group has developed long-term operating masterplans for
each of its terminals 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.

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MANAGEMENT REPORT (CONTINUED)

Risk factor

Risk management approach

Risk factor

Risk management approach

Political, economic and social stability:

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

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

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.

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 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 global coronavirus (COVID-19) pandemic that emerged during
2020 impacted the container ports industry and Global Ports own
operations, resulting in significant interruption to global trade,
disruption to supply chains, reshuffling of vessel calls, and high FX
volatility.

There are no restrictions imposed by the governments on the operations
of ports, since they are considered to be the core transport infrastructure
servicing the inbound and outbound traffic from the country.

Group measures to mitigate risk are grouped under/focused on four main
priorities:

Despite the introduction of vaccination programmes, visibility remains
low and there remains a risk of future outbreaks and disruptions to
business operations. Risks include:

— personnel shortages due to COVID-19 related illness;
— inability to deliver contracted services due to regulatory or safety

requirements;

— loss of revenue due to business interruption, loss of customer volumes

or customer withdrawals;

— additional process steps or safety measures;
— liquidity issues associated with delays in customer payments, potential

customer failures or availability of financing.

— Protecting all employees (operations and admin) and communities:

including medical examinations, restrictions on travelling and external/internal
meetings, social distancing, additional disinfection according to the schedule,
personal protective equipment provided for personnel, improved cleaning,
purchasing protective masks, gloves and COVID-19 tests for the local hospital
in Nakhodka, Far East. Administrative staff had been moved to work from
home. The Group tried to establish the maximum comfort for its employees
during remote work. The IT infrastructure was adapted to new challenges
and was working without major failures. As of the date of signing the financial
statements, the employees were not fully returned from working from home.
The Group has not taken final decision, whether some of the employees
shall continue working from home going forward. Any return to the office is
and will be accompanied by following the strict safety protocols including
social distancing, disinfection, use of masks, limitation of external contacts.

— Supporting customers: uninterrupted 24/7 round the clock operations (quay,
yard and gates), to support and protect customers’ supply chains in Russia,
improved commercial and operational flexibility;

— Strengthening online channels, including maximum digitalisation of

documentation and customer integration, further development of online-
solutions to decrease necessity of client’s presence at the terminal,
improvement of resilience of IT systems to external shocks and cyber attacks;

— Ensuring financial stability and cash preservation, including pro-active

management of costs, receivables and capacity for effective adaptation to
crisis and its consequences, Stress testing of financial performance and
liquidity position, revisiting financial plans.

All these measures implemented ensured that the terminals of the Group
(quay, yard and gates) remained 100% operational to service vessels/handle
cargoes throughout the pandemic as well as the call and service centres of
the Group were working without interruption.

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.

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 22% in 2019 and 2020
respectively).

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MANAGEMENT REPORT (CONTINUED)

Risk management approach

Risk factor

Risk management approach

Health, safety, security and environment:

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 safety policies designed around
international best practices and benchmarks using such measures as GPI
Global Minimum Requirements.

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.

All tariffs are set in Russian roubles. To the best of the knowledge of the Group’s
management, the Group is in full compliance with the tariff 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.

Human resources management:

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

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

The Group annually reviews labour market trends and aligns employee salaries
and benefits 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.

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.

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.

Safety is one of the Group’s top priorities. A safety strategy and annual
action plans 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.

GPI is constantly improving its safety practices by involving the employees
in identifying and mitigating potential safety risks.

Similarly, GPI works with all its stakeholders to maintain high levels of
environmental 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.

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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.

The employees of the Group may have interests in the companies, that
may or potentially may have the business with the Group.

In 2020 the Group adopted the Policy on Conflicts of Interest regulating
the potential conflicts of interest by the employees of the Group.

Risk factor

Financial risks

Foreign exchange 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 of fluctuations in profits and cash flows
of the Group arising from movement of foreign-exchange rates. Risk also
arises from revaluation of assets and liabilities denominated in foreign
currency.

The Group maintains a strong and professional legal function designed
to monitor legal risks, avoid legal actions where possible and carefully
oversee any changes in applicable legislation 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.

Credit risk:

The Group may be subject to credit risk, arising primarily from trade and
other receivables, loans receivable and cash and cash equivalents and
derivative financial instruments.

The Group’s business is also dependent on several large key customers.

Debt, leverage and liquidity:

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 UK left the EU on 31 January 2020 with the prior conclusion of
the EU-UK Trade and Cooperation Agreement. Although the Agreement
covers the financial services in general, it is expected that the parties
further will establish a framework for regulatory cooperation on financial
services.

Risk management approach

As of 2020, all Group tariffs are denominated in Russian roubles,
and part of the Group’s debt is denominated in US Dollars. Most of
the Group’s operating expenses, on the other hand are and will continue
to be denominated and settled in Russian roubles.

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 is converting part
of its existing USD debt into RUB, the currency of revenue. In order
to further mitigate FOREX risk, between June and September 2019
the Group put in place forward hedges and currency options totalling
USD231.4 million to convert part of USD denominated debt into RUB.
During 2018-2020 the Group repurchased part of its USD denominated
Eurobonds and currently/to date ~29% of the total issued Eurobonds
have been canceled. New debt in 2020 was attracted/raised only
in Russian rouble (VSС bonds in the amount of 5 billion RUB-USD
equivalent of USD67,681 thousand). In addition, the Group has negotiated
with some of its customers the right to change its Russian rouble tariffs
in conjunction with RUB/USD exchange rate fluctuations within a range
of +/-15% each time when average RUB/USD exchange rate for a given
month falls beyond 5% from the base exchange rate used for translating
original USD tariffs to RUB, however the risk above the levels of these
currency moves remains.

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

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

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. During 2018-
2020 the Group repurchased USD203.5 million nominal value of
2022 and 2023 Eurobonds of which USD69.5 million were refinanced
via a 5 year/60 month RUB bank loan in 2019. FCT Series 1 Bonds
were repaid in 2020 using the proceeds from VSC bonds issued in
December 2020 with maturity over 5 years and lower interest rate than
FCT bonds. Debt reduction beyond minimum repayment requirements
remains a management priority in 2021.

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

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Risk factor

Risk management approach

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

The risk of liquidity shortfalls within the following 18-24 months has been
significantly reduced via extensions of debt maturities through public
debt issuance in 2020:

VSС issued Russian rouble bonds in the amount of 5 billion RUB —
USD equivalent of USD67,681 thousand, which is a part of the rouble-
denominated Bond Program of VSC with Moscow Exchange which
provides VSC with the potential to issue additional bonds of RUB25
billion — USD equivalent of USD338,406 thousand over an unlimited
period of time with a maturity of up to 10 years. FCT has a similar Bond
Program for RUB50 billion — USD equivalent of USD676,813 thousand. In
addition the Group has over US Dollars 300 million of open uncommitted
limits for credit line facilities from the banks which in combination with
VSC and FCT bonds can facilitate financial flexibility and diversification
of the debt portfolio of the Group and the refinancing of the existing
debt of the Group and ensure all obligations of the Group falling
due in the next 12 months are met. The Group regularly stress tests
scenarios when different negative trends that could affect cash flows are
identified. The liquidity position is carefully monitored in case of further
deterioration of financial performance.

Multi-Link Terminals Ltd Oy, a Finnish joint venture of the Group, secured
a waiver from its financing bank confirming that the bank will not exercise
its right for an early prepayment of the loan due to breach of financial
covenants as 31.12.2020.

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

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

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

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

the following:
— Significant accounting estimates;
— Material changes to the accounting policies.

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

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

Use of financial instruments by the Group

32. The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest
rate risk), credit risk and liquidity risk. For a description of the Group’s financial risk management objectives and policies and a summary of
the Group’s exposure to financial risks please refer to Note 3 of the consolidated financial statements.

The Role of the Board of Directors

33. The Company is governed by its Board of Directors (also referred as “the Board”) which is collectively responsible to the shareholders

for the short- and long-term sustainable success of the Group, generating value to shareholders and contributing to the wider society as
a whole. Its responsibility is to promote adherence to best-in-class corporate governance.

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

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

35. The roles and responsibilities of the Chairman, Senior Independent Director, Board and committees’ members are set out in writing in

the Terms of Reference of the Board and committees. The latest version of the Terms of Reference of the Board of Directors was approved
by the shareholders on 18 June 2019. It is available on the Company`s website.

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Members of the Board of Directors

Chairman of the Board of Directors

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

43. Mr. Soren Jakobsen is the Chairman of the Board since 24 April 2020, when he replaced Mr. Morten Engelstoft.

to shareholders. In accordance with the Terms of Reference of the Board, all Directors are subject to election by shareholders at the first
Annual General Meeting after their appointment, and to re-election at intervals of no more than 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.

37. The Board currently has 11 members and they were appointed as shown on page 2.

38. On 16 April 2020 Mr. Ivan Besedin resigned from the Board and Mr. Andrey Yashchenko replaced him on the same date. Mr. Morten Henrick

Engelstoft resigned from the Board on 29 May 2020 and Mr. Kristian Bai Hollund was appointed on the same date. Both new Board
members were reviewed and recommended for appointment by the Nomination and Remuneration Committee.

39. All other Directors were members of the Board throughout the year ended 31 December 2020, including the independent directors: Mrs.

Britta Dalunde, Mrs. Inna Kuznetsova and Mr. Lambros Papadopoulos.

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

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

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

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

40. Mr. Soren Jakobsen was elected the Chairman of the Board of Directors on 24 April 2020. There were no significant changes in

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

the responsibilities of the Directors during 2020 except for membership in the committees as described below.

41. There is no provision in the Company’s Articles of Association for the retirement of Directors by rotation. However, in accordance with

the Terms of Reference of the Board of Directors and the resolutions adopted by the Shareholders at the Annual General Meeting held on
16 April 2020 and Extraordinary General Meeting held on 29 May 2020 all present directors are subject to re-election at the next Annual
General Meeting of the Shareholders of the Company, which will take place in 2021.

Directors’ Interests

Non-executive and Independent Directors

47. All of the Board members are non-executive directors.

48. Mrs. Britta Dalunde, 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.

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

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

2020 and 31 December 2019 are shown below:

Name

Type of holding

Britta Dalunde

Through holding of the GDRs

Sergey Shishkarev

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

Shares held at
31 December 2020

Shares held at
31 December 2019

7,000 GDRs representing
21,000 ordinary shares

88,769,817 ordinary shares

34,605,183 ordinary
non-voting shares

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

50. Mrs. Britta Dalunde was appointed as the Senior Independent Director on 31 May 2018. The role of Senior Independent Director is to provide
a sounding board for the Chairman and serve as an intermediary for the other directors and shareholders. Led by the senior independent
director, the non-executive directors should meet without the Chairman present at least annually to appraise the Chairman’s performance,
and on other occasions as necessary.

The Board Committees

51. Since December 2008 the Board of Directors established the operation of three committees: an Audit and Risk Committee, a Nomination
Committee and a Remuneration Committee. The composition of the committees was changed by the Board of Directors in June 2019:
Nomination Committee and Remuneration Committee were merged into one and a new Strategy Committee was established.

The Audit and Risk Committee

52. The Audit and Risk Committee comprises of five Non-Executive Directors, three of whom are independent, and meets at least four times
a year. The Audit and Risk Committee is chaired by Mrs. Britta Dalunde (an Independent Non-Executive Director), re-elected on 24 April
2020, and its other members are Mrs. Inna Kuznetsova (an Independent Non-Executive Director appointed as of 01 January 2018, re-elected
on 24 April 2020), Mr. Lambros Papadopoulos (an Independent Non-Executive Director appointed as of 01 January 2018, re-elected on
24 April 2020), Mr. Mogens Petersen (appointed as of 18 June 2019, re-elected on 24 April 2020) and Mr. Andrey Yashchenko (appointed as
of 24 April 2020). Ms. Alexandra Fomenko resigned from the Audit and Risk Committee on 24 April 2020.

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53. The Committee is responsible for:

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

performance, and reviewing significant financial reporting judgements contained in them;

— providing advice (where requested by the board) on whether the annual report and accounts, taken as a whole, is fair, balanced and

understandable, and provides the information necessary for shareholders to assess the company’s position and performance, business
model and strategy;

— reviewing the company’s internal financial controls and internal control and risk management systems;
— monitoring and reviewing the effectiveness of the company’s internal audit function;
— making recommendations to the board, about the appointment, reappointment and removal of the external auditor, and giving the
recommendations in relation to remuneration and terms of engagement of the external auditor for audit and non-audit services;

— reviewing and monitoring the external auditor’s independence and objectivity;
— reviewing the effectiveness of the external audit process;
— developing and implementing policy on the engagement of the external auditor to supply non-audit services; and
— reporting to the Board on how it has discharged its responsibilities.

54. In 2020 the Audit and Risk Committee met 10 times (2019: 13 times) to review and discuss inter alia the following significant issues and

matters in addition and on top of those listed above, among others:
— Meetings with internal auditors to discuss the results of their audits and ad-hoc reviews, working plans and progress in execution of

internal audit recommendations;

— Meetings with external auditors to discuss the matters related to the audit work done by them and any issues arising from their audits

reviews;

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

making the recommendations to the Board;

— Assessment of efficiency of external auditor by discussing the audit approach and audit plan, monitoring of compliance with the plan,
receiving the feedback from the members of the management team, involved in the audit process, assessing the internal resources
allocated by the external auditor, the key risks to the audit process and their mitigation measures, review of the auditor`s management
letter, consideration of the level and quality of communication between the external auditor and Committee during the audit process.
— Consideration and approval of audit schedules and review of the impairment models and the impact of the new IFRS standards on the

Company`s financial statements. The Committee`s task is to align the impairment models with the short-, mid- and long-term forecasts and
to understand what impact the new standards would have on the financial statements and Group`s compliance with the covenants;
— Consideration and approval of the engagement of external auditors for rendering of non-audit services. In each particular case the

Committee was assessing the impact of non-audit services on the independence and objectivity of the external auditor. The Committee
reviewed the scope of services on compliance with the list of permitted non-audit services, the potential impact of the services on the
audit work and financial statements and discussed with the external auditor how their internal compliance procedures were performed
and whether all internal compliance requirements were met. The Committee monitors the share of non-audit service in relation to its
compliance with the standards;

— Review of the public materials containing financial information in relation to compliance with the financial statements, the disclosure and

transparency requirements and Board`s view on mid and long-term development of the Group;

— Consideration of various reports from the management;
— Review of the major risks. The Committee had meetings with Risk Management of GPM to discuss the Кеу Risks, Risk Management

approach, Risk Appetite Statements and control matrices;
— COVID-19 risks evaluation and management action plan;

— Review of dangerous cargoes handling processes and procedures and management suggestions on improvements;
— Review of tax related matters;
— Review of Charity activity in 2020 and budget 2021;
— Review various other compliance related matters;
— Consideration and giving the recommendations to the Board of Director for the approval of the Conflicts of Interest Policy, Procurement

standard of the Company, Related Parties Transaction Policy, amended and restated Charity Policy.

The Nomination and Remuneration Committee

55. The Nomination and Remuneration Committee was established in June 2019 following the merger of Nomination Committee and

Remuneration Committee in order to simplify the work of the committees and Board members.

56. The Nomination and Remuneration Committee as of the date of this report comprises three Directors, one of whom is independent.

The Committee meets at least once each year. Currently the Nomination and Remuneration Committee is chaired by Mrs. Inna Kuznetsova
(an Independent Non-Executive Director appointed as the Chairwoman of the merged Nomination and Remuneration Committee as
of 18 June 2019, Chairwoman of both former committees as of 14 May 2018, re-elected on 24 April 2020). The other members are
Ms. Alexandra Fomenko (appointed as a member of the committee on 11 November 2019, re-elected on 24 April 2020) and Mr. Soren
Jakobsen (appointed as a member of the committee on 24 April 2020). Mr. Morten Henrick Engelstoft resigned from the committee on
24 April 2020.

57. The Committee is a committee of the Board of Directors which assists the Board in discharging its corporate governance responsibilities
in relation to nomination, appointment and remuneration of all Directors and the Chairman / Chairwoman of the Board of Directors and
of the senior executive management of the Company and its subsidiaries and joint venture companies, and oversee the development
of a diverse pipeline for succession as well as to evaluate the performance of the Board of Directors, its committees, the Chairman /
Chairwoman of the Board of Directors and individual directors. The main objective of the Committee is to determine the framework and
policy for the nomination and remuneration of Independent Non-Executive Directors, Executive Directors, the Chairman / Chairwoman of
the Board of Directors, and senior company executives ensuring the consistency with the company talent strategy, remuneration policy and
market trends.

58. In the year 2020 the key focus of Nomination and Remuneration Committee was on the transition of Chief Executive Officer of Global Ports
Management LLC, talent management, new principles and guidelines for setting the targets and evaluation of the annual performance of
the management team and Board performance evaluation.

59. In 2020 the Nomination and Remuneration Committee met 16 times (15 times in 2019):

— to discuss and recommend the candidates to be elected to the Board;
— to discuss and recommend the composition of the Board Committees;
— to lead the process of transition of the Chief Executive Officer of Global Ports Management LLC;
— to review and amend the Key Rules of Awarding and Payment of Performance Based Bonuses of GPI Group and terms of separation of

the management from the Group;

— to discuss and recommend to the Board the appointment of new Chief Operations Officer of Global Ports Management LLC, Chief
Strategy and Development Officer of the Group, new Chief Executive Officer of Moby Dik LLC as well as remuneration of the Key
Management team members of the Group companies. In determining the level of remuneration of the key senior management of the
Group the Committee referred to the level of skills and expertise, the position and scope of work and responsibilities as well as to the
market levels for similar positions.

The Strategy Committee

60. The Strategy Committee was established in June 2019. As per its terms of reference, the Committee meets at least once each year.

The Strategy Committee as of the date of this report comprises five Directors, one of whom is independent. Currently the Strategy
Committee is chaired by Mr. Sergey Shishkarev (appointed as of 18 June 2019 and re-elected on 24 April 2020). The other members are
Mr. Mogens Petersen, Mr. Soren Jakobsen and Mr. Lambros Papadopoulos (an Independent Non-Executive Director), all appointed as of
18 June 2019 and re-elected on 24 April 2020, and Mr. Andrey Yashchenko (appointed as of 24 April 2020).

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61. The Committee is a committee of the Board of Directors which assists the Board of Directors in discharging its corporate governance

67. The number of Board and Board Committee meetings held in the year 2020 and the attendance of directors during these meetings was as

responsibilities in relation to the setting and oversight of the strategy and strategic initiatives of the Company and its subsidiaries and joint
venture companies (the Group) to be approved by the Board of Directors from time to time, and providing oversight over the implementation
and development of those by executive management. The Committee has been formed to foster a cooperative, interactive strategic
planning process between the Board and executive management.

follows:

Board of Directors

Nomination and
Remuneration Committee

Strategy Committee

Audit and Risk
Committee

62. In 2020 the Strategy Committee met 8 times (5 times in 2019) to consider and give recommendations for approval to the Board of:

— Vision statement of the Group,
— the new operating model of Moby Dik to be implemented in 2021;
— Treasury policy principles,
— various investment proposals,
— optimization of Group structure,
— Group refinancing plan, and
— the Group Consolidated budget 2021.

63. In addition Strategy Committee reviewed and discussed he functional strategies, business model of the Group, strategic priorities, and

corporate strategic targets and COVID-19 resilience plan.

Board Performance

64. The Board meets at least five times a year. Fixed meetings are scheduled at the start of each year. Ad hoc meetings are called when there
are pressing matters requiring the Board’s consideration and decision in between the scheduled meetings. In the year of COVID-19 and
the transition of the Chief Executive Officer of Global Ports Managements LLC the Board had more reasons than usual for ad-hoc meetings.

65. In 2020 the Board met formally 13 times (2019: 18) to review current performance and to discuss and approve important business decisions.

66. In 2020 the Board met to discuss and approve important business decisions, which included among others:

— FY2019 financial statements, 1H2020 interim financial statements and Annual Report;
— Review of segments financial and operational performance;
— Consideration of 2021 financial budget, major risks and uncertainties, commercial strategy, corporate social responsibility matters, internal

control framework;

— Changes in Group management and the Board of Directors;
— Revision and adoption of various group wide policies and regulations, namely the Code of Corporate Ethics, Treasury Policy, the Charity
and Sponsorship Policy of the Company, Conflicts of Interest Policy, Procurement Standard of the Company, Operational Efficiency
Improvements Project Charter; Key Rules of Awarding and Payment of Performance based Bonuses of the Group.

— Consideration of various compliance matters;
— Consideration and approval of the revision of external and internal financing arrangements and organizational restructurings;
— Consideration and approval of new financing arrangements, e.g., issue of VSC bonds, repurchase of additional Eurobonds in 2020 and

cancellation of repurchased Eurobonds;

— Consideration and approval of major capital expenditures and investment projects; and
— Consideration and approval of various resolutions related to the operations of the Company`s subsidiaries and joint ventures.

Britta Dalunde

Kristian Bai Hollund

Alexandra Fomenko

Soren Jakobsen

Demos Katsis

Inna Kuznetsova

Shavkat Kary Niyazov

Lambros Papadopoulos

Mogens Petersen

Sergey Shishkarev

Andrey Yashchenko

Ivan Besedin

Morten Henrick Engelstoft

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

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

individual Directors’ performance can be conducted through self-assessment, cross-assessment or by an external third party. The Non-
Executive Directors, led by the Senior Independent Director, are responsible for the performance evaluation of the Chairman of the Board.
The Board did not engage any external advisors for evaluation of its performance in the years 2019 and 2020.

69. In 2020 the Board conducted the self-evaluation, which results were discussed in December 2020.

Board Diversity

70. The Company does not have a formal Board diversity policy with regards to matters such as age, gender or educational and professional
backgrounds, but the Board has the full commitment to diversity within the Group. Following the best practice while making the new
appointments and considering the current composition of the Board of Directors, these aspects are taken into account.

71. As of the date of publication of these financial statements the Board has 3 females representing 27% from the total number of directors.
The average age of directors is 50 years ranging from 32 to 62 years. The Board has a necessary balance of skills and expertise to run
the Company and the Group. The Board members have the following educational backgrounds: port and transportation industry, accounting
and financial, banking sector and legal. There are 6 nationalities present in the Board. The Board members reside in 7 countries.

Global Ports Investments PLC Annual Report 2020

globalports.com

MANAGEMENT REPORT (CONTINUED)

Board and Management Remuneration

Corporate Governance

72. Non-Executive Directors serve on the Board pursuant to the letters of appointment. Such letters of appointment specify the terms of
appointment and the remuneration of Non-Executive Directors. Only Independent Non-Executive Directors receive remuneration.

73. Levels of remuneration for the Independent Non-Executive Directors reflect the time commitment, responsibilities of the role and

membership of the respective committees of the Board. Directors are also reimbursed for expenses associated with discharge of their
duties. Directors are not eligible for bonuses, retirement benefits or to participate in any incentive plans operated by the Group. Additional
remuneration is paid for membership and chairmanship of the committees by the Independent Non-Executive Directors.

74. The shareholders of the Company approved the remuneration of the members of the Board on 29 June 2018, 30 December 2019,

16 April 2020 and 29 May 2020.

75. Neither the Board members, nor the management have long-term incentive schemes. However, the performance-based part of

remuneration of the senior management is aligned to the strategic goals and initiatives approved by the Board.

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

Performance Based Bonuses of GPI Group adopted by the Board on 15 June 2016 and regularly updated with the last update on 29 October
2020. The Nomination and Remuneration Committee monitors the efficiency of the Rules and makes the recommendations to the Board on
their amendment and revision.

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

management.

General Manager

78. Mr. Alexander Iodchin occupies the position of General Manager and the Board granted him the powers to carry out all business related
to the Company`s operation up to a total value as established by the Authority Matrix. It 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.

79. The decisions for all other matters are reserved for the Board. The Authority Matrix contains the list of such reserved matters.

80. Mr. Iodchin is also acting as the Board Secretary since December 2008 and as the Chief Strategy and Business Development Officer at

Global Ports Group pursuant to Board’s decision on 29 October 2020.

Company Secretary

84. The Group has a diverse set of stakeholders, from international institutions holding our shares and bonds and bank financial institutions

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

85. Improving its corporate governance structure in accordance with the internationally recognised best practices the Company adopted

important policies and procedures. The Group is regularly reviewing and updating its policies and procedures.

86. On 18 June 2019 a new Terms of Reference of the Board of Directors were adopted. As of the same date the Board merged Nomination and
Remuneration Committees and established Strategy Committee. Consequently, the terms of reference of the new committees were adopted
in June 2019.

87. The Company’s corporate governance policies and practices are designed to ensure that the Company is focused on upholding its

responsibilities to the shareholders. They include, inter alia:
— Appointment policy;
— Terms of reference of the Board of Directors;
— Terms of reference of the Audit and Risk, Nomination and Remuneration and Strategy Committees;
— Code of Ethics and Conduct;
— Antifraud policy;
— Policy on Reporting of Improper Activities;
— Investigation policy;
— Anti-Corruption Policy;
— Foreign Trade Controls Policy;
— Insurance Standard;
— Charity and Sponsorship Policy;
— Group Securities Dealing Code;
— Conflicts of Interest Policy adopted on 29 June 2020;
— Treasury Policy adopted on 23 April 2020; and
— Procurement Standard of the Company adopted on 18 August 2020.

88. In order to further strengthen the corporate governance and clearly set the management authority limits within the Group the Board of
Directors approved the Authority Matrix framework at the end of the year 2016, which was revised in June 2019 providing extended
authorities to the Group management in order to simplify the decision making process. The implementation of this revised framework in
the operating units was finalised in 2020.

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

Whistle Blower function

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

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

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

and the Group’s charter and internal documents. The company secretary organises the communication process between the parties to
corporate relations, including the preparation and holding of general meetings; storage, maintenance and dissemination of information about
the Group; and review of communications from shareholders.

89. In the course of the year ended 31 December 2017 in order to streamline the reporting of negligence, non-compliance or any other kind of

wrongdoing, the Group established a hotline email and telephone line. It is an important mechanism enabling staff and other members of
the Group as well as third parties to voice concerns in a responsible and effective manner. Throughout 2019 and 2020 the Board together
with the management worked on raising the awareness about the hotline among the Group workforce and stakeholders.

Code of ethics and conduct

90. The new Code of Ethics was approved by the Board of Directors on 08 December 2016 and was introduced in the companies of the Group
in the course of the year 2017. The 3rd revision of the Code of Ethics was adopted by the Board of Directors on 18 August 2020, aimed at
simplifying and updating Group’ mission, values and standards of corporate engagement.

Global Ports Investments PLC Annual Report 2020

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MANAGEMENT REPORT (CONTINUED)

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

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

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

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

Issued share capital
103. The issued share capital of the Company amounts to US$57,317,073.10 divided into 422,713,415 ordinary shares and 150,457,316 ordinary

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

non-voting shares with a par value of US$0.10 each.

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

93. The Board is updated on a regular basis on any breaches various policies with the specific focus on the fraud incidents and resulting actions,
although significant breaches have to be reported to the Board immediately. A colourful booklet reflecting the provisions of Code of Ethics
was prepared and the first testing on the knowledge of Code of Ethics was undertaken in November-December 2020 with the purpose of
raising the awareness.

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

Rules for Amending Articles

Dividends

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

94. Pursuant to the Articles of Association the Company may pay dividends out of its profits. To the extent that the Company declares and pays

dividends, owners of Global Depositary Receipts (hereafter also referred as “GDRs”) on the relevant record date will be entitled to receive
dividends payable in respect of Ordinary Shares underlying the GDRs, subject to the terms of the Deposit Agreement. The Company
expects to pay dividends in US dollars. If dividends are not paid in US dollars, they will be converted into US dollars by the Depositary and
paid to holders of GDRs net of currency conversion expenses.

the shareholders.

Corporate Social Responsibility Report

106. The Corporate Social Responsibility Report is drawn up as a separate report and will be made public at the Company`s website (the address

of which, at the date of publication of this report, is www.globalports.com) within six months from the balance sheet date.

95. The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries and joint ventures to pay

Events after the balance sheet date

dividends to the Company in accordance with the relevant legislation and contractual restrictions (shareholder agreements, bank borrowings
covenants, and terms of the issuance of the public debt instruments). The payment of such dividends by its subsidiaries and joint ventures is
contingent upon the sufficiency of their earnings, cash flows and distributable reserves. The maximum dividend payable by the Company’s
subsidiaries and joint ventures is restricted to the total accumulated retained earnings of the relevant subsidiary or joint venture, determined
according to the law applicable to each entity.

96. The Company has a Dividend Policy in place which provides for the payment of not less than 30% of any imputed consolidated net profit for
the relevant financial year of the Group. Imputed profit is calculated as the consolidated net profit for the period of the Group attributable to
the owners of the Company as shown in the Company’s consolidated financial statements for the relevant financial year prepared under EU
IFRS and in accordance with the requirements of the Cyprus Companies Law, Cap. 113, less certain non-monetary consolidation adjustments.
The Company’s dividend policy is subject to modification from time to time as the Board of Directors may deem appropriate.

97. In 2015 following the revision of current market situation, market prospects and prioritising the deleveraging strategy over dividend

distribution, which should ensure the long-term robustness of the Group’s finances, the Board suspended the payment of the dividends in
the mid-term. The Board continues to monitor the market for recovery as well as for levels of volatility in order to identify the appropriate
timing for a resumption of the payment of a dividend, subject to maintaining conservative leverage ratios.

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

Research and development activities

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

Branches

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

Treasury shares

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

Going Concern

98. During the years 2019 and 2020 the Company did not declare or pay any dividends.

111. Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going concern basis in

99. The Board of Directors of the Company does not recommend the payment of a final dividend for the year 2020.

Share Capital

Significant direct or indirect holdings (including indirect shareholding through structures or cross shareholdings)

100. The information on significant direct and indirect shareholders is available at http://www.globalports.com/globalports/investors/shareholder-

information/major-shareholders.

101. There are no special titles that provide special control rights to any of the shareholders. There are restrictions in exercising of voting rights of

shares (please refer to paragraph 103 below).

preparing the consolidated financial statements based on the fact that, after making enquiries and following a review of the Group’s principle
risks and uncertainties, budget for 2021 financial perspectives in the mid-term and the latest forecasts over a period of 5-10 years reflecting
its business and investment cycles, including cash flows and borrowing facilities, the Directors consider that the Group has adequate
resources to meet its liabilities as they fall due and to continue in operation for the foreseeable future.

Global Ports Investments PLC Annual Report 2020

globalports.com

MANAGEMENT REPORT (CONTINUED)

DIRECTORS’
RESPONSIBILITY STATEMENT

Internal audit

112. The internal audit function is carried out by Group’s Internal Audit Service (IAS). It is responsible for analysing the systems of risk

management, internal control procedures and the corporate governance process for the Group with a view to obtaining a reasonable
assurance that:
— risks are appropriately identified, assessed, responded to and managed;
— there is interaction with the various governance groups occurs as needed;
— significant financial, managerial, and operating information is accurate, reliable, and timely;
— employee’s actions are in compliance with policies, standards, procedures, and applicable laws and regulations;
— resources are acquired economically, used efficiently and adequately protected;
— programs, plans and objectives are achieved;
— quality and continuous improvement are fostered in the Group’s control process; and
— significant legislative or regulatory issues impacting the Group are recognised and addressed properly.

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

This responsibility includes selecting appropriate accounting policies and applying them consistently; and making accounting estimates and
judgements that are reasonable in the circumstances.

In preparing the consolidated financial statements, the Board of Directors is also responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board
of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

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

External auditors

The Board of Directors’ confirmations

The Board of Directors confirms that, to the best of its knowledge:

114. An external auditor is appointed at the Global Ports AGM on an annual basis to review the Group’s financial and operating performance.

115. This follows proposals drafted by the Audit and Risk Committee for the Board of Directors regarding the reappointment of the external

auditor of the Group.

116. In 2020, the shareholders of Global Ports re-appointed the Independent Auditors, PricewaterhouseCoopers as the external auditor for

the purposes of auditing the Group’s IFRS financial statements for 2020.

(a) the consolidated financial statements, which are presented on pages 28 to 94, which have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap.113, give a true
and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation
taken as a whole; and

(b) the management report includes a fair review of the development and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that it
faces/they face.

117. Starting from the year 2021, following the results of the external audit tender performed, KPMG Ltd will take over PricewaterhouseCoopers
Limited. A resolution approving the appointment of KPMG as the external auditor for the purposes of auditing the Group’s IFRS financial
statements for 2021 and giving authority to the Board of Directors to fix their remuneration will be proposed at the next Annual General
Meeting of the Shareholders of the Company, which will take place in 2021.

Further, the Board of Directors confirms that, to the best of its knowledge:

(i) adequate accounting records have been maintained which disclose with reasonable accuracy the financial position of the Group and explain

its transactions;

(ii) all information of which it is aware that is relevant to the preparation of the consolidated financial statements, such as accounting records

and all other relevant records and documentation, has been made available to the Company’s auditors;

(iii) the consolidated financial statements disclose the information required by the Cyprus Companies Law, Cap.113 in the manner so required;
(iv) the Consolidated Management Report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap.113, and

the information given therein is consistent with the consolidated financial statements;

(v) the information included in the corporate governance statement in accordance with the requirements of subparagraphs (iv) and (v) of

paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which is included as a specific section of the Consolidated
Management Report, have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and is consistent
with the consolidated financial statements; and

(vi) the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article

151 of the Cyprus Companies Law, Cap. 113.

By Order of the Board

Soren Jakobsen
Chairman of the Board

Limassol
5 March 2021

Alexander Iodchin
Secretary of the Board

Global Ports Investments PLC Annual Report 2020

globalports.com

Alexander Iodchin

Secretary of the Board

By Order of the Board

Soren Jakobsen

Chairman of the Board

5 March 2021

CONSOLIDATED
INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

(in thousands of US dollars)

For the year ended
31 December

Note

2020

2019

For the year ended
31 December

Note

2020

2019

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

Other gains/(losses) — net

Operating profit/(loss)

Finance income

Finance costs

Change in fair value of derivatives

Net foreign exchange gains/(losses) on financial activities

Finance income/(costs) — net

Profit/(loss) before income tax

Income tax expense

Profit/(loss) for the year

Attributable to:

Owners of the Company

Non-controlling interest

27(a)

9, 3(a)(i)

1,300

(2,973)

(339)

157,394

2,357

(71,751)

18,380

(41,763)

(92,777)

64,617

(14,631)

49,986

1,773

1,920

(33,426)

144,839

2,524

(85,234)

(9,340)

43,846

(48,204)

96,635

(28,963)

67,672

384,436

(200,329)

184,107

361,873

(151,819)

210,054

Profit/(loss) for the year

49,986

67,672

Other comprehensive income/(loss)

Items that may be subsequently reclassified to the income statement

(24,701)

(35,482)

Currency translation differences

Share of currency translation differences of joint ventures accounted for using the equity method

Reclassification to income statement of translation differences due to disposal of assets classified as held for sale

Cumulative other comprehensive income movement relating to assets classified as held for sale

27(a)

Total items that can be reclassified subsequently to the income statement

Items that may not be subsequently reclassified to the income statement

Share of currency translation differences attributable to non-controlling interest

Total items that cannot be reclassified subsequently to the income statement

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

Total comprehensive income/(loss) for the year

Total comprehensive income/(loss) attributable to:

Owners of the Company

Non-controlling interest

Total comprehensive income/(loss) for the year

(79,811)

(2,061)

—

45,520

1,811

33,485

(257)

(81,872)

80,559

(2,820)

(84,692)

(34,706)

1,787

82,346

150,018

27(b)

(33,473)

(1,233)

(34,706)

147,139

2,879

150,018

27(b)

48,399

1,587

49,986

66,580

1,092

67,672

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

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

0.08

0.12

The notes on pages 33 to 94 are an integral part of these consolidated financial statements.

Global Ports Investments PLC Annual Report 2020

globalports.com

CONSOLIDATED
BALANCE SHEET

AS AT 31 DECEMBER 2020

CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

(in thousands of US dollars)

Attributable to the owners of the Company

As at 31 December

Note

2020

2019

Note

Share
capital

Share
premium

Capital
contribution

Translation
reserve

Transactions
with non-
controlling
interest

Retained
earnings*

Non-
controlling
interest

Total

ASSETS

Non-current assets

Property, plant and equipment

Right-of-use assets

Intangible assets

Investments in joint ventures

Prepayments for property, plant and equipment

Deferred tax assets

Derivative financial instruments

Trade and other receivables

Current assets

Inventories

Derivative financial instruments

Trade and other receivables

Income tax receivable

Cash and cash equivalents

TOTAL ASSETS

EQUITY AND LIABILITIES

Total equity

Equity attributable to the owners of the Company

Share capital

Share premium

Capital contribution

Currency translation reserve

Transactions with non-controlling interest

Retained earnings

Non-controlling interest

Total liabilities

Non-current liabilities

Borrowings

Lease liabilities

Derivative financial instruments

Deferred tax liabilities

Current liabilities

Borrowings

Lease liabilities

Derivative financial instruments

Trade and other payables

Current income tax liabilities

TOTAL EQUITY AND LIABILITIES

27(a)

27(b)

1,059,995

417,481

530,362

12,060

23,383

2,842

50,788

9,572

13,507

267,174

7,127

627

48,882

3,570

206,968

1,265,191

499,335

639,699

13,964

27,590

5,843

61,264

—

17,496

189,088

8,306

—

45,487

10,942

124,353

1,327,169

1,454,279

361,378

345,497

57,317

923,511

101,300

(830,686)

(209,122)

303,177

15,881

965,791

786,791

632,925

31,088

—

122,778

179,000

153,276

1,810

—

23,540

374

396,084

378,970

57,317

923,511

101,300

(748,814)

(209,122)

254,778

17,114

1,058,195

924,271

738,113

32,987

8,839

144,332

133,924

99,098

1,194

345

33,278

1,327,169

1,454,279

Balance at 31 December 2018

57,317

923,511

101,300

(829,373)

(209,122)

188,198

231,831

14,235

246,066

Total other comprehensive
income/(loss)

Profit/(loss) for the year

Total comprehensive income/
(loss) for the year ended
31 December 2019

—

80,559

—

80,559

1,787

82,346

66,580

1,092

67,672

—

80,559

—

66,580

147,139

2,879

150,018

Balance at 31 December 2019

57,317

923,511

101,300

(748,814)

(209,122)

254,778

378,970

17,114

396,084

Total other comprehensive
income/(loss)

Profit/(loss) for the year

Total comprehensive income/
(loss) for the year ended
31 December 2020

—

(81,872)

—

(81,872)

(2,820)

(84,692)

48,399

1,587

49,986

—

(81,872)

—

48,399

(33,473)

(1,233)

(34,706)

Balance at 31 December 2020

57,317

923,511

101,300

(830,686)

(209,122)

303,177

345,497

15,881

361,378

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

the Company’s shareholders.

The Board of Directors of Global Ports Investments Plc authorised these consolidated financial statements for issue on 5 March 2021.

Soren Jakobsen, Chairman of the Board

Britta Dalunde, Director

The notes on pages 33 to 94 are an integral part of these consolidated financial statements.

Global Ports Investments PLC Annual Report 2020

globalports.com

CONSOLIDATED STATEMENT
OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

(in thousands of US dollars)

Cash flows from operating activities

Profit/(loss) before income tax

Adjustments for:

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Loss on disposal of subsidiaries and assets held for sale

(Profit)/loss on sale of property, plant and equipment

Write off of property, plant and equipment

Amortisation of intangible assets

Interest income

Interest expense and other finance costs

Loss on extinguishment of financial liabilities

Share of (profit)/loss in jointly controlled entities including impairment

Change in fair value of derivative financial instruments

Foreign exchange differences on non-operating activities

Other non-cash items

Operating cash flows before working capital changes

Changes in working capital

Inventories

Trade and other receivables

Trade and other payables

Cash generated from operations

Income tax paid

Net cash from operating activities

Cash flows from investing activities

Purchases of intangible assets

Purchases of property, plant and equipment

Proceeds from sale of property, plant and equipment

Proceeds from disposal of assets classified as held for sale

Loan and interest repayments received from related parties

Interest received from third parties, bank balances and deposits

Net cash used in investing activities

Cash flows from financing activities

Proceeds from borrowings

Repayments of borrowings

Principal elements of lease payments

Interest paid on borrowings

Interest paid on lease liabilities

Proceeds from/(settlement of) derivative financial instruments not used for hedging

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Exchange gains/(losses) on cash and cash equivalents

Cash and cash equivalents at end of the year

9,22

27(a)

30(g)

22, 24

(171)

(7,459)

(7,011)

196,603

(5,664)

190,939

(910)

2,103

(7,995)

217,414

(31,987)

185,427

(890)

(963)

(33,888)

(26,625)

436

(2)

572

1,279

490

11,842

320

1,570

(32,493)

(13,366)

72,079

(72,981)

(1,961)

70,893

(131,382)

(871)

(66,385)

(74,407)

(4,192)

(849)

(4,271)

(211)

(74,289)

(140,249)

84,157

124,353

(1,542)

31,812

91,613

928

206,968

124,353

For the year ended
31 December

Note

2020

2019

1 General information

Country of incorporation

64,617

96,635

35,559

11,817

—

(7)

891

770

(2,357)

71,224

527

2,973

(18,380)

43,691

(81)

36,952

12,391

33,535

(293)

1,256

(2,524)

77,710

7,524

(1,920)

9,340

(45,956)

(484)

Global Ports Investments Plc (hereafter the “Company” or “GPI”) was incorporated on 29 February 2008 as a private limited liability company
and is domiciled in Cyprus in accordance with the provisions of the Companies Law, Cap. 113. The address of the Company’s registered office is
20 Omirou Street, Ayios Nicolaos, CY-3095, Limassol, Cyprus.

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

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

The Company is jointly controlled by LLC Management Company “Delo” (“Delo Group”), one of Russia’s largest privately owned transportation
companies, and APM Terminals B.V. (“APM Terminals”), a global port, terminal and inland services operator.

211,244

224,216

Approval of the consolidated financial statements

These consolidated financial statements were authorised for issue by the Board of Directors on 5 March 2021.

Principal activities

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

Composition of the Group and its joint ventures

The Group’s terminals are located in the Baltic and Far East Basins, key regions for foreign trade cargo flows. The Group operates:

— five container terminals in Russia — Petrolesport (PLP), First Container Terminal (FCT), Ust-Luga Container Terminal (ULCT) and Moby Dik (MD)

in the St. Petersburg and Ust-Luga port cluster, and Vostochnaya Stevedoring Company (VSC) in the Port of Vostochny;

— two container terminals in Finland — Multi-Link Terminals Helsinki and Multi-Link Terminals Kotka (Multi-Link Terminals or MLT Oy); and
— inland Yanino Logistics Park (YLP), located in the vicinity of St. Petersburg.

See also Note 5 for the description of segmental information of the Group. All entities above are fully consolidated, except for Moby Dik, Multi-
Link Terminals and Yanino Logistics Park, which are joint ventures accounted for using the equity method of accounting.

The Company fully owns all of the above terminals except for as described below:

— MLT and CD Holding groups are joint ventures with CMA Terminals where the Company has 75% effective ownership interest (Note 27(a)).
Moby Dik (a container terminal in the vicinity of St. Petersburg), Multi-Link Terminals and Multi-Link Terminals Ltd constitute the MLT group.
Yanino Logistics Park (an inland container terminal in the vicinity of St. Petersburg) and CD Holding constitute the CD Holding group;
— Ust-Luga Container Terminal (located in Ust-Luga, North-West Russia) is an 80% subsidiary where Eurogate, one of the leading container

terminal operators in Europe has a 20% non-controlling interest (Note 27(b)).

The notes on pages 33 to 94 are an integral part of these consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 Basis of preparation and summary of significant accounting policies

2 Basis of preparation and summary of significant accounting policies (continued)

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

Basis of consolidation (continued)

Basis of preparation

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

As of the date of the authorisation of these consolidated financial statements all International Financial Reporting Standards issued by
International Accounting Standards Board (IASB) that are effective as at 1 January 2020 have been adopted by the EU through the endorsement
procedure established by the European Commission.

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

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

New and amended standards adopted by the Group

The Group adopted all new and revised IFRSs, amendments and interpretations, as adopted by the EU that are relevant to its operations and
are effective for accounting periods beginning on 1 January 2020. This adoption did not have any impact on the amounts recognised in prior
periods and is not expected to significantly affect the current or future periods.

New standards and interpretations not yet adopted by the Group

At the date of approval of these financial statements a number of new standards and amendments to standards and interpretations are effective
for annual periods beginning after 1 January 2020 and have not been applied in preparing these consolidated financial statements. None of
these is expected to have a significant effect on these consolidated financial statements.

Basis of consolidation

(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group
is exposed to, or has the rights to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully included in the consolidated financial statements from the date on which control was transferred
to the Group or to the extent that the subsidiaries were obtained through a transaction between entities under common control from the date
which control was transferred to its shareholders. They are derecognised from the financial statements from the date that control ceases.

The purchase method of accounting is used for acquisitions of subsidiaries that do not involve entities or businesses under common control
with the Group. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-
controlling interest in the acquiree on an acquisition-by-acquisition basis at the non-controlling interest’s proportionate share of the recognised
amounts of acquiree’s identifiable net assets. Goodwill is initially measured as the excess of the aggregate of the consideration transferred over
the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the consolidated income statement.

All intra-company transactions, balances, income, expenses and unrealised gains and losses are eliminated on consolidation. Unrealised losses
are also eliminated but considered as an impairment indicator of the asset transferred. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into compliance with those used by the Group.

(b) Transactions with non-controlling interests
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions — that is, as transactions
with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of
the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded
in equity.

(c) Joint arrangements
Under IFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights
and obligations each investor has rather than the legal structure of the joint arrangement. The Group has assessed the nature of its joint
arrangements and determined them to be joint ventures. Joint ventures are accounted for using equity method of accounting.

Under the equity method of accounting, interests in joint ventures are initially recognised in the consolidated balance sheet at cost and
adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests
that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the joint ventures. The Group applies the requirements of IFRS 9 to determine whether any
additional impairment loss needs to be recognised in respect of loans given to joint ventures, before taking into account the effect (if any) of
the Group’s share of joint ventures’ losses applied against long-term interests in the joint ventures as detailed below.

The Group’s share of losses in a joint venture is first allocated against the Group’s investment in the joint venture and then to any other long-term
interests that in substance form part of the Group’s net investment.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Business combinations involving entities under common control (ultimately controlled by the same party, before and after the business
combination, and that control is not transitory) are accounted using the predecessor basis of accounting. Under this method, the financial
statements of the acquiree are included in the consolidated financial statements using pre-acquisition IFRS carrying amounts using uniform
accounting policies, on the assumption that the Group was in existence from the date where common control was established. For these
transactions, the excess of the cost of acquisition over the carrying amount of the Group’s share of identifiable net assets acquired, including
goodwill, arising at the date of acquisition by the shareholders, is recorded in equity in retained earnings at the date of the legal restructuring.

Investments in joint ventures are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised through profit or loss for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is calculated
by estimating the Group’s share of the present value of the estimated future cash flows expected to be generated from the asset, including
the cash flows from the operations of the asset and the proceeds from the ultimate disposal of the asset. An impairment loss recognised in prior
years is reversed where appropriate if there has been a change in the estimates used to determine the recoverable amount.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 Basis of preparation and summary of significant accounting policies (continued)

Revenue recognition

Other incomes

Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods or
services to the customer, excluding amounts collected on behalf of third parties (for example, value-added taxes).

(a) Rental income
See accounting policy for leases below.

The Group recognises revenue when the parties have approved the contract and are committed to perform their respective obligations,
the Group can identify each party’s rights and the payment terms for the goods or services to be transferred, the contract has commercial
substance, it is probable that the Group will collect the consideration to which it will be entitled in exchange for the goods or services that will be
transferred to customer and when specific criteria have been met for each of the Group’s contracts with customers as described below.

When another party is involved in providing goods or services to a customer, the Group determines whether the nature of its promise is
a performance obligation to provide the specified goods or services itself (the Group is a principal and it controls the specified good or service
before that good or service is transferred to a customer) or to arrange for those goods or services to be provided by the other party (the Group
is an agent). The Group determines whether it is a principal or an agent for each specified good or service promised to the customer.

When the Group that is a principal satisfies a performance obligation, the Group recognises revenue in the gross amount of consideration
to which it expects to be entitled in exchange for the specified good or service transferred. When the Group that is an agent satisfies
a performance obligation, the Group recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange
for arranging for the other party to provide its specified goods or services to the customer.

The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of
each arrangement. In evaluating whether collectability of an amount of consideration is probable, the Group considers only the customer’s ability
and intention to pay the amount of consideration when it is due. Revenues earned by the Group are recognised on the following bases:

(a) Sales of services
The Group offers its customers a wide range of cargo handling services for its import and export logistics operations. These services are
provided over time and usually do not exceed one month. Revenue from rendering of these services is recognised when the Group satisfies
a performance obligation by transferring control over promised service to a customer over time in the accounting period in which the services
are rendered. Revenue from the rendering of these services is recognised net of discounts and estimates for rebates that are in accordance
with the contracts entered into with the customers. Revenue is recognised to the extent that is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur when the uncertainty in relation to the rebates and discounts is resolved.
Estimations for rebates and discounts are based on the Group’s experience with similar contracts and forecasted sales to the customer.

(b) Sales of goods
The Group sells unused materials and goods. Sales of goods are recognised when the Group satisfies a performance obligation by transferring
a control over promised goods to a customer at a point in time at which the customer obtains control of the goods, which is usually when
the customer takes the goods out of the territory of the terminal.

(c) Financing component
The Group does not have any material contracts where the period between the transfer of the promised goods or services to the customer and
payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of
money.

(d) Contract assets and contract liabilities
In case the services rendered by the Group as of the reporting date exceed the payments made by the customer as of that date and the Group
does not have the unconditional right to charge the client for the services rendered, a contract asset is recognised. The Group assesses
a contract asset for impairment in accordance with IFRS 9 using the simplified approach permitted by IFRS 9 which requires expected lifetime
losses to be recognised from initial recognition of the contract asset. An impairment of a contract asset is measured, presented and disclosed on
the same basis as a financial asset that is within the scope of IFRS 9. If the payments made by a customer exceed the services rendered under
the relevant contract, a contract liability is recognised. The Group recognises any unconditional rights to consideration separately from contract
assets as a trade receivable because only the passage of time is required before the payment is due.

(b) Interest income
Interest income on financial assets at amortised cost and financial assets at FVOCI calculated using the effective interest method. Interest
income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that
subsequently become credit impaired. For credit-impaired financial assets — Stage 3 the effective interest rate is applied to the net carrying
amount of the financial asset (after deduction of the loss allowance), for Stage 1 and Stage 2 — gross amount of financial assets.

Transactions with equity holders

The Group may enter into financing transactions with its shareholders and other entities which are under the control of the ultimate shareholders.
When consistent with the nature of the transaction, the Group’s accounting policy is to recognise any gains or losses with its shareholders and
other entities which are under the control of the ultimate shareholders, directly through equity and consider these transactions as the receipt
of additional capital contribution or the distribution of dividends. Similar transactions with non-equity holders, or parties which are not under
the control of the ultimate shareholders, are recognised in profit or loss in accordance with IFRS 9 “Financial Instruments”.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the Board of Directors that makes strategic decisions.

Foreign currency translation

(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in United States dollars (US$), which
is the Company’s functional and presentation currency.

(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses that relate to loans receivable, cash and cash equivalents and borrowings are presented net in the income
statement within ‘net foreign exchange losses on financing activities’. All other foreign exchange gains and losses are presented in the income
statement within ‘other gains/(losses) — net’.

(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional
currency different from the presentation currency are translated into the presentation currency as follows:

— Assets and liabilities are translated at the closing rate existing at the date of the balance sheet presented;
— Income and expense items at the exchange rates prevailing at the date of transaction or using average rates as a reasonable approximation;
— Share capital, share premium and all other reserves are translated using the historic rate; and
— All exchange differences resulting from the above translation are recognised in other comprehensive income.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 Basis of preparation and summary of significant accounting policies (continued)

Foreign currency translation (continued)

Intangible assets

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity.
On disposal of a foreign operation (including partial disposals which result in loss of control, significant influence or joint control of a subsidiary,
associate or joint venture respectively, that include a foreign operation), the cumulative amount of the exchange differences relating to that foreign
operation, recognised in other comprehensive income and accumulated in the separate component of equity is reclassified from equity to profit or
loss (as a reclassification adjustment) when the gain or loss is recognised. In these cases, the cumulative amount of exchange differences relating
to the foreign operation sold that have been attributed to the non-controlling interests are derecognised but are not reclassified to profit or loss.

On partial disposal of a subsidiary that includes a foreign operation, the Group re-attributes the proportionate share of the cumulative amount
of the exchange differences recognised in other comprehensive income to the non-controlling interests in that foreign operation. In any
other partial disposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of
the exchange differences recognised in other comprehensive income.

Impairment of non-financial assets

Non-financial assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable (refer to accounting policy for intangible assets in relation to the impairment
of goodwill) An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-generating units). Non-financial assets other
than goodwill that suffered impairment are reviewed for possible reversal of impairment at each reporting date.

Property, plant and equipment (“PPE”)

Property, plant and equipment are recorded at purchase or construction cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition or construction of the items.

Land is not depreciated.

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost, less residual value, over their
estimated useful lives, as follows:

Buildings and facilities

Loading equipment and machinery

Other production equipment

Office equipment

Number of years

5 to 50

3 to 25

1 to 10

Assets under construction are not depreciated until they are completed and brought into use, at which time they are reclassified in the relevant
class of property, plant and equipment and depreciated accordingly.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.

Expenditure for repairs and maintenance of property, plant and equipment is charged to the income statement of the year in which they are
incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset or recognised as
a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time
to get ready for intended use or sale are capitalised and amortised over the useful life of the asset. Other borrowing costs are recognised as an
expense in the reporting period incurred. Interest is capitalised at a rate based on the Group’s weighted average cost of borrowing or at the rate
on project specific debt, where applicable.

Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds with carrying amount and these are
included within operating income.

(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired
subsidiary/joint venture at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. Goodwill
on acquisition of joint ventures is included in the carrying amount of the Group’s investment in the joint venture (refer to Note 2, Basis
of consolidation,(c)). Separately recognised goodwill is tested for impairment annually and whenever there is indication that goodwill may be
impaired. Goodwill is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses
on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill related to the partial disposal of an entity
is not derecognised unless there is loss of control.

If the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of
the business combination, the Group reassesses the identification and measurement of the acquiree’s identifiable assets, liabilities and
contingent liabilities and the measurement of the cost of the combination and recognises immediately in profit or loss any excess remaining after
that reassessment.

Goodwill is allocated to cash-generating units (CGUs) for the purpose of impairment testing. The allocation is made to those cash-generating
units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The Group
allocates goodwill to each CGU. When the Group reorganises its reporting structure in a way that changes the composition of one or more cash-
generating units to which goodwill has been allocated, the goodwill is reallocated to the units affected.

(b) Computer software
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.
Subsequently computer software is carried at cost less any accumulated amortisation and any accumulated impairment losses. These costs
are amortised using straight line method over their estimated useful lives (3 to 10 years). Costs associated with maintaining computer software
programmes are recognised as an expense as incurred.

Leases

The Group is the lessor
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rental
income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term. Assets leased out under operating
leases include insignificant portions of some properties which are not used by the Group which cannot be sold or leased out separately under
a finance lease. These properties are included in property, plant and equipment in the balance sheet based on the nature of the asset.

The Group is the lessee
The Group leases land, buildings and facilities, offices and loading and other production equipment. Land, buildings and facilities rental contracts
are made for fixed periods of 5 to 53 years and have extension options. Other lease contracts are typically made for fixed periods of 3 to
5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do
not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by
the Group.

Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over
the shorter of the asset’s useful life and the lease term on a straight-line basis.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 Basis of preparation and summary of significant accounting policies (continued)

Leases (continued)

Financial instruments

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of
the following lease payments:

Classification
The Group classifies its financial assets into the following measurement categories:

— fixed payments (including in-substance fixed payments), less any lease incentives receivable;
— variable lease payment that are based on an index;
— amounts expected to be payable by the lessee under residual value guarantees;
— the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
— payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are to be discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in
a similar economic environment with similar terms and conditions.

According to some lease contracts lease payment can be adjusted depending on changes in consumer price indexes of Russian Federation.
When such change occurs the respective lease liability is remeasured with a corresponding adjustment to the right-of-use asset.

Right-of-use assets are measured at cost comprising the following:

— the amount of the initial measurement of lease liability;
— any lease payments made at or before the commencement date less any lease incentives received;
— any initial direct costs; and
— restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or
loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office
furniture with value less than US$5 thousands.

Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise
operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options
held are exercisable only by the Group and not by the respective lessor. In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or
periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within
the control of the lessee.

For business combinations where the acquiree is a lessee, the Group measures the lease liability at the present value of remaining lease
payments as if the acquired lease were a new lease at the acquisition date. The Group measures the right-of-use asset at the same amount as
the lease liability, adjusted to reflect favourable or unfavourable terms of the lease when compared with market terms.

Sale and leaseback transactions

The accounting treatment followed by the Group for sale and leaseback transactions in which the Group, as the owner of an asset, sells
the asset and leases it back from the buyer, depends on whether the transaction qualifies as a sale for which revenue is recognised, or
whether the transaction is a collateralised borrowing. If the transfer of an asset owned by the Group does not qualify as a sale, for example,
because the Group has an obligation or a right to repurchase the asset from the buyer, the Group as the seller-lessee does not de-recognise
the transferred asset, and it accounts for the cash received as a financial liability.

— those to be measured subsequently at fair value (either through other comprehensive income (OCI), or through profit or loss), and
— those to be measured at amortised cost.

The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses are either recorded in profit or loss or OCI.

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

Recognition and derecognition
All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (‘regular
way’ purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other
purchases and sales are recognized when the Group becomes a party to the contractual provisions of the instrument.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and
the Group has transferred substantially all the risks and rewards of ownership.

Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics
of the asset. There are three measurement categories into which the Group classifies its debt instruments:

— Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in ‘other gains/(losses)-
net’, together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
Financial assets measured at amortised cost comprise cash and cash equivalents, loans receivable, trade receivables and other financial
assets at amortised cost.

— FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent
solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit or loss.
When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or
loss and recognised in ‘other gains/(losses)-net’. Interest income from these financial assets is included in finance income using the effective
interest rate method. Foreign exchange gains and losses are presented in ‘other gains/(losses)-net’ and impairment expenses are presented
as separate line item in the statement of profit or loss. The Group does not hold any such instruments.

— FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is
subsequently measured at FVPL is recognised in profit or loss and presented net within ‘other gains/(losses)-net’ in the period in which it
arises.

Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost
and FVOCI and cash and cash equivalents. The Group measures expected credit losses (‘ECL’) and recognises credit loss allowance at each
reporting date. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 Basis of preparation and summary of significant accounting policies (continued)

Financial instruments (continued)

Prepayments

The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of the loss is recognised in
the income statement within ‘net impairment losses on financial and contract assets’. For trade receivables, the Group applies the simplified
approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. For all other
financial assets that are subject to impairment under IFRS 9 the Group applies a general approach — three-stage model for recognizing and
measuring expected losses based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on
initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL
that results from default events possible within the next 12 months or until contractual maturity, if shorter (‘12 Months ECL’). If the Group identifies
a significant increase in credit risk (‘SICR’) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL
on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any (‘Lifetime ECL’). Refer to Note 3, Credit
risk section for a description of how the Group determines when a SICR has occurred. If the Group determines that a financial asset is credit-
impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL.

Additionally, for debt instruments that qualify as low credit risk, the loss allowance is limited to 12 months expected credit losses. For
a description of how the Group determines low credit risk financial assets refer to Note 3, Credit risk section below.

Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to
the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-
current upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained
control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Other prepayments are
written off to profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods
or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding
impairment loss is recognised in profit or loss for the year.

Inventories

Group entities usually maintain a store of spare parts and servicing equipment for critical components. These are often carried as inventory and
recognised in profit or loss as consumed. Major spare parts, stand-by equipment and servicing equipment can also qualify as property, plant and
equipment when they meet the definition of property, plant and equipment. Spare parts in inventory or property, plant and equipment are carried
at cost, unless there is evidence of damage or obsolescence.

Derivative financial instruments and hedging activities

Non-current assets held for sale

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair
value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with a recognised asset
or a liability or highly probable forecast transaction (cash flow hedge).

Derivative financial instruments not designated as a hedging instrument
Derivative financial instruments not designated as a hedging instrument are included within financial assets at fair value through profit or loss
when fair value is positive and within financial liabilities at fair value through profit or loss when fair value is negative. They are presented as
current assets or liabilities if they are expected to be settled within 12 months after the end of the reporting period. Changes in the fair value of
foreign currency derivatives (currency forward contracts and currency options) are presented in the income statement within ‘change in fair value
of derivatives’ as part of ‘finance income/(costs) — net’.

Derivative financial instruments designated as a hedging instrument
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items
including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items.
The Group documents its risk management objective and strategy for undertaking its hedge transactions.

Movements on the hedging reserve are shown in the statement of other comprehensive income. The full fair value of hedging derivatives is
classified as a non-current asset or liability when the maturity of the hedging relationship is more than 12 months and as a current asset or liability
when the remaining maturity of the hedging relationship is less than 12 months.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion of cross-currency interest rate swap hedging variable rate borrowings
is recognised immediately in the income statement within ‘finance costs’ and gain or loss relating to the hedging of currency risk in forecast sale
is recognised in ‘other gains/(losses)-net’.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when
the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of cross-currency interest rate swap hedging
variable rate borrowings is recognised in the income statement within ‘finance costs’ and gain or loss relating to the hedging of currency risk in
forecast sale is recognised in ‘other gains/(losses)-net’.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement.
Gain or loss existing in equity is recognised immediately in the income statement if the forecast transaction is no longer expected to occur.

Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and
a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

Cash and cash equivalents

In the cash flow statement cash and cash equivalents include cash in hand and deposits held at call with original maturity up to 90 days with
banks. Cash and cash equivalents are carried at amortised cost using the effective interest method. Deposits with original maturity over 90 days
are included in the cash flow from investing activities.

Cash flow statement

The cash flow statement is prepared under the indirect method. Purchases of property, plant and equipment (including prepayments for PPE) are
presented within cash flows from investing activities and finance lease repayments within cash flows from financing activities are shown net of
VAT. Related input VAT is included in movement in changes of working capital, within trade and other receivables.

Share capital, share premium and capital contribution

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Any excess of the fair value of consideration received over the par value of shares issued is recognised as share premium. Share premium is
subject to the provision of the Cyprus Companies Law on reduction of share capital.

Capital contribution represents contributions by the shareholders directly in the reserves of the Company. The Company does not have any
contractual obligation to repay these amounts. However, these are distributable to the Company’s shareholders at the discretion of the Board of
Directors subject to the shareholders’ approval.

Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the company or the counterparty.

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 Basis of preparation and summary of significant accounting policies (continued)

Provisions and contingent liabilities

Dividend distribution

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that
an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for
future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in
the same class of obligations may be small.

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which
the dividends are approved, appropriately authorised and are no longer at the discretion of the Company.

More specifically, interim dividends are recognised as liability in the period in which these are approved by the Board of Directors and in
the case of final dividends, they are recognised in the period in which these are approved by the Company’s shareholders.

Income taxes

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of
time is recognised as interest expense.

The tax expense for the period comprises current and deferred tax. Tax is recognised on profit or loss, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity respectively.

Provisions are only used to cover those expenses which they had been set up for. Other possible or present obligations that arise from past
events but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of
the obligation cannot be measured with sufficient reliability, are disclosed in the notes to the financial statements as contingent liabilities.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period
of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of
a qualifying asset, in which case they are capitalised as part of the cost of that asset.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of
the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extend there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment and amortised over the period of the facility to which it
relates.

Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings,
amortisation of discounts or premium relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of
borrowings and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest
costs.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale are capitalised and amortised over the useful life of the asset. Other borrowing costs are recognised
as an expense in the reporting period incurred. Interest is capitalised at a rate based on the Group’s weighted average cost of borrowing or at
the rate on project specific debt, where applicable.

Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve
months after the balance sheet date.

An exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial
modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability
and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under
the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different
from the discounted present value of the remaining cash flows of the original financial liability.

Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method,
with any gain or loss recognised in profit or loss.

Borrowings are removed from the consolidated balance sheet when the obligation specified in the contract is discharged, cancelled or expired.
The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss within ‘finance income/(costs) — net’.

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to or recovered from
the taxation authorities using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the country
where the entity operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. In accordance with the initial recognition exemption, deferred taxes are
not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if
the transaction, when initially recorded, affects neither accounting, nor taxable profit or loss. Deferred income tax is determined using tax rates
and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where
the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse
in the foreseeable future.

The Group considers leases as a single transaction in which the assets and liabilities are integrally linked and recognises deferred tax on net
temporary differences.

Value Added Tax (“VAT”)

In the Russian Federation, output value added tax related to sales is payable to tax authorities on the earlier of (a) collection of the receivables
from customers or (b) delivery of the goods or services to customers. Input VAT is generally recoverable against output VAT upon receipt
of the VAT invoice except for export sales related input VAT that is reclaimable upon confirmation of export. The tax authorities permit
the settlement of VAT on a net basis. Where provision has been made for impairment of receivables, impairment loss is recognised for the gross
amount of the debtor, including VAT. The lease liabilities are disclosed net of VAT. While the leasing payment includes VAT, the amount of VAT
from the lease payment made is reclaimable against sales VAT. VAT related to sales and purchases is recognised in the balance sheet on
a gross basis and disclosed separately as an asset and liability.

Employee benefits

Wages, salaries, contributions to state pension and social insurance funds, paid annual leave and sick leave, bonuses and other benefits (such
as health services) are accrued in the year in which the associated services are rendered by the employees of the Group. These are included in
staff costs and the Group has no further obligations once the contributions have been paid. Staff costs of the Group mainly consists of salaries.

The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created
a constructive obligation.

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3 Financial risk management

Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate
risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the Group’s financial results.

(a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises on monetary items like cash in banks, short-term investments, trade and other receivables, borrowings and
trade and other payables denominated in currency other than functional currency of each of the entities of the Group.

The analysis below demonstrates the effect of a change in a key assumption while other assumptions remain unchanged. In reality, there
is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are usually non-linear, and larger
or smaller impacts should not be interpolated or extrapolated from these results. The sensitivity analysis does not take into consideration
that the Group’s assets and liabilities are actively managed. Additionally, the financial position of the Group may vary at the time that any
actual market movement occurs. Other limitations in the above sensitivity analysis include the use of hypothetical market movements to
demonstrate potential risk that only represent the Group’s view of possible near-term market changes that cannot be predicted with any
certainty; and the assumption that all interest rates move in an identical fashion.

Currently the long-term debt of the Group is denominated in US dollars and Russian roubles. The US dollar interest rates are relatively more
attractive compared to the Russian rouble interest rate. The revenues of Russian operations are mainly priced in Russian roubles and most
of expenses are denominated and settled in Russian roubles. The Group uses from time-to-time derivatives (foreign currency forwards and
options) to manage its exposures to foreign exchange risk, for more details see Note 24. The analysis below does not cover borrowings of
joint ventures as they are not included in the financial position of the Group.

The carrying amount of financial assets and liabilities of the Group’s components that have Russian rouble as their functional currency,
denominated in US dollars are as follows:

(in thousands of US dollars)

Assets

Liabilities

Intra-group financial assets

Intra-group financial liabilities

As at 31 December

2020

2019

135,209

711

142,686

371,638

116,578

916

141,666

397,827

The carrying amount of financial assets and liabilities of the Group’s components that have US Dollar as their functional currency,
denominated in Russian roubles are as follows:

(in thousands of US dollars)

Intra-group financial assets

As at 31 December

2020

2019

107,329

124,367

Had US dollar exchange rate strengthened/weakened by 15% against the Russian rouble and all other variables remained unchanged,
the post-tax profit of the Group for the year ended 31 December 2020, would have (decreased)/increased by US$25,334 thousand (2019:
US$33,082 thousand) and the equity would have (decreased)/increased by US$25,334 thousand (2019: US$33,082 thousand). This is mainly
due to foreign exchange gains and losses arising upon retranslation of cash and cash equivalents, accounts receivable, borrowings, leases
and intra-group financial assets and liabilities denominated in US dollars and Russian roubles. The above sensitivity does not take into
account the effect of foreign currency derivatives.

3 Financial risk management (continued)

Financial risk factors (continued)

(a) Market risk (continued)

The carrying amount of financial assets and liabilities in Russian operations denominated in Euros as at 31 December 2020 and
31 December 2019 are as follows:

(in thousands of US dollars)

Assets

Liabilities

Capital commitments

As at 31 December

2020

2019

673

874

187

5,470

Had Euro exchange rate strengthened/weakened by 20% against the Russian rouble and all other variables remained unchanged, the post-
tax profit and the equity of the Group for the year ended 31 December 2020, would have (decreased)/increased by US$108 thousand (2019:
10% change, (decreased)/increased by US$14 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation
of accounts payable denominated in Euros.

(ii) Cash flow and fair value interest rate risk

The Group is not exposed to changes in market interest rates as its entire borrowings portfolio consists of fixed rate debt as of 31 December
2020 and 2019. However, the Group is exposed to fair value interest rate risk through market value fluctuations of loans receivable,
borrowings and lease liabilities with fixed rates.

Management monitors changes in interest rates and takes steps to mitigate these risks as far as practicable and economically feasible.

(b) Credit risk

(i) Risk management

Financial assets, which potentially subject the Group to credit risk, consist principally of trade and other receivables, loans receivable (Note
19) and cash and cash equivalents (Note 20) and derivative financial instruments (Note 24). The Group has policies in place to ensure that
sales of goods and services are made to customers with an appropriate credit history. These policies enable the Group to reduce its credit
risk significantly. However, the Group’s business is heavily dependent on several large key customers accounting for 51% of the Group’s
revenue for the year ended 31 December 2020 (year ended 31 December 2019: 59%).

(ii) Impairment of financial assets

The Group has three types of financial assets that are subject to the expected credit loss model:

— Trade receivables for sales of goods and from the provision of services;
— Debt instruments and other financial assets carried at amortised cost (loans to related parties and other receivables); and
— Cash and cash equivalents.

Cash and cash equivalents:
The Group’s cash and cash equivalents which have investment grade credit ratings with at least one major rating agency are considered
to have low credit risk, and the loss allowance to be recognised during the period was therefore limited to 12 months expected losses.
The identified impairment loss for cash and cash equivalents was immaterial to be accounted for. For the split of cash and cash equivalents
by credit rating refer to Note 17.

Trade receivables:
To measure the expected lifetime credit losses, the Group performed the assessment on an individual basis for its major customers based
on days past due and the corresponding historical credit losses experienced by the Group with those customers.

For those customers who are independently rated, the Group monitors their credit quality based on the external credit ratings. Otherwise,
if there is no independent rating, the Group monitors the credit quality of trade receivables on the basis of past experience, identifying
customers with working history with the Group of over 12 months and no losses arising and others, and also by reference to the days past due.

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3 Financial risk management (continued)

Financial risk factors (continued)

(b) Credit risk (continued)

Loans and other receivables:
With respect to other financial assets at amortised cost, the Group considers the probability of default upon initial recognition of the asset
and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether
there is a significant increase in credit risk the Group compares the risk of a default occurring on the asset as at the reporting date with
the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.
Especially the following indicators are incorporated:

— actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant

change to the borrower’s/counterparty’s ability to meet its obligations;

— actual or expected significant changes in the operating results of the borrower/counterparty; and
— significant changes in the expected performance and behaviour of the borrower/counterparty, including changes in the payment status

of counterparty and changes in the operating results of the borrower.

Regardless of the analysis above, a significant increase in credit risk for loans and other receivables with a third party is presumed if a debtor
is more than 30 days past due in making a contractual payment.

A default on loans and other receivables with a third party is when the counterparty fails to make contractual payments within 90 days of
when they fall due and/or the counterparty is assessed as unlikely to pay its obligations in full without realisation of collateral, regardless of
the existence of any past-due amount or the number of days past due.

Financial assets including trade and other receivables are written off when there is no reasonable expectation of recovery, such as a debtor/
counterparty failing to engage in a repayment plan with the Group. Where loans or receivables have been written off, the Group continues to
engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in consolidated
income statement.

The Group’s loans receivable from related parties are within Stage 3 of the IFRS 9 impairment model. No material lifetime expected credit
losses were identified in relation to the Group’s loans receivable from related parties.

For more information on the credit risk quality of trade and other receivables of the Group on 31 December 2020 refer to Notes 17 and 19.

(d) Liquidity risk
Management controls current liquidity based on expected cash flows and expected revenue receipts.

Cash flow forecasting is performed at the level of operating entities of the Group and at consolidated level by Group finance department. Group
finance department monitors forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs as well
as scheduled debt service while maintaining sufficient headroom to ensure that the Group does not breach covenants (where applicable) on
any of its borrowing facilities. Such forecasting takes into consideration potential variations in operating cash flows due to market conditions,
the Group’s debt repayments and covenant compliance.

Taking into account expected levels of operating cash flows, availability of cash and cash equivalents amounting to US$206,968 thousand
(31 December 2019: US$124,353 thousand) (Note 20) the Group has the ability to meet its liabilities as they fall due and mitigate risks of adverse
changes in the financial markets environment.

3 Financial risk management (continued)

Financial risk factors (continued)

(c) Liquidity risk (continued)
The management of the Group believes that it is successfully managing the exposure of the Group to liquidity risk.

The table below summarises the analysis of financial liabilities by maturity as of 31 December 2020 and 2019. The amounts in the table are
contractual undiscounted cash flows. Trade and other payables balances due within 12 months equal their carrying balances as the impact of
discounting is not significant.

(in thousands of US dollars)

As at 31 December 2020

Borrowings*
Lease liabilities

Trade and other payables

Derivative financial instruments:

— payments

— receipts

Total

As at 31 December 2019

Borrowings*

Lease liabilities

Trade and other payables

Derivative financial instruments:

— payments

— receipts

Total

Less than
1 month

6,911

592

5,579

4,346

(3,800)

13,628

7,000

582

4,747

3,981

(3,800)

12,510

1-3 months

3–6 months 6 months — 1 year

1–2 years

2–5 years Over 5 years

Total

153,830

930

9,364

—

5,568

1,521

—

22,328

236,330

478,468

—

903,435

2,945

553

5,490

—

4,428

(3,800)

110,982

(114,800)

14,853

137,600

—

163,931

15,503

119,756

(122,400)

164,124

7,096

26,454

238,002

493,321

137,600

1,080,225

20,195

851

16,676

—

8,770

1,425

—

116,732

212,628

643,356

—

1,008,681

2,919

246

5,488

—

14,111

—

5,088

(3,800)

10,471

(7,600)

132,441

(114,800)

170,510

—

195,886

21,669

151,981

(130,000)

37,722

10,195

121,185

220,987

675,108

170,510

1,248,217

* The Group repurchased its own Eurobonds in 2019 and 2020 (Note 22). There are 29% repurchased as of 31 December 2020 (31 December 2019: 27%).

The borrowings payments presented above exclude cash flows related to the repurchased part of Eurobonds (before cancellation in 2020).

Derivative financial instruments (currency forward and option contracts) are gross settled.

(d) Capital risk management
The Group’s main objective when managing capital is to maintain the ability to continue as a going concern in order to ensure the profitability of
the Group, maintain optimum equity structure and reduce its cost of capital.

Defining capital, the Group uses the amount of equity and the Group’s borrowings.

The Group manages the capital based on borrowings to total capitalisation ratio. Borrowings include lease liabilities and loan liabilities.

Total capitalisation is calculated as the sum of the total Group borrowings and equity at the date of calculation. The management does not
currently have any specific target for the rate of borrowings to total capitalisation.

Global Ports Investments PLC Annual Report 2020

globalports.com

The rate of borrowings to total capitalisation is as follows:

(in thousands of US dollars)

Total borrowings

Total capitalisation

Total borrowings to total capitalisation ratio (percentage)

As at 31 December

2020

2019

819,099

1,180,477

69%

871,392

1,267,476

69%

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3 Financial risk management (continued)

Financial risk factors (continued)

4 Critical accounting estimates and judgements (continued)

Critical accounting estimates and assumptions (continued)

(e) Fair value estimation
Fair value is the amount at which a financial asset could be exchanged or a liability settled in a transaction between knowledgeable willing
parties in an arm’s length transaction, other than in a forced sale or liquidation, and is best evidenced by an active quoted market price.

The estimated fair values of financial instruments have been determined by the Group, using available market information, where it exists, and
appropriate valuation methodologies and assistance of experts. However, judgment is necessarily required to interpret market data to determine
the estimated fair value. The Russian Federation continues to display some characteristics of an emerging market and economic conditions continue to
limit the volume of activity in the financial markets. Market quotations may be outdated or reflect distress sale transactions and therefore do not always
represent the fair values of financial instruments. The Group has used all available market information in estimating the fair value of financial instruments.

The fair value of floating rate instruments is normally their carrying amount. The estimated fair value of fixed interest rate instruments is based on
estimated future cash flows expected to be received, discounted at current interest rates for instruments with similar credit risk and remaining maturity.
Discount rates used depend on credit risk of the counterparty. Carrying amounts of trade and other receivables approximate their fair values.

The estimated fair value of fixed interest rate instruments with stated maturity, for which a quoted market price is not available, was estimated
based on expected cash flows, discounted at current interest rates for new instruments with similar credit risk and remaining maturity. Carrying
amounts of trade and other payables which are due within twelve months approximate their fair values.

The disclosure of the fair value of financial instruments carried at amortised cost and the fair value of financial instruments carried at fair value is
determined using the following valuation methods:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 — The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.
These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on Group’s
specific estimates.
Level 3 — Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The Group’s financial instruments carried at fair value relate to derivative financial instruments in the form of currency option and forward
contracts and are disclosed in Note 24. They are valued using Level 2 valuation techniques from the table above. There were no changes in
the valuation techniques during the year.

Specific valuation techniques used to value derivative financial instruments include:

— for currency forwards — the present value of future cash flows based on the forward exchange rates at the balance sheet date
— for currency options — option pricing models (e.g. Black-Scholes model), and
— for other financial instruments — discounted cash flow analysis

Level 2 inputs include use of quoted market prices or dealer quotes for identical or similar instruments. Where significant adjustments to market
based data are made, or where other significant inputs are unobservable, the valuation would be categorised as Level 3.

Changes in Level 2 and Level 3 fair values are analysed at the end of each reporting period.

4 Critical accounting estimates and judgements

(i) Estimated impairment of goodwill, property, plant and equipment, right-of-use assets and investments in joint ventures

The Group follows its accounting policies to test goodwill, other non-financial assets and investments in joint ventures for possible impairment or
reversal of impairment. Because of COVID-19 outbreak the Group performed updated tests of the estimated recoverable amount for all CGUs in
the course of the preparation of the consolidated financial statements for the year ended 31 December 2020.

The Group performed a test of the estimated recoverable amount of the CGUs using the value-in-use method, compared to their carrying value,
for all CGUs except for YLP and MD for which fair value less costs to sell method was used.

For YLP and MD valuation is based on market approach based on recent sales of similar assets (Level 2).

The value-in-use assessment requires making judgments about long-term forecasts related to the CGUs subject to review for which
the recoverable amount was calculated based on estimated discounted future cash flows. These forecasts are uncertain as they require
assumptions about volumes, prices for the products and services, discount rates, future market conditions and future technological
developments. Significant and unanticipated changes in these assumptions could require a provision for impairment in a future period.

For all CGUs tested based on discounted future cash flows, cash flow projections cover a period of five years based on the assumptions of
the next 12 months. Cash flows beyond that five-year period have been extrapolated using a steady terminal growth rate. The terminal growth
rate used does not exceed the long-term average growth rate for the market in which entities operate. For projections prepared for CGUs in
Russian ports segments as at 31 December 2020 a terminal growth rate of 3% (31 December 2019: 3%) and the discount rate 9.4% (31 December
2019: 8.8%) have been applied. For projections prepared for Finnish ports CGUs as at 31 December 2020 a terminal growth rate of 2%
(31 December 2019: 2%) and the discount rate 9.7% (31 December 2019: 5.2%) have been applied.

Key assumptions for Russian ports and Finnish ports CGUs tested based on discounted future cash flows are throughput volume, price per
unit, growth rates, and discount rates. The projected volumes reflect past experience adjusted by the management view on the prospective
market developments. Volume growth is estimated to be in line with the long-term market development, position of each terminal on the market
and its pricing power. For CGUs in the Russian ports segment, as supported by historical market performance and in view of relatively low
containerisation level in Russia, the long-term average throughput growth rate for the Russian container market is higher than in developed
markets.

Based on the results of the impairment tests for CGUs carried out on 31 December 2020, the Board of Directors did not identify any impairment
losses and also believes that there are no indications for reversal of impairments recognised in previous periods for non-financial assets other
than goodwill.

For all CGUs, except ULCT, management believes that any reasonably possible change in the key assumptions on which the recoverable
amount is based would not cause carrying amount to exceed the recoverable amount.

In ULCT, the recoverable amount calculated based on the value in use exceeded the carrying value by US$7.6 million. A decrease in
the average coal tariffs by approximately 2% each year or average container tariffs by approximately 2.5% each year or container handling
volumes by approximately 4% each year or coal handling volumes by approximately 3% each year or the discount rate of 10.9%, as opposed
to those used in projections would remove the headroom. Reasonable changes in other key parameters do not result in the elimination of
the existing headroom.

Estimates and judgments are continually evaluated and they are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.

Russian tax, currency and customs legislation is subject to varying interpretations (Note 28).

(ii) Russian legislation

Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below:

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information

5 Segmental information (continued)

The chief operating decision-maker (CODM) has been identified as the Board of Directors. They review the Group’s internal reporting in order to
assess performance and allocate resources. The operating segments were determined based on these reports.

The following items do not represent operating segments, however, are provided to the CODM together with segment information:

Group operations consist of several major business units that are mainly organised as separate legal entities. Segment profit is obtained directly
from the accounting records of each business unit and adjustments are made to bring their accounting records in line with IFRS as adopted by
the EU; therefore, there are no arbitrary allocations between segments. Certain business units are operating with one major operating company
and some supporting companies.

The Board of Directors considers the business from both a geographic (which is represented by different port locations managed by separate
legal entities) and services perspective regularly monitoring the performance of each major business unit.

The Board of Directors assesses the performance of the operating segments based on revenue (both in monetary and quantity terms) major
costs items and net profit after the accounting records of business units are converted to be in line with IFRS as adopted by the EU with
the exclusion of joint ventures. For the purposes of the internal reporting, joint ventures are assessed on a 100% ownership basis.

Holding companies (all other)

The segment consists of Global Ports Investments Plc (GPI) and some intermediate managing, holding and service companies.

Reconciliation adjustments

Reconciliation adjustments consist of two major components:

— Effect of proportionate consolidation — demonstrates the effect of proportionate consolidation of MD, YLP and Finnish ports. In the segmental
reporting the financial position and financial results of these segments are incorporated using the proportionate consolidation method with
the 75% proportion. MD, YLP and Finnish ports information is presented on the 100% basis in the Russian ports and Finnish ports segments
and then the 25% portion which is not consolidated is deducted as a ‘Reconciliation Adjustment’.

— Other adjustments — all other consolidation adjustments including but not limited to:

Assets are allocated based on the operations of the segment and the physical location of the asset.

— elimination of intragroup transactions (mainly intragroup sales and dividends) and balances (mainly intragroup loans and investments in

subsidiaries and joint ventures);

— consolidation adjustments of results of sale or purchase of shares of subsidiaries;
— other consolidation adjustments.

The Group does not have any material regular transactions between segments except for those which mainly relate to management and
financing activities.

For segmental reporting purposes the Group’s consolidated financial position and consolidated results are presented by using the proportionate
consolidation in relation to interests in jointly controlled entities (MLT and CD Holding groups). There are additional disclosures to reconcile
segmental information with the consolidated income statement and the consolidated balance sheet.

According to this method of accounting, the Group combined its share of the joint ventures’ individual income and expenses, assets and
liabilities and cash flows on a line-by-line basis with similar items in the Group’s consolidated financial statements. The Group recognised
the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. Unrealised gains
on transactions between the Group and its joint venturers were eliminated to the extent of the Group’s interest in the joint venture. Unrealised
losses were also eliminated unless the transaction provided evidence of an impairment of the asset transferred.

The brief description of segments is as follows:

Russian ports

The segment consists of the following operating units:

— First Container Terminal (FCT), Petrolesport and Farvater (PLP) and various other entities (including some intermediate holdings) that own and
manage two container terminals in St. Petersburg port, North-West Russia. FCT and PLP are engaged in handling of containers, PLP is also
engaged in handling of ro-ro, general cargo and scrap metal.

— Ust-Luga Container Terminal (ULCT), a container terminal in Ust-Luga, near St. Petersburg, North-West Russia.
— Vostochnaya Stevedoring Company (VSC) and various other entities (including some intermediate holdings) that own and manage a container

terminal in Port of Vostochny near Nahodka, Far-East Russia.

— Moby Dik (MD) and various other entities (including some intermediate holdings) that own and manage a container terminal in Kronstadt near

St. Petersburg, North-West Russia.

— Yanino Logistics Park (YLP) being an in-land container terminal in Yanino near St. Petersburg, North-West Russia.

All of the above terminals represent separate CGUs, with the exception of PLP and FCT which work as one unit from commercial and operational
points of view and are considered as one CGU. The two terminals have a common managing director and common senior management
team and the Group management and the Board of Directors of the Company look at PLP and FCT as one combined terminal and monitor its
performance as a single unit, without being legally merged together and remaining two separate legal entities.

Finnish ports

The segment consists of container terminals in the ports of Vuosaari (Helsinki) and Kotka, Finland owned and operated by Multi-Link Terminals
Ltd Oy (MLT Oy CGU).

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information (continued)

The segment results for the year ended 31 December 2020 are as follows:

(in thousands of US dollars)

The reconciliation of results for the year ended 31 December 2020 calculated with proportional consolidation to the results presented in
consolidated income statement above is as follows:

Reconciliation adjustments

(in thousands of US dollars)

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Holdings

Group as per
proportionate
consolidation

Equity method
and other
adjustments

Group as per equity
method consolidation
of joint ventures

Revenue from container operations

Non-containerized cargo

Inter-segment revenue

Total revenue

Cost of sales

Administrative, selling and marketing expenses

Other income

Other gains/(losses) — net

Operating profit/(loss)

Finance income/(costs) — net

incl. interest income

incl. interest expenses

incl. change in the fair value of derivative
instruments

incl. net foreign exchange gains/(losses) on
financing activities

Russian ports Finnish ports

302,371

92,979

—

395,350

(211,585)

(7,974)

—

(435)

7,753

973

—

8,726

(8,963)

(802)

—

Total
operating
segments

310,124

93,952

—

404,076

(220,548)

(8,776)

—

(427)

—

397

(408)

(18,744)

1,300

3,252

175,356

(1,031)

174,325

(14,203)

(93,114)

2,683

(72,298)

18,380

(333)

—

(306)

(93,447)

2,683

(493)

117

(72,604)

(1,269)

18,414

—

(2,380)

(2,744)

—

(5,124)

5,367

637

—

(30)

850

291

(4)

424

(9)

(41,879)

(61)

(41,940)

659

(120)

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

82,242

(13,790)

68,452

(1,364)

268

(1,096)

80,878

(14,696)

(13,522)

(507)

67,356

(15,203)

1,141

(151)

990

—

(397)

271

—

(3,037)

(3,157)

—

(1,199)

1,199

—

(3,157)

—

(3,157)

307,744

91,208

—

398,952

(215,583)

(26,612)

1,300

(242)

157,815

(93,649)

1,597

(72,250)

18,405

(41,401)

64,166

(14,180)

49,986

Revenue from container operations

Non-containerized cargo

Inter-segment revenue

Total revenue

Cost of sales

Administrative, selling and marketing expenses

Other income

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

Other gains/(losses) — net

Operating profit/(loss)

Finance income/(costs) — net

incl. interest income

incl. interest expenses

incl. change in the fair value of derivative instruments

incl. net foreign exchange gains/(losses) on financing activities

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

307,744

91,208

—

398,952

(215,583)

(26,612)

1,300

—

(242)

157,815

(93,649)

1,597

(72,250)

18,405

(41,401)

64,166

(14,180)

49,986

(7,139)

(7,377)

—

(14,516)

15,254

1,911

—

(2,973)

(97)

(421)

872

760

499

(25)

(362)

451

(451)

—

300,605

83,831

—

384,436

(200,329)

(24,701)

1,300

(2,973)

(339)

157,394

(92,777)

2,357

(71,751)

18,380

(41,763)

64,617

(14,631)

49,986

CAPEX* on cash basis

34,919

8,340

43,259

127

(2,375)

—

41,011

CAPEX on cash basis

41,011

(7,123)

33,888

* CAPEX represents purchases of property, plant and equipment

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information (continued)

The segment items operating expenses for the year ended 31 December 2020 are as follows:

(in thousands of US dollars)

Russian

ports Finnish ports

Total operating
segments

Holdings

36,698

11,819

331

53,266

68,936

9,449

6,043

186,542

33,017

219,559

1,530

568

4,620

554

493

997

8,765

1,000

9,765

38,228

12,387

334

57,886

69,490

9,942

7,040

195,307

34,017

822

404

530

14,153

—

15,930

3,222

229,324

19,152

Reconciliation adjustments

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

(873)

(244)

(24)

(2,534)

(457)

(311)

(404)

(4,847)

(1,157)

(6,004)

—

(277)

38,177

12,547

840

69,505

69,033

9,637

6,651

206,390

35,805

242,195

Depreciation of property, plant and
equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property,
plant and equipment

Total

Other operating expenses

Total cost of sales, administrative,
selling and marketing expenses

The reconciliation of operating expenses for the year ended 31 December 2020 calculated with proportional consolidation to the results
presented in consolidated income statement above is as follows:

(in thousands of US dollars)

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Total

Other operating expenses

Total cost of sales, administrative, selling and marketing expenses

Group as per
proportionate
consolidation

Equity method
and other
adjustments

Group as per
equity method
consolidation of
joint ventures

38,177

12,547

840

69,505

69,033

9,637

6,651

206,390

35,805

242,195

(2,618)

(730)

(70)

(7,602)

(1,370)

(932)

(1,240)

(14,562)

(2,603)

(17,165)

35,559

11,817

770

61,903

67,663

8,705

5,411

191,828

33,202

225,030

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information (continued)

The segment assets and liabilities as at 31 December 2020 are as follows:

(in thousands of US dollars)

The reconciliation of total segment assets and liabilities as at 31 December 2020 calculated with proportional consolidation to the results
presented in consolidated balance sheet above is as follows:

Reconciliation adjustments

(in thousands of US dollars)

Property, plant and equipment
(including prepayments for PPE)

Right-of-use assets

Investments in joint ventures

Intangible assets

Other non-current assets

Inventories

Trade and other receivables and other current assets

Cash and cash equivalents

Total assets

Long-term borrowings

Long-term lease liabilities

Other long-term liabilities

Trade and other payables

Short-term borrowings

Short-term lease liabilities

Other short-term liabilities

Total liabilities

Non-controlling interest

Russian
ports

Finnish
ports

Total
operating
segments

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Holdings

442,864

15,082

457,946

532,990

4,784

537,774

868

223

(9,623)

(1,909)

—

784

13,257

88,589

7,658

50,972

207,822

—

784

165,870

—

(166,654)

13,268

3,119

(471)

—

126,711

215,300

1,071,622

(33,016)

(1,189,654)

—

3,241

1,241

7,658

54,213

209,063

3,988

2,979

(138)

(1,126)

(1,268)

—

(866)

—

449,191

536,088

—

15,916

64,252

7,540

56,209

210,774

1,344,936

151,070

1,496,006

1,248,689

(47,551)

(1,357,174)

1,339,970

636,897

33,320

123,283

20,920

153,479

1,997

374

3,964

4,038

1,027

1,929

855

885

—

640,861

37,358

124,310

22,849

154,334

2,882

374

19,099

—

4,727

—

202

—

(4,814)

(1,570)

(275)

(817)

(296)

(318)

(2)

(19,099)

636,047

—

(573)

(664)

—

35,798

123,462

26,095

154,038

2,766

372

970,270

12,698

982,968

24,038

(8,092)

(20,336)

978,578

15,881

—

15,881

—

15,881

Included within ‘Russian ports’, ‘Finnish ports’ and ‘Holdings’ segments ‘Other non-current assets’ are investments in subsidiaries in the total
amount of US$5,353 thousand, US$126,614 thousand and US$1,071,189 thousand respectively (fully eliminated on consolidation).

Property, plant and equipment (including prepayments for PPE)

Right-of-use assets

Investments in joint ventures

Intangible assets

Other non-current assets

Inventories

Trade and other receivables and other current assets

Cash and cash equivalents

Total assets

Long-term borrowings

Long-term lease liabilities

Other long-term liabilities

Trade and other payables

Short-term borrowings

Short-term lease liabilities

Other short-term liabilities

Total liabilities

Non-controlling interest

Group as per
proportionate
consolidation

Equity method
and other
adjustments

Group as per
equity method
consolidation of
joint ventures

449,191

536,088

—

15,916

64,252

7,540

56,209

210,774

1,339,970

636,047

35,798

123,462

26,095

154,038

2,766

372

978,578

15,881

(28,868)

(5,726)

23,383

(3,856)

9,615

(413)

(3,130)

(3,806)

(12,801)

(3,122)

(4,710)

(684)

(2,555)

(762)

(956)

(12,787)

—

420,323

530,362

23,383

12,060

73,867

7,127

53,079

206,968

1,327,169

632,925

31,088

122,778

23,540

153,276

1,810

374

965,791

15,881

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information (continued)

The segment results for the year ended 31 December 2019 are as follows:

(in thousands of US dollars)

5 Segmental information (continued)

The reconciliation of results for the year ended 31 December 2019 calculated with proportional consolidation to the results presented in
consolidated income statement above is as follows:

Russian

ports Finnish ports

Total
operating
segments

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Holdings

Reconciliation adjustments

(in thousands of US dollars)

Group as per
proportionate
consolidation

Equity method
and other
adjustments

Group as per equity
method consolidation
of joint ventures

Revenue from container operations

Non-containerized cargo

Inter-segment revenue

Total revenue

Cost of sales

Administrative, selling and marketing expenses

Other income

Other gains/(losses) — net

Operating profit/(loss)

Finance income/(costs) — net

incl. interest income

incl. interest expenses

incl. change in the fair value of derivative
instruments

incl. net foreign exchange gains/(losses) on
financing activities

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

274,504

102,248

—

376,752

(165,475)

(10,602)

—

154

8,796

12,178

—

20,974

(15,839)

(991)

—

177

283,300

114,426

—

397,726

(181,314)

(11,593)

—

331

200,829

4,321

205,150

(46,921)

2,904

(85,910)

(9,385)

(46,624)

2,904

(85,711)

(9,340)

45,523

154,205

(28,410)

125,795

(297)

—

(199)

(45)

(53)

4,024

(760)

3,264

—

168

(349)

(27,188)

1,773

(28,255)

(53,851)

(1,489)

(1,148)

—

(3,807)

(5,161)

—

(8,968)

7,428

771

—

(2)

(771)

(29)

374

45,470

(405)

(304)

158,229

(55,340)

(29,170)

(107)

129,059

(55,447)

(719)

(641)

—

(168)

134

218

—

(5,483)

(5,299)

279,493

109,265

—

388,758

(174,101)

(37,792)

1,773

(33,409)

145,229

—

(48,358)

(1,040)

1,040

—

(5,299)

—

(5,299)

1,899

(85,644)

(9,374)

44,761

96,871

(29,199)

67,672

Revenue from container operations

Non-containerized cargo

Inter-segment revenue

Total revenue

Cost of sales

Administrative, selling and marketing expenses

Other income

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

Other gains/(losses) — net

Operating profit/(loss)

Finance income/(costs) — net

incl. interest income

incl. interest expenses

incl. change in the fair value of derivative instruments

incl. net foreign exchange gains/(losses) on financing activities

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

279,493

109,265

—

388,758

(174,101)

(37,792)

1,773

—

(33,409)

145,229

(48,358)

1,899

(85,644)

(9,374)

44,761

96,871

(29,199)

67,672

(11,416)

(15,469)

—

(26,885)

22,282

2,310

—

1,920

(17)

(390)

154

625

410

(915)

(236)

236

—

268,077

93,796

—

361,873

(151,819)

(35,482)

1,773

1,920

(33,426)

144,839

(48,204)

2,524

(85,234)

(9,340)

43,846

96,635

(28,963)

67,672

CAPEX* on cash basis

27,662

313

27,975

(355)

—

27,690

CAPEX on cash basis

27,690

(1,065)

26,625

* CAPEX represents purchases of property, plant and equipment

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information (continued)

The segment items operating expenses for the year ended 31 December 2019 are as follows:

(in thousands of US dollars)

The reconciliation of operating expenses for the year ended 31 December 2019 calculated with proportional consolidation to the results
presented in consolidated income statement above is as follows:

Russian
ports

Finnish
ports

Total
operating
segments

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Holdings

Reconciliation adjustments

(in thousands of US dollars)

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and
equipment

Total

Other operating expenses

Total cost of sales, administrative, selling and marketing
expenses

38,291

12,050

866

1,566

375

39,857

12,425

869

908

489

466

55,926

11,340

67,266

21,456

17,575

10,774

7,845

404

647

991

17,979

11,421

8,836

—

143,327

32,750

15,326

1,504

158,653

34,254

23,341

4,196

(953)

(131)

(20)

(4,341)

(579)

(404)

(583)

(7,011)

(1,188)

176,077

16,830

192,907

27,537

(8,199)

—

(352)

39,812

12,783

1,315

84,381

17,400

11,025

8,267

174,983

36,910

211,893

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Staff costs

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Total

Other operating expenses

Total cost of sales, administrative, selling and marketing expenses

Group as per
proportionate
consolidation

Equity method
and other
adjustments

Group as per
equity method
consolidation of
joint ventures

39,812

12,783

1,315

84,381

17,400

11,025

8,267

174,983

36,910

211,893

(2,860)

(392)

(59)

(13,026)

(1,738)

(1,212)

(1,748)

(21,035)

(3,557)

(24,592)

36,952

12,391

1,256

71,355

15,662

9,813

6,519

153,948

33,353

187,301

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information (continued)

The segment assets and liabilities as at 31 December 2019 are as follows:

(in thousands of US dollars)

5 Segmental information (continued)

The reconciliation of total segment assets and liabilities as at 31 December 2019 calculated with proportional consolidation to the results
presented in consolidated balance sheet above is as follows:

Russian
ports

Finnish
ports

Total
operating
segments

Effect of
proportionate
consolidation

Other
adjustments

Group as per
proportionate
consolidation

Holdings

Reconciliation adjustments

(in thousands of US dollars)

Property, plant and equipment
(including prepayments for PPE)

Right-of-use assets

Investments in joint ventures

Intangible assets

Other non-current assets

Inventories

Trade and other receivables
(including income tax prepayment)

Cash and cash equivalents

Total assets

Long-term borrowings

Long-term lease liabilities

Other long-term liabilities

Trade and other payables

Short-term borrowings

Short-term lease liabilities

Other short-term liabilities

Total liabilities

Non-controlling interest

533,141

7,109

540,250

1,836

(9,227)

641,689

2,510

644,199

829

784

15,225

—

784

165,870

15,238

3,920

(1,332)

—

(570)

—

(166,654)

—

103,126

126,703

229,829

1,075,425

(33,014)

(1,205,633)

532,859

643,696

—

18,588

66,607

8,762

8,915

—

8,915

59,879

1,396

61,275

122,879

7,106

129,985

—

6,071

3,757

(153)

(1,634)

(2,347)

—

(4,547)

61,165

—

131,395

1,485,638

144,837

1,630,475

1,257,708

(48,277)

(1,376,834)

1,463,072

743,607

35,262

154,689

27,770

99,098

851

365

603

744,210

16,914

2,206

121

1,738

712

346

656

37,468

154,810

29,508

99,810

1,197

1,021

323

322

11,619

—

500

(4,513)

(1,201)

(148)

(962)

(178)

(126)

(169)

(18,044)

738,567

—

(1,231)

(4,143)

—

36,590

153,753

36,022

99,632

1,571

853

1,061,642

6,382

1,068,024

29,679

(7,297)

(23,418)

1,066,988

17,114

—

17,114

—

17,114

Property, plant and equipment (including prepayments for PPE)

Right-of-use assets

Investments in joint ventures

Intangible assets

Other non-current assets

Inventories

Trade and other receivables (including income tax prepayment)

Cash and cash equivalents

Total assets

Long-term borrowings

Long-term lease liabilities

Other long-term liabilities

Trade and other payables

Short-term borrowings

Short-term lease liabilities

Other short-term liabilities

Total liabilities

Non-controlling interest

Group as per
proportionate
consolidation

Equity method
and other
adjustments

Group as per
equity method
consolidation of
joint ventures

532,859

643,696

—

18,588

66,607

8,762

61,165

131,395

1,463,072

738,567

36,590

153,753

36,022

99,632

1,571

853

1,066,988

17,114

(27,681)

(3,997)

27,590

(4,624)

12,153

(456)

(4,736)

(7,042)

(8,793)

(454)

(3,603)

(582)

(2,744)

(534)

(377)

(499)

(8,793)

—

505,178

639,699

27,590

13,964

78,760

8,306

56,429

124,353

1,454,279

738,113

32,987

153,171

33,278

99,098

1,194

354

1,058,195

17,114

Included within ‘Russian ports’, ‘Finnish ports’ and ‘Holdings’ segments ‘Other non-current assets’ are investments in subsidiaries in the total
amount of US19,665 thousand, US$126,614 thousand and US$1,073,463 thousand respectively (fully eliminated on consolidation).

The revenue of the Group mainly comprises of stevedoring services, storage and ancillary port services for container and bulk cargoes.
The subsidiaries and joint ventures of the Group also provide services that are of support nature in relation to the core services mentioned
above.

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5 Segmental information (continued)

Revenue attributable to domestic and foreign customers for the year ended 31 December 2020 is disclosed below in accordance with their
registered address. Major clients of the Group are internationally operating companies and their Russian branches. Their registered addresses
are usually not relevant to the location of their operations.

6 Expenses by nature

(in thousands of US dollars)

Revenue from domestic customers — Cyprus

Revenue from foreign customers by countries:

Russia

South Korea

Switzerland

Denmark

Other

Revenue from foreign customers total

Total revenue

For the year ended 31 December

2020

2019

8,505

8,370

307,585

22,675

14,674

9,433

5,899

15,665

375,931

384,436

282,162

18,754

11,180

8,733

7,173

25,501

353,503

361,873

In both 2020 and 2019 there was one customer representing more than 10% of consolidated revenue. This customer originated from Russian
ports segment and its registered address is in Russia.

The management also assesses the performance of the Group based on adjusted EBITDA that is defined as profit/(loss) for the year before
income tax expense, finance income/(costs)-net, depreciation, write-off and impairment of property, plant and equipment, depreciation and
impairment of right-of-use assets, amortisation, write-off and impairment of intangible assets, share of profit/(loss) of joint ventures accounted for
using the equity method and other gains/(losses)-net.

Staff costs (Note 8)

Depreciation of property, plant and equipment (Note 14)

Depreciation of right-of-use assets (Note 23)

Amortisation of intangible assets (Note 15)

Write-off of property, plant and equipment (Note 14)

Transportation expenses*
Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Taxes other than on income

Legal, consulting and other professional services

Auditors’ remuneration

Expense relating to short-term leases and/or leases of low-value assets

Purchased services

Insurance

Other expenses

Total cost of sales, administrative, selling and marketing expenses

* As a result of new terms of certain sales agreement, VSC acted as a principal in 2020 versus as an agent in the first half of 2019. In the first half of 2019 the net result of
revenue from transportation services and associated cost was included in the consolidated revenue. Starting from the middle of the first half of 2019 full revenue and
associated cost are recognised in consolidated revenue and transportation expenses accordingly. This change resulted in additional US$62.8 million (2019: 11.4 million) to
both consolidated revenue and cost of sales, with no effect on adjusted EBITDA.

The total fees charged by the Company’s statutory auditor for the statutory audit of the annual financial statements of the Company for the year
ended 31 December 2020 amounted to US$266 thousand (2019: US$260 thousand) The total fees charged by the Company’s statutory auditor
for the year ended 31 December 2020 for other assurance services amounted to US$57 thousand (2019: US$56 thousand), for tax and VAT
advisory services amounted to US$47 thousand (2019: US$43 thousand) and other non-audit services amounted to US$6 thousand (2019: nil).

The adjusted EBITDA of the Group is calculated as follows:

(in thousands of US dollars)

Profit/(loss) for the year

Adjusted for:

Income tax expense

Finance (income)/costs-net

Amortisation of intangible assets

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Write-off of property, plant and equipment

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

Other (gains)/losses — net

Adjusted EBITDA

Note For the year ended 31 December

2020

2019

49,986

67,672

27(a)

14,631

92,777

770

35,559

11,817

891

2,973

339

28,963

48,204

1,256

36,952

12,391

—

(1,920)

33,426

The above expenses are analysed by function as follows:

Cost of sales
(in thousands of US dollars)

Staff costs

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Write-off of property, plant and equipment (Note 14)

Transportation expenses

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

209,743

226,944

Taxes other than on income

Expense relating to short-term leases and/or leases of low-value assets

Purchased services

Insurance

Other expenses

Total cost of sales

For the year ended 31 December

2020

2019

61,903

35,559

11,817

770

891

67,663

8,705

5,411

2,496

2,191

993

374

16,162

936

9,159

225,030

71,355

36,952

12,391

1,256

—

15,662

9,813

6,519

2,856

2,762

1,031

412

14,298

713

11,281

187,301

For the year ended 31 December

2020

2019

45,083

34,073

11,817

595

891

67,663

8,528

5,287

2,376

113

16,162

712

7,029

200,329

45,255

35,203

12,391

1,102

—

15,662

9,549

6,324

2,455

289

14,298

537

8,754

151,819

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6 Expenses by nature (continued)

Administrative, selling and marketing expenses
(in thousands of US dollars)

Staff costs

Depreciation of property, plant and equipment

Amortisation of intangible assets

Fuel, electricity and gas

Repair and maintenance of property, plant and equipment

Taxes other than on income

Legal, consulting and other professional services

Auditors’ remuneration

Expense relating to short-term leases and/or leases of low-value assets

Insurance

Other expenses

Total administrative, selling and marketing expenses

7 Other gains/(losses) — net

(in thousands of US dollars)

Foreign exchange gains/(losses) on non-financing activities — net (Note 10)

Net loss on disposal of assets held for sale

Charity

Other gains/(losses) — net

Total other gains/(losses) — net

For the year ended 31 December

2020

2019

16,820

1,486

175

177

124

120

2,191

993

261

224

2,130

24,701

26,100

1,749

154

264

195

401

2,762

1,031

123

176

2,527

35,482

For the year ended 31 December

2020

2019

209

—

(412)

(136)

(339)

2,064

(33,535)

(560)

(1,395)

(33,426)

9 Finance income/(costs) — net

(in thousands of US dollars)

Included in finance income:

Interest income on bank balances

Interest income on short-term bank deposits

Interest income on loans to related parties (Note 30(g))

Total finance income calculated using effective interest rate method

Included in finance costs:

Interest expenses on bank borrowings

Interest expenses on bonds

Interest expenses on lease liabilities

Other finance costs

Loss on extinguishment of financial liabilities (Note 22)

Total finance costs

For the year ended 31 December

2020

2019

1,327

—

1,030

2,357

(6,066)

(61,059)

(4,099)

—

(527)

(71,751)

1,319

254

951

2,524

(263)

(72,425)

(4,375)

(647)

(7,524)

(85,234)

Change in fair value of currency forwards and currency options (Notes 22 and 24)

18,380

(9,340)

Net foreign exchange gains/(losses) on financing activities

Finance income/(costs) — net

10 Net foreign exchange gains/(losses)

The exchange differences (charged)/credited to the income statement are as follows:

(in thousands of US dollars)

(41,763)

(92,777)

43,846

(48,204)

For the year ended 31 December

2020

2019

(41,763)

209

(41,554)

43,846

2,064

45,910

In April 2019 the Group completed the disposal of its 50% holding in VEOS, one of the Group’s joint ventures and operating segments that
was classified as held for sale at the end of 2018. The result of the disposal was a US$(50) thousand loss that is reflected within ‘net loss on
disposal of assets held for sale’. In addition, US$(33,485) thousand (negative) were recycled to ‘net loss on disposal of assets held for sale’ from
the currency translation reserve. This was the amount related to VEOS that was recognised in other comprehensive income and accumulated in
the equity.

Included in ‘finance income/(costs) — net’ (Note 9)

Included in ‘other gains/(losses) — net’ (Note 7)

Total

8 Employee benefit expense

(in thousands of US dollars)

Salaries

Social insurance costs

Other staff costs

Total

Average number of staff employed during the year

For the year ended 31 December

2020

2019

47,610

12,121

2,172

61,903

2,556

58,367

10,798

2,190

71,355

2,669

Included within ‘Social insurance costs’ for 2020 are contributions made to the state pension funds in the total amount of US$7,127 thousand
(2019: US$7,547 thousand).

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14 Property, plant and equipment

(in thousands of US dollars)

Buildings and
facilities

Land

Assets
under
construction

Loading
equipment
and
machinery

Other
production
equipment

Office
equipment

Total

At 1 January 2019

Cost

Accumulated depreciation and impairment

134,693

—

305,711

(119,232)

24,486

—

174,456

(88,295)

38,184

(16,607)

2,534

(1,625)

680,432

(226,127)

Net book amount

134,693

186,479

24,486

86,161

21,577

909

454,305

Additions

Transfers

Disposals and write-offs

Depreciation charge (Note 6)

Translation reserve

—

16,456

5,520

21,482

(48)

(20,307)

23,437

—

(13,110)

—

2,722

19,678

11,017

(162)

(15,580)

12,362

1,488

(19,332)

(29)

(765)

390

(57)

(8)

(300)

26,769

—

(247)

(36,952)

55,460

Closing net book amount

151,149

216,563

14,098

113,476

3,329

720

499,335

At 31 December 2019

Cost

151,149

371,764

14,098

229,133

Accumulated depreciation and impairment

—

(155,201)

—

(115,657)

Net book amount

151,149

216,563

14,098

113,476

10,308

(6,979)

3,329

2,166

(1,446)

720

778,618

(279,283)

499,335

11 Income tax expense

(in thousands of US dollars)

Current tax

Effect of change in withholding tax rate (Note 25)

Deferred tax (Note 25)

Total

For the year ended 31 December

2020

2019

12,261

3,230

(860)

14,631

24,048

—

4,915

28,963

The tax on the Group’s profit/(loss) before tax differs from the theoretical amount that would arise using the applicable tax rate as follows:

(in thousands of US dollars)

Profit/(loss) before tax

Tax calculated at the applicable tax rates — 20%*
Tax effect of expenses not deductible for tax purposes

Tax effect of a result of disposal of assets held for sale

Tax effect of reduced tax rates of entities in Russian ports segment

Tax effect of share of profit/(loss) in jointly controlled entities

Tax credit claimed by entities in Russian ports segment

Effect of change in withholding tax rate

Withholding tax on undistributed profits

Tax charge

For the year ended 31 December

2020

2019

64,617

96,635

12,924

2,645

—

(2,907)

595

(3,922)

3,230

2,066

14,631

19,327

1,881

6,707

—

(384)

—

1,432

28,963

* The applicable tax rate used for 2020 and 2019 is 20% as this is the income statutory tax rate applicable to the Russian ports segment, where a substantial part of

the taxable income arises.

Deferred tax is provided on the undistributed profits of subsidiaries and joint ventures, except when it is probable that the Group will not
distribute dividends from the specific investment in the foreseeable future and the Group can control the payment of dividends.

The Company is subject to corporation tax on taxable profits at the rate of 12.5%. Under certain conditions, interest may be exempt from income
tax and only subject to defence contribution at the rate of 30%. In certain cases, dividends received from abroad may be subject to defence
contribution at the rate of 17%. In certain cases, dividends received from other Cyprus tax resident Companies may also be subject to special
contribution for defence.

12 Basic and diluted earnings per share

Basic and diluted earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number in issue during the respective period.

Profit/(loss) attributable to the owners of the parent of the Company — in thousands of US dollars

Weighted average of ordinary shares in issue (thousands)

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

13 Dividend distribution

During 2020 and 2019 the Company did not declare or pay dividends to the equity holders of the Company.

For the year ended 31 December

2020

2019

48,399

573,171

0.08

66,580

573,171

0.12

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14 Property, plant and equipment (continued)

(in thousands of US dollars)

Buildings
and facilities

Land

Assets
under
construction

Loading
equipment
and
machinery

Other
production
equipment

Office
equipment

Total

At 1 January 2020

Cost

151,149

371,764

14,098

229,133

Accumulated depreciation and impairment

—

(155,201)

—

(115,657)

Net book amount

151,149

216,563

14,098

113,476

10,308

(6,979)

3,329

2,166

778,618

(1,446)

(279,283)

720

499,335

Additions

Transfers

Disposals

Write-offs

Depreciation charge (Note 6)

Translation reserve

—

13,159

701

(186)

—

(19,118)

8,543

(732)

—

(891)

—

(24,488)

(34,858)

(2,938)

12,869

1,230

331

36,132

143

(231)

—

(15,401)

(18,179)

(111)

(9)

—

(759)

(529)

(1)

(3)

—

(429)

(891)

(281)

(115)

(35,559)

(81,107)

14 Property, plant and equipment (continued)

In the cash flow statement proceeds from sale of property, plant and equipment comprise of:

(in thousands of US dollars)

Net book amount

Less: Non-cash items — write-offs of property, plant and equipment

Profit on sale of property, plant and equipment (1)

Proceeds from sale of property, plant and equipment

For the year ended 31 December

2020

2019

1,320

(891)

429

436

247

(50)

197

293

490

(1) Profit on sale of property, plant and equipment is included in ‘Cost of sales’ in the consolidated income statement.

Depreciation expense amounting to US$34,073 thousand in 2020 (2019: US$35,203 thousand) has been charged to ‘cost of sales’ and
US$1,486 thousand in 2020 (2019: US$1,749 thousand) has been charged to ‘administrative, selling and marketing’ expenses (Note 6).

Closing net book amount

126,661

176,261

18,080

92,677

3,151

651

417,481

There were no capitalised borrowing costs in 2020 and 2019.

At 31 December 2020

Cost

126,664

323,066

18,080

197,989

Accumulated depreciation and impairment

(3)

(146,805)

—

(105,312)

Net book amount

126,661

176,261

18,080

92,677

9,527

(6,376)

3,151

2,155

677,481

(1,504)

(260,000)

651

417,481

Lease rentals relating to the lease of machinery and property amounting to US$113 thousand in 2020 (2019: US$289 thousand) have been
charged to ‘cost of sales’ and US$261 thousand in 2020 (2019: US$123 thousand) has been charged to ‘administrative, selling and marketing
expenses’.

As at 31 December 2020 the amounts prepaid for equipment not delivered and prepayments for construction works not yet carried out were
US$2,842 thousand (2019: US$5,893 thousand).

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15 Intangible assets

(in thousands of US dollars)

At 1 January 2019

Cost

Accumulated amortisation and impairment

Net book amount

Additions

Amortisation charge (Note 6)

Translation reserve

Closing net book amount

At 31 December 2019

Cost

Accumulated amortisation and impairment

Net book amount

Additions

Amortisation charge (Note 6)

Translation reserve

Closing net book amount

At 31 December 2020

Cost

Accumulated amortisation and impairment

Net book amount

Goodwill

Computer
software

8,415

—

8,415

—

1,028

9,443

—

9,443

—

(1,530)

7,913

—

7,913

6,820

(1,820)

5,000

255

(1,256)

522

4,521

5,965

(1,444)

4,521

890

(770)

(494)

4,147

6,087

(1,940)

4,147

Total

15,235

(1,820)

13,415

255

(1,256)

1,550

13,964

15,408

(1,444)

13,964

890

(770)

(2,024)

12,060

14,000

(1,940)

12,060

16 Financial instruments by category

The accounting policies for financial instruments have been applied in the line items below:

(in thousands of US dollars)

Financial assets at amortised cost

Trade and other receivables (1)

Cash and cash equivalents

Total

Financial liabilities measured at amortised cost

Borrowings

Trade and other payables (2)

Total

Lease liabilities

Derivative financial instruments

Derivative financial instruments not used for hedging at fair value through profit or loss — assets

Derivative financial instruments not used for hedging at fair value through profit or loss — liabilities

Total

(1) Trade and other receivables do not include taxes and prepayments.

(2) Trade and other payables do not include taxes and contract liabilities.

17 Credit quality of financial assets

As at 31 December

2020

2019

40,901

206,968

247,869

47,037

124,353

171,390

786,201

15,503

801,704

837,211

21,669

858,880

29,319

34,181

10,199

—

10,199

—

9,184

The credit quality of financial assets that are fully performing (i.e. neither past due nor impaired) can be assessed by reference to external and
internal sources of information like business reputation, financial position and performance, prior working history records. Customers with longer
history of working with the Group are regarded by management as having lower risk of default.

Goodwill is allocated to the Group’s cash generating units (CGUs) identified according to their operating segment. An operating segment-level
summary of the goodwill allocation is presented below:

The credit quality of financial assets that are neither past due nor impaired classified by reference to the working history of the counterparty with
the Group is as follows:

(in thousands of US dollars)

PLP/ FCT (Russian ports segment)

VSC (Russian ports segment)

Total

As at 31 December

2020

2019

3,422

4,491

7,913

4,084

5,359

9,443

The recoverable amount of the above CGUs is determined based on value in use calculations. These calculations are based on post-tax cash
flow projections and all the assumptions in relation to growth rates are determined by reference to management’s past experience and industry
forecasts. The discount rates used reflect the specific risks of each segment. See Note 4(i) for details of assumptions used.

Trade and other receivables

Core customers — existing (more than one year of working history with the Group)

Trade and other receivables from other customers (third parties)

Other receivables from third parties with Aa1 credit rating by Moody’s Investors Service

Trade and other receivables from related parties with Baa3 credit rating by Moody’s Investors Service

Trade and other receivables from other related parties

Total

As at 31 December

2020

2019

15,498

1,085

1,300

7,077

911

25,871

15,886

2,404

1,773

6,515

—

26,578

Trade and other receivables from other customers (third parties) are related to highly reputable counterparties with no external credit rating.

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17 Credit quality of financial assets (continued)

Cash at bank and short-term bank deposits (Note 20):

(in thousands of US dollars)

Agency

International rating agency Moody’s Investors Service

Rating

Aa2-Aa3

International rating agency Moody’s Investors Service / Standard & Poor’s / Fitch Ratings

Baa3 / BBB- / BBB

International rating agency Moody’s Investors Service

Ba1-Ba3

* No rating

Total

As at 31 December

2020

2019

593

4,565

160,714

40,905

137

347

624

75,218

47,738

265

161

206,968

124,353

* Cash in hand and cash and cash equivalents with banks for which there is no rating. These banks are highly reputable local banks in the country of operation of

19 Trade and other receivables (continued)

According to management estimates the fair values of trade and other receivables do not materially differ from their carrying amounts.

The average effective interest rate on loans receivable from related parties were 6.4% (2019: 6.4%).

At 31 December 2020, trade and other receivables amounting to US$25,871 thousand were zero days past due (31 December 2019:
US$26,577 thousand).

Trade and other receivables amounting to US$1,357 thousand (31 December 2019: US$3,770 thousand) were past due but not impaired. These
relate to a number of independent customers for whom there is no history of either non repayment in the past or renegotiation of the repayment
terms due to inability of the customer to repay the balance.

The analysis of past due trade and other receivables is as follows:

(in thousands of US dollars)

the respective Group entities.

18 Inventories

(in thousands of US dollars)

Spare parts and consumables

Total

All inventories are stated at cost.

19 Trade and other receivables

(in thousands of US dollars)

Trade receivables — third parties

Trade receivables — related parties (Note 30(d))

Total trade receivables

Other receivables

Loans to related parties (Note 30(g))

VAT and other taxes recoverable

Total financial assets at amortised cost

Prepayments for goods and services

Prepayments for goods and services — related parties (Note 30(d))

Total trade and other receivables

Less non-current portion:

Loans to related parties

Other receivables

Total non-current portion

Current portion

As at 31 December

2020

2019

7,127

8,306

Less than 1 month overdue

From 1 to 3 months overdue

From 3 to 6 months overdue

Over 6 months overdue

Total

During 2020 no trade receivables (2019: nil) were impaired and written off in full.

Other classes within trade and other receivables do not contain impaired assets.

As at 31 December

2020

2019

1,107

204

1,357

2,716

1,006

3,770

As at 31 December

2020

2019

The fair value of receivables approximates their carrying value as the impact of the discounting is insignificant and is within Level 3 of the fair
value hierarchy. The fair value is based on discounting of cash flows using 7% (2019: 7%) discount rate.

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:

(in thousands of US dollars)

Currency:

US dollar

Russian rouble

Euro

Total

As at 31 December

2020

2019

5,010

57,201

178

62,389

8,234

54,426

323

62,983

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group does
not hold any collateral as security for any receivables.

16,501

7,988

24,489

2,739

13,673

8,219

24,631

5,073

8,196

62,389

(13,507)

—

(13,507)

19,655

6,515

26,170

4,177

16,690

10,240

31,107

4,285

1,421

62,983

(16,583)

(913)

(17,496)

48,882

45,487

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

20 Cash and cash equivalents

(in thousands of US dollars)

Cash at bank and in hand

Short-term bank deposits (less than 90 days)

Total

As at 31 December

2020

2019

53,952

153,016

206,968

48,908

75,445

124,353

The effective average interest rate on short-term deposits was 1.5% in 2020 (2019: 1.25%) and these deposits have an average maturity of
19 days in 2020 (2019: 26 days).

Cash and cash equivalents include the following for the purposes of the cash flow statement:

(in thousands of US dollars)

Cash and cash equivalents

Total

21 Share capital, share premium

As at 31 December

2020

2019

206,968

124,353

Authorised share capital
The authorised share capital of the Company amounts to US$175,000,000.00 divided into 750,000,000 ordinary shares and
1,000,000,000 ordinary non-voting shares with a par value of US$0.10 each.

Issued share capital
The issued share capital of the Company amounts to US$57,317,073.10 divided into 422,713,415 ordinary shares and 150,457,316 ordinary non-
voting shares with a par value of US$0.10 each.

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

(in thousands of US dollars)

Number of
shares ‘000

Share capital

Share
premium

Total

At 1 January/31 December 2019/ 31 December 2020

573,171

57,317

923,511

980,828

22 Borrowings

(in thousands of US dollars)

Non-current borrowings

Bank loans

Non-convertible bonds

Total non-current borrowings

Current borrowings

Bank loans

Interest payable on bank loans

Non-convertible bonds

Non-convertible bonds — interest payable

Total current borrowings

As at 31 December

2020

2019

62,845

570,080

632,925

746

135,363

17,071

153,276

71,939

666,174

738,113

115

80,768

18,179

99,098

Total borrowings

786,201

837,211

The maturity of non-current borrowings is analysed as follows:

(in thousands of US dollars)

Between 1 and 2 years

Between 2 and 5 years

Total

As at 31 December

2020

2019

198,745

434,180

632,925

161,523

576,590

738,113

Bank borrowings mature until 2025 (31 December 2019: 2024) and bonds mature until 2025 (31 December 2019: 2023).

Changes in liabilities and assets arising from borrowings and derivative financial instruments:

(in thousands of US dollars)

At beginning of year

Non-cash transactions

Interest charged

Loss on extinguishment of financial liabilities

Change in fair value of derivative financial instruments

Foreign exchange differences

Cash transactions

Borrowings received during the year

Borrowings repaid during the year

Interest repaid during the year and derivatives settlements

At end of year

* Represents net position (liabilities less assets) of derivative financial instruments

For the year ended 31 December 2020

Note

Borrowings

Fair value of
derivative financial
instruments*

Total

837,211

9,184

846,395

24,9

67,125

527

—

(51,375)

72,079

(72,981)

(66,385)

786,201

—

(18,380)

(154)

—

(849)

(10,199)

67,125

527

(18,380)

(51,529)

72,079

(72,981)

(67,234)

776,002

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

22 Borrowings (continued)

(in thousands of US dollars)

22 Borrowings (continued)

For the year ended 31 December 2019

The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows
(the table excludes interest payable):

At beginning of year

Non-cash transactions

Interest charged

Loss on extinguishment of financial liabilities

Change in fair value of derivative financial instruments

Foreign exchange differences

Cash transactions

Borrowings received during the year

Borrowings repaid during the year

Interest repaid during the year and derivatives settlements

At end of year

* Represents net position (liabilities less assets) of derivative financial instruments

Note

Borrowings

Fair value of
derivative
financial
instruments*

24,9

863,809

72,688

7,524

—

28,086

70,893

(131,382)

(74,407)

837,211

—

9,340

—

(211)

9,184

Total

863,809

72,688

7,524

9,340

28,141

70,893

(131,382)

(74,618)

846,395

In December 2020 the Group repaid US$60,500 thousand (RUB4,415 million) RUB-denominated bonds using the proceeds from new RUB-
denominated bonds in the amount of US$67,878 thousand (RUB5 billion) issued with maturity over 5 years and a lower interest rate.

In April and September 2016, the GPI group has successfully finalised issue of two tranches of Eurobonds on the Irish Stock Exchange in the total
amount of US$700 million at a fixed coupon rate. Some companies within GPI group have unconditionally and irrevocably guaranteed these
Eurobonds on a joint and several basis.

In 2018-2020 the Group has repurchased some part of Eurobonds and partly derecognised the liability. In 2020 the Group cancelled those
Eurobonds that were previously purchased by the Group. The aggregate principal amount of the outstanding 2022 and 2023 Eurobonds as of
31 December 2020 is US$198,557 thousands and US$297,975 thousand respectively.

In 2019 the Group obtained RUB-denominated bank loan in amount US$70,843 thousand (RUB4,447 million) that bears fixed interest rate and
matures in 2024. The proceeds from this loan were used to buy-back the Eurobonds for the total nominal amount of US$69,480 thousand.

Fair value of bank loans and non-convertible bonds was as follows:

(in thousands of US dollars)

Non-convertible bonds

Bank loans

Total

Fair value
hierarchy

Level 1

Level 2

As at 31 December

2020

2019

209,945

536,645

63,591

810,181

257,254

552,958

71,975

882,187

(in thousands of US dollars)

6 months or less

6-12 months

1-5 years

Total

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

(in thousands of US dollars)

Russian rouble

US dollar

Total

As at 31 December

2020

2019

135,332

—

138,977

274,309

—

80,676

233,554

314,230

As at 31 December

2020

2019

280,330

505,871

786,201

321,021

516,190

837,211

As of 31 December 2020, from the above amount of borrowings denominated in US$114,400 thousand were covered by RUB/US$ currency
forward contracts effectively converting the US$ denominated obligation into RUB denominated one and US$87,000 thousand were covered by
RUB/US$ currency option contracts (Note 24) that limit foreign exchange risk exposure to a certain level that management considers appropriate
in the current economic environment.

Agreements of the bank loans given to some of the subsidiaries of the Group include certain covenants which set forth certain financial ratios
and other non-financial covenants that must be complied with. All of the Group’s subsidiaries were in compliance with all covenants.

The weighted average effective interest rate on borrowings is 7.99% (2019: 8.98%).

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

23 Lease liabilities and right-of-use assets

Movements in lease liabilities are analysed as follows:

(in thousands of US dollars)

At beginning of period

Non-cash transactions

Adjustments related to changes in the index affecting lease payments

New leases

Leases termination

Interest charged (Note 9)

Exchange differences

Cash transactions

Repayments of leases

Repayments of interest

At end of period

Of which are:

Current lease liabilities

Non-current lease liabilities

The maturity of non-current lease liabilities is analysed as follows:

(in thousands of US dollars)

Between 1 and 2 years

Between 2 and 5 years

Over 5 years

Total

The carrying amounts of the Group’s lease liabilities are denominated in the following currencies:

(in thousands of US dollars)

Russian rouble

US dollar

Total

For the year ended 31 December

2020

2019

34,181

26,803

294

5,797

—

4,099

(5,320)

(1,961)

(4,192)

32,898

1,810

31,088

3,798

1,251

(180)

4,375

3,276

(871)

(4,271)

34,181

1,194

32,987

As at 31 December

2020

2019

1,416

3,251

26,421

31,088

936

866

31,185

32,987

As at 31 December

2020

2019

32,343

555

32,898

33,535

646

34,181

Total cash outflow for leases in 2020 is US$6,527 thousand (2019: US$5,553 thousand).

Major part of US$374 (2019: US$412 thousand) thousand lease expenses included in cost of sales and administrative, selling and marketing
expenses is related to short-term leases.

23 Lease liabilities and right-of-use assets (continued)

Movements in right-of-use assets are analysed as follows:

(in thousands of US dollars)

Land

Buildings
and facilities

Loading
equipment
and
machinery

Other
production
equipment

Office
equipment

Total

Opening net book amount as at 1 January 2019

16,272

560,585

266

Additions

Adjustments related to changes in the index affecting lease
payments

Leases termination

Depreciation (Note 6)

Exchange differences

—

(231)

(402)

1,962

3,798

—

(11,870)

68,202

913

—

(112)

Closing net book amount as at 31 December 2019

17,625

620,719

1,135

Additions

Adjustments related to changes in the index affecting lease
payments

Leases termination

Transfers

Depreciation (Note 6)

Exchange differences

—

120

255

—

(399)

(2,856)

(10,647)

(100,420)

5,677

—

(17)

(697)

(286)

—

144

—

(6)

144

—

(74)

(22)

—

577,123

—

(1)

1,159

3,798

(231)

(12,391)

70,241

639,699

—

(66)

—

(10)

5,797

294

(17)

—

(11,817)

(103,594)

Closing net book amount as at 31 December 2020

14,409

510,027

5,878

—

530,362

24 Derivative financial instruments

During 2019 the Group entered into several RUB/US$ currency options and forward contracts in order to hedge part of foreign exchange risk
associated with its US$ denominated non-convertible bonds (which have been provided as loans to the Russian operating subsidiaries).

The Group decided not to apply hedge accounting to options and forward contracts. As a result, the change in fair value is presented in
the consolidated income statement under ‘change in fair value of derivatives’ as part of ‘finance income/(costs) — net’ (see Note 9).

Cash collected/paid in relation to the options and forward arrangements not used for hedging is presented in the consolidated statement
of cash flows as ‘proceeds from/(settlement of) derivative financial instruments not used for hedging’ as part of ‘financing activities’. During
2020 several forward contracts were settled and options premiums were paid with the resulting net cash outflow US$849 thousand (2019: net
cash outflow US$211 thousand).

As of 31 December 2020, the net fair value of options contracts was positive US$753 thousand (31 December 2019: negative US$(1,316)
thousand) and net fair value of forward contracts was positive US$9,446 thousand (31 December 2019: negative US$(7,868) thousand). As of
31 December 2020, there are outstanding forward contracts to acquire US$122,400 thousand (31 December 2019: US$130,000 thousand) and
currency options contracts with possibility to acquire US$87,000 thousand (31 December 2019: US$87,000 thousand).

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

25 Deferred income tax liabilities

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and
when the deferred taxes relate to the same fiscal authority. The offset amounts are as follows:

(in thousands of US dollars)

Deferred tax assets:

Deferred tax asset to be recovered after more than 12 months

Deferred tax liabilities:

Deferred tax liability to be recovered after more than 12 months

Deferred tax liabilities (net)

The gross movement on the deferred income tax account is as follows:

(in thousands of US dollars)

At the beginning of the year

Income statement charge:

Deferred tax charge (Note 11)

Other movements:

Currency translation differences

At the end of the year

As at 31 December

2020

2019

50,788

61,264

(122,778)

(71,990)

(144,332)

(83,068)

For the year ended 31 December

2020

2019

(83,068)

(69,937)

(2,370)

(4,915)

13,448

(71,990)

(8,216)

(83,068)

The movement on the deferred tax assets (+) and liabilities (-) during the year, without taking into consideration the offsetting of balances within
the same tax jurisdiction, is as follows:

(in thousands of US dollars)

Property,
plant and
equipment

Lease liabilities
and right-of-use
assets

Withholding tax
provision

Intangible
assets

Borrowings

Tax
losses

Other assets
and liabilities

At 1 January 2019

Income statement (Note 11)

Reclassification following IFRS 16
adoption

Translation differences

At 31 December 2019

Income statement (Note 11)

Translation differences

At 31 December 2020

(48,156)

1,376

(301)

(5,987)

(53,068)

1,383

8,631

—

2,766

(108,633)

(13,200)

(119,067)

1,472

19,271

(43,054)

(98,324)

(4,465)

(108,934)

(280)

90,913

(1,297)

(109)

—

108,934

(606)

(6,368)

(4,506)

1,062

(9,812)

(104)

(63)

—

(235)

(126)

(8,329)

—

11,457

94,041

(715)

(15,147)

(360)

78,179

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future
taxable profits is probable. The amount of unremitted earnings of certain subsidiaries and joint ventures on which no withholding tax provision
was recognised amounts to US$701,664 thousand (2019: US$844,515 thousand).

Total

(69,937)

(4,915)

—

(8,216)

985

633

—

115

1,733

(83,068)

(383)

1,444

(2,370)

13,448

(71,990)

26 Trade and other payables

(in thousands of US dollars)

Trade payables — third parties

Trade payables — related parties (Note 30(e))

Payables for property, plant and equipment

Other payables — third parties

Other payables — related parties (Note 30(e))

Payroll payable

Accrued expenses

Contract liabilities

Taxes payable (other than income tax)

Total trade and other payables

Less non-current portion

Current portion

As at 31 December

2020

3,011

237

461

1,328

2,257

1,700

6,509

5,174

2,863

23,540

2019

4,108

782

416

630

2,281

13,430

7,504

4,105

33,278

—

23,540

33,278

During the year ended 31 December 2020, the Group recognised revenue in the amount of US$7,504 thousand (2019: US$3,987 thousand) that
related to carried-forward contract liabilities at the beginning of the year.

The fair value of trade and other payables approximates their carrying amount at the balance sheet date.

27 Joint ventures and non-controlling interests

(a) Joint ventures
The Group has the following investments in joint ventures — MLT group and CD Holding group. These entities are an integral part of operations
of the Group. See Note 1 and Note 5 for more details.

There are no contingent liabilities relating to the Group’s interest in the joint ventures.

At 31 December 2020 there is zero capital expenditure contracted for at the balance sheet date but not yet incurred by the joint ventures
(31 December 2019: US$4,921 thousand).

The summarised investments in joint ventures accounted for using the equity method as at 31 December 2020 and 31 December 2019 are as
follows:

(in thousands of US dollars)

At 1 January 2020

Recognised share of profit/(loss)

Share of losses of joint ventures applied against other long-term interests (Note 30(g))

Translation differences (through other comprehensive income/(loss))

At 31 December 2020

(in thousands of US dollars)

At 1 January 2019

Recognised share of profit/(loss)

Share of profits of joint ventures applied against other long-term interests (Note 30(g))

Translation differences (through other comprehensive income/(loss))

At 31 December 2019

MLT

CD Holding

Total

27,590

(1,980)

—

(2,227)

23,383

—

(993)

827

166

—

27,590

(2,973)

827

(2,061)

23,383

MLT

CD Holding

Total

24,795

767

—

2,028

27,590

—

1,153

(936)

(217)

—

24,795

1,920

(936)

1,811

27,590

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

27 Joint ventures and non-controlling interests (continued)

Set out below are the selected summarised financial information for joint ventures that are accounted for using the equity method.

Selected income statement items

(in thousands of US dollars)

Selected income statement items

(in thousands of US dollars)

Revenue

Depreciation, amortisation and impairment

Interest income

Interest expense

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

Other comprehensive income/(loss)

Total comprehensive income/(loss)

Selected balance sheet items

(in thousands of US dollars)

Total non-current assets

Cash and cash equivalents (including current deposits with maturity over 90 days)

Other current assets

Total current assets

Total assets

Non-current financial liabilities

Other non-current liabilities

Total non-current liabilities

Current financial liabilities excluding trade and other payables

Other current liabilities including trade and other payables

Total current liabilities

Total liabilities

Net assets

For the year ended
31 December 2020

MLT

CD Holding

Revenue

11,570

(3,473)

(604)

(3,242)

602

(2,640)

(2,339)

(4,979)

8,926

(1,088)

(1,092)

(1,324)

—

(1,324)

222

(1,102)

As at 31 December 2020

MLT

CD Holding

34,263

4,884

4,113

8,997

43,260

10,013

1,098

11,111

1,887

2,342

4,229

15,340

13,845

190

875

1,065

14,910

15,524

—

15,524

570

932

1,502

17,026

27,920

(2,116)

Depreciation, amortisation and impairment

Interest income

Interest expense

Profit/(loss) before income tax

Income tax expense

Profit/(loss) after tax

Other comprehensive income/(loss)

Total comprehensive income/(loss)

Selected balance sheet items

(in thousands of US dollars)

Total non-current assets

Cash and cash equivalents (including current deposits with maturity over 90 days)

Other current assets

Total current assets

Total assets

Non-current financial liabilities

Other non-current liabilities

Total non-current liabilities

Current financial liabilities excluding trade and other payables

Other current liabilities including trade and other payables

Total current liabilities

Total liabilities

Net assets

For the year ended
31 December 2019

MLT

CD Holding

25,073

(3,496)

(512)

1,244

(221)

1,023

2,279

3,302

10,798

(918)

(985)

1,629

(92)

1,537

(289)

1,248

As at 31 December 2019

MLT

CD Holding

28,111

12,546

2,380

14,926

43,037

5,259

589

5,848

1,105

3,185

4,290

10,138

16,494

573

969

1,542

18,036

17,599

—

17,599

111

1,340

1,451

19,050

32,899

(1,014)

The information above reflects the amounts presented in the financial statements of the joint ventures adjusted for differences in accounting
policies between the group and the joint ventures.

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

27 Joint ventures and non-controlling interests (continued)

Set out below is the reconciliation of the summarised financial information presented to the carrying amount of the Group interest in joint
ventures.

(b) Non-controlling interests
Ust-Luga Container Terminal (located in Ust-Luga, North-West Russia) is an 80% subsidiary where Eurogate, one of the leading container terminal
operators in Europe, has a 20% non-controlling interest on 31 December 2020 and 31 December 2019.

During 2020 and 2019 Ust-Luga Container Terminal did not declare or pay dividends to the non-controlling interest.

Set out below are the selected summarised financial information for Ust-Luga Container Terminal. The amounts disclosed for the subsidiary are
before inter-company eliminations.

For the year ended 31 December 2020

MLT

CD Holding

Total

32,899

(2,640)

(2,339)

27,920

75%

20,940

—

15,558

(13,115)

23,383

(2,061)

(1,324)

222

(3,163)

75%

(2,371)

1,587

784

—

30,838

(3,964)

(2,117)

24,757

18,569

1,587

784

15,558

(13,115)

23,383

Selected income statement items

(in thousands of US dollars)

Revenue

Profit/(loss) for the year

Other comprehensive income/(loss) for the year

Total comprehensive income/(loss) for the year

Profit/(loss) for the year attributable to non-controlling interest

Total comprehensive income/(loss) for the year attributable to non-controlling interest

(in thousands of US dollars)

Opening net assets at the beginning of the year

Profit/(loss) for the period

Other comprehensive income/(loss)

Closing net assets at the end of the year

Ownership interest

Interest in joint venture

Share of losses of joint ventures applied against other long-term interests
(Note 30(g))

Other movements

Goodwill

Impairment of investment

Carrying value on 31 December 2020

(in thousands of US dollars)

Opening net assets at the beginning of the year

Profit/(loss) for the period

Other comprehensive income/(loss)

Closing net assets at the end of the year

Ownership interest

Interest in joint venture

Share of losses of joint ventures applied against other long-term interests (Note 30(g))

Other movements

Goodwill

Impairment of investment

Carrying value on 31 December 2019

For the year ended 31 December 2019

MLT

CD Holding

Total

Selected balance sheet items

(in thousands of US dollars)

29,597

1,023

2,279

32,899

75%

24,673

—

18,567

(15,650)

27,590

(3,309)

1,537

(289)

(2,061)

75%

(1,544)

760

784

—

26,288

2,560

1,990

30,838

23,129

760

784

18,567

(15,650)

27,590

Total non-current assets

Total current assets

Total assets

Total non-current liabilities

Total current liabilities

Total liabilities

Net assets

Accumulated non-controlling interest

Selected cash flow items

(in thousands of US dollars)

Net cash from operating activities

Net cash from/(used in) investing activities

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents

For the year ended 31 December

2020

2019

20,493

8,044

(13,994)

(5,950)

1,609

(1,189)

27,018

5,462

8,933

14,395

1,092

2,879

As at 31 December

2020

2019

40,653

41,093

81,746

548

1,575

2,123

79,623

15,925

59,101

32,825

91,926

5,615

741

6,356

85,570

17,114

For the year ended 31 December

2020

2019

6,795

3,100

(743)

9,152

13,594

(2,312)

(765)

10,517

Global Ports Investments PLC Annual Report 2020

globalports.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

28 Contingencies

Operating environment of the Group

28 Contingencies (continued)

Tax legislation in Russia (continued)

The Russian Federation displays certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices.
The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations. The Russian
economy continues to be negatively impacted by ongoing political tension in the region and international sanctions against certain Russian
companies and individuals. Further, on 12 March 2020, the World Health Organisation declared the outbreak of COVID-19 a global pandemic.
In response to the pandemic, the Russian authorities implemented numerous measures attempting to contain the spreading and impact of
COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, including closures.
These measures have, among other things, severely restricted economic activity in Russia and have negatively impacted, and could continue
to negatively impact businesses, market participants, clients of the Group, as well as the Russian and global economy for an unknown period of
time.

Management is taking necessary measures to ensure sustainability of the Group’s operations and support its customers and employees:

— Medical examinations have been reinforced at the terminals and offices. Restrictions on travelling and external/internal meetings, social
distancing, additional disinfection according to the schedule, personal protective equipment provided for personnel, improved cleaning,
purchasing protective masks, gloves and COVID-19 tests for the local hospital in Nakhodka, Far East;

— Only critical employees stay at the terminals and in offices. The Group tried to establish the maximum comfort for its employees during

remote work. The IT infrastructure was adapted to new challenges and was working without major failures;

— A mobile application has been developed to monitor the health status of employees;
— Unhindered operational performances 24/7 (quay, yard and gates), to support and protect customers’ supply chains in Russia;
— Improved commercial and operational flexibility to support customers;
— Maximum digitalisation of documentation and customer integration continued. Further development of online solution to decrease necessity

Tax liabilities arising from controlled transactions are determined using actual transaction prices. It is possible, with the evolution of
the interpretation of the transfer pricing rules, that such prices could be challenged. The impact of any such challenge cannot be reliably
estimated; however, it may be significant to the financial position and/or the overall operations of the Group.

The Group includes companies incorporated outside of Russia. The tax liabilities of the Group are determined on the assumption that these
companies are not subject to Russian profits tax, because they do not have a permanent establishment in Russia. The Controlled Foreign
Company (CFC) legislation introduced Russian taxation on the profits of foreign companies and non-corporate structures (including trusts)
controlled by Russian tax residents (controlling parties). The CFC income is subject to a 20% tax rate. This interpretation of the relevant
legislation may be challenged but the impact of any such challenge cannot be reliably estimated currently; however, it may be significant to
the financial position and/or the overall operations of the Group.

As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of
such uncertain areas that could reduce the overall tax rate of the Group. While management currently estimates that the tax positions and
interpretations that it has taken can probably be sustained, there is a possible risk that outflow of resources will be required should such tax
positions and interpretations be challenged by the relevant authorities. The impact of any such challenge cannot be reliably estimated; however,
it may be significant to the financial position and/or the overall operations of the Group.

The Group’s management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax, currency legislation and
customs positions will be sustained. Accordingly, as of 31 December 2020 and as of 31 December 2019 management believes that no additional
tax liability has to be accrued in the financial statements.

of client’s presence at the terminal;

Legal proceedings and investigations

— Discipline in spending: strict and careful management of funds, including pro-active management of costs, receivables and capacity for
effective adaptation to crisis and its consequences, stress testing of financial performance and liquidity position, revisiting financial plans.

All these measures implemented ensured that the terminals of the Group (quay, yard and gates) remained 100% operational to service vessels/
handle cargoes throughout the pandemic as well as the call and service centres of the Group were working without interruption.

The future effects of the current economic situation and the above measures are difficult to predict and management’s current expectations and
estimates could differ from actual results.

Finland represents established market economy with more stable political systems and developed legislation based on EU directives
and regulations. The Finnish authorities implemented numerous measures attempting to contain the spreading and impact of COVID-19.
Management is taking necessary measures to ensure the safety of employees and ensure sustainability operations. Recommendation to use
face masks has been given to employees. Separation of shifts was reinstated from October 2020.

Tax legislation in Russia

Russian tax and customs legislation which was enacted or substantively enacted at the end of the reporting period, is subject to varying
interpretations when being applied to the transactions and activities of the Group. Consequently, tax positions taken by management and
the formal documentation supporting the tax positions may be challenged by the tax authorities. Russian tax administration is gradually
strengthening, including the fact that there is a higher risk of review of tax transactions without a clear business purpose or with tax incompliant
counterparties. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year when
a decision about the review was made. Under certain circumstances reviews may cover longer periods.

The Russian transfer pricing legislation is generally aligned with the international transfer pricing principles developed by the Organisation
for Economic Cooperation and Development although it has specific features. This legislation provides for the possibility of additional tax
assessment in respect of controlled transactions (transactions between related parties and certain transactions with unrelated parties) if such
transactions are not on an arm’s length basis.

From time to time and in the normal course of business, claims against the Group may be received. On the basis of its own estimates and both
internal and external professional advice, management is of the opinion that no provisions should be recognised in these consolidated financial
statements.

Environmental matters

The Group is subject to laws, regulations and other legal requirements relating to the protection of the environment, including those governing
the discharge of waste water and the clean-up of contaminated sites.

Issues related to protection of water resources in Russia are regulated primarily by the Environmental Protection Law, the Water Code and
a number of other federal and regional normative acts.

Pursuant to the Water Code, discharging waste water into the sea is allowed, provided that the volume does not exceed the established
standards of admissible impact on water resources. At the same time, the Environmental Protection Law establishes a “pay-to-pollute” regime,
which implies that companies need to pay for discharging waste waters. However, the payments of such fees do not relieve a company from its
responsibility to comply with environmental protection measures.

If the operations of a company violate environmental requirements or cause harm to the environment or any individual or legal entity,
environmental authorities may suspend these operations or a court action may be brought to limit or ban these operations and require
the company to remedy the effects of the violation. The limitation period for lawsuits for the compensation of damage caused to the environment
is twenty years. Courts may also impose clean-up obligations on offenders in lieu of or in addition to imposing fines.

The enforcement of environmental regulation in the countries in which the Group operates is evolving and the enforcement posture of
government authorities is continuously being reconsidered. The Group periodically evaluates its obligations under environmental regulations.
As obligations are determined, they are recognised immediately. Potential liabilities, which might arise as a result of changes in existing
regulations, civil litigation or legislation, cannot be estimated but could be material. In the current enforcement climate under existing legislation,
management believes that there are no significant liabilities for environmental damage.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

29 Commitments

Capital commitments

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

(in thousands of US dollars)

Property, plant and equipment

Total

30 Related party transactions

As at 31 December

2020

2019

9,207

14,998

For the purposes of these consolidated financial statements, parties are considered to be related if one party has the ability to control the other
party or exercise significant influence over the other party in making financial and operational decisions as defined by IAS 24 “Related Party
Disclosures”. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely
the legal form. Related parties may enter into transactions, which unrelated parties might not, and transactions between related parties may not
be effected on the same terms, conditions and amounts as transactions between unrelated parties.

30 Related party transactions (continued)

(d) Trade and other receivables and prepayments

(in thousands of US dollars)

Entities under control of owners of controlling entities

Joint ventures in which GPI is a venturer

Total

(e) Trade and other payables

(in thousands of US dollars)

Entities under control of owners of controlling entities

Joint ventures in which GPI is a venturer

Other related parties

Payroll payable and accrued expenses related to key management

Total

(f) Key management compensation/directors’ remuneration

(in thousands of US dollars)

The following transactions were carried out with related parties:

(a) Sale of services

(in thousands of US dollars)

Entities under control of owners of controlling entities

Joint ventures in which GPI is a venturer

Other related parties

Total

(b) Purchases of services and incurred expenses

(in thousands of US dollars)

Entities under control of owners of controlling entities*
Joint ventures in which GPI is a venturer

Other related parties

Total

(in thousands of US dollars)

Joint ventures in which GPI is a venturer

Total

For the year ended 31 December

2020

2019

Key management compensation:

Salaries, payroll taxes and other short-term employee benefits

92,912

103,270

271

93,200

103,302

Directors’ remuneration (included also above):

Fees

Emoluments in their executive capacity

Total

For the year ended 31 December

(in thousands of US dollars)

(g) Loans to related parties
The details of loans provided to joint ventures in which GPI is a venturer are presented below (see also Note 19):

2020

52,065

1,466

1,636

55,167

2019

334

—

1,978

2,312

At the beginning of the year

Loans advanced during the year

Interest charged

Loan and interest repaid during the year

GPI’s share of losses of joint ventures applied against other long-term interests (Note 27(a))

Foreign exchange differences

At the end of the year (Note 19)

For the year ended 31 December

2020

2019

The loans are not secured, bear effective interest at 6.4% (2019: 6.4%) and are repayable in 2021. However, the loans are classified as non-
current because of the Group’s intention to defer repayment for more than 12 months.

1,030

951

The fair value of loans to related parties approximates their carrying value, as the impact of discounting is not significant.

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* In the end of 2019 one of the previously existed counterparties became a related party as a result of investing activity of owners of controlling entities. Purchases from this

new related party amounted to US$51,580 thousand in 2020.

As at 31 December

2020

2019

16,048

136

16,184

7,926

7,936

As at 31 December

2020

2019

2,310

122

876

3,370

652

—

3,421

4,073

For the year ended 31 December

2020

2019

3,743

8,311

245

—

245

248

570

818

For the year ended 31 December

2020

2019

16,690

14,942

—

1,030

(572)

(827)

(2,648)

13,673

—

951

(320)

936

181

16,690

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

INDEPENDENT AUDITOR’S
REPORT

TO THE MEMBERS OF GLOBAL PORTS INVESTMENTS PLC
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

31 Events after the balance sheet date

In February 2021, the Group repaid US$67,520 thousand (RUB5 billion) RUB-denominated bonds from its cash balances.

Our opinion

There were no other material post balance sheet events which have a bearing on the understanding of these consolidated financial statements.

In our opinion, the accompanying consolidated financial statements of Global Ports Investments Plc (the “Company”) and its subsidiaries and
joint ventures (hereafter collectively referred to as the “Group” consistent with the consolidated financial statements) give a true and fair view
of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union
and the requirements of the Cyprus Companies Law, Cap. 113.

What we have audited

We have audited the consolidated financial statements which are presented in pages 28 to 94 and comprise:
— the consolidated balance sheet as at 31 December 2020;
— the consolidated income statement for the year then ended;
— the consolidated statement of comprehensive income for the year then ended;
— the consolidated statement of changes in equity for the year then ended;
— the consolidated statement of cash flows for the year then ended; and
— the notes to the consolidated financial statements, which include a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the consolidated financial statements is International Financial
Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

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

Global Ports Investments PLC Annual Report 2020

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PricewaterhouseCoopers Ltd, City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus
P O Box 53034, CY-3300 Limassol, Cyprus
T: +357 25 - 555 000, F:+357 - 25 555 001, www.pwc.com.cy

PricewaterhouseCoopers Ltd is a private company registered in Cyprus (Reg. No.143594). Its registered office is at 3 Themistocles Dervis Street, CY-1066, Nicosia. A list of
the company’s directors, including for individuals the present and former (if any) name and surname and nationality, if not Cypriot and for legal entities the corporate name,
is kept by the Secretary of the company at its registered office. PwC refers to the Cyprus member firm, PricewaterhouseCoopers Ltd and may sometimes refer to the PwC
network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

Independence
We remained independent of the Group throughout the period of our appointment in accordance with the International Ethics Standards Board
for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code)
together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Cyprus and we have fulfilled our
other ethical responsibilities in accordance with these requirements and the IESBA Code.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for
the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the consolidated financial statements as a whole.

Our audit approach

Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial
statements. In particular, we considered where the Board of Directors made subjective judgements, for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits,
we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.

Overall group materiality

How we determined it

Rationale for the materiality benchmark applied

US$5 million

Approximately 2.5% of EBITDA

We chose EBITDA as the benchmark, because, in our view:
— It is the benchmark against which the performance of the Group is most

commonly measured by the users, and

— It is a generally accepted benchmark.

We chose 2.5% which is within the range of acceptable quantitative
materiality thresholds in auditing standards.

Overall group materiality: US$5 million, which represents approximately 2.5% of Earnings Before Interest, Tax,
Depreciation and Amortisation (“EBITDA”).

We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above US$0,5 million as
well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Materiality

Audit
scope

We conducted full scope audit procedures for the parent entity, all the significant components, and
the consolidation process.

Key audit
matters

For the remaining non-significant components, we performed a full scope audit, or analytical procedures, and/
or audit of specific account balances.

We have identified the impairment assessment of goodwill and other non-financial assets and investments in
joint ventures as the key audit matter.

Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether
the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered
material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
the consolidated financial statements.

Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of
material misstatements due to fraud

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

How our audit addressed the Key Audit Matter

Impairment assessment of goodwill and other non-financial assets
and investments in joint ventures

Because of COVID-19 related uncertainties, the Company’s Board of
Directors considered that there are impairment indications and has
performed an impairment test for all cash generating units (“CGUs”). We
focused on this area due to:

— the size of the goodwill and other non- financial assets, and investments in

joint ventures, and

— the assessment of the recoverable amount of the CGUs involves complex

and

We evaluated the valuation inputs and assumptions, methodologies and
calculations adopted by the Company’s Board of Directors in determining
the CGUs’ recoverable amounts. In order to assist us in our audit we
involved valuation experts that have the knowledge and experience in
the industry and country of operation of the underlying CGUs to assist us
in evaluating the methodology, models and assumptions used in value
in use calculations, as well as evaluating the fair value less cost to sell
calculations.

For MD and YLP CGUs, we evaluated whether the fair value less costs
to sell approach is more appropriate than value in use approach to
determine the CGUs’ recoverable amounts

Global Ports Investments PLC Annual Report 2020

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INDEPENDENT AUDITOR’S REPORT (CONTINUED)

Key Audit Matter

How our audit addressed the Key Audit Matter

Key Audit Matter

How our audit addressed the Key Audit Matter

subjective judgements about the future results of the business and
the applicable discount rates where value in use models were used and
about the estimation of the fair value less costs to sell of the CGUs.

In particular, we focused our audit effort on the Board of Directors’ assessment
of impairment of the following CGUs:

— Petrolesport and Farvater and First Container Terminal (PLP/FCT) CGU

and Vostochnaya Stevedoring Company (VSC) CGU due to the fact that
these two CGUs have allocated goodwill and therefore require an annual
impairment assessment, and

given the specific circumstances of each CGU. We further evaluated
the work of the management’s expert involved for the valuation of MD
and YLP CGUs’ assets by assessing the competence, capabilities and
objectivity of the independent appraiser and the methodology, models
and inputs used by the management’s expert.

With respect to the value in use models used for PLP/FCT, VSC, ULCT
and MLT Oy CGUs, we challenged and evaluated the composition of
the future cash flow forecasts in the models including comparing them to
the latest budgets approved by the Board of Directors.

— Ust-Luga Container Terminal (ULCT) CGU, Yanino Logistics Park (YLP)

We have also challenged and evaluated:

CGU and Moby Dik (MD) and Multi-Link Terminals (MLT Oy) CGUs, both
being components of the Company’s joint venture Multi-Link Terminals
Limited (MLT), due to the fact that for these CGUs, an impairment test
was performed by the Board of Directors due to identified impairment
indications as a result of the COVID-19 outbreak.

The recoverable amounts of MD and YLP CGUs were determined by
the Board of Directors based on the fair value less costs to sell approach.
In determining the fair values of MD and YLP CGUs, the Board of Directors
involved an independent appraiser (the management’s expert).

The recoverable amounts of PLP/FCT, VSC, ULCT and MLT Oy CGUs were
determined based on value in use calculations.

The expected cash flows (budgets) for the year 2021 and the remaining
assumptions used for each CGU’s value in use calculations have been
approved by the Company’s Board of Directors. Certain assumptions made by
the Board of Directors in the determination of the CGUs’

— the Board of Directors’ key assumptions for the long term growth rates

of key inputs, such as volume and price and compared them to historical
results, economic and industry forecasts,

— the discount rate applied to these cash flows, by assessing the weighted
average cost of capital, and considering territory specific factors, and
— the macroeconomic assumptions used by the Board of Directors, by

comparing them to market benchmarks and publicly available information.

We have also performed look-back procedures by comparing previous
budgets used in value in use calculations to actual results.

We further challenged and evaluated the adequacy of the Board of
Directors’ sensitivity calculations over ULCT CGU’s recoverable amount
and determined the assumptions that created the most variability, being
assumptions for average tariffs, volumes and the discount rate.

We lastly evaluated the adequacy of the disclosures made in Notes
4 and 15 of the consolidated financial statements, including those
regarding the key assumptions and

value in use calculations were considered to be key assumptions (Note 4).

sensitivities to reasonably possible changes in such assumptions.

Based on the results of the impairment tests, no impairment losses have been
identified, that require recognition in the consolidated income statement of
the Group.

Based on the evidence obtained, we found that the methodologies,
assumptions and data used within the models and the related disclosures
included in the consolidated financial statements, are appropriate.

For ULCT CGU, it was determined that the impairment test is sensitive to
reasonably possible changes in certain key assumptions for value in use
calculations.

Refer to Notes 4 and 15 to the consolidated financial statements for the related
disclosures.

Reporting on other information

The Board of Directors is responsible for the other information. The other information comprises the information included in the Management
Report, including the Corporate Governance Statement, and the Directors’ Responsibility Statement which we obtained prior to the date of
this auditor’s report and the Annual Report, which is expected to be made available to us after that date. Other information does not include
the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of
assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained
prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.

When we read the Group’s complete Annual Report, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance and if not corrected, we will bring the matter to the attention of the members of
the Company at the Company’s Annual General Meeting and we will take such other action as may be required.

Global Ports Investments PLC Annual Report 2020

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INDEPENDENT AUDITOR’S REPORT (CONTINUED)

Responsibilities of the Board of Directors and those charged with governance for the Consolidated
Financial Statements

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

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of
Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial statements.

— Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence

obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.

— Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the

consolidated financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.
— Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to

express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of
the consolidated financial statements of the current period and are therefore the key audit matters.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We
also:

Report on Other Legal and Regulatory Requirements

— Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by

the Board of Directors.

Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent Auditor’s
Report, which is required in addition to the requirements of International Standards on Auditing.

Appointment of the Auditor and Period of Engagement

We were first appointed as auditors of the Company in 2008 by shareholder resolution for the audit of the financial statements for the period
ended 31 December 2008. Our appointment has been renewed annually, since then, by shareholder resolution. In 2011 the Company was listed
in the Main Market of the London Stock Exchange and accordingly the first financial year after the Company qualified as an EU PIE was the year
ended 31 December 2011. Since then, the total period of uninterrupted engagement appointment was 10 years.

Consistency of the Additional Report to the Audit and Risk Committee

We confirm that our audit opinion on the consolidated financial statements expressed in this report is consistent with the additional report to
the Audit and Risk Committee of the Company, which we issued on 1 March 2021 in accordance with Article 11 of the EU Regulation 537/2014.

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101

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

Provision of Non-audit Services

Other Matter

We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors Law of
2017 were provided. In addition, there are no non- audit services which were provided by us to the Group and which have not been disclosed in
the consolidated financial statements or the Management Report.

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article 10(1) of
the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or
assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

Other Legal Requirements

The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas.

Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:

— In our opinion, based on the work undertaken in the course of our audit, the Management Report has been prepared in accordance with

the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements.
— In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if

we have identified material misstatements in the Management Report. We have nothing to report in this respect.

— In our opinion, based on the work undertaken in the course of our audit, the information included in the Corporate Governance Statement in
accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and
which is included as a specific section of the Management Report, have been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap.113, and is consistent with the consolidated financial statements.

— In our opinion, based on the work undertaken in the course of our audit, the Corporate Governance Statement includes all information

referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.

— In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if
we have identified material misstatements in the Corporate Governance Statement in relation to the information disclosed for items (iv) and (v)
of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect.

Tasos Nolas
Certified Public Accountant and Registered Auditor for and on behalf of

PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors

City House, 6 Karaiskakis Street,
CY-3032 Limassol, Cyprus

Limassol, 5 March 2021

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Global Ports Investments PLC Annual Report 2020

globalports.com

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Global Ports
at a Glance

Strategic
Report

Corporate
Governance

Consolidated
Financial
Statements

Parent
Company
Financial
Statements

Additional
Information

PARENT COMPANY

FINANCIAL
STATEMENTS

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Global Ports Investments PLC Annual Report 2020
Global Ports Investments PLC Annual Report 2020

globalports.com
globalports.com

105

TABLE OF CONTENTS

Board of Directors and other officers

Management report

Directors’ Responsibility Statement

Statement of comprehensive income for the year ended 31 December 2020

Balance sheet as at 31 December 2020

Statement of changes in equity for the year ended 31 December 2020

Statement of cash flows for the year ended 31 December 2020

Notes to the financial statements

General information

Summary of significant accounting policies

Financial risk management

Critical accounting estimates and judgments

Finance income – net

Administrative expenses

Other gains/(losses) – net

Staff costs

Finance costs

10.

Income tax expense

11.

Financial instruments by category

12. Credit quality of financial assets

13. Property, plant and equipment

14.

Investments in subsidiaries

15.

Investments in joint ventures

16. Trade and other receivables

17. Cash and bank balances

18. Share capital, share premium and dividends

19. Trade and other payables

20. Contingencies and commitments

21. Related party transactions

22. Events after the balance sheet date

Independent auditor’s report