Globaltrans Investment Plc
Annual Report 2020

Plain-text annual report

Annual Report & Accounts Presentation of Financial and Other Information All financial information presented in this Annual Report is derived from the Consolidated Management Report and Consolidated Financial Statements of Globaltrans Investment PLC (the “Company” and, together with its consolidated subsidiaries, “Globaltrans” or the “Group”) and has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of Cyprus Companies Law, Cap. 113 (EU IFRS). The Group’s Consolidated Management Report and Consolidated Financial Statements and the Parent Company Financial Statements for the year ended 31 December 2020 are included in the Financial Statements section of this Annual Report. Financial statements for prior years can be found on Globaltrans’ corporate website (www.globaltrans. com). The presentational currency of the Group’s financial results is the Russian rouble (RUB), which is the functional currency of the Company as well as of its Cypriot and Russian subsidiaries. Certain financial information derived from management accounts is marked in this Annual Report with an asterisk (*). In this Annual Report, the Group has used certain “non-IFRS financial information” (i.e. measures not recognised by EU IFRS or IFRS) as supplementary explanations of the Group’s operating performance. Information (non-IFRS financial and operating measures) requiring additional explanation or defining is marked with initial capital letters and the explanations or definitions are provided at the end of this Annual Report. Reconciliations of the non-IFRS measures to the closest EU IFRS measures are included in the body of this Annual Report. Rounding adjustments have been made in calculating some of the financial and operational information included in this Annual Report. As a result, numerical figures shown as totals in some tables may not be exact arithmetical aggregations of the figures that precede them. This Annual Report, including its appendices, may contain forward- looking statements regarding future events or the future financial performance of the Group. Forward- looking statements can be identified by terms such as "expect," "believe," "estimate," "anticipate," "intend," "will," "could," "may" or "might," and the negative of such terms or other similar expressions. By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. The Group cautions that forward-looking statements are not guarantees of future performance and that the Group’s actual results of operations, financial condition, liquidity, prospects, growth and strategies, and the development of the industry in which the Group operates, may differ materially from those described in or suggested by the forward-looking statements contained in this Annual Report. For a detailed description of the presentation of financial and other information, please see the Presentation of Financial and Other Information section of this Annual Report. Contents Overview Corporate Governance 6 8 Highlights of 2020 86 Board of Directors At a Glance 92 Executive Management 12 Our Assets 14 Our History 16 Our Industry 96 Corporate Governance Report 108 Share Capital 109 Corporate Structure Strategic Report Financial Statements 20 Chairman’s Statement 110 Consolidated Management Report 26 Our Strategy 28 CEO Review 32 Market Review and Consolidated Financial Statements 256 Management Report and Parent Company Financial Statements 36 Financial and Operational Review 56 Risk Management 66 Sustainability Additional Information 358 Selected Operational Information 364 Definitions 368 Presentation of Financial and Other Information 370 GRI Content Index 374 Contacts 4 4 4 Globaltrans Investment PLC Globaltrans Investment PLC Annual Report & Accounts 2020 Annual Report & Accounts 2020 01 01 Overview Overview 02 02 Strategic Strategic Report Report 03 03 Governance Governance 04 04 Financial Financial Statements Statements 05 05 Additional Additional Information Information Globaltrans Investment PLC Globaltrans Investment PLC Annual Report & Accounts 2020 Annual Report & Accounts 2020 5 5 5 Overview Overview Highlights of 2020 At a Glance Our Assets Our History Our Industry 6 8 12 14 16 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 20206 6 Globaltrans Investment PLC Annual Report & Accounts 2020 Annual Report & Accounts 2020 01 01 Overview Overview 02 Strategic Strategic Report Report 03 Governance 04 Financial Statements 05 Additional Information 7 Highlights of 2020 Weathering the storm: industry outperformance, increased Free Cash Flow, strong 2020 dividends delivered as targeted +2.2 % year-on-year increase in Freight Rail Turnover 45 % Gondola Empty Run Ratio (2019: 42%) 64 % Share of Net Revenue from Operation of Rolling Stock contributed by service contracts RUB 26.8 bln Adjusted EBITDA (down 32% y-o-y) RUB 15.1 bln Free Cash Flow (up 14% y-o-y) 1.01x Net Debt to Adjusted EBITDA (2019 end: 0.60x) RUB 74.55 per share/GDR1 Combined 2020 interim and final dividends 1 Global Depositary Receipt ("GDR"). The spread of the COVID-19 virus disrupted economic activity across Russia. Our industry did not escape the impact of this, although it was very much a year of two halves for freight rail transportation. In the first half of 2020, demand slumped as the sector suffered the full economic impact of COVID-19; in the second half, our markets recovered and overall freight rail turnover returned to pre-COVID levels. Globaltrans again delivered a resilient business performance even at this exceptionally challenging time. We outperformed the market in freight rail turnover, secured further new contracts and extensions of existing contracts, and invested in the growing specialised container transportation segment. Although our financial results were inevitably impacted by the weak market conditions, our focus on cost control and CAPEX flexibility resulted in the Group delivering increased Free Cash Flow and solid dividends for shareholders as targeted and announced beforehand. I am very proud of the spirit, commitment and agility shown by our workforce in responding to what has been a very demanding environment over the past year. Valery Shpakov Chief Executive Officer See more at CEO Review (p. 28) Industry outperformance and robust client retention Strong 2020 dividends delivered as targeted, H1 2021 dividend target set • As targeted, strong total 2020 dividends of RUB 13.3 billion or RUB 74.55 per share/GDR delivered (including interim and final dividends). Total 2020 dividends equate to 99% of the Group’s Attributable Free Cash Flow for 2020. Interim 2021 dividends of a minimum of RUB 3.0 billion or about RUB 16.78 per share/GDR targeted reflecting conservative financial policies and ongoing pricing pressure in gondola segment. • Consistent focus on shareholder value creation • Secondary listing on Moscow Exchange undertaken in October 2020 driving almost three-fold rise in combined liquidity on London Stock Exchange and Moscow Exchange3. • Share buyback programme (for up to 5% of the share capital)4 is on track providing ongoing support during market volatility. • Globaltrans’ Freight Rail Turnover rose 2.2% year on year in contrast to market decline, supported by powerful operating model enabling efficient switching between cargo groups. • Service contracts portfolio successfully extended (Rosneft, MMK, Metalloinvest), new one-year contract concluded with EVRAZ. • Gondola Empty Run Ratio rose to 45% (2019: 42%) but remained one of the lowest in the Russian market despite the substantial volatility in client cargo flows and routes driven by unprecedented COVID-19 lockdowns. Efficient cost control, increased Free Cash Flow and continued low leverage • Adjusted EBITDA at RUB 26.8 billion (–32% year on year) largely driven by weakness in gondola segment pricing. • Total Operating Cash Costs were reduced 1% year on year due to cost optimisation measures. • 14% year-on-year increase in Free Cash Flow to RUB 15.1 billion2 supported by flexible expansion CAPEX (–83% year on year). • Low leverage with Net Debt to Adjusted EBITDA at 1.01x (2019 end: 0.60x). The summary information on pages 6 and 7 covers the Group’s key financial and operating performance indicators. These include non-IFRS measures that the Group believes are helpful to investors in analysing the Group’s performance and well understood in the freight rail transportation industry. The key non-IFRS financial metrics are not a substitute for the IFRS financial information included and discussed in the Financial and Operational Review section of this Annual Report. 2 Free Cash Flow is presented net of principal elements of lease payments for leases with financial institutions for both years (2019 and 2020). During the first half of 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both years for comparison purposes. 3 Calculated as combined Average Daily Traded Volumes in US dollar terms (ADTV) on MOEX and LSE since secondary listing at MOEX comparing to ADTV at LSE for six months prior to secondary listing. 4 The Annual General Meeting of shareholders (AGM) approved on 29 April 2021 the renewal of the buyback programme (for up to 5% of the share capital) for twelve months from the date of the respective AGM and authorised the means of disposition of the resulting treasury shares. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 8 8 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 9 9 At a Glance Who we are Robust business model and efficient operations • Strong positions in key freight rail segments of metals and oil products and oil • Diversified blue-chip customer portfolio, underpinned by long-term service agreements Industry-leading operational efficiency • • Founded and led by entrepreneurs with a focus on quality and innovation • Well-invested, diversified fleet assets Best-in-class governance • Compliance with best-practice governance standards • Dual-listed on LSE and MOEX • Sustainable business with a strong ESG focus • Experienced Board and management team Strong Free Cash Flow generation and robust financial profile • Revenues underpinned by multi-year outsourcing What we do 71.7 ths Units Total Fleet contracts • Efficient cost control • Strong Free Cash Flow generation supported We are leaders in the provision of complex freight rail logistics and transport services to leading industrial companies in the region in our targeted market by fully discretionary expansion CAPEX segments of metals and mining and oil products and oil as well as in other segments. • Conservative balance sheet Attractive dividend returns to shareholders • Track record of consistent dividends and  Our customers benefit from our state-of-the-art logistics, large and modern fleet, customer focus and innovation drive. meeting dividend guidance • Semi-annual dividend payments • Clear dividend policy that distributes excess cash not used for expansion as dividends, subject to Leverage Ratio What we do MARKET SHARE1, 2020, % NET REVENUE FROM OPERATION OF ROLLING STOCK BY CARGO TYPE1, 2020, % We are leaders in the provision of complex freight rail logistics and transport services to leading industrial companies in the region in our targeted market segments of metals and mining and oil products and oil as well as in other segments. Our customers benefit from our state-of-the-art logistics, large and modern fleet, customer focus and innovation drive. Russia's freight rail transportation volumes 7.6% Metallurgical cargoes 19.7% 7% 4% 17% Oil products and oil 8.9% Coal 4.4% Construction materials 6.6% 38% 34% Metallurgical cargoes Oil products and oil Coal Construction materials Other Source: Globaltrans Source: Globaltrans 1 Metallurgical cargoes including ferrous metals, scrap metal and iron ore; coal including coke; construction materials including cement. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 10 10 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 11 11 At a Glance We deliver a consistent flow of value to our clients through our pursuit of operational and service excellence. Our operating platform is fundamental to our success How we deliver value Sophisticated logistics We are experts at managing complex cargo logistics that improve our customers’ productivity, saving them time and money. Sector-leading operational efficiency Our centralised gondola dispatching hub is the nerve centre of our railcar operations. Working round-the-clock, it ensures our fleet works efficiently, maintains high utilisation levels and low Empty Runs, which in turn drives profitability. High quality long-term client base We are trusted partners for our clients, who range from large industrial groups to smaller, more specialised companies. We focus on long-term outsourcing partnerships, whereby we handle most of a client’s freight rail logistics. Our clients benefit from operational scale, round-the-clock services, state-of-the-art logistics, and access to one of the largest fleets in Russia. Improved productivity due to in-house locomotives Our in-house locomotive fleet transport oil products and oil in block trains where all the cargo is bound for a single destination, obviating the need to stop at multiple sorting stations, which optimises delivery schedules and fleet utilisation. NET REVENUE FROM OPERATION OF ROLLING STOCK BY LARGEST CLIENTS (INCL. THEIR AFFILIATES AND SUPPLIERS), 2020, % 28% 1% 1% 25% GONDOLA LOGISTICS KEY ILLUSTRATIVE ROUTES Kamennogorsk Novy Port Export Khanty-Mansi AO Yamalo-Nenets AO Denisovsky Cherepovets-2 Vorontskova Lena Vostochnaja Berkakit Moscow Smychka Yegozovo Kiltchug Zheleznogorsk Pervouralsk Polevskoy Stoylenskaya Trubnaya Taganrog Metallurgicheskaya Yekaterinburg Belovo Kamensk- Uralsky Chelyabinsk Yuzhny Novokuznetsk Mezhdurechensk Novorossiysk Export Zhirnov Magnitogorsk Novotroitsk HISTORICAL EMPTY RUN RATIO, 2016–2020, % 2020 2019 2018 2017 2016 45% 42% 38% 37% 38% Bazaikha Cargo routes: Grodekovo Export Vladivostok Export Zabaykalsk Export Metals Iron ore Pipes Scrap metal Crushed stone Coal Empty Runs 45,647 Gondolas 64% of Total Fleet Total Empty Run Ratio (for all types of railcars) Empty Run Ratio for gondola cars 14% 4% 7% 13% 3% 2% 2% Rosneft MMK Metalloinvest Gazprom Neft TMK EVRAZ UGMK-Trans TAIF SDS-Ugol ChelPipe Other (incl. small and medium enterprises) Source: Globaltrans Source: Globaltrans Source: Globaltrans 51% 49% 46% 45% 48%Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 12 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 13 Our Assets 71.7 ths units Total Fleet 12.4 years Average age of Owned Fleet One of the largest most modern railcar fleets in Russia FLEET COMPOSITION <1% 3% 5% 28% 64% Gondola cars Tank cars Specialised containers Other railcars Locomotives Operational flexibility maintained by striking appropriate balance between Owned Fleet (95%) and Leased-in Fleet (5%). Fleet composition matches serviced industrial segments: 64% are universal gondola cars for bulk cargoes, 28% are tank cars for liquid cargoes and 8% are niche specialist units. Average age of railcar fleet at 12 years is roughly 1/2 the useful life of an average gondola car and 1/3 that of an average tank car. Growing presence in high-value rail transport niches: petrochemicals and high-grade steel products. Outstanding fleet maintenance programme maintains our focus on operational and service excellence. OPERATIONAL FLEXIBILITY 5% 95% Owned Fleet Leased-in Fleet Source: Globaltrans Source: Globaltrans GONDOLA CARS TANK CARS • Open-top, high-sided universal • Designed to carry liquid cargoes railcar • Backbone of Globaltrans’ fleet • Designed to carry bulk cargoes like metals, ores, coal, construction materials, etc. • Able to be redeployed quickly between different bulk cargoes in response to changes in market demand including oil and petroleum products, chemicals, liquefied gas and other liquid substances • Principally used by Globaltrans in the transportation of oil products SPECIALISED CONTAINERS (INTERMODAL) • Designed to be moved between different modes of transport without any handling of the freight itself • Globaltrans operates mostly tank containers used to transport petrochemicals and specialised containers to transport high-quality steel products 45,647 units 64% of Total Fleet 20,417 units 28% of Total Fleet 3,334 units 5% of Total Fleet OTHER RAILCARS LOCOMOTIVES • Globaltrans’ fleet largely includes flat cars among the other cars used to carry specialised containers • Globaltrans has its own mainline locomotive fleet, which hauls block trains principally in the oil products and oil segment 2,216 units 3% of Total Fleet Source: Globaltrans 74 units <1% of Total Fleet Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202014 14 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Over 70ths units Total Fleet 2019 Service contracts extended with MMK (to end Sep 2022) and Metalloinvest (to end 2020), in line with the Group’s strategy to develop its outsourcing client partnerships. A new three-year service contract (to end June 2022) signed with Gazprom Neft, a long-standing client of the Group. A new service for the steel industry launched, transporting high-quality rolled steel in specialised containers. Over 69ths units Total Fleet 2018 The Group celebrated its 10th anniversary of its Main Market listing on the London Stock Exchange. Partnership with MMK extended to end Sep 2020. Two new five-year service contracts signed: with TMK, a leading global manufacturer and supplier of steel pipes for the oil and gas industry and with ChelPipe Group, a leading Russian manufacturer of pipe products and provider of integrated solutions for fuel and energy companies. Over 66ths units Total Fleet 2017 The enhanced Dividend Policy introduced linking dividends to Attributable Free Cash Flow and Leverage Ratio. 2016 Extended long-term partnerships with Rosneft (five years) and with Metalloinvest (three years). Our History Globaltrans was formed in 2004 as a merger of two entrepreneur-led companies and from these roots has grown to become one of the leading freight rail transportation groups in Russia and the CIS. Through strong organic growth and acquisition of both railcars and other freight rail businesses, we have created a profitable company with best-in-class capabilities. Our commitment to transparency and corporate governance helped us to become the first freight rail group focused on Russia to list on an international stock exchange. Since the Group's Initial Public Offering (IPO) on the London Stock Exchange in 2008, we have continuously focused on value creation and growth and today operate a fleet that is three times larger than at the time of our IPO. In 2020 we additionally listed our GDRs on the Moscow Exchange to diversify our investor base. Over 37ths units Total Fleet 2009 Secondary Public Offering (SPO) to fund further business expansion. Over 26ths units Total Fleet 2008 Successful IPO on the London Stock Exchange. Over 50ths units Total Fleet 2010 Organic expansion of the business — purchases of new rolling stock and the expansion of the Leased-in Fleet. Ukrainian subsidiary created and Estonian tank car leasing business acquired. Acquisition of 50% stake in BaltTransServis, increasing the Group’s presence in the oil products and oil sector. 2014– 2015 The Group's corporate structure simplified to drive efficiency and cut costs. Formed specialised SyntezRail subsidiary with partners to transport petrochemicals in tank containers. 2013 Acquired MMK-Trans, the captive freight rail operator of MMK Group, one of the world’s largest steel producers. Signed a long- term outsourcing contract with MMK. Created a single 24/7 gondola dispatching centre. 2012 Acquired Metalloinvesttrans, the captive freight rail operator of Metalloinvest, a leading producer of hot briquetted iron (HBI), iron ore products and high- quality steel. Signed industry’s first ever long- term outsourcing contract with Metalloinvest. 2004 Established as a merger of two entrepreneur- led companies. More than 16 years of growth and leadership Globaltrans Investment PLC Annual Report & Accounts 2020 15 15 2021 The service contract with Rosneft extended for a further five years until end Mar 2026. Established ESG Committee. Over 71ths units Total Fleet 2020 Globaltrans' GDRs began trading on MOEX on 28 Oct 2020. The GDRs have ticker symbol GLTR and are included in Level One, MOEX’s highest quotation list. The service contract with MMK was extended for a further two years and is now valid until the end of Sep 2024. The service contract with Metalloinvest was extended for a further one-year period to the end of 2021. Globaltrans has expanded its cooperation with EVRAZ signing a one-year contract. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202016 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 17 Our Industry Russia's rail network at a glance 3 rd largest rail network links the world’s largest country across 11 time zones Vital strategic asset connecting Russia to the global economy Freight rail powers the economy responsible for 87 % of all Russian freight turnover excluding pipeline traffic Globaltrans' operating subsidiaries, their branches and representative offices Russia’s rail network’s key illustrative routes 2.5 tn overall freight rail turnover in 2020 (tonnes-km) Sustainable choice: most eco-friendly means of long-distance freight transportation Vibrant deregulated freight rail sector ~88 % of total Russia's railcar fleet is controled by private players Long-term structural Growth drivers backed by government rail infrastructure investment into extension of the Far East railway corridor Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202018 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Strategic Report Chairman’s Statement Our Strategy CEO Review Market Review Financial and Operational Review Risk Management Sustainability DIRECTORS’ RESPONSIBILITY Each of the Directors confirms that, to the best of his or her knowledge, the Strategic Report presented on pages 18 to 83 of this Annual Report includes a fair review of the development and performance of the business and the position of Globaltrans Investment PLC and its subsidiary undertakings, included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face. By order of the Board, Sergey Tolmachev Director 19 20 26 28 32 36 56 66 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 21 Chairman’s Statement DEAR SHAREHOLDERS, 2020 was, by any definition, an exceptionally challenging year. We have long experience of successfully navigating through tough markets, and last year was no exception. Sergey Maltsev Chairman Chief Strategy Officer Co-founder and shareholder RUB 13.3 bln Total 2020 dividends, including interim, final and special RUB 74.55 Total 2020 dividends per share/GDR We again outperformed the industry, extended important service contracts, generated strong Free Cash Flow, and despite the unprecedented conditions delivered strong dividends as targeted and previously announced. Throughout this unprecedented period, the Group was sustained by the quality of its management, the resilience of its business model, and the strength of its people. Inevitably, the abrupt changes in the trading environment as a result of the COVID-19 pandemic impacted our financial results. Nevertheless, it is reassuring that the Group was still able to deliver strong Free Cash Flow (up 14% year on year) and dividends in line with expectations by controlling costs and flexing expansion CAPEX. The Group's performance in a challenging year speaks to the underlying robustness of the business. Operationally, our performance was strong, highlighting the professionalism of our team and the effectiveness of our business model. Once again outperforming the market in terms of freight rail turnover, we also were able to further develop our client partnerships. We signed a new one-year contract with EVRAZ, one of the leading steel and coal producers, deepening that relationship, as well as agreeing separate important contract extensions with MMK and Metalloinvest, both longstanding customers of the Group. In April 2021, we were proud to extend our service contract with Rosneft, another key client, which is a testament to the high quality and reliability of our service. The year also marked another important milestone in the Group’s corporate development when Globaltrans became the first company in the freight rail sector to list its GDRs on the MOEX. The secondary listing on MOEX has raised the Group’s profile and increased the availability of its GDRs. We expect the listing will further expand the Group’s shareholder base, including among the growing base of retail investors in Russia. Since October’s listing on MOEX, the combined average daily trading volumes in Globaltrans GDRs on LSE and MOEX have increased almost three-fold1. 1 Calculated as combined Average Daily Traded Volumes in US dollar terms (ADTV) on MOEX and LSE since secondary listing at MOEX comparing to ADTV at LSE for six months prior to the secondary listing. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202022 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 23 Chairman’s Statement COVID-19 response Board and governance Sustainability Our industry Our response to the evolving situation in 2020 as a result of the COVID-19 pandemic was an excellent demonstration of the Group’s can- do culture. Despite the pandemic’s disruptive impact on the economy, our teams kept operations running throughout, always with an unwavering focus on our clients and a commitment to supporting each other. At the onset of the COVID-19 pandemic in February 2019, our priority was to protect the health and wellbeing of our employees and customers while seeking to ensure the continuity of operations. We resisted making COVID-related redundancies as we believed that by remaining fully staffed and operational we could better support our customers and communities through the period of the pandemic. I want to express my thanks to our employees for their hard work, resilience and focus. The Board is very proud of how the whole team pulled together to deliver what was, in the circumstances, a positive set of results in 2020. Good governance underpins successful business performance and never has that been truer than over the last twelve months. I am fortunate to lead an experienced and stable Board of Directors, whose diverse skills and experience complement the talents of the executive team. While COVID-19 was a true test of the Board’s oversight skills, it also served to demonstrate the quality of our Board and executive team. Responding to the pandemic’s spread, the Board moved quickly and decisively to maintain business operations, safeguard our employees and support our customers. These actions ensured that throughout the year Globaltrans continued operating and providing a full service to its customers. We focused on maintaining transparency and keeping communication channels open during the pandemic. We successfully launched a new bilingual corporate website, containing a host of features, including intuitive navigation, increased functionality and an interactive centre. Our investor communications programme in 2020 was inevitably impacted by the various travel bans and stay-at-home orders. However, the team adapted quickly, reverting to online meetings with investors; in all, we conducted almost the same number of meetings with investors as the year before. The COVID-19 pandemic has highlighted the attractions of rail as a sustainable, efficient mode of transport. I believe that this could spark a more permanent shift in the fortunes of the freight rail sector globally. Rail is a better, greener alternative to other modes of freight transport, especially road, and will be a key agent in the drive to decarbonise the global transport industry. As a freight rail operator, we recognise our responsibility to manage the impact our business has on the environment. Companies increasingly need to align their business standards, culture and strategy with the social, economic and environmental needs of their stakeholders. As a responsible business, the Board and executives at Globaltrans are working to enshrine sustainable, responsible and ethical practices into everything we do. The Board established the ESG Committee in January 2021 to oversee the Group’s environmental, social and governance strategy and activities, which will ensure we stay at the forefront of this important area. Further details of the Group’s progress in sustainable development are contained in our Integrated Sustainability Report. The COVID-19 pandemic has served to highlight some important trends and features of the industry. First, it has reinforced the systemic importance of the freight rail industry in Russia, and its role as the logistical backbone of the country. It has shown that running trains efficiently and keeping supply chains open through both domestic and international corridors are essential to the economy and for the comfort of our society, especially when travel is restricted. The fact that the whole sector continued to operate largely uninterrupted through the crisis highlights the resilience of rail as a key mode of transport. Second, it has highlighted the long- term growth trends in cross-border transported volumes and traffic, especially between Russia and Asian countries. It is interesting to note that despite the pandemic, freight rail turnover bounced back in the second half as the global economy began to reopen, with freight turnover actually surpassing the previous year’s result. At present, the Far Eastern rail infrastructure is operating right on the limits in terms of carrying capacity, which the government and JSC Russian Railways ("RZD") are racing to address with about 17% more throughput capacity delivered in 2018–2020 and an additional expansion of about 26% targeted by the end of 2024. These programmes provide a basis for increasing overall cargo volumes for the Russian freight rail sector, and, as I stated last year, the companies that will benefit most will be those like us that have the specialist expertise, customer relationships, fleet and finances to manage greater throughput volumes. Third, it has underlined the importance of innovation, adaptability and customer focus, features that have their origin in the practices introduced by entrepreneurial commercial operators like Globaltrans when the industry deregulated in the early 2000s. The rail freight industry has demonstrated strong adaptation skills with many tasks being performed remotely, staff working from home, and physical interaction reduced to a minimum. Looking ahead, I would expect that the COVID-19 pandemic will lead to further process improvements and accelerate digitalisation, which can only improve the resilience and stability of the sector. Dividends and share buyback Having been through several economic cycles, we are determined to maintain our cost and capital discipline. In 2017, we reviewed the Group’s capital allocation to ensure that we struck the right balance between supporting growth, maintaining appropriate leverage and returning excess capital to shareholders. This formula has served us well, providing a solid cushion from which to pay robust dividends. In a year that saw many companies cancel dividend payments to shareholders, Globaltrans once again announced target dividends, delivering on stated targets without compromising its business in any way. The total dividends payable to shareholders in respect of 2020, including interim, final and special, amounted to RUB 13.3 billion (RUB 8.3 billion in respect of the first half 2020 and RUB 5.0 billion in respect of the second half 2020), or RUB 74.55 per share/GDR, equivalent to 99% of the Group’s Attributable Free Cash Flow for the year. Dividend distribution remains a priority for the Company in 2021. Our efficient business model, cost discipline and opportunistic CAPEX management are solid foundation for ongoing dividend payments throughout the cycle. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202024 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 25 Chairman’s Statement Summary In 2020, the Group responded well to the unprecedented circumstances brought about by the COVID-19 pandemic. We ensured that our employees, clients and communities were properly supported without compromising the health and safety of our people. We acted quickly to switch to less affected cargoes and made a huge effort to ensure that we kept our operations running throughout the period. Our business model again proved itself in difficult markets, and we maintained our reputation as one of the most efficient rail operators in the industry, with the result that we outperformed the market and reinforced our market positions. In the short-term, the outlook for markets is predicated on how quickly economies can rebound from COVID-19. As I said at the beginning, Globaltrans has core strengths that have enabled it to successfully navigate challenges and we are therefore well-placed to deliver another year of progress on our plans. Sergey Maltsev Chairman Chief Strategy Officer Co-founder and shareholder The Board is targeting a minimum total interim dividend of RUB 3.0 billion (about RUB 16.78 per share/ GDR) in respect of the first half of 2021 reflecting its conservative financial policies along with ongoing pricing pressure in the gondola segment. Our share buyback programme for up to 5% of share capital which commenced in May 2020 is on track. As we made clear at that time, buying back shares is a secondary avenue for returning capital to shareholders and one we access at times of serious market dislocations, provided there is available excess liquidity. The Annual General Meeting of shareholders in April 2021 approved the renewal of the programme for an additional twelve months. Our Approach to Dividends The Group’s Dividend Policy strikes a balance between investing in business expansion and delivering returns to shareholders. This means: • with a focus on maximising shareholder value, the policy boosts pay-outs during low investment cycles and limits them in periods when sizeable expansion opportunities meeting Globaltrans’ strict return criteria are identified; • having a clear formula linking dividends to Attributable Free Cash Flow and Leverage Ratio1 providing flexibility and transparency in capital allocation. Leverage Ratio Dividends as a % of Attributable Free Cash Flow Less than 1.0x Not less than 50% From 1.0x to 2.0x Not less than 30% 2.0x or higher 0% or more To view the Dividend Policy, please visit our corporate website www.globaltrans.com DIVIDEND HISTORY, RUB PER SHARE/GDR, IN RESPECT OF RELATED FINANCIAL YEAR/PERIOD2 89.65 44.80 44.85 92.40 93.10 74.55 45.90 46.50 46.55 46.55 46.55 39.20 28.00 22.20 22.28 18.86 12.41 10.34 4.42 2009 2010 2011 2012 2013 2014 – 20153 2016 H1 20174 H2 20174 H1 20184 H2 20184 H1 20194 H2 20194 H1 20204 H2 20204 Declared after approval of enchanced Dividend Policy 1 The Board of Directors of Globaltrans reserves the right to recommend to the General Meeting of shareholders dividends in the amount calculated on a reasonable basis other than described in this Annual Report in its sole discretion. For more details please see the Dividend Policy as adopted by the Board on 31 March 2017 and amended on 24 August 2018, which is available at www.globaltrans.com. 2 Prior to 2016, dividends on Globaltrans shares/GDRs were declared and paid in US dollars, thus the amounts in Russian roubles are presented for information purposes only and calculated at the Central Bank of Russia’s official exchange rate for the Russian rouble as of the date of the General Meeting that approved the respective dividend. From 2016, dividends on Globaltrans shares/GDRs are declared in Russian roubles and paid in US dollars. 3 The dividend declared in 2016 related to both the 2014 and 2015 financial years. 4 Including regular and special dividends. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 26 26 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 27 27 Our Strategy Vision Our shared principles Our vision is to maintain our position as a leading freight rail group with operations in Russia, Belarus, Ukraine, Kazakhstan and other countries and to be the partner of choice for blue-chip industrial customers by continually developing our service offering to ensure we meet customers’ changing needs. Strategic priorities Promote a strong entrepreneurial and governance culture Strategic priorities Deliver operational excellence and efficiency in operations Focus on opportunistic investments and pursue prudent capital allocation Value customers: they are at the heart of our business and we work hard to exceed their expectations. Deliver excellence: we strive to excel in everything that we do. Prioritise safety: safety is our number one priority and we strive to act safely and responsibly at all times. Respect people: we respect the rights of all employees and invest in their training and development. Uphold good governance: we aim to pursue a course that benefits all stakeholders. Protect our environment: we value our communities and the world around us and treat them with the respect and consideration they deserve. Strategy Historical key financial results Our strategy is to offer our industrial customers reliable and innovative transportation solutions aimed at achieving the cost-effective and timely management of their cargoes. We invest opportunistically to grow our business, subject to strict returns criteria, and maintain a conservative balance sheet. Together these underpin our ability to create sustainable value for our shareholders, employees and other stakeholders. Our entrepreneurial spirit, disciplined approach and focus on logistical efficiency and innovation are central to delivering this strategy. Along with our sizeable modern fleet and advanced logistical platform, they form our key competitive advantages. By focusing on long- term outsourcing partnerships, we can use our deep understanding of our clients’ needs to improve our service quality whilst increasing our logistical efficiency. We allocate our capital prudently, investing in attractive growth opportunities when they arise and returning capital to shareholders at times when such opportunities do not exist. We review both organic and non- organic prospects subject to our strict returns criteria. Maintaining a strong balance sheet is fundamental for us, ensuring we can seize the right opportunities and still remain flexible to any changes in the business or market environment. ADJUSTED REVENUE, RUB BLN ADJUSTED EBITDA, RUB BLN 44.2 52.1 60.9 68.8 54.9 17.7 25.8 33.1 39.6 26.8 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 ADJUSTED EBITDA MARGIN, % FREE CASH FLOW1, RUB BLN 40 50 54 57 49 8.9 17.0 12.3 13.3 15.1 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 NET DEBT TO ADJUSTED EBITDA, YEAR END TOTAL DIVIDENDS2, RUB PER SHARE/GDR 0.7 0.4 0.6 0.6 1.0 39.2 89.65 92.4 93.1 74.55 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Source: Rosstat 1 Free Cash Flow is net of principal elements of lease payments for leases with financial institutions presented for both periods (2019 and 2020). During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both periods for comparison purposes. 2 Total dividends (including interim, final and special) in respect of declared year. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 28 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 29 CEO Review DEAR SHAREHOLDERS, The spread of the COVID-19 virus disrupted economic activity across Russia. Our industry did not escape the impact of this although it was very much a year of two halves for freight rail transportation. In the first half of 2020, demand slumped as the sector suffered the full economic impact of COVID-19; in the second half, our markets recovered and overall freight rail turnover returned to pre-COVID levels. Globaltrans again delivered a resilient business performance even at this exceptionally challenging time. We outperformed the market in freight rail turnover, secured further new contracts and extensions of existing contracts, and invested in the growing specialised container transportation segment. Although our financial results were inevitably impacted by the weak market conditions, our focus on cost control and expansion CAPEX flexibility resulted in the Group delivering increased Free Cash Flow and solid dividends for shareholders as targeted and announced beforehand. I am very proud of the spirit, commitment and agility shown by our workforce in responding to what has been a very demanding environment over the past year. Valery Shpakov Chief Executive Officer Managing COVID-19 risks Highlights At the outset of the pandemic, we identified the key priority areas we needed to focus on: safeguarding the health and safety of our employees, supporting our customers, and ensuring the business stayed fully operational. All subsequent management decisions were made with these priorities firmly in mind. In 2020, we once again outperformed the market. By leveraging our operating platform to efficiently switch between cargoes depending on demand, the Group’s Freight Rail Turnover grew 2.2% year on year, despite the market suffering a 2.2% decline. Safety is management’s top priority and in the heightened risk environment we were operating in last year, it took on even greater urgency. We quickly instituted additional precautions to protect the health and wellbeing of our employees and engaged with them to ensure appropriate measures were being taken. We made sure we were operating within the rules and guidelines set out by the government such as introducing distance working where it was feasible to do so. We also introduced a raft of practical measures to safeguard our employees and customers, including: • the transfer of a large number of employees to remote working; • rigorous cleaning schedules at all our workplaces; • measures to minimise contact between staff and enforce social distancing; • additional protective equipment and clothing for those that needed it; information on government guidelines. • In the context of the challenging economic climate stemming from the COVID-19 pandemic, our financial results were inevitably impacted. The Group’s Adjusted Revenue was down 20% year on year to RUB 54.9 billion, largely reflecting weaker pricing conditions in the gondola segment. Adjusted EBITDA at RUB 26.8 billion was down 32% compared to the record result set in 2019 of RUB 39.6 billion. Our Adjusted EBITDA Margin held up well at a robust 49%, down from 57% in the prior year. Management’s efforts to optimise costs proved successful, and despite ongoing inflationary pressures, we reduced Total Operating Cash Costs by 1% year on year. Excluding regulated RZD Empty-Run regulatory tariffs the year-on-year decline in Total Operating Cash Costs was 9%. The Group produced strong Free Cash Flow1 generation of RUB 15.1 billion, up 14% on the previous year. The financial impact of weaker markets on operating activities was more than offset by an 83% year-on-year targeted cut in expansion CAPEX, the release of working capital and a decline in Tax paid. The Group continued to benefit from a strong balance sheet and low leverage. The year-end Net Debt to Adjusted EBITDA ratio stood at 1.01 times up from 0.6 times at the end of the prior year. We managed to significantly improve the financing terms with the average weighted interest rate down to 6.9% compared to 8.1% at the end of the previous year. Our markets Market conditions for the freight rail industry fluctuated considerably over the course of 2020. In the first half of the year, the industry suffered as economies locked down as a result of the COVID-19 pandemic before staging a comeback in the second half as economies began to reopen with pent-up global demand for industrial commodities driving a recovery in cargo volume dynamics. Overall freight rail turnover for the industry in 2020 dropped 2.2% year on year, although again with a very clear split in performance between the two halves of the year. Freight rail turnover was down 5.3% year on year in the first half as a result of the COVID-19 pandemic followed by a 1% year- on-year increase in the second half stimulated by greater export activity and currency weakness. Overall freight transportation volumes for the year ended down 2.7% year on year. The first half saw a fall in volumes of 4.5% year on year, with downward pressure experienced in all key cargo segments, except construction materials. Cargo volume dynamics gradually improved over the second half with overall freight volumes down only 0.9% year on year. 1 Free Cash Flow is net of principal elements of lease payments for leases with financial institutions presented for both years (2019 and 2020). During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both years for comparison purposes. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202030 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 31 CEO Review The non-oil (bulk) cargo segment fared better than the overall market with the overall volumes in the segment decreasing 1.1% year on year. The performance was uneven across the individual transport segments. Weakness in coal and metallurgical cargoes, down 4.8% and 3.5% year on year respectively, was partially offset by strength in construction materials where volumes grew by a healthy 4.2% year on year1. The oil products and oil segment was particularly affected by the COVID-19 pandemic and the resultant international and domestic travel restrictions and lockdowns. Due to these constraints, fuel consumption fell significantly, a situation further exacerbated by the OPEC+ agreement on oil production cuts. Overall freight rail volumes in the segment fell 10% year on year. Market pricing revealed a mixed segmental picture. The pricing pressure in the gondola segment we experienced in the latter part of 2019 continued, the result of an ongoing oversupply of gondolas combined with lower demand. In contrast, the rail tank segment experienced relatively stable railcar operator rates despite weak demand. Operational performance It was clear that the sector would not be immune to the unprecedented trading conditions of 2020, and so management’s focus was on the things we could control, namely operational efficiency, superior client service, and cost discipline. In the rail logistics industry, operational efficiency is a source of competitive advantage, and even more so in periods of market stress. Globaltrans’ operating model gives us an edge in such times as we can adapt our logistics to respond to rapid changes in routes and cargo flows and flex our gondola fleet to capture demand changes in freight segments. We took full advantage of this important capability in 2020. As I mentioned earlier, despite the volatile conditions, we delivered 2.2% year-on-year growth in Freight Rail Turnover while the overall market declined by that same amount in 2020. In non-oil bulk cargo operations, our Freight Rail Turnover increased 4.9% year on year, benefitting from the efficiency with which we were able to migrate railcars between different cargoes. In the tank car segment, our operations were affected by those trends described above that severely impacted demand across the industry – global lockdowns, reduced fuel consumption in Russia, and the OPEC+ agreement on crude oil productions cuts. This was reflected in the 13.3% year-on-year decline in the Group’s Freight Rail Turnover in this segment. The Group’s Average Price per Trip, a key metric, suffered due to weak pricing in the gondola segment, partially offset by more stable pricing dynamics for tank car operators in the oil products and oil segment. As a result, Average Price per Trip declined 19% year on year. In a challenging environment, we managed the logistical test of adapting to the changes in cargo patterns. Whilst not immune from the headwinds created by the volatile conditions, we managed to restrict the increase in our gondola Empty Run Ratio, an important indicator of our operating efficiency, which rose to 45% from 42%. This remains among the lowest in the industry. The Total Empty Run Ratio for all types of railcars also increased to 51% compared to 49% in the previous year. 2021 has started well helped by a recovery in global demand for both energy and basic materials, which has driven increased freight volumes. Recent rail freight statistics support this view with average daily overall Russian freight turnover in the first quarter of 2021 ahead 3.1% year on year3. We have a flexible business model, well-balanced portfolio of assets, strong management, and a consistent focus on efficiency and cost control. These factors, together with almost entirely discretionary expansion CAPEX mid-term, are expected to support our ability to deliver strong dividends. As is evident from our 2020 performance, Globaltrans is well positioned to benefit from a sustained recovery in our markets and we remain cautiously optimistic about our prospects for 2021. Valery Shpakov Chief Executive Officer As one of the leaders in the provision of freight logistics, we maintained a high level of client retention in 2020. We signed a new one-year deal with EVRAZ, significantly expanding our cooperation with them. We also extended our service contracts with MMK for a further two years until September 2024, and with Metalloinvest for an additional one year until the end of December 2021. Our success in retaining key clients continued into 2021 with a new service contract signed with Rosneft for five years until the end of March 2026. Long-term service contracts provide for better volume visibility and lower pricing volatility and enable logistical efficiencies. Our strong portfolio of service contracts with five leading businesses accounted for about 64% of the Group’s Net Revenue from Operation of Rolling Stock in 2020, helping to underpin the Group’s business model. Capital expenditure Given the market volatility and pricing pressures we observed coming into 2020, we had already signalled that our plans envisaged only a modest level of expansion CAPEX for the year. Due to the specifics of our business model, which includes ownership of long-life assets, we have discretion over our expansion CAPEX and can adjust it in light of market conditions. In light of the economic impact of the COVID-19 pandemic, we confined expansion CAPEX to targeted investments into the growing niche segment for the rail transportation of petrochemicals and high-grade steel in specialised containers. To support our developing business in this segment, we acquired 300 flat cars in 2020 taking our expansion CAPEX for the year to RUB 1.1 billion*, down 83% year on year. Consequently, our Total CAPEX fell 49% year on year to RUB 6.9 billion2 in 2020 and consisted primarily of maintenance CAPEX. Outlook How the freight rail sector performs over the next year will largely depend on how quickly the economy can recover from the pandemic. The introduction of mass vaccination programmes alongside the gradual easing of lockdowns provide grounds for optimism in this regard. The pricing environment remains mixed with some further weakness in gondolas rates at the beginning of the year compared to the second half of 2020 and with the rail tank segment experiencing relatively steady pricing. The issue of gondola oversupply is likely to continue to weigh on the industry. In light of this, we anticipate maintaining our freeze on expansion investment this year. Total CAPEX is expected to mostly include maintenance and to remain in the range of RUB 6-7 billion in 2021, which will support the Group’s Free Cash Flow generation. 1 Metallurgical cargoes including ferrous metals, scrap metal and irone ore; coal including coke; construction materials including cement. 2 Total CAPEX is net of principal elements of lease payments for leases with financial institutions presented for both years (2019 and 2020). During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both years for comparison purposes. 3 Estimated by the Company. Average daily overall freight rail turnover better illustrates the market trends taking into account higher base in February 2020 due to a leap year. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202032 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 33 Market Review Market rebound in the second half of 2020 after spread of COVID-19 affected demand in the first half of the year BREAKDOWN OF RUSSIA’S FREIGHT RAIL TRANSPORTATION VOLUMES BY CARGO TYPE, 2020 RUSSIA’S FREIGHT RAIL TURNOVER, 2016–2020 (BLN TONNES-KM) RUSSIA’S FREIGHT RAIL TRANSPORTATION VOLUMES, 2016–2020 (MLN TONNES) 2,344 2,493 2,597 2,602 2,545 1,227 1,266 1,292 1,279 1,245 • Overall freight rail turnover and volumes in Russia decreased 2.2% 24% 29% -2.2% -2.7% – 2.2 % year-on-year decline in overall freight rail turnover in Russia and 2.7% year on year in 2020 respectively. • Noticeable split in freight rail turnover performance between the two halves with a first-half decline of 5.3% year on year followed by an export-driven recovery with second-half turnover rising 1% year on year. Non-oil (bulk) cargo volumes fared better than the overall market • Non-oil (bulk) cargo volumes fell 1.1% year on year in 2020 compared to an overall market decline of 2.7% year on year. Decline in coal and metallurgical cargo volumes were partially mitigated by a rise in construction cargo volumes. • Gondola segment rates remained under pressure throughout 2020. Oil products and oil segment under significant pressure due to COVID-19 and OPEC+ • Overall freight rail volumes declined 10% year on year in 2020 as lockdowns due to COVID-19 affected fuel consumption while OPEC+ agreement cut crude oil production. • Relatively stable railcar operator rates in the tank car segment. 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 13% 18% 17% RUSSIA’S MONTHLY FREIGHT RAIL TURNOVER, 2019–2020 (BLN TONNES-KM) Change in freight turnover 2020, month on month -5.0% -1.2% -7.1% -7.2% -6.5% -4.0% -1.7% 1.5% -0.3% 0.5% 2.1% 3.7% 221 209 200 198 232 215 225 225 208 210 206 198 213 210 214 217 213 212 222 224 213 218 218 226 Coal (incl. coke) Oil products and oil Metallurgical cargoes (incl. ferrous metals, scrap metal, ores) Construction materials (incl. cement) Other Source: Rosstat Source: Rosstat, Globaltrans Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec 1.2 mln units railcar fleet in Russia 577ths units gondola cars in Russia 249 ths units tank cars in Russia Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 34 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 35 Market Review The market in 2020 It was an unprecedented year with the impact of the COVID-19 pandemic triggering the biggest global economic contraction in decades. The Russian economy suffered its largest decline since 2009, as gross domestic product (GDP) shrank 3% year on year in 2020. Industrial production in Russia also declined with a decrease of 2.9% year on year in 2020 following year-on-year growth of 3.4% in 2019. The fall in industrial output reflected a steep drop in the performance of the extractive industries, down 7%, which was partially offset by a 0.3% year-on- year rise in manufacturing output. The underperformance of the extractive industries sector was mostly attributable to a drop in crude oil production as a consequence of the OPEC+ decision in 2020 to substantively curb output. The quarterly rate of decline in industrial production improved steadily as the year progressed, having touched a low point in 2Q 2020 when it dropped 6.7% year on year. In 3Q 2020, industrial production was 4.8% lower year on year, before ending the year down just 2.5% year on year in 4Q 2020. In December, industrial production rebounded and was broadly in line with the level achieved in the prior year period. The freight rail sector in Russia tends to track industrial production and the performance of the sector shows it was a year of two halves. In the first six months of 2020, Russia’s overall freight rail turnover and volumes fell 5.3% and 4.5% year on year respectively as the full force of the measures to combat the COVID-19 pandemic took effect. As restrictions eased and global industrial demand began to recover, the freight rail sector experienced a solid recovery with freight rail turnover increasing 1% year on year in the second half compared to the same period the previous year. Rail maintained its position as the main mode of freight transport in Russia carrying 87% of overall Russian freight turnover (excluding pipeline traffic) in 2020, the same level as in 2019. Weak economic conditions led rail companies to cut back investments with Russia’s overall railcar fleet growing just 3%, or 36 thousand units to 1.2 million units by year end 2020. Gondola cars accounted for 48%, tank cars made up 21%, and other types, including flat cars and hopper cars, constituted 31% of the total fleet at the end of 2020. Net additions of gondola cars declined significantly with 19 thousand units or 3% added (about 40% fewer than were added over 2019) with the overall size of the gondola fleet reaching 577 thousand units. In the tank car segment, net additions totalled 2 thousand units (or 0.8% compared to the end of 2019), taking the overall size of Russia’s tank car fleet to 249 thousand units. RUSSIA'S TOTAL RAILCAR FLEET BY CAR TYPE, AT YEAR-END 2020, THOUSAND UNITS 380 (31%) 577 (48%) 249 (21%) Gondola cars Tank cars Other railcars Source: Globaltrans Bulk (non-oil) segment This segment delivered a relatively resilient performance given the challenging market, with volumes dipping 1.1% year on year in 2020. They recovered from a year-on- year 4% first-half decline to surpass the level set in the second half of the previous year by 1.7% with exports being the principal driver behind the recovery. The recovery was supported by a global revival in demand for key commodities, a weak Russian rouble and the reopening of many economies after lockdowns. Weak demand for coal and metallurgical cargoes was partially compensated by solid demand for construction materials. There was continued pressure in the pricing environment in the gondola segment in both leasing rates and operator pricing throughout 2020 on the back of an ongoing unfavourable supply and demand balance. Coal (including coke): As the largest industrial cargo segment, coal contributed 29% of Russia’s overall freight volumes in 2020. Overall coal volumes fell 4.8% year on year, under pressure from a combination of deteriorating demand and weak pricing conditions for thermal coal. In the first half, thermal coal volumes slumped 10.1% before staging a recovery in the second half on the back of increasing export demand and better pricing, with the result that second-half volumes were at the same level as for that period in 2019. In the coking coal segment conditions were less volatile with solid growth in the second half putting total annual volumes up 4% year on year in 2020. Metallurgical cargoes (including ferrous metals, scrap metal and ores): This segment represented 18% of Russian freight rail volumes in 2020. Total volumes were affected by weak economic activity across 2020, which resulted in freight rail volumes falling 3.5% year on year. As in other areas, this weakness peaked in the first half with volumes falling 4.4% year on year and while there was a modest recovery in the second half with volumes down 2.5% year on year it was insufficient to match the performance of the previous year. Volume trends varied across the individual segments: ferrous metals and scrap metal volumes dropped 10% and 2.7% respectively year on year, while in ores volumes were broadly unchanged year on year in 2020. Construction materials (including cement): The segment performed strongly in 2020 supported by solid levels of construction activity, delivering a 4.2% year-on-year rise in volumes. This segment contributed 13% of the overall Russian freight rail volumes in 2020. Oil products and oil segment The oil products and oil transport segment experienced particularly difficult trading conditions, with overall freight volume ending 2020 down 10% year on year. The market came under significant pressure as the impact of the COVID-19 pandemic and the OPEC+ agreement combined to reduce both fuel consumption and output volumes. Despite weak demand, the pricing environment was generally supportive, and operators pricing stood broadly unchanged year on year although leasing rates did exhibit some pricing pressures. RUSSIA’S FREIGHT RAIL TRANSPORTATION VOLUMES BY CARGO, 2016–2020 (MLN TONNES) Coal 343 373 386 383 364 -4.8% 2016 2017 2018 2019 2020 Oil products and oil 236 236 237 232 209 -10.0% 2016 2017 2018 2019 2020 Metallurgical cargoes 217 219 231 228 220 -3.5% 2016 2017 2018 2019 2020 Construction materials 168 160 149 150 157 +4.2% 2016 2017 2018 2019 2020 Source: Rosstat Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 36 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 37 Financial and Operational Review “Our financial performance highlights the strength of our operating model. The Group continued to be highly cash generative and financially robust. We delivered a double-digit increase in free cash flow, maintained low leverage and as a result, we delivered strong cash dividends to our shareholders, consistent with our focus on long-term value creation.” Alexander Shenets Chief Financial Officer • Total CAPEX1 was down 49% to RUB 6.9 billion and primarily consisted of maintenance expenses. The Group currently expects its Total CAPEX (including maintenance) to remain low in 2021 in the range of RUB 6–7 billion. • Leverage continued to be held at a low level with a Net Debt to Adjusted EBITDA ratio of 1.01x at year end 2020 (at year-end 2019: 0.60x). DIVIDENDS Continued robust dividend payments as targeted and previously announced • Strong total FY2020 dividends of RUB 13.3 billion or RUB 74.55 per share/GDR delivered (including interim and final dividends), reflecting strong Free Cash Flow generation and low leverage. Total FY2020 dividends equate to 99% of the Group’s Attributable Free Cash Flow for 2020. FINANCIAL RESULTS Efficient cost control, increased Free Cash Flow and continued low leverage • Total revenue was down 28% year on year to RUB 68.4 billion. Adjusted Revenue declined 20% year on year to RUB 54.9 billion with lower gondola segment net revenues partially offset by a less volatile tank car segment and growing revenues from specialised containers and railcar leasing businesses. • Total Operating Cash Costs were reduced 1% year on year due to cost optimisation measures. • Operating profit decreased 41% year on year to RUB 18.8 billion largely due to gondola segment pricing weakness. • Adjusted EBITDA was 32% lower year on year at 26.8 billion while the Adjusted EBITDA Margin narrowed to 49% (2019: 57%). • Profit for the year declined 46% year on year to RUB 12.2 billion. • Free Cash Flow1 increased 14% year on year to RUB 15.1 billion with the decline in Net cash from operating activities more than offset by an 83% year- on-year targeted cut in expansion CAPEX, release of working capital and lower Tax paid. ADJUSTED REVENUE (RUB MLN) / TOTAL OPERATING COSTS (RUB MLN) ADJUSTED EBITDA (RUB MLN) / ADJUSTED EBITDA MARGIN (%) Adjusted Revenue Adjusted EBITDA 9 1 0 2 0 2 0 2 68,840 54,934 -20% 9 1 0 2 0 2 0 2 39,552 26,807 -32% Total Operating Cash Costs Adjusted EBITDA Margin 9 1 0 2 0 2 0 2 29,409 29,121 -1% 9 1 0 2 0 2 0 2 57% 49% NET CASH FROM OPERATING ACTIVITIES (RUB MLN) / TOTAL CAPEX (RUB MLN) / FREE CASH FLOW (RUB MLN) NET DEBT (RUB MLN) / NET DEBT TO ADJUSTED EBITDA Net cash from operating activities2 Net Debt 9 1 0 2 0 2 0 2 29,404 25,226 -14% 9 1 0 2 0 2 0 2 Total CAPEX (incl. maintenance CAPEX)1 Net Debt to Adjusted EBITDA 9 1 0 2 0 2 0 2 Free Cash Flow1 9 1 0 2 0 2 0 2 Source: Globaltrans 6,941 -49% 13,517 9 1 0 2 0 2 0 2 13,251 15,103 +14% 23,574 27,037 +15% 0.60 1.01 1 Free Cash Flow and Total CAPEX are net of principal elements of lease payments for leases with financial institutions presented for both years (2019 and 2020). During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both years for comparison purposes. 2 After “Changes in working capital” and “Tax paid”. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 38 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 39 OPERATIONAL PERFORMANCE Globaltrans outperformed the industry despite weak markets • Solid Freight Rail Turnover growth achieved in 2020 of 2.2% year on year even as the overall market declined 2.2% year on year. • Gondola operating model provides for flexibility • Deepened relationships with other high-profile clients. Significant increase in business volumes with EVRAZ accompanied by parties entering into a one-year contract. Expanded relationships with clients in coal and construction segments including Kuzbasskaya Toplivnaya Company and National Non-Metallic Company. Mixed pricing across segments and responsiveness to market changes enabling a 4.9% year-on-year rise in bulk cargoes Freight Rail Turnover due to efficient contracting and migration between freight segments. • Balanced fleet composition helped partially offset weak pricing in the gondola segment with solid pricing in tank cars. Average Price per Trip declined 19% year on year. • Tank car segment business volumes under pressure from unprecedented COVID-19 lockdowns reducing fuel consumption in Russia along with impact of crude oil production cuts agreed under OPEC+. Against this backdrop, the Group’s Freight Rail Turnover in the oil products and oil segment declined 13.3% year on year. • Challenging operational conditions in the tank car segment drove Average Number of Loaded Trips per Railcar down 5% year on year along with a 6% year- on-year rise in Average Distance of Loaded Trip. Robust client retention, key service contracts extended • Strong portfolio of service contracts with superior clients in metallurgical and oil products and oil segments, which contributed 64% of Net Revenue from Operation of Rolling Stock in 2020. • Long-term service contracts provide for better volume visibility and lower pricing volatility and enable logistical efficiencies. • Key service contracts successfully extended. Flexible operating model enabled Group to maintain one of the sector’s best Empty Run Ratios • Gondola Empty Run Ratio remained one of the lowest in the Russian market despite the substantial volatility in client cargo flows and routes driven by unprecedented COVID-19 lockdowns. Empty Run Ratio for gondola cars rose to 45%, compared to 42% in 2019. • Total Empty Run Ratio (for all types of rolling stock) increased to 51%, compared to 49% in 2019. • Share of Empty Run Kilometres paid by Globaltrans rose to 99% (2019: 89%) due to changed cargo mix and gondola segment headwinds. Large diversified fleet with minimum scrappage requirements • Balanced fleet of 71,688 units2, primarily universal gondola cars and tank cars strengthened by owned fleet of mainline locomotives. • Moderate average age of 12.4 years as of the end – Rosneft — the service contract extended for a further five years until the end of March 20261. of 2020 with limited need for scrappage in the mid-term. – MMK — the service contract extended for a further two years until the end of September 2024. • The Group’s Average Rolling Stock Operated was up 1% year on year. – Metalloinvest — the service contract extended for one year until the end of 2021. 1 As announced on 26 April 2021. 2 Total Fleet as of 31 December 2020. FREIGHT RAIL TURNOVER (BLN TONNES-KM) / TRANSPORTATION VOLUMES (MLN TONNES) FREIGHT RAIL TURNOVER BY KEY CARGO (BLN TONNES-KM)3 Freight Rail Turnover 9 1 0 2 0 2 0 2 Transportation Volumes 9 1 0 2 0 2 0 2 Metallurgical cargoes 2019 2020 Oil products and oil 2019 2020 Coal 2019 2020 147.1 150.3 +2.2% 91.6 88.9 -3% 73.1 68.2 -6.8% 22.0 19.1 -13.3% 33.8 42.2 +24.8% AVERAGE PRICE PER TRIP (RUB) 9 1 0 2 0 2 0 2 36,909 -19% NET REVENUE FROM OPERATION OF ROLLING STOCK BY KEY CONTRACT 36% 64% Construction materials 2019 2020 6.3 9.7 +52.2% 11.8 11.2 -5.3% 45,807 Other 2019 2020 Total 2019 2020 147.1 150.3 +2.2% KEY EMPTY RUN METRICS 2019 2020 Empty Run Ratio for gondola cars 42% 45% Total Empty Run Ratio (for all types of rolling stock) 49% 51% Share of Empty Run Kilometres paid by Globaltrans 89% 99% Service contracts (Rosneft, MMK, Metalloinvest, Gazprom Neft, TMK, ChelPipe) Other contracts Source: Globaltrans 3 Metallurgical cargoes including ferrous metals, scrap metal and iron ore; coal including coke; construction materials including cement. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202040 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 41 RESULTS IN DETAIL The following tables provide the Group’s key financial and operational information for the years ended 31 December 2020 and 2019. EU IFRS financial information Non-IFRS financial information Revenue Total cost of sales, selling and marketing costs and administrative expenses 2019, RUB mln 94,994 2020, RUB mln 68,367 (62,908) (50,664) Operating profit Finance costs - net Profit before income tax Income tax expense Profit for the year Profit attributable to: Owners of the Company Non-controlling interests Basic and diluted earnings per share for profit attributable to the equity holders of the Company during the year (expressed in RUB per share) Cash generated from operations (after changes in working capital) Tax paid Net cash from operating activities Net cash used in investing activities Net cash used in financing activities 32,120 (2,375) 29,745 (7,091) 22,653 20,808 1,846 116.41 2019, RUB mln 35,422 (6,018) 29,404 (12,765) (16,939) 18,811 (2,100) 16,712 (4,525) 12,187 10,587 1,600 59.24 2020, RUB mln 28,278 (3,052) 25,226 (6,528) (20,357) Change, % -28% -19% -41% -12% -44% -36% -46% -49% -13% -49% Change, % -20% -49% -14% -49% 20% Adjusted Revenue Including Net Revenue from Operation of Rolling Stock Operating lease of rolling stock Net Revenue from Specialised Container Transportation Total Operating Cash Costs Including Empty Run Cost Repairs and maintenance Employee benefit expense Fuel and spare parts - locomotives Adjusted EBITDA Adjusted EBITDA Margin, % Total CAPEX (including maintenance CAPEX)1 Free Cash Flow1 Attributable Free Cash Flow1 2019, RUB mln 68,840 64,994* 1,634 1,623* 29,409 14,752* 4,403 4,483 1,914 39,552 57% 13,517 13,251 11,405 2020, RUB mln 54,934 Change, % -20% 50,527* 1,932 1,923* 29,121 15,799* 4,261 4,154 1,630 26,807 49% 6,941 15,103 13,503 -22% 18% 18% -1% 7% -3% -7% -15% -32% - -49% 14% 18% Debt profile Total debt Cash and cash equivalents Net Debt Net Debt to Adjusted EBITDA (x) As of 31 December 2019, RUB mln As of 31 December 2020, RUB mln 30,095 6,522 23,574 0.60 32,015 4,978 27,037 1,01 Change, % 6% -24% 15% - 1 Free Cash Flow, Total CAPEX and Attributable Free Cash Flow are presented net of principal elements of lease payments for leases with financial institutions for both years (2019 and 2020). During the first half of 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both years for comparison purposes. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 42 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 43 Operational information Adjusted Revenue Freight Rail Turnover, billion tonnes-km (excluding Engaged Fleet) Transportation Volume, million tonnes (excluding Engaged Fleet) Average Price per Trip, RUB Average Rolling Stock Operated, units Average Distance of Loaded Trip, km Average Number of Loaded Trips per Railcar Total Empty Run Ratio (for all types of rolling stock), % Empty Run Ratio for gondola cars, % Share of Empty Run Kilometres paid by Globaltrans, % Total Fleet, units (at year-end), including: Owned Fleet, units (at year-end) Leased-in Fleet, units (at year-end) Leased-out Fleet, units (at year-end) Average age of Owned Fleet, years (at year-end) Total number of employees (at year-end) 2019 147.1 91.6 45,807 56,845 1,591 25.0 49% 42% 89% 70,720 67,669 3,051 6,842 11.5 1,640 2020 150.3 88.9 36,909 57,484 1,681 23.8 51% 45% 99% 71,688 67,762 3,926 7,032 12.4 1,697 Change, % 2.2% -3.0% -19% 1% 6% -5% - - - 1% 0% 29% 3% - 3% Revenue The Group’s Total revenue was 28% lower year on year at RUB 68,367 million in 2020 reflecting a 20% year-on-year decline in Adjusted Revenue and a 49% year-on-year decrease in the “pass through” cost items: “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”. Net Revenue from Operation of Rolling Stock (a key component of Adjusted Revenue) declined 22% year on year and was partially offset by higher revenues from niche segments for the rail transportation of specialised containers and leasing of rolling stock. The following table provides details of Total revenue, broken down by revenue-generating activity, for the years ended 31 December 2020 and 2019. Railway transportation – operators services (tariff borne by the Group)1 Railway transportation – operators services (tariff borne by the client) Revenue from specialised container transportation Operating lease of rolling stock Other Total revenue 2019, RUB mln 2020, RUB mln Change, % 49,141 42,018 1,815 1,634 386 27,197 36,671 2,168 1,932 400 94,994 68,367 -45% -13% 19% 18% 4% -28% 1 Includes “Infrastructure and locomotive tariffs: loaded trips” for 2020 of RUB 10,957 million (2019: RUB 22,020 million) and “Services provided by other transportation organisations” of RUB 2,476 million (2019: RUB 4,134 million). Adjusted Revenue is a non-IFRS financial measure defined as “Total revenue” adjusted for “pass through” items: “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”. “Infrastructure and locomotive tariffs: loaded trips” comprises revenue resulting from tariffs that customers pay to the Group and the Group pays on to RZD, which are reflected in equal amounts in both the Group’s Total revenue and Cost of sales. “Services provided by other transportation organisations” is revenue resulting from the tariffs that customers pay to the Group and the Group pays on to third-party rail operators for subcontracting their rolling stock, which are reflected in equal amounts in both the Group’s Total revenue and Cost of sales. The net result of Engaged Fleet operations is reflected as Net Revenue from Engaged Fleet and is included in Adjusted Revenue. The 20% year-on-year decline in the Group’s Adjusted Revenue to RUB 54,934 million in 2020 was primarily due to the decrease in Net Revenue from Operation of Rolling Stock, down 22%, which was partially offset by an 18% year- on-year increase in both Net Revenue from Specialised Container Transportation and Revenue from operating leasing of rolling stock. The following table provides details of Adjusted Revenue for the years ended 31 December 2020 and 2019 and its reconciliation to Total revenue. Total revenue Minus “pass through” items Infrastructure and locomotive tariffs: loaded trips Services provided by other transportation organisations Adjusted Revenue 2019, RUB mln 94,994 22,020 4,134 68,840 2020, RUB mln 68,367 10,957 2,476 54,934 Change, % -28% -50% -40% -20% The principal components of Adjusted Revenue include: (i) Net Revenue from Operation of Rolling Stock, (ii) Net Revenue from Specialised Container Transportation, (iii) Revenue from operating leasing of rolling stock, (iv) Net Revenue from Engaged Fleet, and (v) other revenues generated by the Group’s auxiliary business activities, including freight forwarding, repair and maintenance services provided to third parties, and other. The following table provides a breakdown of the components of Adjusted Revenue for the years ended 31 December 2020 and 2019. Net Revenue from Operation of Rolling Stock Operating leasing of rolling stock Net Revenue from Specialised Container Transportation Net Revenue from Engaged Fleet Other Adjusted Revenue 2019, RUB mln 64,994* 1,634 1,623* 202* 386 2020, RUB mln 50,527* 1,932 1,923* 152* 400 68,840 54,934 Change, % -22% 18% 18% -25% 4% -20% Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202044 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 45 Net Revenue from Operation of Rolling Stock Other revenue Net Revenue from Operation of Rolling Stock is a non-IFRS financial measure, derived from management accounts, describing the net revenue generated from freight rail transportation services which is adjusted for respective “pass through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”). The Group’s Net Revenue from Operation of Rolling Stock contributed 92% of the Group’s Adjusted Revenue in 2020 and was 22% lower year on year at RUB 50,527 million* primarily reflecting weak pricing conditions in the gondola segment. Other revenue (1% of the Group’s Adjusted Revenue), which includes the revenues generated by the Group’s auxiliary business activities such as freight forwarding, repair and maintenance services provided to third parties, and other, increased 4% year on year to RUB 400 million in 2020. • Average Price per Trip declined 19% year on year to RUB 36,909 with solid pricing in tank cars partially compensating Cost of sales, selling and marketing costs and administrative expenses for continued weak pricing in the gondola segment. • Average Rolling Stock Operated increased 1% year on year to 57,484 units. • Average Number of Loaded Trips per Railcar decreased 5% year on year mainly reflecting changed logistics and volatility in demand for rail transportation specifically in the tank car segment. Revenue from operating leasing of rolling stock Revenue from operating leasing of rolling stock, which contributed 4% of the Group’s Adjusted Revenue in 2020, increased 18% year on year to RUB 1,932 million as a result of the more favourable pricing terms achieved in the tank car leasing segment compared to the previous year. Net Revenue from Specialised Container Transportation Net Revenue from Specialised Container Transportation is a non-IFRS financial measure, derived from management accounts, that represents the revenue generated from the specialised container operations (included in the EU IFRS line item: “Revenue from specialised container transportation”) less the respective “pass through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”). Net Revenue from Specialised Container Transportation increased 18% year on year to RUB 1,923 million* in 2020 benefitting from fleet expansion, solid demand, stable pricing and the launch of high grade steel transportation. This revenue contributed 4% of the Group’s Adjusted Revenue in the reporting year. The Group’s total fleet employed in this segment was 5,046 units at 31 December 2020 including specialised containers and flat cars. This business segment is mostly focused on the rail transportation of petrochemicals and high grade steel and has SayanskKhimPlast, NLMK, EVRAZ, Bashkir Soda Company and KuibyshevAzot among its key clients. Net Revenue from Engaged Fleet Net Revenue from Engaged Fleet is a non-IFRS financial measure, derived from management accounts, that represents the net sum of the price charged to clients for transportation by the Group utilising Engaged Fleet less the respective “pass-through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”) and less the “pass-through” cost of engaging fleet from third-party rail operators (included in the EU IFRS line item “Services provided by other transportation organisations”). Net Revenue from Engaged Fleet, which comprised less than 1% of the Group’s Adjusted Revenue, declined 25% year on year in 2020 to RUB 152 million*, largely reflecting a decline in the number of Engaged Fleet operations. The following table provides a breakdown of Cost of sales, selling and marketing costs and administrative expenses for the years ended 31 December 2020 and 2019. Cost of sales Selling and marketing costs Administrative expenses Total cost of sales, selling and marketing costs and administrative expenses 2019, RUB mln 58,833 216 3,859 62,908 2020, RUB mln 47,066 205 3,394 50,664 Change, % -20% -5% -12% -19% In 2020, the Group’s Total cost of sales, selling and marketing costs and administrative expenses were reduced 19% year on year to RUB 50,664 million, primarily due to the factors described below. • “Pass through” cost items (a combination of “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”) were 49% lower year on year at RUB 13,434 million mainly as a result of changes in the proportion of clients that pay Infrastructure and locomotive tariffs: loaded trips through the Group. • The Group’s Total cost of sales, selling and marketing costs and administrative expenses adjusted for “pass-through” cost items increased 1% year on year to RUB 37,231 million in 2020, which reflected: – A 1% year-on-year decline in the Group’s Total Operating Cash Costs to RUB 29,121 million in 2020. — Efficient cost optimisation measures that enabled the Group to achieve a 9% year-on-year reduction in Total Operating Cash Costs excluding Empty Run Costs. — An increase in the regulated RZD infrastructure and locomotive traction tariffs for empty trips, higher Group’s Freight Rail Turnover and a rise in Empty Runs on the back of the challenging industry environment drove a 7% year-on-year increase in Empty Run Costs. – A 10% year-on-year rise in Total Operating Non-Cash Costs to RUB 8,109 million, due in large part to an increase in the Depreciation of property, plant and equipment on the back of asset expansion, principally in 2019. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 46 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 47 In order to show the dynamics and nature of the Group’s cost base, individual items of Total cost of sales, selling and marketing costs and administrative expenses have been regrouped as shown below: Total Operating Cash Costs “Pass through” cost items Infrastructure and locomotive tariffs: loaded trips Services provided by other transportation organisations Total cost of sales, selling and marketing costs and administrative expenses (adjusted for “pass through” cost items) Total Operating Cash Costs Empty Run Costs Repairs and maintenance Employee benefit expense Fuel and spare parts – locomotives Infrastructure and Locomotive Tariffs - Other Tariffs Expense relating to short-term leases - rolling stock Engagement of locomotive crews Other Operating Cash Costs Total Operating Non-Cash Costs Depreciation of property, plant and equipment Depreciation of right-of-use assets Loss on derecognition arising on capital repairs Amortisation of intangible assets Net impairment losses on trade and other receivables Net loss on sale of property, plant and equipment Reversal of impairment of property, plant and equipment 2019 26,154 22,020 4,134 36,754 29,409 14,752* 4,403 4,483 1,914 987* 722 775 1,372 7,345 5,795 424 472 697 13 10 (65) 2020 13,434 10,957 2,476 37,231 29,121 15,799* 4,261 4,154 1,630 998* 824 421 1,034 8,109 6,969 655 420 60 6 0.3 - Total cost of sales, selling and marketing costs and administrative expenses 62,908 50,664 Change, % -49% -50% -40% 1% -1% 7% -3% -7% -15% 1% 14% -46% -25% 10% 20% 54% -11% -91% -57% -97% NM -19% “Pass through” cost items Infrastructure and locomotive tariffs: loaded trips Infrastructure and locomotive tariffs: loaded trips is in principle a “pass through” cost item for the Group1 and is reflected in equal amounts in both the Group’s Total revenue and Cost of sales. In 2020, this cost item fell 50% year on year to RUB 10,957 million primarily reflecting the change in the proportion of clients that pay infrastructure and locomotive tariffs: loaded trips through the Group. Services provided by other transportation organisations Services provided by other transportation organisations is in principle a “pass through” cost item for the Group and is reflected in equal amounts in both the Group’s Total revenue and Cost of sales and includes tariffs that the Group pays to third-party rail operators for subcontracting their rolling stock (Engaged Fleet). Services provided by other transportation organisations fell 40% year on year to RUB 2,476 million in 2020 principally due to the decreased costs associated with the engagement of third-party fleet. 1 Under contracts where the RZD tariff is borne by the Group, the Group has a contractual relationship with the client. The Group sets the terms of the transactions, such as selling and payment terms and, in some cases, bears credit risk and controls the flow of receipts and payments. Total Operating Cash Costs (a non-IFRS financial measure) represents operating cost items payable in cash and calculated as “Total cost of sales, selling and marketing costs and administrative expenses” less the “pass through” cost items and non-cash cost items. Efficient cost optimisation measures facilitated a 1% year-on-year reduction in the Group’s Total Operating Cash Costs to RUB 29,121 million in 2020 due to a combination of the factors described below. The following table provides a breakdown of the Total Operating Cash Costs for the year ended 31 December 2020 and 2019. Empty Run Costs Repairs and maintenance Employee benefit expense Fuel and spare parts - locomotives Infrastructure and Locomotive Tariffs - Other Tariffs Expense relating to short-term leases - rolling stock Engagement of locomotive crews Empty Run Costs 2020, % of total 2019, RUB mln 54% 15% 14% 6% 3% 3% 1% 14,752* 4,403 4,483 1,914 987* 722 775 2020, RUB mln 15,799* 4,261 4,154 1,630 998* 824 421 Change, % 7% -3% -7% -15% 1% 14% -46% Empty Run Costs (a non-IFRS financial measure meaning costs payable to RZD for forwarding empty railcars) is derived from management accounts and presented as part of the “Infrastructure and locomotive tariffs: empty run trips and other tariffs” component of “Cost of sales” reported under EU IFRS. Empty Run Costs accounted for 54% of the Group’s Total Operating Cash Costs in 2020. This cost item rose 7% year on year to RUB 15,799 million* in 2020 due to a combination of the following factors: • A 2.2% year-on-year increase in the Group’s Freight Rail Turnover. • A 3.5% year-on-year rise in regulated RZD tariffs for the traction of empty railcars. • A higher Total Empty Run Ratio (for all types of rolling stock) at 51% (2019: 49%) on the back of substantial volatility in client cargo flows and routes due to the unprecedented COVID-19 lockdowns. • A rise in Share of Empty Run Kilometers paid by Globaltrans to 99% (2019: 89%) largely due to changes in the cargo mix and gondola segment headwinds. Repairs and maintenance Repairs and maintenance costs, which comprised 15% of the Group’s Total Operating Cash Costs in 2020, decreased 3% year on year to RUB 4,261 million largely reflecting the decrease in the number of depot, wheel pairs and locomotive repairs and prices for certain spare parts and repair works. Employee benefit expense Employee benefit expense, comprising 14% of the Group’s Total Operating Cash Costs, fell 7% year on year to RUB 4,154 million in 2020. A 6% year-on-year increase in average headcount due to the move to utilising in-house locomotive crews and inflation-driven growth in wages and salaries were more than offset by a reduction in bonuses. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 48 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 49 Fuel and spare parts - locomotives Other Operating Cash Costs, which comprised 4% of the Group’s Total Operating Cash Costs, dropped 25% to RUB 1,034 million in 2020 compared to the previous year, primarily as a result of cost optimisation measures. Fuel and spare parts - locomotives expenses, which accounted for 6% of the Group’s Total Operating Cash Costs, were down 15% year on year at RUB 1,630 million in 2020 reflecting lower fuel consumption as a result of volume volatility in the oil products and oil segment. Total Operating Non-Cash Costs Infrastructure and Locomotive Tariffs - Other Tariffs Infrastructure and Locomotive Tariffs - Other Tariffs (a non-IFRS financial measure, derived from management accounts), which is presented as part of the ”Infrastructure and locomotive tariffs: empty run trips and other tariffs” component of cost of sales reported under EU IFRS. This cost item includes the costs of the relocation of rolling stock to and from maintenance, the transition of purchased rolling stock to its first place of commercial utilisation, and the relocation of rolling stock in and from lease operations as well as other expenses including empty run costs attributable to the specialised container transportation business. Infrastructure and Locomotive Tariffs - Other Tariffs, representing 3% of the Group’s Total Operating Cash Costs, were RUB 998 million* in 2020, up 1% year on year, impacted by the increase in regulated RZD tariffs and the higher costs of relocating rolling stock due to volatility in client demands and logistics. Expense relating to short-term leases - rolling stock In 2020, Expense relating to short-term leases - rolling stock, representing 3% of the Group’s Total Operating Cash Costs, increased 14% year on year to RUB 824 million, largely reflecting the rise in the tank car leasing rates. Engagement of locomotive crews Costs related to the engagement of locomotive crews from RZD in 2020 (1% of the Group’s Total Operating Cash Costs) were 46% lower year on year at RUB 421 million following the decline in outsourcing hours for locomotive crews as the Group increased its usage of in-house crews. Other Operating Cash Costs Other Operating Cash Costs (a non-IFRS financial measure) include the following cost items: “Advertising and promotion”, “Auditors’ remuneration”, “Communication costs”, “Information services”, “Legal, consulting and other professional fees”, “Expense relating to short-term leases - tank containers”, Expense relating to short-term leases - office”, “Taxes (other than income tax and value added taxes)” and “Other expenses”. Total Operating Non-Cash Costs (a non-IFRS financial measure) include the following cost items: “Depreciation of property, plant and equipment”, “Amortisation of intangible assets”, “Loss on derecognition arising on capital repairs”, “Depreciation of right-of-use assets”, “Net impairment losses on trade and other receivables”, “Impairment/(reversal of impairment) of property, plant and equipment” and “Net (gain)/loss on sale of property, plant and equipment”. The following table provides a breakdown of the Total Operating Non-Cash Costs for the year ended 31 December 2020 and 2019. Depreciation of property, plant and equipment Depreciation of right-of-use assets Loss on derecognition arising on capital repairs1 Amortisation of intangible assets Net impairment losses on trade and other receivables Net loss on sale of property, plant and equipment Reversal of impairment of property, plant and equipment Total Operating Non-Cash Costs 2019, RUB mln 5,795 2020, RUB mln 6,969 424 472 697 13 10 (65) 7,345 655 420 60 6 0.3 - 8,109 Change, % 20% 54% -11% -91% -57% -97% NM 10% Total Operating Non-Cash Costs increased 10% year on year to RUB 8,109 million in 2020, largely due to the following factors: • A 20% year-on-year rise in Depreciation of property, plant and equipment on the back of asset expansion primarily during 2019. • A 54% year-on-year rise in Depreciation of right-of-use assets on the back of a rise in the average number of rolling stock leased-in under contracts exceeding a twelve-month period. The following table provides a breakdown of the Other Operating Cash Costs for the years ended 31 December 2020 and 2019. • These were partially offset by a 91% year-on-year decline in Amortisation of intangible assets reflecting full amortisation of intangible assets linked to the service contract with MMK. Expense relating to short-term leases - office Legal, consulting and other professional fees Auditors' remuneration Advertising and promotion Communication costs Taxes (other than on income and value added taxes) Expense relating to short-term leases - tank containers Information services Other expenses Other Operating Cash Costs 2019, RUB mln 139 48 55 39 35 (9) - 19 1,046 1,372 2020, RUB mln 109 69 55 35 26 25 24 16 675 1,034 Change, % -21% 42% 1% -11% -24% NM NM -17% -35% -25% 1 The cost of each major periodic capital repair (including the replacement of significant components) is recognised in the carrying amount of the relevant item of rolling stock repaired and separately depreciated. Simultaneously, the carrying amount of the repaired rolling stock that is attributable to the previous periodic capital repair and/or significant component replacement, if any, is derecognised and debited in “Cost of sales” in the income statement as “Loss on derecognition arising on capital repairs” for the period during which the repair was carried out. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202050 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 51 Adjusted EBITDA (non-IFRS financial measure) Finance income and costs EBITDA (a non-IFRS financial measure) represents “Profit for the period” before “Income tax expense”, “Finance costs - net” (excluding “Net foreign exchange transaction (gains)/losses on financing activities”), “Depreciation of property, plant and equipment”, “Amortisation of intangible assets” and “Depreciation of right-of-use assets”. Adjusted EBITDA (a non-IFRS financial measure) represents EBITDA excluding “Net foreign exchange transaction (gains)/losses on financing activities”, “Share of profit/(loss) of associate”, “Other losses/(gains) - net”, “Net (gain)/loss on sale of property, plant and equipment”, “Impairment/(reversal of impairment) of property, plant and equipment”, “Impairment of intangible assets”, “Loss on derecognition arising on capital repairs” and “Reversal of impairment of intangible assets”. The Group’s Adjusted EBITDA fell 32% in 2020 to RUB 26,807 million from the previous year. The Adjusted EBITDA Margin narrowed to 49% in 2020 from 57% in 2019 following a 20% year-on-year decline in Adjusted Revenue partially offset by a 1% year-on-year decline in Total Operating Cash Costs. Total interest expense calculated using the effective interest rate method Leases with financial institutions The following table provides details on Adjusted EBITDA for the years ended 31 December 2020 and 2019, and its reconciliation to EBITDA and Profit for the year. The following table provides a breakdown of Finance income and costs for the year ended 31 December 2020 and 2019. 2019, RUB mln 2020, RUB mln Change, % Interest expense: Bank borrowings Non-convertible bonds Interest expenses on loans Other interest expense Other lease liabilities Total interest expense Other finance costs Total finance costs Interest income: Bank balances Short term deposits Loans to third parties Total interest income calculated using the effective interest rate method Finance leases-third parties Total finance income Net foreign exchange transaction gains/(losses) on borrowings and other liabilities Net foreign exchange transaction (losses)/gains on cash and cash equivalents and other monetary assets Net foreign exchange transaction (losses)/gains on financing activities Net finance costs Finance costs (1,456) (743) (5) (9) (2,214) (165) (118) (2,497) (32) (2,529) 122 374 0.6 497 37 534 207 (587) (380) (2,375) (1,482) (808) (5) (2) (2,298) (74) (113) (2,485) (25) (2,510) 190 27 0.1 217 47 264 (6) 153 147 (2,100) 2% 9% 0% -79% 4% -55% -4% 0% -22% -1% 55% -93% -81% -56% 29% -51% NM NM NM -12% Total finance costs remained stable, declining 1% year on year to RUB 2,510 million in 2020 with an increase in the Group’s average level of total borrowings over the year offset by the significant improvement in the average weighted interest rate. Finance income In 2020, the Group’s Total finance income fell 51% year on year to RUB 264 million, primarily due to the decline in short term deposits which was partially offset by an increase in bank balances. Net foreign exchange transaction gains/(losses) on financing activities In 2020 the Group had Net foreign exchange transaction gains on financing activities of RUB 147 million compared to Net foreign exchange transaction losses on financing activities of RUB 380 million in the previous year. This resulted from foreign exchange volatility on the available cash and cash equivalents denominated in foreign currency. Profit for the year Plus (Minus) Income tax expense Finance costs - net Net foreign exchange transaction (losses)/gains on financing activities Amortisation of intangible assets Depreciation of right-of-use assets Depreciation of property, plant and equipment EBITDA Minus (Plus) Loss on derecognition arising on capital repairs1 Net foreign exchange transaction (losses)/gains on financing activities Other (losses)/gains - net Net loss on sale of property, plant and equipment Reversal of impairment of property, plant and equipment 2019, RUB mln 22,653 2020, RUB mln 12,187 Change, % -46% 7,091 2,375 (380) 697 424 5,795 38,656 (472) (380) (99) (10) 65 4,525 2,100 147 60 655 6,969 26,642 (420) 147 108 (0.3) - -36% -12% NM -91% 54% 20% -31% -11% NM NM -97% NM -32% Adjusted EBITDA 39,552 26,807 1 The cost of each major periodic capital repair (including the replacement of significant components) is recognised in the carrying amount of the relevant item of rolling stock repaired and separately depreciated. Simultaneously, the carrying amount of the repaired rolling stock that is attributable to the previous periodic capital repair and/or significant component replacement, if any, is derecognised and debited in “Cost of sales” in the income statement as “Loss on derecognition arising on capital repairs” for the period during which the repair was carried out. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202052 Profit 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 53 Profit before income tax The Group reported Profit before income tax of RUB 16,712 million in 2020, down 44% compared to the previous year, reflecting a 41% year-on-year decrease in the Group’s Operating profit to RUB 18,811 million, primarily due to the factors described above, which was partially offset by a 12% year-on-year decrease in Net finance costs to RUB 2,100 million. Income tax expense Income tax expense declined 36% year on year to RUB 4,525 million in 2020 following a 44% year-on-year decrease in Profit before income tax. The weighted average annual income tax rate for 2020 rose to 27.1% compared to 23.8% for 2019, which mainly reflects the increase in Estonian tax incurred due to a dividend payment by one of the Estonian subsidiaries of the Company in 2020 and a higher dividend withholding tax provision in relation to the intended dividend distribution of subsidiaries, including Estonian subsidiaries. Profit for the year Cash flows from operating activities Changes in working capital: Inventories Trade receivables Other assets Other receivables Trade and other payables Contract liabilities Cash generated from operations Tax paid Net cash from operating activities Cash flows from investing activities 2019, RUB mln 39,506 (4,084) (394) (713) (1,299) 10 (270) (1,418) 35,422 (6,018) 29,404 2020, RUB mln 26,932 1,346 816 (427) 1,439 10 (208) (283) 28,278 (3,052) 25,226 Purchases of property, plant and equipment (13,516) (6,941) Purchases of intangible assets Proceeds from sale of property plant and equipment Loan repayments received from third parties The Group’s Profit for the year was 46% lower year on year at RUB 12,187 million reflecting the factors described above. Interest received Profit for the year attributable to the owners of the Company was down 49% year on year to RUB 10,587 million reflecting the factors described above. Liquidity and capital resources In 2020, the Group’s capital expenditure consisted primarily of maintenance CAPEX (including capital repairs) and the selective acquisition of rolling stock. The Group was able to meet its liquidity and capital expenditure needs comfortably through operating cash flow, available cash and cash equivalents and proceeds from borrowings. The Group manages its liquidity based on expected cash flows. As at 31 December 2020, the Group had Net Working Capital of RUB 3,810 million*. Given its anticipated operating cash flow and borrowings, the Group believes that it has sufficient working capital to operate successfully. Cash flows The following table sets out the principal components of the Group’s consolidated cash flow statement for the years ended 31 December 2020 and 2019. Receipts from finance lease receivable Net cash used in investing activities Cash flows from financing activities Net cash inflows from borrowings and financial leases: Proceeds from bank borrowings Proceeds from issue of non-convertible unsecured bonds Repayments of borrowings Principal elements of lease payments for leases with financial institutions Purchase of treasury shares Principal elements of lease payments for other lease liabilities Interest paid on bank borrowings and non-convertible unsecured bonds Interest paid on leases with financial institutions Interest paid on other lease liabilities Dividends paid to non-controlling interests in subsidiaries Dividends paid to owners of the Company Payments from non-controlling interests for share capital increase of subsidiary Payments to non-controlling interest Net cash used in financing activities Net decrease in cash and cash equivalents Exchange losses on cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at year end (1) 92 3 534 124 - 67 4 264 78 (12,765) (6,528) 4,183 10,408 5,000 (10,737) (489) - (340) (2,018) (167) (112) (1,602) (16,632) 200 (451) (16,939) (300) (308) 7,130 6,522 1,946 23,265 - (19,603) (1,716) (31) (672) (2,315) (81) (114) (2,272) (16,637) - (180) (20,357) (1,659) 116 6,522 4,978 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202054 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 55 Net cash from operating activities Free Cash Flow A 14% year-on-year decline in Net cash from operating activities which fell to RUB 25,226 million was due to the following factors: • Cash generated from operations (after “Changes in working capital”) decreased 20% year on year to RUB 28,278 million with a 32% year-on-year decline in Cash flows from operating activities partially offset by a release of working capital largely due to lower inventory levels and pre-payments for wheel pairs compared to the end of 2019. • Tax paid was 49% lower year on year at RUB 3,052 million mainly as a result of the year-on-year decrease in taxable profits. Net cash used in investing activities Net cash used in investing activities declined 49% year on year to RUB 6,528 million reflecting a targeted decrease in the Group’s capital expenditure for expansion in 2020. Purchases of property, plant and equipment (on a cash basis; including maintenance CAPEX) were down 49% year on year to RUB 6,941 million resulting largely from an 83% year-on- year decline in expansion CAPEX. Net cash used in financing activities Net cash used in financing activities rose 20% year on year to RUB 20,357 million in 2020. This was due to a combination of the following factors: Free Cash Flow (a non-IFRS financial measure) is calculated as “Cash generated from operations” (after “Changes in working capital”) less “Tax paid”, “Purchases of property, plant and equipment” (including maintenance CAPEX), “Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired”, “Principal elements of lease payments for leases with financial institutions”, “Principal elements of lease payments for other lease liabilities”, “Interest paid on other lease liabilities”, “Interest paid on bank borrowings and non-convertible unsecured bonds” and “Interest paid on leases with financial institutions”. The Group’s Free Cash Flow2 increased 14% year on year to RUB 15,103 million in 2020, primarily as a result of the following factors: • Cash generated from operations (after “Changes in working capital”) declined 20% or RUB 7,144 million year on year to RUB 28,278 million, which was more than offset by: • a 49% or RUB 6,576 million year-on-year targeted reduction in Total CAPEX (including maintenance CAPEX)2 to RUB 6,941 million; and a 49% or RUB 2,966 million year-on-year decrease in Tax paid to RUB 3,052 million as described above. The following table sets out details on Free Cash Flow and Attributable Free Cash Flow for the years ended 31 December 2020 and 2019, and its reconciliation to Cash generated from operations. • The Group completed a sizeable refinancing of its debt portfolio in 2020 in order to improve the average weighted Cash generated from operations (after “Changes in working capital”) interest rate which was brought down to 6.9% as of 31 December 2020 from 8.1% as of 31 December 2019. Total CAPEX (including maintenance CAPEX)2 • Net cash inflows from borrowings and finance leases1 declined 53% year on year to RUB 1,946 million in 2020. • Interest paid (including “Interest paid on bank borrowings and non-convertible unsecured bonds” and “Interest paid on leases with financial institutions”) rose 10% year-on-year to RUB 2,396 million in 2020 with the rise in the average level of the Group’s total borrowings over the year partially offset by the significant improvement in the average weighted interest rate. • The amount of dividends paid to owners of the Company in 2020 (including combined fin al dividends for second half of 2019 and interim dividends for first half of 2020) remained stable year on year and amounted to RUB 16,637 million. • Dividends paid to non-controlling interests in subsidiaries increased 42% year on year to RUB 2,272 million in 2020. Tax paid Interest paid on bank borrowings and non-convertible unsecured bonds Principal elements of lease payments for other lease liabilities Interest paid on leases with financial institutions Interest paid on other lease liabilities Free Cash Flow2 Minus Adjusted Profit Attributable to Non-controlling Interests Attributable Free Cash Flow2 2019, RUB mln 2020, RUB mln Change, % 35,422 (13,517) (6,018) (2,018) (340) (167) (112) 13,251 1,846 11,405 28,278 (6,941) (3,052) (2,315) (672) (81) (114) 15,103 1,600 13,503 -20% -49% -49% 15% 98% -52% 2% 14% -13% 18% 1 Net cash inflows (outflows) from borrowings and financial leases (a non-IFRS financial measure) defined as the balance between the following line items: “Proceeds from bank borrowings”, “Proceeds from issue of non-convertible unsecured bonds”, “Repayments of borrowings” and “Principal elements of lease payments for leases with financial institutions”. 2 Free Cash Flow, Attributable Free Cash Flow and Total CAPEX are presented net of principal elements of lease payments for leases with financial institutions for both years (2019 and 2020). During the first six months of 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both years for comparison purposes. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 56 Capital expenditure 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 57 Total CAPEX (a non-IFRS financial measure) calculated on a cash basis as the sum of “Purchases of property, plant and equipment” (which includes maintenance CAPEX), “Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired” and “Principal elements of lease payments for leases with financial institutions” (as part of the capital expenditures was financed with a finance lease). In 2020, the Group’s Total CAPEX (on a cash basis, including maintenance CAPEX)1 decreased 49% to RUB 6,941 million2 compared to 2019. The decline in capital expenditures was primarily due to the following factors: • An 83% year-on-year targeted cut in expansion CAPEX3 to RUB 1,139 million* on a cash basis, despite the delivery of 300 flat cars to support the growing niche business of freight rail transportation of specialised containers (for petrochemicals and high grade steel)4. • Maintenance CAPEX that was 16% lower year on year at RUB 5,803 million* reflecting the usage of wheel pairs stockpiled in 2019 at an advantageous price and a decline in the market cost of wheel pairs throughout 2020. The following table sets out the principal components of the Group’s Total CAPEX for the year ended 31 December 2020 and 2019. Purchase of property, plant and equipment Purchase of intangible assets Total CAPEX1 Not included 2019, RUB mln 2020, RUB mln Change, % 13,516 0.8 13,517 6,941 - 6,941 -49% -100% -49% Principal elements of lease payments for leases with financial institutions 489 1,716 251% The following table sets out details on the Group’s total debt, Net Debt and Net Debt to Adjusted EBITDA at 31 December 2020 and 31 December 2019, and the reconciliation of Net Debt to Total debt. Total debt Minus Cash and cash equivalents Net Debt Net Debt to Adjusted EBITDA As of 31 December 2019, RUB mln As of 31 December 2020, RUB mln Change, % 30,095 6,522 23,574 0.60 32,015 4,978 27,037 1.01 6% -24% 15% - Rouble-denominated borrowings accounted for 100% of the Group’s debt portfolio as of 31 December 2020. The Russian rouble is the functional currency of the Company. The weighted average effective interest rate improved to 6.9% as of 31 December 2020 compared to 8.1% as of the end of 2019. The vast majority of the Group’s debt had fixed interest rates as of the end of the reporting year. The Group has a balanced maturity profile supported by the Group’s robust cash flow generation, available cash and cash equivalents, as well as undrawn borrowing facilities of RUB 29,449 million as of 31 December 2020. The following table gives the maturity profile of the Group’s borrowings (including accrued interest of RUB 353 million*) as of 31 December 2020. As of 31 December 2020, RUB mln 2,458* 2,525* 4,002* 1,946* 11,555* 6,732* 2,797* 32,015 Capital resources As of 31 December 2020, the Group’s financial indebtedness consisted of borrowings and non-convertible unsecured bonds for an aggregate principal amount of RUB 32,015 million (including accrued interest of RUB 353 million*). Under IFRS 16, Other lease liabilities of RUB 1,405 million was recognised on the balance sheet as of 31 December 20205 which primarily related to the long-term leasing of offices and certain rolling stock. The Group’s Net Debt was RUB 27,037 million as of 31 December 2020, a 15% increase as compared to 31 December 2019. Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 2023 2024-25 Total 1 Total CAPEX is net of principal elements of lease payments for leases with financial institutions presented for both periods (2019 and 2020). During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both periods for comparison purposes. 2 The Group’s capital expenditure (including maintenance CAPEX) on an accrual basis was RUB 8,626 million in 2020 (2019: RUB 14,136 million). The difference between capital expenditure given on a cash basis and on an accrual basis is principally because of a time lag between prepayments for and delivery of rolling stock. 3 Including “Purchases of intangible assets”. 4 In 2019 the Group took delivery of 2,502 units (including 1,154 specialised containers, 700 flat cars, 638 gondola cars and 10 locomotives). 5 Not included in Total debt. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202058 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 59 Related party transactions For the purposes of 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. Litten Investments Ltd, controlled by a Director of the Company!, has a shareholding in the Company of 5.1% as at 31 December 2020 (31 December 2019: 5.1%). Goldriver Resources Ltd, controlled by a member of key management personnel of the Group2, has a shareholding in the Company of 4.0% as at 31 December 2020 (31 December 2019: 4.0%). As at 31 December 2020, another 0.2% (2019: 0.2%) of the shares of the Company is controlled by Directors and key management of the Company. The following transactions were carried out with related parties: Key management compensation Key management salaries and other short-term employee benefits Share based compensation Total 2019, RUB mln 2020, RUB mln 1,418 83 1,501 1,139 29 1,168 The key management compensation above includes directors’ remuneration paid to the directors of the Company both by the Company and by subsidiaries of the Company in respect of services provided to such subsidiaries amounting to RUB 433 million (2019: RUB 508 million) and analysed as follows: Non-executive directors’ fees Emoluments in their executive capacity Share based compensation in their executive capacity Total Year-end balances arising from sale of shares/purchases of services Accrued key management remuneration – current: Accrued salaries and other short-term employee benefits Share based payment liability Total Accrued key management remuneration – non-current: Share based payment liability Total 2019, RUB mln 2020, RUB mln 21 475 12 508 26 406 1 433 2019, RUB mln 2020, RUB mln 416 123 539 255 104 359 2019, RUB mln 2020, RUB mln 82 82 - - More information is available in Note 35 to the Group’s Consolidated Management Report and Consolidated Financial Statements included into the Financial Statements section of this Annual Report. 1 Beneficially owned by Alexander Eliseev, Non-executive Director and co-founder of Globaltrans. 2 Beneficially owned by Sergey Maltsev, Chairman of the Board of Directors, Chief Strategy Officer and co-founder of Globaltrans. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202056 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 57 Risk Management Globaltrans faces a wide range of potential and current risks to its business. To identify, evaluate and mitigate these risks, the Group has established a system for monitoring and controlling uncertainties and risks that it faces. This system is overseen by a dedicated risk management function. The Board of Directors has overall responsibility for the Group’s risk management. The Board, as part of its role in providing strategic oversight and stewardship of the Company, is responsible for maintaining a sound risk management and internal control system. As part of that system, the Board determines principal risks and sets respective risk tolerance levels. Globaltrans has adopted a risk management policy that provides a consistent framework for the identification, assessment and management and, where possible, mitigation of risks. The oversight of risk management is delegated to the Audit Committee. In January 2021, the Board established the ESG Committee to analyse and oversee risks related to environmental, social and governance issues. In addition, the Board has delegated to the CEO the responsibility for the effective and efficient implementation and maintenance of the risk management system. The Directors, through the Audit Committee, review the systems that have been established for this purpose and regularly review their effectiveness. Appropriate actions are then taken to manage the risk to an acceptable level as defined by the Board. Ultimately, risk management aims to establish and maintain a holistic view of risks across the enterprise, so capabilities and performance objectives are achieved via risk-informed resources and investment decisions. Globaltrans bases its risk management activity on a series of well-defined risk management principles, derived from experience, best practice and in accordance with corporate governance principles. The Group’s risk management principles consist of nine interdependent and interconnected components that aim to provide a holistic view of risk across the whole organisation. Risk management principles Enterprise-wide Systematic and structured Based on top-down and bottom-up approach 1 Risks that the Group faces should be managed on an enterprise- wide basis as a continuous and developing process that runs throughout the Group’s strategy and the implementation of that strategy. 2 Risk management should involve recognised processes and activities in a systematic, methodical way that ensures the results of risk management activities are reliable, robust and comparable. 3 Risk management should evaluate the potential upside and downside of all risks that could affect the Group. It should increase the probability of success and reduce both the probability of failure and the uncertainty of achieving the Group’s overall objectives. Risk management activity should include the development and implementation of risk response actions to remove or mitigate all risks the Group faces, transfer them to a third party or accept them. Forward-thinking approach Aligned with the Group’s objectives Integrated into the Group’s business Risk management should be forward- thinking. It should involve identifying and preparing for what might happen rather than always managing retrospectively. Risk management should encourage the Group to manage proactively rather than reactively. Risk management should be aligned with the Group’s objectives and provide reasonable assurance regarding the achievement of those objectives. Risk management should be embedded in all the Group’s practices and business processes (including business and strategic planning, budgeting and decision- making) so that it is relevant, effective, efficient and sustained. All Group staff should be responsible and accountable for managing the risks in their activities. Integrated into corporate culture Clear and understandable Evolving Risk management should be a part of the Group’s corporate culture. All employees should be aware of the relevance of risk to the achievement of their objectives. Risk management principles, methods and tools should be clear and easily understood by the Group’s employees. The Group’s risk management system should be continually evolving. The management of risk is an ongoing process and it is recognised that the level and extent of the risk management system will evolve as the Group evolves. 4 7 5 8 6 9 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 58 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 59 PRINCIPAL RISKS AND UNCERTAINTIES STRATEGIC: RISKS THAT INFLUENCE THE GROUP’S ABILITY TO ACHIEVE ITS STRATEGY Risk Description Controls and mitigating factors Globaltrans has grouped risks that it considers significant into key categories – strategic, operational, compliance and financial. This list is not exhaustive and the order of information does not reflect the probability of occurrence or the magnitude of any potential effect. Additional risks not currently known or that are currently considered immaterial could also have an impact on the Group’s business, financial condition, operational results and prospects, as well as on the trading price of its Global Depositary Receipts ("GDRs"). We monitor and assess risks on an ongoing basis and we make efforts to control and mitigate such risks. Regulatory risk and relations with government authorities and state-owned enterprises STRATEGIC: RISKS THAT INFLUENCE THE GROUP’S ABILITY TO ACHIEVE ITS STRATEGY Risk Description Controls and mitigating factors The Group is subject to regulatory risks relating to the operation of the Russian railway transportation market and railway industry reform. Any changes to the regulatory environment of the Russian railway transportation market or in other markets where the Group operates, including, but not limited to, railway tariff regulations and technical requirements for fleet operation and maintenance, could negatively impact the Group’s business, its profitability and prospects for further business growth. Government authorities have significant influence over the functioning of the Russian railway transportation market. Any deterioration in the Group’s direct or indirect relationship with government authorities at either the local or federal level could result in greater government scrutiny of the Group’s business and how it conducts its operations or less effective access to services dependent upon government authorities. In addition, the Group relies on its relationship with and the services (including maintenance and repairs), infrastructure and information provided by RZD, an entity controlled by the state. While the Group has enjoyed a good relationship with RZD, there is no assurance it will always continue to do so in the future or that RZD will not increase its charges for such service provision and infrastructure use. Railway transportation regulations in countries bordering Russia may change, limiting the access of the Group’s rolling stock to certain territories. Growth strategies Business growth can be constrained by an increase in prices for new rolling stock and spare parts, overproduction of rolling stock, partial scrappage of Group’s rolling stock due to expiration of its useful life, a limited supply of long-term funding, an increase in the cost of borrowing and/or adverse market conditions that can have a negative impact on the return on any investments. Although the Group takes a conservative approach to investments, any deterioration in the market environment may negatively impact the profitability and payback period of investments in rolling stock, thus limiting the Group’s return on its investments and ability to expand its business. Alongside pursuing organic growth strategies, the Group has expanded its operations through acquisitions in the past and may pursue more in the future if appropriate opportunities arise. The pursuit of an acquisition strategy entails certain risks, including problems with integrating and managing such new acquisitions. The expiry of long-term service contracts with its key customers may also limit the Group’s growth opportunities as these may result in volatility in logistics, a reduction in the Group’s business volumes and/or profitability of its operations. The management of the Group regularly monitors changes to the regulatory regime of the railway transportation market in the countries in which it operates. The Group has a diversified portfolio of service providers (e.g. for rolling stock repair services), which allows it to use private repair depots (including three in-house repair facilities) to ensure less dependence on RZD-owned depots, obtain higher-quality service and minimise the costs of that service. RZD remains the only provider of infrastructure and locomotive traction services, although the Group does operate its own locomotives in the form of block trains (cargo or client specific Group-operated block trains all going in the same direction) on some routes. The Group also continues to monitor market liberalisation reforms to ensure that it can take advantage of any opportunities when they arise. The Group monitors Federal Antimonopoly Service (“FAS”) initiatives regarding railway tariff regulation and also seeks to minimise its exposure to adverse changes in RZD’s regulated tariffs for the usage of infrastructure and locomotive traction by providing that these changes are adequately passed on to the Group’s customers where possible. Any acquisition of rolling stock is matched against projected demand for railway transportation and the economically viable expected payback period for such investments. The Group cooperates with numerous rolling stock producers in Russia and other CIS countries without placing too much reliance on any particular supplier. The Group is also focused on the diversification of its business, including by developing transportation of petrochemicals and other niche projects. Any valuation of an acquisition target is subject to review by external advisers, and fairness opinions are normally provided by reputable appraisal companies to the Group’s Board of Directors when a transaction is considered. General economic situation and operating environment The Group and its subsidiaries operate mainly in Russia and other emerging markets. Emerging markets, such as Russia, Kazakhstan and Ukraine, are subject to greater risks than more developed markets, including significant economic, political, social, legal and legislative uncertainties. Moreover, the Group’s business depends on demand in the Russian freight rail transportation market, which in turn depends on certain key commodity sectors and, accordingly, on economic conditions in Russia, Europe and elsewhere. A decrease in production and demand for key commodities in Russia, or in adjacent countries where the commodities of the Group’s key customers are shipped by rail, as a result of a technological shift, economic downturn, political crisis or another event in Russia or another relevant country, negatively impacts the Group’s business and growth prospects. In addition to the human impact, the spread of Coronavirus (COVID-19) continues to affect global businesses and may lead to further and/or continued lockdowns, trade wars and turbulence in different currencies. The Group’s outlook for 2021 may be further impacted by the Coronavirus outbreak, which continues to cause uncertainty. The freight rail market may experience reduced demand stemming from the effects of COVID-19. The Group cannot predict the full impact of COVID-19 on its markets, business or prospects although they may be materially adversely impacted by the rapidly evolving situation. Also, the appearance of new pandemics or other dangerous illnesses could seriously affect the global and local business environment and lead to negative consequences for the Group’s business. Significant levels of COVID-19 illness in the Group or its key clients could interfere with the stability of the Group’s operations. The political turmoil experienced within Ukraine and sanctions imposed by the United States and the European Union on Russia, and by Russia on other countries, have had a negative impact on the Russian economy. The potential decrease in demand for Russian commodities or change in directions of supply for Russian commodities may have a negative impact on the freight rail transportation market and the Group’s business. The threat of sanctions against the Group’s existing customers, any deterioration in or threat to their financial condition and/or the temporary closure of certain markets may decrease demand for the Group’s services and/or negatively impact the Group’s logistics. In addition, the political instability in Ukraine could have a negative impact on the Group’s business and assets in Ukraine and/or on the ability of the Group’s customers to carry on business in Ukraine. Mitigation methodology involves understanding the political and economic uncertainties of the operating environment and the risks faced in our business operations. The Group’s compliance and legal teams constantly monitor changes in legislation and report them to the Group’s management and Board of Directors while the finance and business teams monitor economic developments and do the same. The counterparties, banks and transactions of the Group are constantly reviewed by the Group’s compliance and legal teams to ensure full compliance with all applicable legislation. Risk managers have direct access to the Group’s key management. The Group maintains a balanced fleet as one of the cornerstones of its business model. A balanced fleet (between universal gondola cars, adaptable to the demand for the transportation of various bulk cargoes, and tank cars, which are used for the transportation of oil products and oil) enables the Group to adapt to market conditions and reduces its dependence on any one cargo flow. In addition, the Group has entered into long-term service contracts with several large clients. Management assesses the possible impairment of the Group’s tangible and intangible assets by considering the current economic environment and outlook. Management believes that it is taking all necessary measures to support the sustainability and development of the Group’s business in the current business and economic environment. Management is closely monitoring the implications of the global outbreak of COVID-19 and acts depending on the development of the situation. The Group constantly evaluates and implements options for distant work for its workforce to mitigate risks of spreading and catching COVID-19 illness. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202060 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 61 STRATEGIC: RISKS THAT INFLUENCE THE GROUP’S ABILITY TO ACHIEVE ITS STRATEGY OPERATIONAL: RISKS THAT INFLUENCE THE GROUP’S OPERATIONAL EFFICIENCY Risk Description Controls and mitigating factors Risk Description Controls and mitigating factors Competition and customer concentration The Russian freight rail transportation market is highly competitive in terms of unregulated operators’ services tariffs. The ongoing market consolidation may lead to greater price competition. The risk of an irrational supply of railcars on the market by railcar producers and/or irrational behaviour of competitors (including new market entrants) may place additional pressure on the profitability of railcar operations and thus negatively impact the Group. Competition between railway transportation and other means of transportation, including, but not limited to, oil product and oil transportation by pipeline, river and road, may negatively impact the Group’s business volumes and profitability. The Group’s customer base is characterised by significant concentration: the business is heavily dependent on a few large industrial groups and their suppliers, with its top 10 customers and their suppliers accounting for around 72% of the Group’s Net Revenue from Operation of Rolling Stock in 2020. While the Group has long-term service contracts with several key customers, failure to extend and/or maintain the current service contracts or for such customers to no longer have the volume requirements they have had in the past may have a negative impact on the Group’s operational results and financial performance. Locomotive traction The Group is dependent on RZD to issue permits allowing it to operate locomotives and to approve its use of locomotives for particular routes. If those routes are not in demand by the Group’s clients, their utilisation could be lower. Furthermore, there is uncertainty about the prospects for, and the timing of, further deregulation of locomotive traction. Shareholder activism Global depositary receipts of Globaltrans have been listed on the Main Market of the London Stock Exchange since May 2008 and on the Moscow Exchange since October 2020 with a free float of over 50%. Publicly traded companies are often subject to shareholder activism, and the Company’s shareholders may seek to advocate for changes to corporate governance practices, social issues, or for certain corporate actions or reorganisations via media campaigns or other activities. Responding to these campaigns can be costly and time consuming and may have an adverse effect on the Group’s reputation or ability to execute its business plan. Globaltrans has significant competitive advantages that mitigate some of the risks of competition. These advantages include its strong reputation for high-quality service and reliability; its independent status; its long-term partnership with customers; its sophisticated operating capabilities; and its modern fleet. The Group has long-term, established relationships with its key customers and their affiliates and suppliers. In most cases, Globaltrans has become an integrated part of their operations. Around 64% of the Group’s Net Revenue from Operation of Rolling Stock in 2020 was covered by long-term service contracts with several large clients. Such contracts provide additional stability and greater certainty regarding transport volumes for the Group. Globaltrans continues its focus on expanding business with small and medium companies to further diversify its customer base. In 2020, the share of small and medium companies amounted to 28% of Net Revenue from Operation of Rolling Stock (2019: 26%). Furthermore, the Group’s marketing function regularly monitors competitors’ business strategies, their use of technology, their price strategies and industry trends. The Group has a competitive advantage in providing freight rail transportation services to some clients, as it operates its own locomotives for the traction of block trains dedicated to particular routes. By assembling full trains composed only of its own railcars, the Group increases the speed and reliability of transportation for its clients. The Group has established controls to obtain the timely renewal of locomotive operation licenses and the respective permits from RZD. The Group regularly monitors the progress of the reform relating to continued deregulation of locomotive traction. In addition, the Group’s management actively participates in the development of the required regulation through various dedicated industrial organisations and partnerships. The Group has an active shareholder engagement programme and seeks to maintain a constructive dialogue with the Company’s major shareholders. Feedback from shareholders is provided to the Company’s Board of Directors. Infrastructure The rail network and physical infrastructure in Russia, owned and operated by RZD, as well as the networks and infrastructure of other countries on which the Group depends to operate its rolling stock, like Kazakhstan, Ukraine and other neighbouring countries, largely date back to the Soviet era. In some cases, these rail networks have not been adequately maintained, which could negatively affect the condition of the Group’s rolling stock, performance and business. In addition, the oversupply of rolling stock, inefficient logistics at local destinations as well as maintenance and modernisation of rail infrastructure undertaken from time to time by RZD could negatively impact the average speed of transportation and therefore affect the operational performance of railcars. RZD tariffs for the use of the railway network and the provision of locomotive services are regulated by the FAS and are in principle “pass-through” items for the Group and other private freight rail operators. Meanwhile, RZD tariffs for the traction of empty railcars are in most cases a direct cost to the Group and other private freight rail operators. Significant upward changes in the regulated tariffs, whether as a result of annual indexation or changes in the tariff-setting methodology, could have an adverse effect on the Group’s business. With immaterial exceptions, all of the Group’s rolling stock is insured against damage. Moreover, as a freight carrier on the railway network, RZD bears full responsibility for third-party losses caused by accidents on the network. The Group monitors its rolling stock through its dispatch centre on a 24/7 basis and plans its routes accordingly to optimise logistics and minimise the risks of disruption. The Group monitors FAS initiatives to detect possible changes in tariff-setting methodology and tries to reflect relevant changes in contracts with customers. Operational performance Rising inflation in Russia and an increase in prices for spare parts and railcar repair works may increase the Group’s costs and maintenance CAPEX, while the Group may have limited opportunities to increase tariffs to customers. Employees Customer satisfaction The Group’s future success will partly depend on its ability to continue to attract, retain and motivate key employees and qualified personnel, in particular an experienced management team and logistics and railway experts. Competition in Russia for such personnel with relevant expertise is intense due to the small number of qualified individuals with suitable practical experience in the rail industry. Customers rely on the Group for the provision of high-quality freight rail transportation and other related services and expect the Group to be commercially responsive to their needs. These include the timely collection and delivery of cargo and availability of rolling stock, which is not always within the direct control of the Group because it is dependent upon RZD for locomotive traction and maintenance of infrastructure. Accordingly, timely delivery of cargo is highly dependent on a third party whose performance could be unsatisfactory to the Group’s customers. Among the Group’s key objectives are to increase operational efficiency and to focus on controlling and reducing costs. The Group seeks to diversify and control its supply chain to maintain cost efficiency. Adequate remuneration packages, which are in line with or above market levels, are offered to all employees and key managers and the remuneration of key managers is linked to the Group’s financial results. The human resources function regularly monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages are appropriate. The Group has a strong reputation for delivering good quality, reliable and flexible freight rail transportation services to its customers. Customer satisfaction is one of the key metrics that the Group’s management monitors. Each customer is assigned an account manager responsible for the day-to-day relationship with that customer. Customer feedback is analysed and appropriate follow-up actions are taken. The Group has a track record of high customer retention and the majority of key customers stay with the Group for many years. In addition, the Group serves several key clients on a long-term basis and has recently added new contracts and extended others. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202062 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 63 OPERATIONAL: RISKS THAT INFLUENCE THE GROUP’S OPERATIONAL EFFICIENCY COMPLIANCE: RISKS THAT INFLUENCE THE GROUP’S ADHERENCE TO RELEVANT LAWS AND REGULATIONS Risk Description Controls and mitigating factors Risk Description Controls and mitigating factors IT availability/ continuity The Group uses specialised rail transport and logistics software to ensure the efficiency and effectiveness of its logistics, dispatching and rolling stock tracking services. These systems are either licensed to the Group and then customised to the Group’s needs or delivered to the Group and maintained for its needs by third parties under service agreements. The Group may potentially face risks related to access privileges, audit trails, authentication, authorisation, backup procedures, business continuation, change management (software and hardware), data integrity, disaster recovery, infrastructure, information/data security and cyber-attacks. The Group may lose access to IT products if third party providers do not renew commitments under existing or expiring service agreements. Further, as a result of technological change systems and products that the Group uses could cease to be maintained by third party service providers, requiring the Group to adopt new systems or products. Local IT specialists have introduced solutions to maintain the availability and proper licensing of IT services and ensure their recovery in case of disruption. The IT function and internal audit function monitor all IT-related activities and performance for compliance with IT policies and procedures. Risks of terrorist attacks, natural disasters or other catastrophic events beyond the Group’s control The Group’s business operations could be adversely affected or disrupted by terrorist attacks, natural disasters (such as earthquakes, floods, tsunamis, hurricanes, fires or typhoons) or other catastrophic or otherwise disruptive events – including changes to predominant natural weather, sea and climatic patterns, piracy, sabotage, insurrection, military conflict or war, riots or civil disturbance, radioactive or other material environmental contamination, an outbreak of a contagious disease or changes to sea levels – which may adversely affect global or regional trade volumes or customer demand for cargo transported to or from affected areas, or lead to denial of the use of any railway, port, airport, shipping service or other means of transport and disrupt customers’ logistics chains. In addition, the Group may be exposed to extreme weather conditions such as severe cold periods and icy conditions that disrupt activities in ports that are destination points for customer cargoes. Furthermore, many of these events may not be covered by the Group’s insurance or any applicable insurance may not adequately cover any resulting losses. The Group’s rolling stock is insured against damage, and the responsibility for third-party losses caused by accidents on the network lies with RZD. The Group consistently monitors any disruptive events and applies a business continuity policy to: • Ensure the safety of employees and human life; • Maintain continuity of time-critical services; • Minimise disruptions to clients and partners; • Minimise the operational, financial and reputational impact. The Group’s rolling stock could be adversely affected by unlawful acts in Russia or neighbouring countries. The occurrence of any such events may reduce the Group’s business volumes, cause idle time for its rolling stock or disruptions to its operations in part or whole, subject the Group to liability, impact its brand and reputation and otherwise hinder normal operations. This could have a material adverse effect on the Group’s business, results of operations or financial condition. Pending and potential legal actions The Group is involved in legal actions from time to time. Such actions may have an adverse effect on the Group. The ambiguity of the law in Russia and CIS countries creates regulatory uncertainty and could result in claims from government authorities not expected by the Group. ESG risks Environmental, social and governance (ESG) risks include those related to climate change impacts mitigation and adaptation, environmental management practices, environmental protection and duty of care, working and safety conditions, respect for human rights, gender equality, supporting a culture in which all relevant stakeholders are valued and respected, compliance with relevant laws and regulations and ensuring compliance with regulations governing the protection of human rights, operational and occupational health and safety, and ESG practices in the jurisdictions in which we operate. Compliance with regulations and sanctions The Group functions in several jurisdictions, including Cyprus, Russia, Estonia, Finland and Ukraine. In addition, the Group has its GDRs listed on the London Stock Exchange and the Moscow Exchange. Thus, the Group is subject to the laws and regulations of those countries in which it is active, the regulations of stock exchanges on which its securities are traded and any applicable sanctions legislation, all of which may change from time to time. The Group runs its operations in compliance with tax, currency, labour, customs, antimonopoly and other applicable legislation and constantly monitors any changes in the regulatory environment. The Group monitors its compliance with the terms of its agreements. Standard forms of agreements are used for transportation services, and various controls are in place to ensure that the terms of agreements are adhered to. All contracts are subject to rigorous review by all of the Group functions concerned and to a formal approval process prior to execution. Although rail is one of the greenest modes of transport, the Group is committed to the protection of the environment by seeking to reduce the environmental footprint of its business and develop a sustainable supply chain. The Group aims to ensure compliance with regulations governing the protection of human rights, operational and occupational health and safety, and ESG practices in the jurisdictions in which the Group operates. The Group promotes high ethical standards and respect for human rights. In January 2021, the Group formally adopted an ESG policy and also established the ESG Committee of the Board of Directors. The main purpose of ESG Committee is to oversee the development and implementation of the corporate environmental and social responsibility initiatives of the Group, monitor and review activities, and make recommendations to the Board of Directors of the Company on actions needed to address any issues identified or to make improvements where desirable. The legal and compliance teams of the Group together with the external lawyers monitor the applicable requirements in each of jurisdiction in which it is active and stock exchange on which its securities are trading, including monitoring US personal and sectoral sanctions (SDN OFAC, SSI OFAC and CAATSA), and the appropriate controls are in place to ensure that all subsidiaries of the Group comply with applicable regulations. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202064 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 65 COMPLIANCE: RISKS THAT INFLUENCE THE GROUP’S ADHERENCE TO RELEVANT LAWS AND REGULATIONS FINANCIAL: RISKS THAT INFLUENCE THE GROUP’S FINANCIAL PERFORMANCE Risk Description Controls and mitigating factors Risk Description Controls and mitigating factors Fiscal risk Impact of Brexit and Takeover regulations Local tax, currency and customs legislation, especially in Russia, other emerging markets and Cyprus, may be subject to varying interpretations, inconsistencies between federal laws, regional and local laws, rules and regulations, frequent changes and a lack of judicial and administrative guidance on interpreting legislation. Any increase in applicable tax rates, as well as introduction of new taxes in the countries where the Group is active, may reduce the profitability of the Group. The Group has controls in place, including highly qualified and experienced personnel, to monitor changes in legislation and determine the appropriate action needed to minimise the risk of a challenge to such treatments by the authorities. For complex matters, the Group engages and cooperates with external consultants and law firms. From 1 January 2021, as a result of the end of the transitional period following the United Kingdom’s exit from the European Union, as a company organised under the laws of Cyprus, the Takeover Panel will no longer exercise shared jurisdiction over transactions involving the Company which would otherwise be subject to the Takeover Code, including takeover bids, merger transactions, or schemes of arrangement resulting the change or consolidation of control over the Company. In addition, from 1 January 2021, the London Stock Exchange (where the Company’s Global Depositary Receipts are admitted to trading) will no longer be a regulated market as defined in Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments; as a result, the legislation in Cyprus regulating takeovers, including those requiring mandatory takeover offers in certain situations, will no longer apply to the Company. The absence of Takeover regulations applicable to the Company will allow existing significant shareholders, or persons acting in concert, to increase their holdings (or new significant shareholders, or persons acting in concert, to acquire more than 30% of the outstanding share capital of the Company) without being obliged to make a mandatory tender offer to other shareholders. The Group monitors developments in applicable regulations, making appropriate disclosures of any relevant new regulations and will make all required notifications of significant shareholdings (or changes in respect of such shareholdings) in the Company. FINANCIAL: RISKS THAT INFLUENCE THE GROUP’S FINANCIAL PERFORMANCE Currency risks Currently, the Group has neither borrowings nor lease liabilities denominated in US dollars and therefore does not have formal arrangements for hedging foreign exchange risk with the exception of hedging foreign currency risk associated with dividend payments that are considered highly probable and the associated dividend payable until their settlement. The Group may however keep bank balances in US dollars and other currencies. The Group therefore has limited exposure to the effects of currency fluctuations on bank balances between the US dollar and the Russian rouble. A large proportion of the Group’s revenues and expenses are denominated and settled in Russian roubles. At present, the risks related to liabilities denominated in foreign currency are not material and are partly compensated for by assets and income denominated in foreign currency. The Group has refinanced all of its liabilities denominated in US dollars with long-term debt denominated in Russian roubles. Since 2008, the Group has taken action to mitigate currency risks and adjusted the profile of the borrowings in its credit portfolio. As of 31 December 2020, all the Group’s debt was denominated in Russian roubles. Interest-rate risks The Group’s income and operating cash flows are exposed to changes in market interest rates. These arise mainly from floating rate lease liabilities and borrowings. An increase in market interest rates in Russia may negatively influence the Group’s profits. The Group enters into long-term borrowing and leases with financial institutions to finance purchases of rolling stock and acquisitions of subsidiaries. The Group borrows at current market interest rates and does not use any hedging instruments to manage interest- rate risk. Management monitors changes in interest rates and takes steps to mitigate these risks as far as practicable by ensuring that the Group has financial liabilities with both floating and fixed interest rates as appropriate. As of 31 December 2020, all of the Group’s debt was at fixed interest rates. Management also considers alternative means of financing. Credit risk Liquidity risk Financial assets that potentially subject the Group to credit risk consist principally of trade receivables, cash and cash equivalents. Furthermore, the Group’s business is substantially dependent on a few large key customers, including their affiliates and suppliers. Its top 10 clients accounted for around 70% of the Group’s trade and other receivables as of 31 December 2020 and around 72% of the Group’s Net Revenue from Operation of Rolling Stock in 2020. The Group has policies in place to ensure that sales of goods and services are made to customers with an appropriate credit history. Substantially all of the Group’s bank balances are held with reputable banks. The Group’s business is capital-intensive. The political turmoil experienced within Ukraine and sanctions imposed by the United States and the European Union on Russia have had a negative impact on the Russian financial markets and have limited the Group’s access to international sources of funding. Any lack of available funding and potential increases in market interest rates could have a negative impact on the Group’s ability to obtain financing for the settlement of its liabilities or cash to meet its financial obligations. The Group has a budgeting policy in place that allows the management to control current liquidity based on expected cash flows. These include, among other things, operating cash flows, capital expenditure needs, funds borrowed from financial institutions and funds raised from listed debt instruments. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202066 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 67 Sustainability OUR APPROACH The Sustainability Report which is integrated into the 2020 Annual Report has been prepared in accordance with the sustainability reporting guidelines of the Global Reporting Initiative (GRI) and in line with the non- financial and diversity disclosure information contained in the EU’s 2014/95/EU Directive. The overall aim is to achieve high standards in the areas of balance, comparability, accuracy, timeliness, clarity and reliability, as defined by the GRI Standards. The structure and content of this Sustainability Report reflects the relevant GRI Reporting Principles. The details within this Sustainability Report cover the key results and activities of Globaltrans Investment PLC and its subsidiaries in the field of sustainable development for the year ended 31 December 2020. How it works: Materiality matrix Step 1. Identification of material topics We identified material topics relevant to the Group’s business operation by carefully reviewing and analysing global sustainability trends, our sustainability performance, internal regulations and non-financial reports issued by peers. Step 2. Prioritisation of material topics To develop a broader, deeper understanding of the materiality of the sustainability issues the Group faces, we sought input from a range of stakeholders (employees, shareholders, investors, clients, regulators and other authorities) on what mattered to them. Step 3. Preparation of materiality matrix We developed a materiality matrix to identify those topics that are deemed most important/significant to the Group’s system of sustainability reporting. A validity check was also conducted on identified material topics to ensure that all of them are disclosed in the Annual Report. l r e d o h e k a t s r o f y t i l a i r e t a M y l e m e r t x E t n a t r o p m I t n a t r o p m I 3 4 10 12 1 9 8 6 2 5 7 11 Important Materiality for business Extremely Important Economic impact Social impact 1 Economic performance 2 Socioeconomic development of regions 3 Business ethics, risk management and anti-corruption 4 Customer satisfaction 9 Employee education and development 10 Employee motivation 11 Diversity and equal opportunity 12 Occupational health and safety Environmental impact 5 Risks and opportunities posed by climate change 6 Responsible water use and reduction of water consumption 7 Reduction of energy consumption 8 Non-compliance with environmental laws and regulations HIGHLIGHTS OF 2020 Successful protection of employee health & safety while ensuring business continuity and a high level of client service • Effective digital transformation to remote working model • Ensured continued motivation and positive engagement of staff throughout the pandemic • No COVID-related redundancies ESG management strengthened including the introduction of new policies Improved ESG disclosure • An ESG Board Committee created • Diversity and Inclusion, Freedom of Association, Human Rights, Supplier Code of Conduct, Environmental and Energy and ESG policies adopted • First-time disclosure of Group-wide water • consumption1 Introduction of Group-wide LTIFR measure of employee health & safety • Website relaunched with a separate Sustainability section 1 This excludes data from AS Spacecom and BaltTransServis (except for data from the BTS railcar repair depot in Ivanovo which is included). Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 68 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 69 STAKEHOLDER ENGAGEMENT Effective stakeholder engagement is critical to the long- term success and sustained growth of any business. Globaltrans has always valued regular and high quality engagement with its stakeholders and is committed to engaging with them in an open and transparent manner in order to build strong and trusted relationships. Our goal is to keep our stakeholders up-to-date on developments and create a better understanding of our business, our strategy and our performance. As part of our daily operations, we regularly engage with employees, customers, government and regulators and with our local communities while at Group level the emphasis is on maintaining an open dialogue with investors, shareholders, credit rating agencies, financial institutions and the media. Although 2020 was an extremely difficult and unusual year, we were able to maintain a high degree of engagement with our stakeholders. Although much of our communications became virtual as a result of the COVID-19 pandemic, it was more important than ever to keep these channels open. Globaltrans intensified its efforts to enhance communication around the impact of, and our response to, the COVID-19 pandemic that including with regard to the safety of our people, our business continuity and other ESG (environmental, social, and governance) issues. As is the case for many companies, business interactions, especially at Group level, have essentially become digital, including client communication, investor roadshows and conferences. The corporate website remains the main source of information on the Company: results presentations, webcasts, current and historical financial information, news releases, market statistics, and other important data can be found there. Due to its importance to our communications strategy, the Globaltrans’ website was revamped and relaunched in early 2020 to provide visitors with a better online experience. We have added a separate section on sustainability given our increasing commitment to this important issue. Stakeholder engagement mechanisms EMPLOYEES SHAREHOLDERS AND INVESTORS CUSTOMERS AND BUSINESS PARTNERS Mechanisms of stakeholder engagement • Intranet • Labour-management consultations • Staff surveys • Corporate booklets, information boards • Regular, direct communication between managers, teams and individuals • Career development, training and performance reviews Outcomes in 2020 • No COVID-related redundancies • COVID-19 related measures to protect health and safety of employees implemented • Employee development maintained at a high level with 21,226 hours of training • Senior management and our HR team maintained close communications with employees throughout lockdown • Provision of social benefits and guarantees, including medical insurance Mechanisms of stakeholder engagement • Open, effective and transparent Mechanisms of stakeholder engagement • Regular meetings, presentations communication Investor Relations website • • Dedicated Investor Relations team • Annual General Meetings • Corporate reporting, webcasts • Broker-hosted investor events and roadshows, conference calls and Company-initiated roadshows Outcomes in 2020 • Information disclosure on a semi- annual basis • Analyst and investor conference calls and webcasts and formal consultations • Customer analytics, customer evaluation system Industry conferences and forums • • Customer satisfaction surveys • Transparent supply chain Outcomes in 2020 • Strong portfolio of service contracts with superior clients in metallurgical and oil products and oil segments maintained contributing 64% of Net Revenue from Operation of Rolling Stock in 2020 • Virtual non-deal roadshows: • Successful service contract around 260 meetings held with international investors in 2020 • Series of investor webinars with Russian retail investors following secondary-listing on the Moscow Exchange on 28 October 2020 • Share buyback programme extensions with three major long- term customers: MMK, Metalloinvest and Rosneft2 • Deepening relationships with other high-profile clients — significantly increased business volumes with EVRAZ launched • Regular dividend payments1 • Publication of the Annual Report and the integrated Sustainability Report 1 Total dividends in respect of 2020 amounted to RUB 13.3 billion (including interim, final and special dividends). 2 As announced on 26 April 2021. GOVERNMENT, REGULATORS AND LOCAL COMMUNITIES MEDIA PROFESSIONAL AUTHORITIES Mechanisms of stakeholder engagement • Regular communication with regulators/policy makers on issues affecting the freight rail transportation industry Industry and regulatory forums • Outcomes in 2020 • Participation in industry associations including the Council of Railway Operators and the Russian Union of Transport Workers • All applicable guidelines to manage the impact of COVID-19 implemented Mechanisms of stakeholder engagement • Corporate philanthropy and charitable contributions • Community investment Outcomes in 2020 • Assistance given to support socioeconomic development of our communities • Regular contributions to aid various charitable projects Mechanisms of stakeholder engagement • Communication with media representatives • Transparent disclosure through various channels • Dedicated Media section on corporate website • Dedicated media relations contacts • Press conferences and exhibitions Outcomes in 2020 • Distribution of news and information announcements • Providing access to results calls with CEO and CFO • Responding to media queries • Interviews with the top management, ad hoc comments on various industry issues and answers to journalists’ questions Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202070 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 71 ETHICS AND BEHAVIOUR OUR RESPONSE TO THE COVID-19 PANDEMIC At Globaltrans, we understand that our good name and reputation are of paramount importance, and could easily be lost by actual or suspected unethical behaviour. This is why we are committed to ensuring that in our business dealings, we behave openly and honestly and operate to the highest ethical and professional standards. The way we conduct our business is guided by the Group’s core values and principles that are formally enshrined in our Code of Ethics and Conduct. It sets out our ethical standards as an organisation and explains how we expect our people to act. The Code helps our employees to understand what is expected of them and our requirements regarding compliance withthe Group's policies and all relevant laws and regulations. The Code also describes the Group’s principles with respect to confidential information, anti-bribery, conflicts of interest and reporting concerns. All our employees are required to read and fully understand the Code and must sign an acknowledgement to this effect. We do not tolerate any violations of the Code. Tolerance Understanding and respecting diverse cultures and people with different views Impartiality Acting objectively and professionally Respect Acknowledging people’s abilities, qualities and achievements and complying with all applicable labour laws Equality for all Creating opportunities and a working environment that excludes any form of discrimination Safety Complying with required rules to create a safe and healthy workplace Globaltrans works closely with its suppliers and partners who play an integral part in delivering value-added solutions to its clients. The Group chooses to work with those who share its values and adhere to the same ethical standards. In 2020 the Group formally adopted a Supplier Code of Conduct, based on the principles set out in the UN Global Compact, which describes what Globaltrans expects from its suppliers with regards to business ethics, human and labour rights, employee relations, health and safety and other related topics. Globaltrans has consistently sought to deliver sustainable value to its stakeholders and embrace responsible business practices. With regard to managing ESG issues, we are continually improving our sustainability-related practices and policies and increasing transparency, recognising its long-term importance to our business. To strengthen this ongoing commitment, in January 2021 we established the ESG Committee that assists the Board in considering and overseeing environmental, social and governance issues relevant to the Group’s business. The ESG Committee also oversees the development of the Group’s sustainability approach and reviews and recommends ESG disclosures for Board approval. The ESG Committee consists of two Board members: Elia Nicolaou, Non-executive Director, who serves as the Chair, and John Carroll Colley, Independent Non- executive Director. This commitment at the highest level of the Group is further reinforced by the active participation of Valery Shpakov, CEO of Globaltrans, in all ESG-related processes and evaluations. Supporting our people Business continuity Globaltrans rose to the challenges presented by the COVID-19 pandemic, changing the way we carried out our daily work in order to keep our employees and other stakeholders safe while continuing to deliver best-in- class services for our customers. As COVID-19 pandemic has shown us, businesses need to be well-prepared and willing to take swift, deliberate, and proactive measures to navigate successfully in the face of unprecedented change. As the safety of our people is a top priority, we moved swiftly to put in place measures to help minimise the risk from COVID-19 to our employees and their families. We shifted almost our entire office workforce to remote working, while those few office-based employees whose presence was deemed essential were allowed into the workplace and proper safety precautions were taken to protect them. While the nature of the job meant that staff at our depots were required to be on-site more often, we tried to minimise their presence as much as possible and put in place safety protocols to protect them. We understood that switching to remote working could affect the Group’s operations, internal processes, and, above all, our people and clients. One of the key reasons that enabled us to transition smoothly and maintain service continuity was our state of readiness for digital transformation. As a result, we were able to move efficiently to remote working while ensuring that all our regular business processes were unaffected. Simultaneously, Globaltrans moved quickly to equip its employees with the right hardware and software and provide its customers with effective remote tools so that everyone stayed connected and engaged. Maintaining clear communication is another critical element of successful remote working. We all had to find new ways to work together and each department within the Group had its own specific requirements. Our ability to keep in touch and respond quickly to the immediate needs of our employees and clients enabled us to remain fully operational during this challenging period. We provided daily communications with regular updates on the evolving COVID-19 pandemic, its impact on our business and our response. The Group formally reinforced its ESG approach in January 2021 with the adoption of a specific ESG Policy. This policy defines the significance of ESG factors for the Group’s business as well as our commitments to employees, investors and other stakeholders. It also clarifies the lines of responsibility and accountability for achieving these policy commitments. Globaltrans has adopted a number of formal Group- wide policies which address Human Rights, Freedom of Association, Data protection, Diversity and Inclusion, and Supplier Conduct. These documents are continually reviewed and monitored to ensure their relevance and compliance with legal requirements. The Group requires that all employees acknowledge their understanding and acceptance of the relevant policies. All the documents are publicly available and can be viewed on the Company’s website. We value people and respect their fundamental rights and freedoms. As an employer, business partner and member of the wider community, we have the power to do good. We are committed to supporting and abiding by human rights and labour practices throughout our business. In 2020, we introduced our Human Rights Policy, which sets out minimum requirements that all those working for and with Globaltrans must meet on all human rights issues. Our approach conforms to international human rights standards such as the UN Guiding Principles on Business and Human Rights. Our commitment to human rights is further made clear in our Code of Ethics and Conduct and our Supplier Code of Conduct and in our Diversity and Inclusion Policy. To promote acceptance of our human rights policies internally, in line with our values, and to ensure compliance, we regularly review human rights issues, conduct any required training, and integrate the results into our operations. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202072 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 73 Key ESG activities: Globaltrans aspires to be a diverse and inclusive work environment in which our people can be themselves and feel at ease. Our Diversity and Inclusion Policy commits us to treating everyone with dignity and respect and to providing our people with equal opportunities regardless of ethnicity, gender, religious beliefs, nationality, age or any physical disability. Diversity and inclusion are prioritised and applied at the highest levels of the Group, including at Board level. The Board recognises that diversity can strengthen its performance and takes into account these aspects when making new appointments and considering the composition of the Board. Globaltrans strives to promote a positive employment environment and ensure compliance with all applicable labour laws and regulations. We recognise the fundamental rights of Globaltrans employees to form and join workers’ organisations and to engage in collective bargaining. Our formal Freedom of Association Policy, adopted in 2020, strengthens the Group’s commitment. We respect the choices made by our employees in the matter and are committed to maintaining a regular and constructive dialogue with them and their designated representatives. At Globaltrans, we have a zero-tolerance approach to bribery and corruption in all its forms and we are committed to acting ethically and with professionalism, fairness and integrity in all our business activities and relationships. Our Anti-fraud Policy is consistent with all applicable legislation, and defines the standards of acceptable behaviours to which all employees must adhere. It also provides guidance on how to avoid, recognise and tackle any such issues. We have established rules and procedures for handling alleged violations, supervised by an internal team responsible for internal controls and investigations. Each employee is required to understand the types of violations that may occur within their area of responsibility and to closely monitor for any signs of potential non-compliance. The Group’s Whistleblowing Policy fosters a culture of honest behaviour and encourages the investigation and reporting of improper activities, including non- compliance with our Code of Ethics and Conduct. Employees are actively encouraged to speak up and to report any concerns that they may have with workplace issues. We provide confidential, safe and secure mechanisms for anonymous reporting of suspected violations of Group standards. And importantly, we ensure that whoever reports suspected breaches is protected and supported. Executive management meets regularly to discuss, inter alia, anti-fraud and anti-corruption measures. During 2020, no instances of alleged fraud, bribery or corruption were reported within the Group. We respect and protect the confidentiality and security of our stakeholders’ personal information. We comply with the EU General Data Protection Regulation (GDPR) which was adopted in April 2016. Data privacy and security are of the utmost importance to the Group and we have a dedicated Privacy Policy which can be accessed on the Group’s website. Corporate governance Employees 1 The objective of corporate governance is to support the Board in its efforts to ensure effective, transparent and ethical oversight of the Group. Our governance framework is in line with the highest international standards supporting the Board to take decisions that are in the best long-term interests of the Group and its communities and that will create value for all its stakeholders. 3 Focusing on employing more energy-efficient practices, reducing our carbon emissions and emphasising the importance of recycling are some of the ways in which we work to minimise the adverse impact of Globaltrans’ activities on the environment. 2 Creating and sustaining a safe workplace is the key role of a responsible employer. Our goal is to enable people to work with dignity and respect, to provide opportunities for growth and development and to create a just and rewarding work culture. We also ensure that we operate in full compliance with all relevant employment legislation. 4 We are very conscious of the role we can play in supporting our communities. We do this through the interactions of our employees, the opportunities our businesses create and the economic value generated by our Company. We also actively participate in community initiatives and provide direct support to important community causes through charitable giving. Environment Communities Globaltrans continuously strives to improve the way it controls, manages and mitigates the impact of non-financial risks, which include strategic, operational and compliance risks. This is not just to satisfy regulatory obligations but also to meet the expectations of our stakeholders. Further details on Globaltrans’ Risk Management are set out on pages 56 to 65. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202074 EMPLOYEES 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 75 The wellbeing, respect and commitment of our people are what define us. At Globaltrans, we do our utmost to be the type of company that people want to work for, where people know they can grow professionally and personally. We strive for an environment in which our employees are safe, healthy, engaged, valued and rewarded. As an employer, we have a responsibility to offer fair remuneration, to provide training opportunities for career development and to create a supportive and respectful workplace and culture. We do our utmost to ensure the safety and well-being of all our employees wherever they work. The extraordinary challenges of the pandemic have reinforced our commitment to employee health and safety. We maintain well-run and safe workplaces and apply a zero-tolerance approach to all forms of hostility, harassment or unprofessional behaviour. We want our people to feel supported and connected to our values and principles through the implementation of clear human resources policies and guidelines regarding human rights, health and safety, workplace relations, performance and development processes and non- discrimination. Our core policies and guidance include: • Anti-fraud Policy; • Code of Ethics and Conduct; • Compensation and Benefits Policy; • Diversity and Inclusion Policy; • Freedom of Association Policy; • Human Rights Policy; • • Job Descriptions; • Regulations on Business Trips; • Regulations on Contractual Work; • Regulations on Protection of Personal Data Internal Code of Labour Conduct; of Employees. Average employee headcount in 2020 increased 6% year on year to 1,664 (2019: 1,569) employees. Overall headcount at the end of the year rose 3% compared to 2019 to 1,6971 (2019: 1,640). The increase in the headcount was mostly attributable to the shift to the in-house locomotive crews. BaltTransServis and New Forwarding Company continued to employ the most people within the Group. Diversity We value and appreciate the individuality of our employees and respect them for their performance, skills and contributions regardless of age, disability, ethnicity, nationality, gender, race, colour, religion or sexual orientation. We ensure that our employees are treated fairly and equally, creating a supportive and engaging work environment where people at all levels enjoy respect and have dignity. The Group has zero tolerance for any form of discrimination. Our approach to diversity is outlined in our Diversity and Inclusion Policy, the breaches of which are grounds for disciplinary action. Globaltrans’ commitment to diversity extends to all our business activities including hiring, employee retention, promotions, compensation and benefits, career development and training, work arrangements and Board appointments. The Group aims to offer equal pay opportunities for both women and men. The freight rail transportation industry has traditionally been a male-dominated environment. We are gradually and successfully addressing this gender imbalance within our Group by focusing on attracting more women into the workforce. As at year-end 2020, women comprised 33% of our workforce. At Board level, women represented 13% of the Board of Directors (two Board members). 1 The difference between the headcount and the average headcount is due to different calculation techniques. The headcount is presented as at the end of 2020, while the average headcount is calculated by summing up the number of employees on the list in each month of the reporting period and dividing this sum by the number of months. HEADCOUNT BY SUBSIDIARY, 2019–2020 (AT YEAR-END) 555 551 659 567 393 359 2019 2020 New Forwarding Company BaltTransServis Ural Wagonrepair Company GTI Management Other subsidiaries 50 49 75 79 HEADCOUNT BY GENDER IN 2020 (AT YEAR-END) HEADCOUNT BY AGE IN 2020 (AT YEAR-END) PERMANENT CONTRACT 41% 59% 33% 67% 24% 11% Part time Full time 67% 33% TEMPORARY CONTRACT 25% 75% Full time Men Women 65% < 30 years 30–50 years > 50 years Men Women EMPLOYEE TURNOVER RATE BASED ON GENDER AND AGE, 2019–2020 2019 2020 14% 14% 11% 10% 4% 3% 5% 3% 3% 3% 8% 7% Total Men Women < 30 years 30–50 years > 50 years Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 76 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 77 Training and education Motivation We are committed to investing in talent development and education to sustain the success of our people and business. Providing opportunities for our employees to grow and remain competitive and effective in a rapidly- changing world is essential. At Globaltrans, we provide a range of learning and development programmes including training, workshops and seminars that are tailored to individual work requirements and current needs. In 2020, due to the coronavirus pandemic, we rapidly shifted to offering our employees more digital learning programmes. As a result, 71% of all training and development was carried out via distance learning compared to 25% in the previous year. Technology is a vital element in so many processes, and understanding it is arguably now a necessity, not an option. That is why we have been focusing on improving the digital literacy of all our employees. Along with equipping employees with the equipment and software tools needed to do their jobs efficiently, we have provided them with a variety of online resources including webinars, to support their development. We recognise that one of our major strengths is our people and that nothing can be achieved without engaging them. Their success is our success. Therefore it is our responsibility to keep our people motivated about what they do and what they can achieve. We are committed to actively engaging with our colleagues and responding to their needs. We can best serve our people by listening carefully and being adaptive. Our support for our employees is ongoing and essential, even more so during times of crisis. Through the COVID-19 pandemic, Globaltrans kept all its people employed and, importantly, maintained salaries at the pre-COVID level. While managing a remote workforce, it is important to keep communication channels open. For this reason, throughout last year we focused on maintaining frequent dialogue with our workforce, providing regular updates and check-ins to ensure they had the right level of advice and support needed to adjust to the new working environment and to perform at the highest levels. During 2020, 336 employees attended training programmes and despite the disruption caused by COVID-19 the Group still delivered a total of 21,226 hours of training and development (2019: 28,447). During the year, training was provided in various areas including accounting, business administration, environmental safety, information security, health and safety, financial management and marketing. We strive to continuously improve working conditions for our people. We want them to work in a supportive and considerate environment, enjoy opportunities for career progression and receive competitive reward packages and benefits. Our staff reward packages include health insurance, childcare support, additional holidays as well as other benefits. Eligible employees can participate in the various incentive schemes that the Group operates. We are committed to maintaining a motivated and productive workforce that values being part of Globaltrans. We believe that our low staff turnover rate (14% overall: 10% for men and 4% for women) reflects this and is an important indicator of workforce stability and satisfaction. AVERAGE TRAINING HOURS BY GENDER, 2019-2020 84 80 DISTRIBUTION OF TRAINING AMONG EMPLOYEES BY EMPLOYEE CATEGORY IN 2020 MAIN TYPES OF TRAINING FORMATS IN 2020 2019 2020 51 73 Men Women 84% 16% 71% 29% Employees Managers Distance learning On-site learning Corporate culture and internal communications Interaction, collaboration and teamwork are essential parts of the Globaltrans culture. We strongly believe that they improve productivity, lead to proper and prudent business decisions, underpin a trusting and supportive work environment and enable us to deliver a better result in everything we do. We want every employee’s voice to be heard and every idea to be shared openly. All employees are encouraged to raise any issues and concerns and to provide suggestions and feedback for improving the business. Our communication channels enable everyone to learn more about our performance, important events and projects and connect with senior management. To understand our employees’ needs and improve their experience, we conduct various surveys and some Group subsidiaries have employee helplines. To encourage a sense of community and promote better teamwork, we also regularly host sports, cultural and recreational events for our employees and their families. We understand that with so many people working virtually, it takes extra effort to keep everyone feeling cared for, connected and engaged. To provide a platform for healthy debate and interaction, we communicate regularly with our employees via reports and updates, management calls, webinars, and formal and informal virtual meetings. Health and safety The safety and wellbeing of our people has always been Globaltrans’ number one priority. It is paramount to our corporate culture and ultimately to the success of our business. The extraordinary events of 2020 with the spread of the COVID-19 pandemic, have resulted in a whole new level of concern for employee wellbeing in companies around the world. Globaltrans acted quickly to protect its employees, taking immediate action to improve health and safety measures throughout the Group. We swiftly adapted to the new work environment, strictly following the advice of government and medical organisations, and moving our office-based staff to remote working. For our on-site (repair depot) employees, we revised our work procedures to ensure their safety, implementing various precautions including workplace disinfection, shift rotations, social distancing and the use of masks, temperature scans and hand sanitisers. As set out in our Code of Conduct and Human Rights Policy, we are committed to acting in a socially responsible manner that protects our people, suppliers and partners, all of whom we expect to share that commitment. Globaltrans has health and safety procedures, practices and policies that comply with all applicable regulations, laws and other requirements. We strive to ensure that all levels of the Group conform to the rules. Our Group companies are implementing the following policies: Instruction for Carrying Out Health and Safety Briefings; Instruction on Pre-medical First Aid; • Fire-safety Instructions; • • • Occupational Safety Regulations; • Workplace Safety Guidance for PC Users. In our efforts to maintain a safe workplace, we actively promote a culture of a zero-harm and risk awareness among our people, and provide appropriate health and safety education, training, instruction and supervision. Safety is always a team effort. We encourage our employees to adopt good health and safety practices and to make the right decisions about their wellbeing on a daily basis. We also perform regular spot-checks at our operations to ensure that they continue to meet high safety standards. In 2020, because of the pandemic and the move to remote working, we reduced the number of workplace safety checks to 341 visits (2019: 769 visits), focusing on providing online occupational health and safety training instead. Our occupational health and safety performance has always been positive. The nature of our business means that our employees typically work in a low-risk environment. So it is with deep sadness and regret that the Group recorded its first-ever workforce fatality at one of its repair depots in 2020. The Group immediately investigated the incident and took corrective action, putting in place preventive training for its depot personnel. We investigate and analyse each incident and share the findings across the Group in order to prevent similar incidents at other locations. All incidents are reported and discussed at the Board level. The Group remains committed to ensuring such incidents are eliminated and do not reoccur. To make our reporting processes more transparent, from now on we will implement the Lost Time Injury Frequency Rate (LTIFR), a leading benchmark for measuring safety and health performance. In 2020, the LTIFR1 (per million hours worked) performance of the Group stood at 0.66. In 2021, we will continue to put greater emphasis on safety, risk awareness and accountability in order to strengthen the safety culture of the Group. 1 LTIFR (Lost-Time Injury Frequency Rate) is the number of lost time injuries multiplied by 1,000,000, divided by the employee total hours worked in the reporting period. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202078 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 79 ENVIRONMENT Rail is considered to be one of the greenest modes of transport, with its limited impact on the natural world, mainly linked to lower greenhouse gas emissions. The Group is nonetheless committed to minimising its environmental footprint, recognising the importance that our stakeholders and the wider community attach to this issue as well as the Group’s own responsibility to protect the environment for the benefit of everyone. To this end, we focus not only on controlling emissions but also on other areas such as energy efficiency, optimising water management and reducing paper consumption. factors is reinforced through the Group’s formal ESG Policy and Environmental and Energy Policy, which set out our commitment to carry out our activities in an environmentally responsible way. We make sure that all of our employees understand and act in a manner that is consistent with our policies. Guided by these policies, we are constantly monitoring and finding ways to improve our subsidiaries environmental management and reporting systems in order to better monitor, measure and assess the environmental aspects of our activities. Globaltrans is fully compliant with all applicable environmental laws, industry regulations and requirements and we strive to continually improve our environmental performance over time to stay compliant. Our approach to the management of environmental We also focus on raising our employees’ and suppliers’ awareness of the environment and improving transparency for our investors. To support this, we report the Group’s performance on a number of environmental metrics consistent with external reporting frameworks such as the Global Reporting Initiative (GRI). Annual data and information on monitoring and progress are contained in our integrated sustainability reports that are publicly available on the Group’s website. The results for 2020 are set out below. There were no instances of non-compliance with environmental laws and regulations during the reporting period. Energy usage At Globaltrans, we are determined to use energy prudently and to be climate neutral. It is something that we are working towards promoting and improving at all levels of the Group. The Group’s operations consume various forms of energy, including electricity, oil and gas, and we are constantly working on ways to improve the Group’s energy efficiency and reduce our carbon footprint. PETROL AND DIESEL CONSUMPTION PER EMPLOYEE, 2019–2020, LITRES PETROL 2019 2020 134 95 – 29 % DIESEL 2019 2020 33,895 27,394 – 19 % In 2020, we again decreased our energy consumption in three key areas as shown below. Various factors contributed to this, including the consolidation of a number of offices to a single office location, the impact of COVID-19 lockdowns on our operations and the move to remote working. While clearly the incidence of remote working due to the pandemic had a positive impact on the Group’s annual water consumption, Globaltrans continues to seek opportunities to improve water use and adopt practices that would help its employees to manage and use water efficiently. Use of water Paper recycling As part of our commitment to conserve resources, we monitor water usage in an effort to optimise its use and consumption. While Globaltrans is not a significant water user, we recognise that it is a vital resource for society and are committed to acting responsibly. Our internal management systems and practices ensure transparency and effective governance of water use in our day-to-day work. Since 2018, we have been developing and improving our monitoring, collection and processing of water usage data across the Group’s subsidiaries. We are now in a position to release our first annual figures for water consumption, which in 2020 totalled 16,627 m3 1. The issue of office waste is something we are very familiar with since the Group consumes relatively large amounts of paper. Consequently, we actively promote the merits of a green workplace and encourage employees to reduce the frequency and volume of printing. We have been focused on digitising business processes and using electronic documentation for a number of years, but the events of 2020 have accelerated these trends. In 2020, we registered 42% reduction in paper consumption by employees, as the Group’s office activities went essentially ‘virtual’. We will continue to develop office waste recycling initiatives as we revert to a more normal working environment. TOTAL CONSUMPTION OF ENERGY RESOURCES BY TYPE, 2019–2020 PAPER CONSUMPTION (KG PER EMPLOYEE), 2019–2020 Energy type Electricity (KWh) Diesel (litres) Petroleum (litres) 2019 2020 Change 2019 12 4,795,686 4,182,373 53,184,738 45,584,067 210,715 158,816 –13% –14% –25% 2020 7 1 This excludes data from AS Spacecom and BaltTransServis (except for data from the BTS railcar repair depot in Ivanovo which is included). – 42 % Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202080 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 81 ENVIRONMENT Greenhouse gas management Globaltrans operates in one of the greenest and most eco-friendly industries based on its relatively low greenhouse gas (GHG) emissions. Rail remains the most fuel-efficient mode of transport, as just one litre of fuel is sufficient to transport one tonne of freight over a distance of approximately 200 kilometres. Nevertheless, we recognise that we can contribute to minimising emissions through efficient logistics and careful management of our assets. Since its creation, Globaltrans has focused on operational efficiency, in particular on reducing the number of empty railcars transported as part of the Group’s logistics movements. This not only helps us achieve solid financial and business results but also helps improve our environmental performance. We have led the industry for many years in terms of efficiency, and we consistently deliver one of the lowest gondola Empty Run ratios in the sector, which speaks to our commitment. In the freight rail transportation sector locomotives are the biggest contributors to GHG emissions. In Russia the vast majority of locomotive traction for loaded and empty trips, as well as the ownership of railway infrastructure itself belongs to RZD. Due to industry regulations, freight rail operators including Globaltrans have to outsource locomotive traction and infrastructure services from this provider. Nevertheless, the Group has a competitive advantage, as it runs one of the largest privately-owned locomotive fleets in Russia and provides a unique service solution for its clients in the oil products and oil segment. We therefore measure, report and account for only those emissions (Scope 1) that are directly attributable to our fleet of 74 locomotives. Operating a modern, well-maintained fleet also contributes to minimising our environmental footprint. In 2019, we further improved fleet efficiency with the purchase of 10 new, more energy-efficient and cleaner diesel locomotives. Since 2018 we have made significant progress in measuring, managing and disclosing GHG emission information in our operations, and this process is still ongoing. In 2020, due to a combination of reduced fuel consumption resulting from the impact of the COVID-19 pandemic and sustainability measures taken by the Group including the use of the new, cleaner locomotives, GHG emissions from the Group’s locomotive fleet across all its subsidiaries were 138,198 tonnes of CO2 equivalent1, 14% lower than in 2019 (2019: 161,299 tonnes of CO2 equivalent). While we continue to promote the environmental benefits of rail, we are committed to continuously improving our energy efficiency and exploring appropriate options and proposals to reduce our GHG emissions. 1 The Group’s greenhouse gas emissions were calculated per IPCC Guidelines for National Greenhouse Gas Inventories (2006). Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 82 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 83 COMMUNITIES Since its founding, Globaltrans has recognised the importance of having a direct positive impact on the communities where it operates. We strive to serve our communities responsibly as an organisation, an employer and a business partner. This sense of responsibility to our communities can also be seen in our legislative compliance, the transparency of our financial and non- financial reporting and our commitment to improving our environmental footprint. Our solid financial performance, essential to our long-term business success and sustainability strategy, enables us to benefit society in a variety of ways. We contribute to Russia’s economic and social development and add value through our business operations, direct and indirect employment, tax payments, social activities and charitable contributions. The Group works closely with its communities, through its support for community groups and charities, the work of its volunteer staff, and through the provision of internships and educational support. We work with our local communities to identify how best to contribute whether through contributions of time, skills or financial assistance. By establishing internships and pro bono social programmes, we can help our employees add to their capabilities and contribute more to society. Our business success not only creates opportunities for current and prospective employees, but it also means we are making a direct financial contribution to the broader economy through local and national taxes, the payment of license and other fees and the use of third party services and suppliers. We recognise the value that diversity and respect bring to any environment. We have created a fair, safe and respectful work environment so that our employees and those we work with can prosper. To contribute fully to the success of Globaltrans and society as a whole, people need to feel valued and supported. To that end, we provide health insurance, childcare support and part-time job options to improve the quality of life for our employees and their families. We encourage our businesses and people to extend their support beyond our operations by participating in community initiatives, charities and sports activities. We believe that this strengthens their sense of well-being while helping to instil our values of respect and cooperation more broadly. By improving the lives of those living in the communities where we operate and creating valuable opportunities, Globaltrans is making a positive difference to society as a whole. Also, we contribute directly to charitable efforts in our communities in the areas of health and well-being, sports, culture, education and in support for vulnerable groups like the disabled and elderly. Despite challenging economic environment in 2020, we ensured continued support for those organisations we have been working with for many years. One such example is the Life Line Fund which provides vital assistance to children facing life-threatening illnesses and which Globaltrans has supported since 2011. We fundamentally believe that having valued, healthy, prosperous employees, families and communities sets the strongest foundations for their success, our success and that of our stakeholders. The following table illustrates how our company creates financial value for its stakeholders. DIRECT ECONOMIC VALUE GENERATED, DISTRIBUTED AND RETAINED1 Direct economic value generated2 Economic value distributed Total cost of sales (excluding Employee benefit expense) Total selling, marketing and administrative expenses (Community investments and excluding Employee benefit expense and Taxes (other than income tax and value added tax) Employee benefit expense Payments to the providers of capital3 Payments to the government4 Economic value retained 2020, RUB mln 68,367 75,136 45,548 938 4,154 21,419 3,077 (6,769) 1 Information in the table is derived from the Consolidated Management Report and Consolidated Financial Statements for the year ended 31 December 2020. 2 Direct economic value generated includes “Revenue”. 3 Payments to providers of capital include “Interest paid”, “Dividends paid to owners of the Company” and “Dividends paid to non-controlling interests in subsidiaries”. 4 Payments to the government include “Tax paid” and “Taxes (other than income tax and value added taxes)”. The Company also pays Russian Value Added Tax (“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. Purchases of property, plant and equipment are shown net of VAT. Related input VAT is included in movement in changes of working capital, within trade and other receivables. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202084 84 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 85 85 Corporate Governance Board of Directors Executive Management Corporate Governance Report Share Capital Corporate Structure 86 92 96 108 109 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 202086 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 87 Board of Directors The Board of Globaltrans is responsible for providing effective leadership for the Group, establishing its values and culture, overseeing its governance, and promoting the success of the Group for the benefit of all stakeholders. The Board is composed of highly experienced directors, equipped with the diverse skills, expertise and commercial experience required to lead the Group effectively and provide support for the executive management. Board of Directors 15 Members 4Independent Non-executive Directors Sergey Maltsev John Carroll Colley Dr. Johann Franz Durrer Vasilis Hadjivassiliou Chairman of the Board, Executive Director, Independent Non-executive Director, Senior Independent Non-executive Independent Non-executive Director Chief Strategy Officer, Сo-founder and shareholder of Globaltrans Chairman of the Audit Committee Director, Chairman of the Remuneration and Nomination committees Appointment: Mr. Maltsev was elected Chairman of the Board of Directors in April Appointment: Mr. Colley was appointed to the Board as an Independent Appointment: Dr. Durrer was appointed to the Board as an Independent Appointment: Mr. Hadjivassiliou was appointed to the Board as an Independent 2018 and has served as Chief Strategy Officer Non-executive Director in April 2013. Non-executive Director in March 2008. Non-executive Director in September 2019. since August 2017. Skills and experience: Mr. Maltsev was instrumental in the development of the freight rail market in Russia and has worked in the industry for over 30 years. He co-founded Globaltrans and served as Chief Executive Officer from 2008 until 2015 when he left the Group. At that point he served as Senior Vice President for strategy and corporate governance at JSC Russian Railways until his return to Globaltrans as Chief Strategy Officer in 2017. Committee membership: Mr. Colley is Chairman of the Audit Committee Committee membership: Dr. Durrer is Chairman of the Remuneration Committee membership: In 2021 Mr. Hadjivassiliou became a member and a member of the Nomination and Nomination committees. of the Audit Committee. and Remuneration committees. In 2021 Mr. Colley became a member of the ESG Committee. Skills and experience: Mr. Colley has extensive experience in international trade and risk management both in the public Skills and experience: Dr. Durrer began his career at Union Bank of Switzerland Skills and experience: Mr. Hadjivassiliou was a partner in Assurance and Advisory and in 1970 founded Fidura Treuhand AG, services in PricewaterhouseCoopers (PwC), which provides bookkeeping, auditing Cyprus, from 1990 until 2018 when he retired. and financial services. During this time he held various leadership positions with PwC, including as an elected and private sectors. From 2007 to 2010, Dr. Durrer graduated from the University member of the Executive Board, Head of the Mr. Colley served as country manager of Zurich with a doctorate in Economics Limassol office as well as a number of other for Russia at Noble Resources SA. Prior and is a member of the Swiss Fiduciary offices in Cyprus and was a leading figure Mr. Maltsev was a founding member to that, he held a variety of positions Association. and Chairman of the non-profit partnership in the public sector, including at the office “Council of Railway Operators”. In recognition of the US Trade Representative and the US of his services to the rail industry, Mr. Maltsev received the “Honoured Railwayman of Russia” award. He has a degree in railway engineering. Department of Commerce in Washington, DC. He worked for Linkful Ltd and Noble Resources SA in Moscow from 1992 to 1999. Mr. Colley, a fluent Russian speaker, holds an MA in History and a BA in International Affairs and Russian Studies from the University of Virginia. Other appointments: Mr. Colley is currently the principal of Highgate Consulting LLC, a global advisory consulting company. in business development. He has extensive experience in auditing, International Financial Reporting Standards and business advisory services having advised major local and international groups including companies publicly listed on the London Stock Exchange as well as in Cyprus. Mr. Hadjivassiliou is a graduate of the University of Manchester and a Fellow of the Institute of Chartered Accountants of England and Wales. Other appointments: Mr. Hadjivassiliou holds directorships in several companies affiliated with his family and is also a Board member in a number of other private companies. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 88 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 89 George Papaioannou Alexander Eliseev Andrey Gomon Elia Nicolaou Melina Pyrgou Konstantin Shirokov Independent Non-executive Director Non-executive Director, Сo-founder Non-executive Director Non-executive Director, Company Non-executive Director Executive Director, Head of Internal Audit of Globaltrans Secretary, Secretary to the Board Appointment: Mr. Papaioannou joined the Board as an Independent Non-executive Appointment: Mr. Eliseev joined the Board in March 2008. Appointment: Mr. Gomon served as a member of the Board of the Company Appointment: Ms. Nicolaou joined the Board as a Non-executive Director Appointment: Ms. Pyrgou was appointed to the Board as a Non-executive Director Appointment: Mr. Shirokov was appointed to the Board as an Executive Director Director in April 2013. from 2013 to 2016 and rejoined the Board in March 2008. She is the Company in April 2013. in March 2008 and heads Globaltrans’ in April 2017. Secretary. internal audit function. Committee membership: Mr. Papaioannou is a member of the Audit Committee. Skills and experience: Mr. Eliseev co-founded Globaltrans in 2004 and has Skills and experience: Mr. Gomon has over 13 years management experience in the Committee membership: Ms. Nicolaou was a member of the Audit Committee Skills and experience: Ms. Pyrgou is a barrister and registered insolvency Skills and experience: Mr. Shirokov has over 12 years’senior international Skills and experience: Mr. Papaioannou has an experience of more than 20 years played a leading role in introducing railway industry. From 2006 to 2012 he was in 2020. In 2021, Ms. Nicolaou stepped practitioner and has practised corporate law management experience. Prior to joining market-based reforms to the Russian freight CEO of Transoil, one of the largest oil rail down as a member of the Audit Committee for over 25 years. She is currently Managing Globaltrans, he worked in senior finance rail transportation market. He has spent transportation companies in Russia, having and became a member and Chair of the Director of Pyrgou Vakis Law Firm, a Cyprus- roles at Mechel and as an economist in financial reporting, risk management, more than 17 years in senior management previously served as CFO between 2003 ESG Committee. based corporate and commercial law at Glencore International. He served as auditing, financial performance analysis positions, mostly within the rail sector, and 2006. He sits on the boards of two and taxation. In 2004, he founded G. and sits on the boards of two Globaltrans Globaltrans subsidiaries, New Forwarding Papaioannou Auditors Ltd, which provides subsidiaries, New Forwarding Company Company and BaltTransServis. accounting, audit, tax and consulting and BaltTransServis. Skills and experience: Ms. Nicolaou has extensive experience in commercial, practice. Previously she was Director of Legal a non-executive member on the board Services at PricewaterhouseCoopers of Global Ports Investments PLC between in Cyprus. Ms. Pyrgou served as 2008 and April 2018 where he was corporate and funds law. She is currently the Chairman of EuropeFides Association, a member of the Audit and Risk committee. services. From 2002 to 2004, he worked Mr. Gomon studied economics at St the Managing Director of Amicorp (Cyprus) a European network of accounting, audit, at Grant Thornton in Cyprus and before that Mr. Eliseev is a graduate of the Russian Petersburg State University and holds for PricewaterhouseCoopers in Cyprus. State Medical University, where he studied an MBA from INSEAD. Mr. Papaioannou holds a degree biophysics. in Accounting and Financial Management from the University of Essex. He is a Other appointments: Mr. Eliseev is Chairman of the Board of Globaltruck, qualified chartered accountant and a Fellow a leading freight trucking operator in Russia, of the Institute of Chartered Accountants listed on the Moscow Exchange. in England and Wales. Ltd. Previously, she was head of the Corporate Legal department at Polakis tax and legal firms, from 2015 to 2016 and is a member of various business associations. Mr. Shirokov graduated from the Finance Academy under the Russian government Sarris LLC and also worked at C. Patsalides and studied business management LLC. Ms. Nicolaou participates in various Ms. Pyrgou graduated from the University at Oxford Brookes University. associations of the Cyprus Chamber of Keele with a degree in Law and Sociology of Commerce and sits on the boards and holds a diploma in Environmental Law of other listed and private companies. from the University of Geneva. She was called to the bar in Cyprus in 1992 and in Ms. Nicolaou graduated with an LLB London (Grays Inn) in 1995. in Law from the University of Nottingham and holds an LLM in Commercial and Corporate Law from University College Other appointments: Ms. Pyrgou currently serves as a member of the Cyprus London. She has an advanced diploma Investments Promotion Agency (CIPA). She in Business Administration from the Cyprus also sits on the Disciplinary Committee of International Institute of Management. the Institute of Certified Public Accountants of Cyprus (ICPAC). Ms. Pyrgou is also a Board member of the Health Insurance Organisation. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 90 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 91 Alexander Storozhev Alexander Tarasov Michael Thomaides Marios Tofaros Sergey Tolmachev Executive Director, Chief Procurement Officer Non-executive Director Non-executive Director Non-executive Director Executive Director, Managing Director Appointment: Mr. Storozhev joined the Board as an Executive Director in April Appointment: Alexander Tarasov joined the Board in April 2013. Appointment: Mr. Thomaides was appointed to the Board as a Non-executive Appointment: Mr. Tofaros was appointed to the Board as a Non-executive Director Appointment: Mr. Tolmachev was appointed to the Board as a Non-executive 2013. Director in April 2014. in April 2013. Director in April 2013 and as an Executive Skills and experience: Mr. Storozhev has held senior management roles throughout Skills and experience: Mr. Tarasov served as a deputy director general in Sevtekhnotrans, a Globaltrans subsidiary Skills and experience: Mr. Thomaides served as a director at Globaltrans from a 20-year career in the rail industry that subsequently merged with Ferrotrans. 2004 to 2008 and sat on the Board Skills and experience: Mr. Tofaros is a director of the Client Accounting department at Amicorp (Cyprus) Ltd. Director in October 2013. Skills and experience: Mr. Tolmachev became the Group’s Managing Director and has been with Globaltrans since He has held management positions at a of Global Ports Investments PLC, Russia’s He was a financial accountant at Depfa in October 2013. He joined N-Trans Group it was established. He is chairman of a number of leading Russian companies leading container port operator. He has Investment Bank Ltd from 2004 to 2008 in 2001 and has held various management number of Globaltrans subsidiary boards, across different sectors, with a focus been a director at Leverret Holding Ltd and a finance officer at Louis Catering Ltd positions focused on corporate finance including AS Spacecom, AS Spacecom on financial management and analysis. (Cyprus) since 2007. Trans, GTI Management and BaltTransServis from 2003 to 2004. He has held various and treasury. He also serves on Globaltrans positions in the Audit department at KPMG subsidiary boards, including AS Spacecom and serves on the boards of other Mr. Tarasov graduated from the Bauman Mr. Thomaides graduated from London Cyprus. Globaltrans’ subsidiaries including New Moscow State Technical University with Southbank University with a BSc degree and AS Spacecom Trans. He has extensive experience in financial analysis Forwarding Company and Ural Wagonrepair a degree in Engineering and holds a degree in Consumer Product Management. Mr. Tofaros has a degree in Accounting, and modelling. Company. Since February 2015, he has in Economics from the Moscow State been Director of Investments and Business University of Commerce. Development at New Forwarding Company. Mr. Storozhev is a recipient of the “Honoured Transport Worker of CIS” Award. Mr. Storozhev graduated from the Kiev Military Academy of Aviation and Engineering in 1990 with a degree in Engineering. He holds a diploma from the Mirbis Business School in Moscow and a Master’s degree in Business Administration and Finance. Finance and Economics and a master’s degree in Business Studies, both from Mr. Tolmachev graduated from Lomonosov the University of Kent. He holds a chartered Moscow State University with a degree certified accountant (FCCA) diploma and is in Mechanics and Applied Mathematics. a member of the Institute of Certified Public Accountants of Cyprus. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 92 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 93 Executive Management The executive leadership has responsibility for managing the Group’s day-to-day business operations and support functions. The senior management team comprises the executive directors along with individuals responsible for the key subsidiaries and Group functions. Senior management is in turn supported by a team of highly skilled and competent line managers. Valery Shpakov Sergey Maltsev Alexander Shenets Vyacheslav Stanislavsky Chief Executive Officer Chief Strategy Officer, Chairman of the Chief Financial Officer Deputy Chief Executive Officer, Board, Executive Director, Co-founder and shareholder Head of Operations Mr. Shpakov became CEO in March 2016, having served as interim CEO since November 2015. He joined New Forwarding Company, a Globaltrans subsidiary, in 2003 and has been its CEO since 2007. Mr. Maltsev has served as Chief Strategy Mr. Shenets has been CFO of Globaltrans Mr. Stanislavsky joined New Forwarding Officer of the Group since August 2017 since the Group’s establishment and has Company, a Globaltrans subsidiary, as and was elected as Chairman of the Board more than 15 years of experience in senior Deputy General Director for Operations of Directors of Globaltrans in April 2018. finance positions, mostly in the rail sector. and Commerce in March 2010 and became He is a member of the boards of GTI First Deputy General Director in April 2011. Mr. Maltsev has worked in the rail sector Management, New Forwarding Company, He is an experienced manager with a track for more than 30 years and was instrumental BaltTransServis, AS Spacecom, AS He has more than 30 years of experience record of over 30 years in the rail industry. He began his career in the private sector in 1999 and has held managerial positions at various companies in the transport sector. He is a recipient of the “Honoured Railwayman of Russia” award. in the development of the private freight rail Spacecom Trans and Ural Wagonrepair in the rail industry and is a recipient of the market in Russia. Mr. Maltsev was a founding Company, all Globaltrans subsidiaries. “Honoured Railwayman of Russia” award. member and Chairman of the non-profit partnership “Council of Railway Operators”. He holds an MBA from Lomonosov Moscow Having co-founded Globaltrans, he served State University. as the Company’s CEO and member of the Board for over a decade before stepping down in 2015. Subsequently, he worked as the Senior Vice President for strategy and corporate governance at JSC Russian Railways. He is a recipient of the “Honoured Railwayman of Russia” award. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 94 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 95 Alexander Storozhev Kirill Prokofiev Roman Goncharov Sergey Avseykov Svetlana Brokar Artem Gabestro Chief Procurement Officer, member CEO of BaltTransServis Head of Treasury Business Development Officer Government Relations Officer General Counsel, Corporate Governance of the Board, Executive Director Advisor to CEO Mr. Storozhev joined the Board as Mr. Prokofiev was appointed CEO Mr. Goncharov has served as CFO of New Mr. Avseykov is in charge of business Ms. Brokar joined as Government Relations Artem Gabestro joined the Group in 2007 an Executive Director in April 2013. He of BaltTransServis, a Globaltrans subsidiary, Forwarding Company, a Globaltrans development for the Group. He joined Officer in December 2018. She is an as a lawyer before becoming general has held a series of senior management in February 2017. Prior to his appointment, subsidiary, since 2005 and has over 15 years New Forwarding Company, a Globaltrans attorney with significant expertise in civil, counsel of Globaltrans two years later. roles over a 20-year career in the rail he spent more than seven years working of management experience. subsidiary, in 2011 as Head of the Marketing tax, commercial, corporate, finance He is a member of the Audit Committee industry. He has been with Globaltrans in senior executive roles in the rail sector. and Development Division. Between 2017 and railway transport matters. She has of Globaltrans’ subsidiary New Forwarding since the company was established and is He has an MBA from the Moscow and 2018, Mr. Avseykov served as acting worked with government departments Company and in January 2020 was Chairman of a number of Globaltrans He graduated from Saint Petersburg State International School of Business. Head of Business Project Management including the Russian Transport, Finance appointed as an advisor to Globaltrans’ CEO subsidiary boards, including AS Spacecom, University of Economics, where he majored AS Spacecom Trans, GTI Management in economics. He also holds an MBA and BaltTransServis. He also serves on the in Strategic Management from Moscow’s boards of New Forwarding Company Higher School of Economics. and Ural Wagonrepair Company, both Globaltrans subsidiaries. Mr. Storozhev is a recipient of the “Honoured Transport Worker of CIS” award. He graduated from the Kiev Military Academy of Aviation and Engineering in 1990 with a degree in Engineering. He also holds a diploma from the Mirbis Business School in Moscow and a Master’s degree in Business Administration and Finance. at JSC Russian Railways before rejoining and Railway Ministries. From 2009 to 2013, on issues of corporate governance. Globaltrans in 2018. Ms. Brokar was a member of the Board Mr. Avseykov graduated from Tomsk State subsidiary, and since 2014 has acted as its University of International Affairs and holds University and holds a PhD in political in-house legal counsel or provided it with a Master’s degree in law. of New Forwarding Company, a Globaltrans Mr. Gabestro is a graduate of Moscow State science from the Russian Presidential legal services. She also previously worked Academy of National Economics. with the non-profit partnership “Council of Railway Operators”. Ms. Brokar graduated with a law degree from Kaliningrad State University. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 96 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 97 Corporate Governance Report Dear shareholders, On behalf of the Board, I am pleased to introduce the Group’s Governance Report for 2020, which provides an overview of how the Board maintained its governance focus in the challenging circumstances we faced last year due to  the COVID-19 pandemic. The Board views good governance, transparency and accountability as essential building blocks in supporting Globaltrans' long-term success and sustainability. In this context, the impact of the COVID-19 pandemic was not only an examination of our strategy and business model, but it was also a real-life test of the Group’s governance and in particular the Board’s ability to exercise effective leadership and governance oversight during a period when the business was under extreme stress. It is very gratifying to report that the Board of Directors rose to the challenge of leading the Group with great pragmatism, urgency, and commitment. I would like to thank all of the directors for their input, commitment, and unwavering support during this unprecedented period. As a result, the Board was able to continue to engage with and to provide constructive feedback to the executive team without our governance oversight suffering. The Board, working closely with the management, took decisive action to mitigate the impact of COVID-19 and to ensure that the business continued to remain fully operational. This included the introduction of measures to protect the health and safety of our employees, to improve costs, to optimise capital allocation (for instance by cancelling all non-essential expansion CAPEX) to protect free cash flows, to safeguard dividend payments, and to maintain a dialogue with the stakeholders. Board and Committee meetings continued as scheduled but as virtual meetings, with all directors participating via remote meeting technology. Whilst responding to the impact of the pandemic inevitably took up a lot of the Board’s time last year, we nonetheless continued to make progress against our strategic governance priorities. In recognition of stakeholders’ growing focus on environmental and social issues, the Board announced in January 2021 the formation of the ESG Committee to oversee the Group’s integration of ESG into our strategy and business processes and ensure that our governance continues to evolve in line with international best practice. The secondary listing of the Company's GDRs on the Moscow Exchange was another important step in increasing the Group’s profile with Russian investors, especially with the growing retail base of investors, illustrating again our firm commitment to open and proactive engagement with our stakeholders. 2020 was a very challenging period and I would like to thank the Board and the executive team for their commitment and enthusiasm during this time. Sergey Maltsev Chairman Chief Strategy Officer Co-founder and shareholder Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 98 98 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 99 99 Corporate Governance Report Corporate governance framework Corporate governance policies Globaltrans’ corporate governance policies and practices are designed to ensure that the Group upholds its responsibilities to shareholders and other stakeholders. This key principle is promoted and applied across all levels of the Group in order to establish effective and transparent corporate governance. To that end, Globaltrans’ Board of Directors has adopted the Company’s Code of Corporate Governance (based on the principles of the UK Corporate Governance Code), guaranteeing that the interests of all shareholders are given due consideration. Globatrans’ policies include, inter alia: Corporate documents and policies Business ethics Disclosure, transparency and market abuse regulation • Articles of Association • Appointment Policy for the Board of Directors and its committees • Audit Committee — terms • Anti-Fraud Policy • Business Continuity Policy • Code of Ethics and Conduct • Corporate Diversity and Inclusion of reference Policy • Board of Directors — terms of reference • Dividend Policy • ESG (Environmental, Social and Governance) Committee — terms of reference • Nomination Committee — terms of reference • Policy on assessment of independence and objectivity of external auditor • Remuneration Committee — terms of reference • Environmental and Energy Policy • ESG Policy • Freedom of Association Policy • Human Rights Policy • Policy on reporting and investigating allegations of suspected improper activities (Whistleblowing Policy) • Supplier Code of Conduct • Continuing Obligations Policy • Corporate policy on the treatment of the rights of minority shareholders • Disclosure Policy • Internal control rules for insider information • List of insider information • Securities Dealing Code and the PDMR Securities Dealing Code Privacy • Privacy Policy For the Group’s corporate governance documents and policies, please visit our corporate website at: https://globaltrans.com/governance/corporate- documents. The Board responsibilities and activities Globaltrans’ Board of Directors is accountable to the Company’s shareholders for standards of governance across the Group’s activities. The Board is committed to providing effective, transparent and ethical oversight of the Group so that the Board can take decisions which it believes benefit all its stakeholders and communities and create value for the Group. Responsibilities • Providing leadership, setting the overall strategy and ensuring that the necessary components are in place for the Group to meet its objectives. • Setting Group values and standards, and ensuring that obligations to all stakeholders are understood and met. • Monitoring and reviewing the performance of the Group and its management. • Maintaining an effective system of internal control and risk management to safeguard shareholders’ rights and interests and the Group’s assets. • Ensuring an effective governance framework and compliance with relevant regulations. • Assessing from time to time whether the Independent Non- executive Directors continue to demonstrate independence. Membership The process for Board appointments is led by the Nomination Committee and members of the Board are elected at the General Meeting. Board members are nominated based on their industry knowledge, expertise and experience in areas such as accounting, finance, business management and strategic planning. In selecting candidates for the Board, the Group seeks to create an effective and complementary Board whose capability is appropriate for the scale, complexity and strategic positioning of the business. Non-executive Directors are drawn from a wide range of industries and backgrounds including infrastructure, transport audit and financial services, and have appropriate experience working with and for large international organisations. In addition, the Group selects Independent Directors intending to ensure that the views of the free-float shareholders are represented and that the interests of all stakeholders are taken into account. The Board comprises 15 members, eleven of whom are Non-executive Directors. Four of the Non-executive Directors are independent. Globaltrans separates the positions of Chairperson and CEO to ensure appropriate segregation of roles and a clear division of responsibilities. In 2020, members of the Board of Directors held 16,326,121 shares and GDRs in Globaltrans. Diversity The Board does not operate a formal diversity policy concerning age, gender or educational and professional backgrounds. However, in line with best practice, the Board does take into account these aspects when making new Board appointments and considering the composition of the Board. There are 2 female members on the Board, equivalent to about 13% of the Board. The Board ranges in age from 40 to over 70 years old, with the average age being 52.5 years. Board members have experience across the following areas: the transportation and port industry, audit, accounting, economics and finance, the banking sector and legal, engineering and mechanics, biophysics and mathematics, history, international affairs and risk management. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 100 100 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 101 101 Corporate Governance Report Induction and professional development Activities The Chairman is responsible for ensuring that there is a properly constructed and timely induction for new directors upon joining the Board. Directors have full access to a regular supply of financial, operational, strategic and regulatory information to help them discharge their responsibilities. Performance evaluation The Board’s performance is assessed annually and the evaluation process is conducted through a combination of self-assessment and annual appraisals. The Chairman’s performance is evaluated by the Non-executive Directors. The Board meets at least four times a year. Fixed meetings are scheduled at the end of each quarter, while ad hoc meetings are called when there are pressing matters requiring the Board’s consideration in between the scheduled meetings. The Board met 18 times Regular meetings during 2020 and considered 79 items including the following: Ad hoc meetings • Review of the Group’s financial and operational performance. • Approval of the annual budget. • Review of the Group’s performance against the approved annual budget. • Approval of change of the GDR depositary bank and transfer of GDR Programme. • Approval of material borrowings and pledges by subsidiaries. • Approval of the contracts of the • Approval of the annual and semi- Company. annual financial statements and the respective regulatory announcements. • Review of the results of risk assessments. • Approval of the Annual General Meeting agenda, including dividend proposals and Board reappointments. • Approval of Company policies. • Approval of the remuneration of key management and executive directors. • Appointment of the key management of the Group. • Approval of dividend distribution by subsidiaries. • Review and consideration • Approval of appointments to the Board of Directors of subsidiaries. • Approval of the interim dividend of various business development opportunities and major transactions. of the Company. • Approval of the buyback of the Company’s GDRs from the market. • Approval for the listing of the Company’s GDRs on MOEX. • Changes in the responsibilities of Board members and other matters. THE BOARD AND THE BOARD COMMITTEES MEETINGS IN 2020 AND THE ATTENDANCE OF DIRECTORS Board of Directors Nomination Committee Remuneration Committee Audit Committee E 1 1 A 1 1 E 3 3 A 3 3 E 4 4 4 A 4 4 4 Sergey Maltsev (Chairman) John Carroll Colley Dr. Johann Franz Durrer Alexander Eliseev Andrey Gomon Vasilis Hadjivassiliou Elia Nicolaou George Papaioannou Melina Pyrgou Konstantin Shirokov Alexander Storozhev Alexander Tarasov Michael Thomaides Marios Tofaros Sergey Tolmachev E A Eligible Attended E 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 A 18 18 18 17 18 18 18 18 18 18 18 18 17 18 18 The total gross remuneration of the members of the Board of Directors paid by the Group in 2020 amounted to RUB 433 mln. Remuneration of the Board and the management Directors serve on the Board under letters of appointment which specify their terms of appointment and remuneration. Appointments are effective until the following Annual General Meeting. Remuneration levels for Non-executive Directors reflect their expertise, time commitment, responsibilities and membership of any Board Committees. Directors are also reimbursed for expenses associated with the discharge of their duties. Non-executive Directors are not eligible for bonuses, retirement benefits or participation in any incentive plans operated by the Group. The Group’s shareholders approved the remuneration of Board members for 2020 at the Annual General Meeting held on 30 April 2020. For details of the remuneration paid to the Board and key executives in 2020, please refer to Note 35a of the Group’s Consolidated Management Report and Consolidated Financial Statements included in the Financial Statements section of this Annual Report. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 102 102 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 103 103 Corporate Governance Report Board committees In 2020, in order to assist the Board and ensure transparency and impartiality in specific areas, Globaltrans had 3 Board committees: the Audit Committee, the Nomination Сommittee and the Remuneration Сommittee. The Chairperson of each committee is an Independent Director. In January 2021, the Group also established the ESG Committee. All committees are advisory bodies. While these committees have the authority to examine particular issues and report back with recommendations, the ultimate decision-making responsibility for all matters lies with the full Board. Each committee has written terms of reference, approved by the Board, that summarise the committee’s role and responsibilities. 4Board committees1 Audit Committee The role of the Audit Committee is to ensure the integrity of the Group’s published financial information and the effectiveness of the internal audit function and the systems for internal control and risk management, as well as the external audit process. Members and meetings Responsibilities Issues considered in 2020 Number of members Members as at  31 December 2020 Minimum meetings a year Number of meetings in 2020 4 John Carroll Colley, Independent Non-executive Director (Chairman) Elia Nicolaou, Non-executive Director George Papaioannou, Independent Non-executive Director 4 3 members 2 independent Integrity of the Group’s financial statements. • • Effectiveness of the Group’s internal control and risk management systems. • Relationship with the Group’s external auditors, including the audit process and reports. • Terms of the auditor’s appointment and remuneration. • • Assessment of the Chairman of the Board’s performance. Implementation of codes of conduct. • Review of the Group’s Consolidated Financial Statements for 2019 and interim financial results for the six months ended 30 June 2020. • Review of the external auditor’s report to the Audit Committee following its full-year audit for 2019 and review for the six months ended 30 June 2020. • Review of the Group’s external auditor and terms of reappointment for 2020. The Committee recommended reappointment of the external auditors to the Board which, in turn, proposed their reappointment at the Annual General Meeting of the Group held on 30 April 2020. • Review of the report of the external auditor on the audit strategy for 2020. • Review of regulatory announcements by the Group. • Review of internal controls and risk management processes. • Approval of non-audit services to be provided to the Group by the external auditor. • Review of the internal audit function and reports on its activities, and on the internal audit model and plan. THE AUDIT COMMITTEE MEETINGS IN 2020 John Carroll Colley Elia Nicolaou George Papaioannou Eligible Attended 4 4 4 4 4 4 1 Including an ESG Committee established in January 2021. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020104 104 Globaltrans Investment PLC Annual Report & Accounts 2020 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information Globaltrans Investment PLC Annual Report & Accounts 2020 105 105 Corporate Governance Report Nomination Committee Remuneration Committee The role of the Nomination Committee is to monitor and review the composition and balance of the Board and its committees to ensure Globaltrans has the right structure, skills and diversity for the effective management of the Group. The role of the Remuneration Committee is to ensure that executive remuneration aligns appropriately with the business strategy and that the Remuneration Policy remains appropriate. Number of members Members as at  31 December 2020 Minimum meetings a year Number of meetings in 2020 Number of members Members as at  31 December 2020 Minimum meetings a year Number of meetings in 2020 Members and meetings 2 members 2 independent Johann Franz Durrer, Senior Independent Non-executive Director (Chairman) John Carroll Colley, Independent Non-executive Director 1 1 Responsibilities • Preparation of selection criteria and appointment procedures for Board members. • Regular review of the Board’s structure, size and composition. • Future Board appointments. • Recommendations regarding the membership of the Audit and Remuneration Committees. Members and meetings 2 members 2 independent Johann Franz Durrer, Senior Independent Non-executive Director (Chairman) John Carroll Colley, Independent Non-executive Director 1 3 Responsibilities • Remuneration of Executive Directors (Chairman and Executive Directors determine the remuneration for independent members). • Review of the Group’s Remuneration Policy. Issues considered in 2020 • Advice to the Annual General Meeting on the appointment of Board members. • Recommendation on appointment of a Director to the Board of the Company. Issues considered in 2020 • Approval of bonuses to the Chief Strategy Officer and the Chief Financial Officer. THE NOMINATION COMMITTEE MEETINGS IN 2020 THE REMUNERATION COMMITTEE MEETINGS IN 2020 Dr. Johann Franz Durrer John Carroll Colley Eligible Attended 1 1 1 1 Dr. Johann Franz Durrer John Carroll Colley Eligible Attended 3 3 3 3 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020106 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 107 Corporate Governance Report Establishment of the ESG Committee The Board’s strategy and business model aims to deliver sustainable growth for all stakeholders and the consideration of environmental, social and governance (ESG) issues has a central role to play. Companies increasingly are expected by stakeholders to explain how their business impacts on the environment, society and the people in it. The coronavirus pandemic has only served to intensify debate around sustainability and increase calls for greater transparency. The Group takes its ESG responsibilities seriously and in January 2021 the Board established an ESG Committee to lead its thinking on ESG matters and ensure that ESG issues are integrated into the Group’s long-term strategy. The ESG Committee will also monitor the development of the Group’s sustainability strategy, review and recommend ESG disclosures for Board approval and approve the Group’s sustainability reports. The ESG Committee is comprised of 2 Board members: Elia Nicolaou, Non-executive Director, who will serve as the Chair, and John Carroll Colley, Independent Non-executive Director. The ESG Committee will meet at least 2 times a year. As the Committee was established at the start of 2021, further information about its activities will be published in the Group’s Annual Report for 2021. Shareholder engagement The Board places great importance on its relationships with the Company’s shareholders. It continually strives to provide high levels of transparency and build trust, recognising that engaging with shareholders is key to creating long-term, sustainable shareholder value. The Board engages with shareholders in a variety of ways. The CEO and CFO meet regularly with the Group’s institutional investors to hear their views and provide updates on the Group’s strategy and business performance. The Group has a dedicated Investor Relations team that acts as the primary point of contact with the investor community. Management undertakes a regular schedule of meetings, presentations, conference calls and webcasts with institutional investors and sell-side analysts. The Group’s commitment to open and constructive communication has been particularly important in the last year in light of the coronavirus pandemic. The Board and management worked hard to maintain open channels of communications, maintaining a full investor relations contact programme using remote communications tools to interact with investors. The Group’s new website was also launched in 2020, providing easy- to-navigate access and an enhanced investor relations experience. In connection with the Group’s secondary listing on MOEX, the Company arranged 7 interactive events and seminars for Russian retail investors to introduce them to the Company, and set out the investment case. These events were well supported by retail investors in Russia. There are currently 11 sell-side analysts who monitor Globaltrans. Corporate information, including annual reports, Company announcements and presentations is available on the corporate website at  www.globaltrans.com/investors. Internal control and audit The Board is primarily responsible for establishing a framework of prudent and effective internal controls and risk management in relation to the financial reporting process for the undertakings included in the Group consolidation that enables risks to be assessed and managed and financial reports to be prepared. The Audit Committee reviews and assesses the Group’s internal control and risk management processes. The system of controls is designed to manage rather than eliminate the risks relevant to the In 2020, Globaltrans' Investor Relations team held 260 meetings with investors and shareholders, participated in arranged conferences, 7 investor 3 roadshows Group’s operations and, therefore, can only provide reasonable, and not absolute, assurance against material errors, losses, fraud or breaches of laws and regulations. At Globaltrans, the body responsible for internal audit is the Internal Audit Service (IAS). It tests the Group’s systems of risk management, internal control and corporate governance to obtain reasonable assurance that: • the risk management system functions efficiently; • material financial, management and operating information is accurate, reliable and up-to-date; • the actions of employees and management bodies comply with the Group’s policies, standards and procedures and applicable laws; • resources are procured reasonably and used efficiently and their safekeeping is fully guaranteed; • Group companies conduct their business in compliance with applicable laws. Every year the Audit Committee approves an internal audit plan, which is developed by identifying the audit universe, performing a risk analysis and obtaining input from management relative to risks, controls and governance processes. The internal auditor regularly reports to the Audit Committee on the progress of planned audits. If any material internal control deficiencies are identified, they are immediately communicated to the Audit Committee and consequently to the Board. External auditor The Audit Committee manages the relationship with the external auditor on behalf of the Board. Each year it considers the reappointment of the external auditor, reviews requirements of the rotation of the audit partner and the audit firm when applicable, as well as its remuneration and other terms of engagement, and makes a recommendation to the Board. Shareholders are then asked to approve the appointment at the Annual General Meeting. The Group has a formal policy on assessing the independence and objectivity of the external auditor. It regulates the terms of appointment of the external auditor and the nature of audit and permitted non- audit services provided to the Group. External auditors periodically (at least annually) provide written confirmation to the Committee that, in their professional judgement, they are independent of the Group. The Committee is satisfied that the independence and objectivity of the external auditors is not impaired and that the external audit process remains effective. The Audit Committee recommended the reappointment of PricewaterhouseCoopers as the Group’s external auditor for 2020 and 2021. The appointment for 2020 was approved by the Group’s shareholders at the Annual General Meeting on 30 April 2020. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 108 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 109 Share Capital Corporate Structure OWNERSHIP STRUCTURE, AS OF 30 MARCH 2021 10.8% 11.5% 11.5% 56.9% Globaltrans was formed in 2004 when a group of like-minded entrepreneurs brought their freight rail businesses together to form the Company, giving it  the scale, governance and focus to become one of the leading players in the region. Globaltrans provides freight rail transportation, railcar leasing and other ancillary services to clients in Russia, the CIS and Baltic countries through its subsidiaries — New Forwarding Company, BaltTransServis, GTI Management, SyntezRail, Spacecom, Spacecom Trans and Ukrainian New Forwarding Company. The Group’s corporate structure ensures efficient asset management and operational control while creating logical business segments. Those founders continue to be shareholders today with a combined stake of about 43% in total and their entrepreneurial spirit remains at the heart of the Group's culture and approach. In addition, other directors and management of Globaltrans are shareholders in the Company representing about 0.2% of the issued share capital. In 2008, Globaltrans’ founders recognised the benefits of an international listing and undertook an Initial Public Offering on the London Stock Exchange, becoming the first freight rail company serving Russian cargo flows to be listed internationally. In October 2020 Globaltrans' GDRs were admitted to trading on the Moscow Exchange. Today, the majority of the Company’s shares are in the hands of the public with Globaltrans’ free float amounting to approximately 56.9%1 of the issued share capital. The issued share capital of Globaltrans consists of 178,740,916 ordinary shares with a nominal value of USD 0.10 each, a certain portion of which is held in the form of Global Depositary Receipts ("GDRs"). The GDRs represent one ordinary share each and have been traded on the Main Market of LSE (ticker symbol: GLTR) since May 2008 and on the Level One quotation list of MOEX since October 2020 (ticker symbol: GLTR). Citibank N.A. is the depositary bank for the GDR programme of Globaltrans. 5 founders 0.2% 0.9% 3.1% 5.1% Marigold Investments Ltd 2 Onyx Investments Ltd 2 Maple Valley Investments Ltd 2 Litten Investments Ltd 3 Goldriver Resources Ltd 4 Transportation Investments Management Ltd 5 Directors and management Treasury shares Free float 1 1 For these purposes, the free float consists of the ordinary shares and GDRs held by investors not affiliated or associated with Globaltrans. 2 A. Filatov, N. Mishin and K. Nikolaev are co-founders of Globaltrans and are beneficiaries with regard to 11.5%, 11.5%, 10.8% respectively of Globaltrans’ ordinary share capital each through their respective SPVs (Marigold Investments Ltd, Onyx Investments Ltd and Maple Valley Investments Ltd). 3 Beneficially owned by Alexander Eliseev, Non-executive Director and co-founder of Globaltrans. 4 Beneficially owned by Sergey Maltsev, Chairman of the Board of Directors, Chief Strategy Officer and co-founder of Globaltrans. 5 Beneficially owned by Andrey Filatov, Nikita Mishin and Konstantin Nikolaev, co-founders of Globaltrans. CORPORATE STRUCTURE, AS OF 31 DECEMBER 2020 Globaltrans Investment PLC New Forwarding Company, AO (Russia) 100% BaltTransServis, OOO (Russia) 60% GTI Management, OOO (Russia) 100% Ural Wagonrepair Company, AO (Russia) 100% Ukrainian New Forwarding Company, LLC (Ukraine) 100% Source: Globaltrans AS Spacecom, (Estonia) 65.25% SyntezRail Limited (Cyprus) 60% BTS-Locomotive solutions, OOO (Russia) 100% RemTransServis, OOO (Russia) 100% AS Spacecom Trans, (Estonia) 100% Ekolinja Oy, (Finland) 100% SyntezRail, ООО (Russia) 100% Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 110 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 111 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020 Board of Directors and other officers ........................................................ 112 Consolidated Management Report ...........................................................114 Directors’ responsibility ........................................................................... 136 Independent Auditor’s Report .................................................................. 138 Consolidated cash flow statement........................................................... 152 Notes to the consolidated financial statements ...................................... 154 1. General information ......................................................................................................154 2. Basis of preparation .....................................................................................................154 3. Adoption of new or revised standards and interpretations ............................155 4. Summary of significant accounting policies .......................................................155 5. New accounting pronouncements ......................................................................... 175 6. Financial risk management ......................................................................................... 176 7. Critical accounting estimates and judgements .................................................. 189 8. Segmental information ................................................................................................ 191 9. Non-IFRS financial information................................................................................. 198 10. Revenue........................................................................................................................... 204 11. Expenses by nature ..................................................................................................... 206 12. Other gains/(losses) — net ........................................................................................ 210 13. Employee benefit expense ........................................................................................ 210 14. Finance income and costs ...........................................................................................211 15. Income tax expense ......................................................................................................212 16. Net foreign exchange losses .....................................................................................214 17. Property, plant and equipment .................................................................................215 18. Right-of-use assets .......................................................................................................220 19. Intangible assets ........................................................................................................... 223 20. Principal subsidiaries ................................................................................................... 224 21. Share-based payments ...............................................................................................230 22. Financial assets ..............................................................................................................231 23. Other assets ...................................................................................................................234 24. Inventories ......................................................................................................................236 25. Cash and cash equivalents ........................................................................................236 26. Share capital, share premium and treasury shares ...........................................238 27. Dividends ........................................................................................................................239 28. Borrowings ......................................................................................................................240 29. Other lease liabilities ...................................................................................................245 30. Deferred income tax ...................................................................................................246 31. Trade and other payables ...........................................................................................248 32. Earnings per share ........................................................................................................248 33. Contingencies ...............................................................................................................249 34. Commitments ................................................................................................................ 253 35. Related party transactions ........................................................................................254 36. Events after the balance sheet date ....................................................................... 255 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020112 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 113 Board of Directors and other officers Mr. Sergey Maltsev Chairman of the Board of Directors Executive Director Alternate director: Mr. Yuri Isaev Mr. Sergey Tolmachev Executive Director Mr. Alexander Storozhev Executive Director Alternate Director: Ms. Elia Nicolaou Mr. Konstantin Shirokov Executive Director Mr. Alexander Eliseev Non-executive Director Alternate Director: Ms Ekaterina Golubeva Mr. Andrey Gomon Non-executive Director Alternate Director: Ms. Melina Pyrgou Mr. Alexander Tarasov Non-executive Director Board of Directors Dr. Johann Franz Durrer Senior Independent Non-Executive Director Chairman of the Remuneration Committee Chairman of the Nomination Committee Mr. Vasilis Hadjivassiliou Independent Non-Executive Director Member of the Audit Committee (since January 2021) Mr. John Carroll Colley Independent Non-Executive Director Chairman of the Audit Committee Member of Remuneration Committee Member of Nomination Committee Member of ESG Committee (since January 2021) Mr. George Papaioannou Independent Non-Executive Director Member of the Audit Committee Ms. Elia Nicolaou Non-executive Director Chairwoman of the ESG Committee (since January 2021) Member of the Audit Committee (until January 2021) Company Secretary Secretary of the Board Alternate Director: Mr. Marios Tofaros Mr. Michalakis Thomaides Non-Executive Director Ms. Melina Pyrgou Non-executive Director Mr. Marios Tofaros Non-executive Director Board support The Company Secretary is available to advise all Directors to ensure compliance with the Board procedures. Also a procedure is in place to enable Directors, if they so wish, to seek independent professional advice at the Company’s expense. Company Secretary Ms. Elia Nicolaou Dimitriou Karatasou, 15 Anastasio Building, 6th floor, Office 601 Strovolos, 2024, Nicosia, Cyprus Assistant secretary: Mr. Marios Tofaros Registered office 20 Omirou Street Agios Nicolaos CY-3095 Limassol, Cyprus Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020114 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 115 Consolidated Management Report The Board of Directors presents its report together with the audited consolidated financial statements for the year ended 31 December 2020. The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the requirements of Cyprus Companies Law, Cap. 113. Principal activities The principal activities of the Group, which are unchanged from last year, are the provision of railway transportation services, using own and leased rolling stock and fleet engaged from third party rail operators, as well as the operating lease of rolling stock. Review of developments, position and performance of the Group’s business Although the Group’s financial results were inevitably impacted by the weak markets and the unprecedented trading conditions of 2020, the Group was nonetheless able to deliver a solid performance in 2020. The weak pricing conditions in the gondola segment were partially offset by a less volatile Russian tank car segment and growing revenues from specialised containers and the railcar leasing businesses resulting in the Group delivering increased free cash flow and solid dividends for the Company’s shareholders. IFRS financial information Management considers amongst others the following IFRS measures in analysing the performance of the Group. The Group’s Total revenue decreased 28% year on year to RUB 68,367,404 thousand in 2020 (2019: RUB 94,993,874 thousand). Operating profit decreased 41% year on year to RUB 18,811,071 thousand in 2020 (2019: RUB 32,119,830 thousand). The Profit for the year ended 31 December 2020 decreased 46% year on year to RUB 12,186,847 thousand (2019: RUB 22,653,332 thousand). On 31 December 2020 the total assets of the Group were RUB 98,327,207 thousand (2019: RUB 99,574,549 thousand) and net assets were RUB 52,773,813 thousand (2019: RUB 56,526,065 thousand). On 31 December 2020 the total debt of the Group was RUB 32,015,239 thousand and increased by 6% as compared to end of 2019 which amounted to RUB 30,095,218 thousand. Total cash and cash equivalents on 31 December 2020 decreased by 24% and amounted to RUB 4,978,322 thousand (31 December 2019: 6,521,543 thousand). Non-IFRS financial information Amongst others, management analyses the following key non-IFRS measures. These non-IFRS measures are marked with capital letters and their definitions are provided at the end of this section in alphabetical order. Adjusted Revenue decreased 20% year on year to RUB 54,933,713 thousand (2019: RUB 68,839,669 thousand) primarily reflecting weak pricing conditions in the gondola segment and partially offset by a less volatile tank car segment and growing revenues from specialised containers and railcar leasing businesses. Total Operating Cash Costs were down 1% year on year to RUB 29,121,210 thousand (2019: RUB 29,408,565 thousand). Adjusted EBITDA decreased 32% year on year to RUB 26,807,224 thousand (2019: RUB 39,551,913 thousand) with the Adjusted EBITDA Margin reduced to 49% (2019: 57%), mainly impacted by weak pricing conditions in the gondola segment. The Group’ Free Cash Flow was RUB 15,103,243 thousand, a 14% increase compared RUB 13,250,559 thousand in 2019. The Group had a strong balance sheet with Net Debt to Adjusted EBITDA increasing to 1.01x (2019 end: 0.60x). Net Debt rose by 15% to RUB 27,036,917 thousand (2019 end: RUB 23,573,675 thousand). As at 31 December 2020 and 31 December 2019 100% of the Group’s debt was denominated in Russian roubles. In 2020, management continued to make disciplined decisions on capital allocation whilst pursuing cost improvement and productivity measures. The Total Capex decreased 49% year on year to RUB 6,941,159 thousand (2019: RUB 13,516,817 thousand). This lower capital expenditure was largely due to the decrease in expansion CAPEX, reflecting moderate investments together with lower maintenance CAPEX, largely reflecting decrease in the number of depot repairs, wheel pairs and locomotive repairs and prices for certain spare parts and repair works. In 2020, the Group acquired 300 flat cars to support the growing niche business of freight rail transportation of specialised containers (for petrochemicals and high grade steel compared to 2,502 units (including 1,154 specialised containers, 700 flat cars, 638 gondola cars and 10 locomotives in the previous year). Operational information In 2020, Freight Rail Turnover (excluding Engaged Fleet) increased 2.2% year on year and the Group’s Transportation Volume (excluding Engaged Fleet) decreased 3%. The Freight Rail Turnover amounted to 150.3 billion tonnes-km (2019: 147.1 billion tonnes-km) and the Group’s Transportation Volume was 88.9 million tones in 2020 (2019: 91.6 million tones). The Average Number of Loaded Trips per Railcar decreased by 5% year on year and the Average Distance of Loaded Trips increased by 6% year on year, mainly reflecting changed logistics and volatility in demand for rail transportation specifically in the tank car segment. Average Price per Trip reduced 19% year on year to RUB 36,909 (2019: RUB 45,807), with solid pricing in tank cars partially compensating for continued weak pricing in the gondola segment. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020116 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 117 Consolidated Management Report The increase in the Empty Run Ratio for gondola cars to 45% (2019: 42%) on the back of substantial volatility in client cargo flows and routes due to the unprecedented COVID-19 lockdowns resulting in increase in the Total Empty Run Ratio to 51% (2019: 49%). Total Fleet increased by 1% to 71,688 units (2019 end: 70,720 units) primarily reflecting the increase in number of leased-in fleet. The financial position, development and performance of the Group as presented in the financial statements is considered satisfactory. Definitions to Non-IFRS financial measures Adjusted EBITDA represents EBITDA excluding “Net foreign exchange transaction losses from financing activities”, “Share of loss of associate”, “Other losses/(gains) - net”, “Net loss/(gain) on sale of property, plant and equipment”, “Reversal of impairment/(impairment) of property, plant and equipment”, “Loss on derecognition arising on capital repairs” and “Reversal of impairment of intangible assets”. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Adjusted Revenue. Adjusted Revenue is calculated as “Total revenue” less the following “pass through” items “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”. Average Distance of Loaded Trip is calculated as the sum of the distances of all loaded trips for a period divided by the number of loaded trips for the same period. Average Number of Loaded Trips per Railcar is calculated as total number of loaded trips in the relevant period divided by Average Rolling Stock Operated. Average Price per Trip is calculated as Net Revenue from Operation of Rolling Stock divided by the total number of loaded trips during the relevant period in the respective currency. Net Revenue from Operation of Rolling Stock is defined as the sum of “Revenue from railway transportation - operators services (tariff borne by the Group)” and “Revenue from railway transportation - operators services (tariff borne by the client)” less “Infrastructure and locomotive tariffs: loaded trips”, “Services provided by other transportation organisation” and net revenue from engaged fleet. Average Rolling Stock Operated is calculated as the average weighted (by days) number of rolling stock available for operator services (not including rolling stock in maintenance, purchased rolling stock in transition to its first place of commercial utilisation, rolling stock leased out, Engaged Fleet, flat cars and tank containers used in petrochemical business). EBITDA represents “Profit for the year” before “Income tax expense”, “Finance costs - net” (excluding “Net foreign exchange transaction gains/(losses) on financing activities”), “Depreciation of property, plant and equipment”, “Amortisation of intangible assets” and “Depreciation of right-of-use assets”. Empty Run Ratio is calculated as the total of empty trips in kilometres by respective rolling stock type divided by total loaded trips in kilometres of such rolling stock type. Empty trips are only applicable to rolling stock operated (not including rolling stock in maintenance, purchased rolling stock in transition to its first place of commercial utilisation, rolling stock leased out, engaged fleet, platforms and tank containers used in petrochemical business). Engaged Fleet is defined as rolling stock subcontracted or otherwise engaged from a third-party rail operator for a loaded trip from the point of origination to the cargo’s destination, at which point the railcar is then released to such third-party. Free Cash Flow is calculated as “Cash generated from operations” (after “Changes in working capital”) less “Tax paid”, “Purchases of property, plant and equipment”, “Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired”, “Interest paid on lease liabilities”, “Interest paid on bank borrowings and non-convertible unsecured bonds” and “Interest paid on leases with financial institutions”. Freight Rail Turnover is a measure of freight carriage activity over a particular period calculated as the sum of tonnage of each loaded trip multiplied by the distance of each loaded trip, expressed in tonnes-km. It includes volumes transported by the engaged fleet and excludes performance of petrochemical tank container segment. Net Debt is defined as the sum of total borrowings (including interest accrued) less “Cash and cash equivalents”. Net revenue from engaged fleet represents the net sum of the price charged for transportation to clients by the Group utilising Engaged Fleet less the loaded railway tariff charged by OAO “Russian Railways” (included in “Infrastructure and locomotive tariffs: loaded trips”) less the cost of attracting fleet from third-party operators (included in “Services provided by other transportation organisations”). Owned Fleet is defined as the fleet owned and leased in under finance lease as at the end of the reporting period. It includes railcars, locomotives and containers, unless otherwise stated, and excludes Engaged Fleet. Total CAPEX calculated on a cash basis as the sum of “Purchases of property, plant and equipment”, “Purchases of intangible assets”, “Acquisition of subsidiary undertakings — net of cash acquired”. Total Empty Run Ratio is calculated as total kilometres travelled empty divided by the total kilometres travelled loaded by the rolling stock fleet operated by Globaltrans (not including the relocation of rolling stock to and from maintenance, purchased rolling stock in transition to its first place of commercial utilisation, or rolling stock leased out, Engaged Fleet, platforms and tank containers used in petrochemical business) in the relevant period. Total Fleet is defined as the fleet owned and leased in under finance and operating leases as at the end of reporting period. It includes railcars, locomotives and petrochemical tank containers, unless otherwise stated, and excludes engaged fleet. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020118 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 119 Consolidated Management Report Total Operating Cash Costs represent operating cost items payable in cash and calculated as “Total cost of sales, selling and marketing costs and administrative expenses” less the “pass through” items: “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations” and non-cash items: “Depreciation of property, plant and equipment”, “Amortisation of intangible assets”, “Depreciation of right-of-use assets”, “Loss on derecognition arising on capital repairs”, “Net impairment losses on trade and other receivables”, “Reversal of impairment/(impairment) of property, plant and equipment” and “Net loss/(gain) on sale of property, plant and equipment”. Transportation Volume is a measure of freight carriage activity over a particular period, measuring weight of cargo carried in million tonnes. It excludes volumes transported by Engaged Fleet and the performance of petrochemical tank container segment. Changes in group structure There were no changes in the Group structure of the Company during the year ended 31 December 2020. For the principal subsidiaries of the Company, refer to Note 20 of the consolidated financial statements. Human resources Globaltrans considers the wellbeing of employees central to its success and strives to maintain exemplary working standards, ensure job satisfaction and create opportunities for professional growth. The Group’s personnel policy focuses on creating a positive atmosphere at all offices and facilities to maximise productivity. As part of this, it offers medical insurance, support for education, opportunities to obtain additional qualifications and training, and financial aid in particularly difficult times. The Group’s future success will partly depend on its ability to continue to attract, retain and motivate key employees and qualified personnel, in particular an experienced management team. Competition in Russia for such personnel with relevant expertise is intense due to the small number of qualified individuals with suitable practical experience in the rail industry. Adequate remuneration packages, which are in line with or in excess of market levels, are offered to all employees and key managers and remuneration is linked to the Group’s financial results. The Human Resource function regularly monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages are adequate. Non-Financial Information and Diversity Statement Principal risks and uncertainties The Group will be publishing its Non-Financial Information and Diversity Statement within its Annual report that will be issued within four months after the balance sheet date and will be available on the Company’s website, www.globaltrans.com Environmental matters Rail is one of the most environmentally friendly modes of transport. Nonetheless, any commercial activity has an environmental impact and Globaltrans strives to minimise those from its operations where possible. To this end, the Group ensures that its activities fully comply with local environmental regulations. It also aims to help business and nature co-exist by focusing on applying modern technology in its operations and using natural resources rationally. In January 2021, the Board established the ESG Committee to analyse and oversee risks related to the environmental, social and governance issues. The Group faces a number of diverse potential and actual risks to its business. The Board has adopted a formal process to identify, evaluate and manage principal risks and uncertainties faced by the Group. To identify, evaluate and mitigate these, the Group has established an in-house system to monitor and control uncertainties and threats throughout its activities. This is overseen by a dedicated Risk Management function, which works directly with the Board of Directors in this area. The Group has grouped the risks that it considers to be significant into key categories — strategic, operational, compliance and financial — and they are presented below. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020120 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 121 Consolidated Management Report Strategic risks Operational risks The strategic risks faced by the Group that pose risks that influence the Group’s ability to achieve its strategy include the general economic situation and operating environment in Russia, Kazakhstan, Ukraine, CIS and Baltic countries in which the Group operates; the regulatory risk relating to the operation of the Russian railway transportation market, including railway tariff regulation and technical requirements for fleet maintenance; the highly competitive Russian rail transportation market with unregulated operator’s services tariffs; the significant concentration of the Group’s customer base with the top 10 customers (including their affiliates and suppliers) accounting for around 72% of the Group’s Net Revenue from the operation of rolling stock in 2020; cost of borrowing and/or deterioration in market conditions with potential impacts on the profitability and recoverability of investments; and reliance on RZD for issuing permits allowing the Group to operate locomotives. The Group operates mainly in Russia and other emerging markets. Emerging markets, such as Russia, Kazakhstan and Ukraine, are subject to greater risks than more developed markets, including significant economic, political, social, legal and legislative uncertainties. Moreover, the Group’s business depends on the demand in the Russian freight rail transportation market, which in turn depends on certain key commodity sectors and, accordingly, on economic conditions in Russia, Europe and elsewhere. A decrease in production and demand for key commodities in Russia, or in adjacent countries where the commodities of the Group’s key customers are shipped by rail, as a result of a technological shift, economic downturn, political crisis or other event in Russia or another relevant country, negatively impacts the Group’s business and growth prospects. The management of the Group constantly monitors the developments in the operating environment and regulatory regime of the railway transportation market in the countries in which the Group operates. The Group’s business model is to maintain a balanced fleet between universal gondola cars, adaptable to the demand for transportation of various bulk cargoes and rail tank cars, which are used for the transportation of oil products and oil. Further, the Group has long-term, established relationships with its key customers and their affiliates and suppliers and in some cases, the Group becomes an integrated part of its customers’ operations. Around 64% of the Group’s Net Revenue from the Operation of Rolling Stock in 2020 was covered by long-term service contracts with several large clients. Such contracts provide additional stability and greater certainty regarding transport volumes for the Group. In addition, the Group’s marketing function regularly monitors competitors’ strategies, their use of technology, their price strategies and industry trends. In addition to the human impact, the spread of Coronavirus (COVID-19) continues to affect global businesses and may lead to further and/or continued lockdowns, trade wars and turbulence in different currencies. The Group’s outlook for 2021 may be further impacted by the Coronavirus outbreak, which continues to cause uncertainty. The freight rail market may experience reduced demand stemming from the effects of COVID-19. The Company cannot predict the full impact of COVID-19 on its markets, business or prospects although they may be materially adversely impacted by the rapidly evolving situation. In addition, the appearance of new pandemics or other dangerous illnesses could seriously affect the global and local business environment and lead to negative consequences for Group’s business. Significant levels of COVID-19 illness in the Group or its key clients could interfere with stability of Group’s operations. Management is closely monitoring the implications of the global outbreak of COVID-19 and acts depending on the development of the situation. The Group constantly evaluates and implements options for distant work for its workforce to mitigate risks of spreading and catching COVID-19 illness. The operational risks faced by the Group that could influence the Group’s operational efficiency include the physical state of the Russian, Ukrainian, CIS and Baltic countries railway infrastructure which may negatively impact the condition of the Group’s rolling stock and the performance of the Group; the impact of inflation in Russia on the Group’s costs with limited opportunities to increase tariffs to customers; the competition for personnel with relevant expertise and experience in Russia and the impact on the Group’s ability to continue to attract, retain and motivate key employees and qualified personnel; reliance on RZD for locomotive traction and infrastructure usage and the impact of this on the quality of the Group’s freight transportation services and therefore customer satisfaction; IT availability and continuity considerations due to reliance on specialised trail transport and logistics software for ensuring efficient and effective logistics, dispatching and rolling stock tracking services; and risks of terrorist attacks, natural disasters or other catastrophic events beyond the Group’s control. The Group is managing operational risk by ensuring that practically all of the Group’s rolling stock is insured against damage. Further, the Group monitors its rolling stock through the Group’s dispatch centre on a 24/7 basis and plans routes accordingly to minimise the risks of disruption. The Group monitors FAS initiatives with the aim of detecting possible changes in tariff-setting methodology and tries to reflect respective changes in contracts with customers. Among the Group’s key objectives are to increase operational efficiency and to focus on control and reduction of costs. The Group continuously monitors its costs to maintain efficiency. The Human Resource function regularly monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages are adequate. Customer satisfaction is one of the key metrics that the Group’s management monitors, with customer feedback being analysed and appropriate follow-up actions being taken. Local IT specialists have introduced solutions to maintain the availability of IT services and ensure their recovery in case of disruption. The IT function and Internal Audit function monitor all IT-related activities and performance for compliance with IT policies and procedures. Further the Group permanently monitors any disruptive events and applies a Business Continuity Policy to ensure the safety of employees and human life; maintain continuity of time-critical services; minimise disruptions to clients and partners; and minimise operational, financial and reputational impact. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020122 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 123 Consolidated Management Report Compliance risks The Group is also subject to compliance risk, being the risks that influence the Group’s adherence to relevant laws and regulations, including the regulations of the London Stock Exchange (“LSE”) and the Moscow Exchange (“MOEX”), where Company’s GDR are admitted to trading. The Group is involved in legal actions from time to time. Some of it may have an adverse effect on the Group. The ambiguity of the law in Russia and CIS countries creates regulatory uncertainty and might result in claims from different government authorities. Local tax, currency and customs legislation, especially in Russia, other emerging markets and Cyprus, may be subject to varying interpretations, inconsistencies between federal laws, regional and local laws, rules and regulations, frequent changes and a lack of judicial and administrative guidance on interpreting legislation. The Group runs its operations in compliance with tax, currency, labour, customs, antimonopoly and other applicable legislation and constantly monitors any changes in the regulatory environment as well as compliance with the terms of its agreements. Standard forms of agreements are used for transportation services, and various controls are in place to ensure that the terms of agreements are adhered to. All contracts are subject to rigorous review by all of the Group functions concerned and a formal approval process prior to execution. The Group has controls in place, including highly qualified and experienced personnel, to monitor changes in legislation and determine the appropriate action needed to minimise the risk of a challenge to such treatments by the authorities. For complex matters, the Group retains external consultants. Financial risks Cash flow and fair value interest rate risk The Group’s income and operating cash flows are exposed to changes in market interest rates. The Group obtains borrowings at current market interest rates and does not use any hedging instruments to manage interest rate risk. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Credit risk arises from cash and cash equivalents, trade receivables, loans and other receivables as well as finance lease receivables. Liquidity risk The Group has an excess of current liabilities over current assets of RUB 2,842,697 thousand as at 31 December 2020. Due to availability of committed credit lines amounting to, together with long-term borrowings (Note 28) the Group has the ability to meet its liabilities as they fall due and mitigate risks of adverse changes in the financial markets environment. Management controls current liquidity based on expected cash flows and expected revenue receipts. In the long-term perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new credit, loan or lease agreements and by budgeting procedures. Further details on the Group’s exposure to financial risks are presented in Note 6 to the consolidated financial statements. The Group’s activities exposed 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 program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial results. Contingencies The Group’s contingencies are disclosed in Note 33 to the consolidated financial statements. Foreign exchange risk Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in the currency different from the functional currency of each of the entities of the Group. Future developments The Group is exposed to the effects of currency fluctuations between (i) the Russian Rouble and the US Dollars in relation to US Dollar denominated balances held in the Company and the Cypriot and Russian subsidiaries of the Group having the Russian Rouble as their functional currency; (ii) the Euro and the US Dollar for US Dollar denominated balances held in the Estonian subsidiaries of the Group which have the Euro as their functional currency and (iii) the Ukrainian Hryvnia and the US Dollar for the US Dollar denominated balances held in the Ukrainian subsidiary of the Group which has the Ukrainian Hryvnia as its functional currency. The Group does not have formal arrangements for hedging foreign exchange risk, with the exception of application of hedge accounting to hedge foreign currency risk associated with highly probable dividend payments and associated dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these financial statements. The Board of Directors does not expect any significant changes in the activities of the Group for the foreseeable future. The Group’s strategic objective is to strengthen its position as a leading private freight rail group in Russia. Results The Group’s results for the year are set out on pages 146 and 147. The Board of Directors recommends the payment of a dividend as detailed below and the remaining net profit for the year is retained. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020124 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 125 Consolidated Management Report Dividends Treasury shares Pursuant to its 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 (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 declare dividends in Russian Roubles and pay such dividends in US Dollars. If dividends are not paid in US Dollars, except as otherwise described under “Terms and Conditions of the Global Depositary Receipts — Conversion of Foreign Currency”, they will be converted into US Dollars by the Depositary and paid to holders of GDRs net of currency conversion expenses. In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company started a GDRs buyback program. The buyback programme is for the Company’s GDRs, each representing one ordinary share of the Company with a par value of US$0.10 per share, and will run till the earlier of the close of the Annual General Meeting of the Company to be held in 2021 and May 2021. The total number of purchased GDRs shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046 shares, with each GDR representing one ordinary share). The buyback programme allows the Company to take advantage of opportunities, if any, when its return criteria are better met by way of a GDR buyback than through investment in fleet expansion. The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries to pay dividends to the Company in accordance with relevant legislation and contractual restrictions. The payment of such dividends by its subsidiaries is contingent upon the sufficiency of their earnings, cash flows and distributable reserves. The maximum dividend payable by the Company’s subsidiaries is restricted to the total accumulated retained earnings of the relevant subsidiary, determined according to the law. In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31 December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary share/GDR (US Dollar equivalent of US$ 110,787 thousand). In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend in the amount of RUB 5,237,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293 thousand). On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020 in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021 inclusive. Share capital As at 31 December 2020 the issued share capital of the Company which remains unchanged from the prior year, comprised 178,740,916 ordinary shares with a par value of US$0.10 per share. As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand). In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.  Research and development activities The Group has not undertaken any research and development activities during the year ended 31 December 2020. Events after the balance sheet date The events after the balance sheet date are disclosed in Note 36 to the consolidated financial statements. Branches The Group operates through branches and representative offices, maintaining eight branches and eight representative offices during 2020 (eight branches and eight representative offices during 2019). Going concern Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going concern basis in preparing the consolidated financial statements based on the fact that, after making enquiries and following a review of the Group’s budget for 2021, including cash flows and borrowing facilities, the Directors consider that the Group has adequate resources to continue in operation for the foreseeable future. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020126 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 127 Consolidated Management Report Auditors Members of the Board of Directors The Independent Auditor, PricewaterhouseCoopers Limited, has expressed their willingness to continue in office. A resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting. Corporate governance As at 31 December 2020 and at the date of this report, the Board comprises 15 members (2019: 15 members),11 (2019: 11 members) of whom are non-executive directors. Four (2019: four) of the non-executive directors are independent, they have no relationship with the Company, its related companies or their officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the best interests of the Company, and they are able to exercise objective judgment on corporate affairs independently from management. Globaltrans’ Board of Directors adopted the Company’s Code of Corporate Governance (the “Code”), guaranteeing that the interests of all shareholders are given due consideration. Although the Code is based on principles recommended by the UK Corporate Governance Code (formerly the Combined Code), this does not constitute voluntary compliance with such governance code. The members of the Board of Directors at 31 December 2020 and at the date of this report are shown on page 112. All of them were members of the Board throughout the year 2020. There were no significant changes in the assignment of responsibilities of the Board of Directors. Globaltrans’ corporate governance policies and practices are designed to ensure that the Group upholds its responsibilities to shareholders. As such, all employees are required to comply with these guidelines and the Group’s management team takes responsibility for ensuring that all departments adhere to these standards. These key principles are promoted and applied across all levels of the Group in order to establish effective and transparent corporate governance. In January 2010, the Board supplemented its Code of Corporate Governance with a corporate policy on the treatment of the rights of its non-controlling shareholders; this aims to ensure fair treatment of the rights of non-controlling shareholders of the Company. Full details of our governance policies can be found at https://globaltrans.com/governance/corporate-documents. The role of the Board of Directors The Group is managed by the Board of Directors which is collectively responsible to the shareholders for the success of the Group. The Board sets the strategic objectives and ensures that the necessary resources are in place to enable these objectives to be met. The Board is fully involved in decision making in the most important areas of business and conducts regular reviews of the Group’s operational and financial performance. One of the Board’s key responsibilities is to ensure that there is in place a system of prudent and effective risk controls that enable risks to be identified, assessed and managed appropriately. There is no provision in the Company’s Articles of Association for retirement of Directors by rotation; however, in accordance with the Terms of reference of the Board of Directors all board members are required to submit for re-election at least once every three years. Should a non-executive Director serve any term beyond six years, his/her re-election would be subject to particularly rigorous review. In practice, all current appointments are for one year and all directors will stand for re-election at the forthcoming Annual General Meeting of shareholders of the Company. The total gross remuneration of the members of the Board of Directors incurred by the Group in 2020 amounted to RUB 433,063 thousand (2019: RUB 507,802 thousand). Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 128 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 129 Consolidated Management Report Board performance The Board Committees The Board held 18 meetings in 2020. The Directors’ attendance is presented in the table below. Eligible Attended Sergey Maltsev (Chairman) John Carroll Colley Dr. Johann Franz Durrer Alexander Eliseev Andrey Gomon Vasilis Hadjivassiliou Elia Nicolaou George Papaioannou Melina Pyrgou Konstantin Shirokov Alexander Storozhev Alexander Tarasov Michael Thomaides Marios Tofaros Sergey Tolmachev 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 17 18 18 18 18 18 18 18 18 17 18 18 During 2020 the Board had three committees: the Audit Committee, the Nomination Committee and the Remuneration Committee. In January 2021 the Board has established the ESG Committee. A brief description of the terms of reference of the committees is set out below. Audit Committee The Audit Committee comprises of three Directors and meets at least four times each year. As of 31 December 2020 two members Audit Committee were independent and the Audit Committee was chaired by Mr. J. Carroll Colley and was also attended by Mr. Papaioannou and Ms. Nicolaou. In January 2021 Mr. Vasilis Hadjivassiliou became a member of the Audit Committee and Ms. Nicolaou resigned from the Audit Committee and was appointed to the ESG Committee, as a result since January 2021 the Audit Committee comprises of three independent Directors. The Audit Committee is responsible for considering, among other matters: the integrity of the Company’s financial statements, including its annual and interim accounts, and the effectiveness of the Company’s internal controls and risk management systems; auditors’ reports and the terms of appointment and remuneration of the auditor. The Committee supervises, monitors and advises the Board on risk management and control systems and the implementation of codes of conduct. In addition, the Audit Committee supervises the submission by the Company of financial information and a number of other audit-related issues. The Audit Committee is also responsible for assessing the efficiency of the performance of the Chairman of the Board. The Audit Committee manages the relationship with the external auditor on behalf of the Board. It considers the reappointment of the external auditor each year, as well as remuneration and other terms of engagement, and makes a recommendation to the Board. Shareholders are asked to approve the reappointment of the auditor each year at the Annual General Meeting. The Internal Audit function is carried out internally by the Group’s Internal Audit Service (“IAS”). IAS is responsible for testing the systems of risk management, internal control and corporate governance of the Group. Nomination Committee The Nomination Committee comprises of two Independent Directors and meets at least once a year. The Nomination Committee is chaired by Dr. Durrer and Carroll Colley is the other member. The Committee’s remit is to prepare selection criteria and appointment procedures for members of the Board and to review on a regular basis the structure, size and composition of the Board. In undertaking this role, the Committee refers to the skills, knowledge and experience required of the Board, given the Company’s stage of development, and makes recommendations to the Board as to any changes. The Committee also considers future appointments in respect of the Board’s composition and makes recommendations regarding the membership of the Audit and Remuneration Committees. Remuneration Committee The Remuneration Committee comprises of two Independent Directors and meets at least once a year. The Remuneration Committee is chaired by Dr. Durrer and Carroll Colley is the other member. The Committee’s responsibility is the determination and review of, among other matters, the remuneration of Executive Directors, and Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020  130 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 131 Consolidated Management Report the review of the Company’s remuneration policies. The remuneration of Independent Directors is a matter for the Chairman of the Board and the Executive Directors. No Director or manager may be involved in any decisions as to his/ her own remuneration.   ESG Committee In January 2021 the Board of Directors established an ESG Committee to lead its thinking on ESG matters and ensure that ESG issues are integrated into the Group’s long-term strategy. The ESG Committee will also monitor the development of the Group’s sustainability strategy, review and recommend ESG disclosures for Board approval and approve the Group’s sustainability reports. The ESG Committee is comprised of two Board members: Elia Nicolaou, Non-executive Director, who serves as the Chair, and John Carroll Colley, Independent Non-executive Director. The ESG Committee will meet at least two times a year. Board and Management Remuneration Non-executive directors serve on the Board pursuant to the letters of appointment which are subject to approval by the shareholders at the Annual General Meeting. Such letters of appointment specify the terms of appointment and the remuneration of non-executive directors. Appointments are for one year. Levels of remuneration for Non-Executive Directors reflect the time commitment, responsibilities of the role and membership of the respective committees of the Board. Directors are also reimbursed for expenses associated with discharge of their duties. The shareholders of the Company approved the remuneration of the members of the Board of Directors at the Annual General Meeting of shareholders held on 30 April 2020. Refer to Note 35 of the consolidated financial statements for details of remuneration of directors and other key management personnel. Diversity policy The Company does not have a formal Board diversity policy to aspects such as age, gender or educational and professional backgrounds, but, following best practice, while making the new appointments and considering the current composition of the Board of Directors, these aspects are taken into account. As of the date of publication of these financial statements the Board has 2 females representing approximately 13.3% from the total number of directors. The age of the members of the Board of Directors starts from over 40 years, with the average age of directors being 52 years. The Board members have the following educational backgrounds: transportation and ports industry, accounting, economics and financial, banking sector and legal, engineering and mechanics, biophysics and mathematics, history, international affairs and risk management. The Board has a necessary balance of skills and expertise to run the Company and the Group. Further details of the corporate governance regime of the Company can be found on the website: https://globaltrans.com/governance/corporate-documents. Regulations with regards to the amendment of the article of association The Articles of Association of the Company may be amended from time to time by special resolution at the General Meeting of the Shareholders. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020132 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 133 Consolidated Management Report Company’s internal control and risk management systems in relation to the financial reporting process Significant direct or indirect holdings (including indirect shareholding though structures or cross shareholdings) 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. The Board is primarily responsible for establishing a framework of prudent and effective controls that enables risks to be assessed and managed. The Audit Committee assists the Board in this task by reviewing and assessing the Group’s internal control and risk management processes in relation to Group’s financial reporting process. The issued share capital of the Company consists of 178,740,916 ordinary shares with a nominal value of USD 0.10 each, a certain portion of which is held in the form of Global Depositary Receipts (GDRs). The GDRs represent one ordinary share each and are listed and traded on the Main Market of the London Stock Exchange and, from October 2020, in the Moscow Exchange, under the ticker GLTR. The free float of Globaltrans amounts to approximately 56.9%1 of the issued share capital. In June 2020 the Company changed the depositary bank for the GDR programme of the Company from the Bank of New York Mellon to Citibank N.A. The shareholder structure of the Company as at 31 December 2020 was as follows: Onyx Investments Ltd2 Marigold Investments Ltd2 Maple Valley Investments Ltd2 Litten Investments Ltd3 Goldriver Resources Ltd4 Controlled by Directors and management of Globaltrans 11.5% 11.5% 10.8% 5.1% 4.0% 0.2% 56.9% The system of controls is designed to manage rather than eliminate the risks relevant to the Group’s operations and, therefore, can only provide reasonable, and not absolute, assurance against material errors, losses, fraud or breaches of laws and regulations. Free float1 At Globaltrans, the body responsible for internal audit is the Internal Audit Service (IAS). It tests the Group’s systems of risk management, internal control and corporate governance to obtain a reasonable assurance that: • • • • • The risk management system functions efficiently; Material financial, management and operating information is accurate, reliable and up-to-date; The actions of employees and management bodies are in compliance with the Group’s policies, standards and procedures and the applicable laws; Resources are procured reasonably and used efficiently and their safekeeping is fully guaranteed; and Group companies conduct their business in compliance with applicable laws. Each year, the Audit Committee approves an internal audit plan, which is developed by identifying the audit universe, performing a risk analysis and obtaining input from management relative to risks, controls and governance processes. The internal auditor regularly reports to the Audit Committee on the progress of planned audits. If any material internal control deficiencies are identified, they are communicated to the Audit Committee, and consequently to the Board, at once. 1 For these purposes, the free float consists of the ordinary shares and GDRs held by investors not affiliated or associated with the Company. 2 Nikita Mishin, Andrey Filatov and Konstantin Nikolaev are co-founders of the Company and beneficiaries with regard to 11.5%, 11.5% and 10.8% respectively of Globaltrans’ ordinary share capital each through their respective SPVs (Onyx Investments Ltd, Marigold Investments Ltd and Maple Valley Investments Ltd). 3 Beneficially owned by Alexander Eliseev, Non-Executive Director and co-founder of the Company. 4 Beneficially owned by Sergey Maltsev, Chairman of the Board, Executive Director, Chief strategy officer and co-founder of the Company.  Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020134 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 135 Consolidated Management Report Directors’ interests The holders of special titles that provide special control rights and description of such rights The interests in the share capital of Globaltrans Investment PLC and its Group companies, both direct and indirect, of those who were Directors of the Company as at 31 December 2020 and 31 December 2019 are shown below: The Company does not have any titles with special rights. Name Type of holding 2020 2019 Any restrictions in exercising of voting rights of shares Alexander Eliseev Indirect holding of ordinary shares and GDRs 9,065,790 9,065,790 Sergey Maltsev Indirect holding of ordinary shares and GDRs 7,099,725 7,099,725 Johann Franz Durrer Holding of GDRs 160,606 160,606 There are no restrictions in the exercising of voting rights of shares issued by the Company. By Order of the Board .................................................. Sergey Tolmachev Director Limassol, 26 March 2021 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020136 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 137 Directors’ responsibility 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. Directors’ confirmations Each of the directors, whose names and functions are listed in page 112 confirms that, to the best of his or her knowledge: (a) the consolidated financial statements, which are presented on pages 146 to 255, 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 take as a whole; and  (b) the Consolidated 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. Further, each of the Directors confirms that, to the best of their 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 they are 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; (v) (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; 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 .............................................. Sergey Tolmachev Director Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020  138 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 139 Independent Auditor’s Report To the Members of Globaltrans Investment PLC Report on the Audit of the Consolidated Financial Statements Our audit approach Our opinion In our opinion, the accompanying consolidated financial statements of Globaltrans Investment PLC (the “Company”) and its subsidiaries (together the “Group”) 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 146 to 255 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 cash flow statement for the year then ended; and • the notes to the consolidated financial statements, which include a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the consolidated financial statements is International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the Group throughout the period of our appointment in accordance with the International Ethics Standards Board for Accountants’ 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. 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: RUB 800,300 thousand, which represents 5% of profit before tax as adjusted for non-recurring items (rounded). We conducted full scope audit for the parent entity, all the significant components and the group consolidation. For the non-significant components, we performed a full scope audit or specified procedures over specific financial statement lines and/or analytical procedures. We have determined the assessment of impairment of rolling stock of the Estonian rail tank cars/operating leasing CGU as the key audit matter. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated financial statements as a whole. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 140 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 141 Independent Auditor’s Report Overall group materiality RUB 800,300 thousand Key Audit Matter How our audit addressed the Key Audit Matter How we determined it 5% of profit before tax as adjusted for non-recurring items (rounded) Rationale for the materiality benchmark applied We chose the adjusted profit before tax 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 of the consolidated financial statements and is a generally accepted benchmark. We chose 5% which is within the range of acceptable quantitative materiality thresholds in auditing standards. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above RUB 40,000 thousand as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. We focused our audit effort on the Board of Directors’ impairment assessment for the Estonian rail tank cars/ operating leasing CGU, due to:  We also compared the prices included in the model to publicly available quoted prices. • the size of the CGU’s rolling stock balance of RUB12,786,087 thousand as at 31 December 2020;  and We lastly evaluated the fair presentation of the disclosures made in Note 17 of the consolidated financial statements. • the fact that the Board of Director’s impairment assessment indicated a narrow headroom between the recoverable amount and the carrying amount of the said CGU. Based on the evidence obtained, we found that the methodology and inputs used and the related disclosures included in the consolidated financial statements are appropriate. Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of material misstatements due to fraud Reporting on other information Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our audit addressed the Key Audit Matter The Board of Directors is responsible for the other information. The other information comprises the information included in the Consolidated Management Report, including the Corporate Governance Statement, and the Directors’ responsibility, which we obtained prior to the date of this auditor’s report, and the Company’s complete Annual Report, including the Non-Financial Information and Diversity Statement, 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. Assessment of impairment of rolling stock of the Estonian rail tank cars/operating leasing CGU 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. Based on the requirements of the applicable accounting standards and in line with the Group’s accounting policy for impairment of non-financial assets, as set out in Note 4 to the consolidated financial statements, the Board of Directors assessed whether there were any indications of impairment of the Group’s rolling stock as of 31 December 2020. The Company’s Board of Directors considered the deterioration of the economic environment, the prevailing industry conditions and the COVID-19 pandemic related uncertainties, as these are set out in Note 33 to the consolidated financial statements, as indications of impairment of the Group’s cash generating units (“CGUs”) and proceeded to  perform impairment assessments to determine if there is an impairment loss. For the Estonian rail tank cars/operating leasing CGU, we obtained and evaluated the analysis of indications of impairment performed by the Board of Directors. We further evaluated the valuation methodology and calculations used by the Board of Directors in determining the CGU’s recoverable amount, including the underlying inputs used. In particular, we examined the valuation technique applied by the Board of Directors as to whether this incorporated all factors and inputs that market participants would consider in setting a price for the specific rolling stock in the CGU. 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 Company’s complete Annual Report, including the Non-Financial Information and Diversity Statement, 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. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 142 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 143 Independent Auditor’s Report 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. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors. • Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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. Report on Other Legal and Regulatory Requirements Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on Auditing. Appointment of the Auditor and Period of Engagement We were first appointed as auditors of the Company in 2005 by shareholders’ resolution for the audit of the financial statements for the year ended 31 December 2004. Our appointment has been renewed annually since then, by shareholders’ resolution. In 2008 the Company was listed in the Main Market of the London Stock Exchange and accordingly the first financial year that the Company qualified as a European Union Public Interest Entity was the year ended 31 December 2008. Since then, the total period of uninterrupted engagement appointment was 13 years. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 144 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 145 Independent Auditor’s Report Consistency of the Additional Report to the Audit Committee We confirm that our audit opinion on the consolidated financial statements expressed in this report is consistent with the additional report to the Audit Committee of the Company, which we issued on 25 March 2021 in accordance with Article 11 of the EU Regulation 537/2014. Provision of Non-audit Services We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which were provided by us to the Group and which have not been disclosed in the consolidated financial statements or the consolidated management report. Other Legal Requirements Pursuant to the additional requirements of the Auditors Law of 2017, we report the following: • • • • • In our opinion, based on the work undertaken in the course of our audit, the consolidated management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements. 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 consolidated 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 consolidated management report, have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and is consistent with the consolidated financial statements. In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the corporate governance statement in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect. Other Matter This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas. Tasos Nolas Certified Public Accountant and Registered Auditor for and on behalf of PricewaterhouseCoopers Limited Certified Public Accountants and Registered Auditors City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus 26 March 2021 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020146 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 147 Consolidated income statement Consolidated statement of comprehensive income FOR THE YEAR ENDED 31 DECEMBER 2020 FOR THE YEAR ENDED 31 DECEMBER 2020 Revenue Cost of sales Gross profit Selling and marketing costs Administrative expenses Other income Other gains/(losses) — net Finance income Finance costs Net foreign exchange transaction gains/(losses) on financing activities Finance costs — net Profit before income tax Income tax expense Profit for the year Profit attributable to: Owners of the Company Non-controlling interest Note 2020 2019 10 11 11 11 12 14 14 14 14 15 RUB’000 RUB’000 68,367,404 94,993,874 (47,065,999) (58,833,383) 21,301,405 36,160,491 (204,666) (216,298) (3,393,665) (3,858,549) 1,000,232 107,765 133,508 (99,322) 18,811,071 32,119,830 263,968 533,857 (2,510,495) (2,529,098) 147,008 (379,824) (2,099,519) (2,375,065) 16,711,552 29,744,765 (4,524,705) (7,091,433) 12,186,847 22,653,332 10,586,535 20,807,651 1,600,312 1,845,681 12,186,847 22,653,332 Weighted average number of ordinary shares in issue (thousand) Basic and diluted earnings per share for profit attributable to the equity holders of the Company during the year (expressed in RUB per share)1 32 32 178,705 59.24 178,741 116.41 Profit for the year Other comprehensive income: Items that may be reclassified subsequently to profit or loss Currency translation differences Losses on cash flow hedge reserve Reclassification to the income statement Items that will not be reclassified to profit or loss 2020 2019 RUB’000 RUB’000 12,186,847 22,653,332 2,050,512 (925,000) (475,042) 475,042 — — Currency translation differences attributable to non-controlling interest 1,066,715 (493,622) Other comprehensive income for the year, net of tax 3,117,227 (1,418,622) Total comprehensive income for the year 15,304,074 21,234,710 Total comprehensive income for the year attributable to: — owners of the Company — non-controlling interest 12,637,047 19,882,651 2,667,027 1,352,059 15,304,074 21,234,710 Items in the statement above are disclosed net of tax. There is no income tax relating to the components of other comprehensive income above. 1 Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. ! The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these consolidated financial statements. ! The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these consolidated financial statements. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020                  148 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 149 Consolidated balance sheet AT 31 DECEMBER 2020 ASSETS Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Other assets Trade receivables Loans and other receivables Total non-current assets Current assets Inventories Other assets Loans and other receivables Trade receivables Current income tax assets Cash and cash equivalents Assets classified as held for sale Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to the owners of the Company Share capital Share premium Treasury shares 17 18 19 23 22 22 24 23 22 22 25 26 26 Note 31 December 2020, RUB’000 31 December 2019, RUB’000 84,420,941 1,080,415 1,460 549,493 236,165 3,887 80,532,645 1,410,448 61,316 336,416 197,284 10,374 86,292,361 82,548,483 691,033 2,586,593 47,483 3,465,381 266,024 4,978,322 12,034,836 10 12,034,846 98,327,207 1,722,781 5,190,504 37,645 3,012,282 501,087 6,521,543 16,985,842 40,224 17,026,066 99,574,549 Non-current liabilities Borrowings Other lease liabilities Trade and other payables Contract liabilities Deferred tax liabilities Total non-current liabilities Current liabilities Borrowings Other lease liabilities Trade and other payables Contract liabilities Current tax liabilities Total current liabilities TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES Note 31 December 2020, RUB’000 31 December 2019, RUB’000 28 29 31 10 30 28 29 31 10 21,084,067 720,487 — 8,710 8,862,587 30,675,851 10,931,172 684,109 2,197,994 964,042 100,226 14,877,543 45,553,394 98,327,207 22,294,914 881,706 90,742 11,191 7,592,182 30,870,735 7,800,304 649,177 2,355,872 1,244,702 127,694 12,177,749 43,048,484 99,574,549 ! The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these consolidated financial statements. On 26 March 2021, the Board of Directors of Globaltrans Investment PLC authorised these financial statements for issue. 516,957 27,929,478 (31,496) 516,957 27,929,478 — By order of the Board Common control transaction reserve (10,429,876) (10,429,876) Translation reserve Capital contribution Retained earnings Total equity attributable to the owners of the Company Non-controlling interest Total equity 5,443,187 2,694,851 20,724,107 46,847,208 5,926,605 52,773,813 3,392,675 2,694,851 26,774,750 50,878,835 5,647,230 56,526,065 ............................................ ............................................. Sergey Tolmachev Director Konstantin Shirokov Director Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 150 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 151 Consolidated statement of changes in equity FOR THE YEAR ENDED 31 DECEMBER 2019 Balance at 1 January 2019 Comprehensive income Profit for the year Other comprehensive income Currency translation differences Total comprehensive income for 2019 Transactions with owners Dividends to owners of the Company Dividends to non-controlling interest Total transactions with owners Balance at 31 December 2019   Attributable to the owners of the Company Note Share capital, RUB’000 Share premium, RUB’000 Common control transaction reserve, RUB’000 Translation reserve, RUB’000 Capital contribution, RUB’000 Retained earnings, RUB’000 Total, RUB’000 Non-controlling interest, RUB’000 Total, RUB’000 516,957 27,929,478 (10,429,876) 4,317,675 2,694,851 22,598,941 47,628,026 5,897,408 53,525,434 — — — — — — — — — — — — 27 27 — — — — — — — (925,000) (925,000) — — — — — — — — — 20,807,651 20,807,651 1,845,681 22,653,332 — 20,807,651 (925,000) 19,882,651 (493,622) 1,352,059 (1,418,622) 21,234,710 (16,631,842) (16,631,842) — (16,631,842) — — (1,602,237) (1,602,237) (16,631,842) (16,631,842) (1,602,237) (18,234,079) 516,957 27,929,478 (10,429,876) 3,392,675 2,694,851 26,774,750 50,878,835 5,647,230 56,526,065 FOR THE YEAR ENDED 31 DECEMBER 2020   Attributable to the owners of the Company  Share capital, RUB’000 Share premium, RUB’000 Treasury shares, RUB’000 Common control transaction reserve, RUB’000   Note Cash flow hedge reserve, RUB’000 Translation reserve, RUB’000 Capital contribution, RUB’000 Retained earnings, RUB’000 Total, RUB’000 Non-controlling interest, RUB’000 Total, RUB’000 Balance at 1 January 2020 516,957 27,929,478 Comprehensive income Profit for the year Other comprehensive income Currency translation differences Losses on cash flow hedge reserve Reclassification to the income statement Total comprehensive income for 2020 Transactions with owners Dividends to owners of the Company Dividends to non-controlling interest Purchase of treasury shares Total transactions with owners 27 27 26 — — — — — — — — — — — — — — — — — — Balance at 31 December 2020 516,957 27,929,478 — — — — — — — — (31,496) (31,496) (31,496) (10,429,876) — — — — — — — — — (10,429,876) ! The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these consolidated financial statements. — — — (475,042) 475,042 — — — — — — 3,392,675 2,694,851 26,774,750 50,878,835 5,647,230 56,526,065 — 2,050,512 — — 2,050,512 — — — — — — — — — — — — — 10,586,535 10,586,535 1,600,312 12,186,847 — — — 2,050,512 (475,042) 475,042 1,066,715 — — 3,117,227 (475,042) 475,042 10,586,535 12,637,047 2,667,027 15,304,074 (16,637,178) (16,637,178) — (16,637,178) — — (2,387,652) (2,387,652) (31,496) — (31,496) (16,637,178) (16,668,674) (2,387,652) (19,056,326) 5,443,187 2,694,851 20,724,107 46,847,208 5,926,605 52,773,813 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020        152 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 153 Consolidated cash flow statement FOR THE YEAR ENDED 31 DECEMBER 2020 Cash flows from operating activities Profit before tax Adjustments for: Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortisation of intangible assets Net loss on sale of property, plant and equipment Loss on derecognition arising on capital repairs  Reversal of impairment of property, plant and equipment Net impairment losses on trade and other receivables Interest income Interest expense and other finance costs Net foreign exchange transaction (gains)/losses on financing activities Other losses Changes in working capital: Inventories Trade receivables Other assets Other receivables Trade and other payables Contract liabilities Cash generated from operations Tax paid Net cash from operating activities Cash flows from investing activities Loans repayments received from third parties Purchases of property, plant and equipment Note 2020 2019 RUB’000 RUB’000 17 18 19 17 17 17 11 14 14 14 16,711,552 29,744,765 6,968,694 5,794,912 655,070 59,856 316 419,982 — 5,511 424,220 696,725 10,047 471,746 (64,889) 12,699 (263,968) (533,857) 2,510,495 2,529,098 (147,008) 11,496 379,824 41,197 26,931,996 39,506,487 816,127 (427,317) (394,213) (712,934) 1,438,733 (1,299,140) 9,979 (208,134) (283,141) 9,816 (270,224) (1,417,574) 28,278,243 35,422,218 (3,051,888) (6,018,371) 25,226,355 29,403,847 4,301 2,728 (6,941,159) (13,515,985) Purchases of intangible assets Proceeds from sale of property, plant and equipment Interest received Receipts from finance lease receivable Net cash used in investing activities Cash flows from financing activities Proceeds from bank borrowings Proceeds from issue of non-convertible unsecured bonds Repayments of borrowings Principal elements of lease payments for leases with financial institutions Principal elements of lease payments for other lease liabilities Interest paid on bank borrowings and non-convertible unsecured bonds Interest paid on leases with financial institutions Interest paid on other lease liabilities Dividends paid to owners of the Company Dividends paid to non-controlling interests in subsidiaries Payments from non-controlling interest for share capital increase of subsidiary Purchase of treasury shares Payments to non-controlling interest Net cash used in financing activities Net decrease in cash and cash equivalents Exchange losses on cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 17 28 28 28 28 28 28 28 28 27 27 — 66,765 263,968 77,870 (832) 91,649 533,857 123,598 (6,528,255) (12,764,985) 23,265,000 10,408,000 — 5,000,000 (19,603,415) (10,736,723) (1,715,794) (488,723) (672,432) (339,597) (2,314,937) (2,017,915) (80,813) (113,771) (167,048) (111,911) (16,637,178) (16,631,842) (2,271,815) (1,602,237) — 200,060 (31,496) — 20 (180,281) (450,934) (20,356,932) (16,938,870) (1,658,832) (300,008) 115,611 6,521,543 4,978,322 25 25 (308,367) 7,129,918 6,521,543 Principal non-cash investing and financing transactions The principal non-cash investing and financing transactions consist of finance leases with the Group acting as a lessor (Note 23) and leases with the Group acting as the lessee (Notes 28 and 29). ! The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these consolidated financial statements. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020                              154 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 155 Notes to the consolidated financial statements 1. General information 3. Adoption of new or revised standards and interpretations Country of incorporation Globaltrans Investment Plc (“the Company”) is incorporated and domiciled in Cyprus as a limited liability company in accordance with the provisions of the Cyprus Companies Law, Cap. 113 and converted into a public company on 15 April 2008. The address of its registered office is 20 Omirou Street, CY-3095 Limassol, Cyprus. The Group’s principal place of business is at Nizhnyayа Krasnoselskaya st. 39, bld. 1, Moscow, Russia. Approval of the consolidated financial statements These consolidated financial statements were authorised for issue by the Board of Directors on 26 March 2021. Global Depositary Receipts Global Depositary Receipts, each representing one ordinary share of the Company, are listed on the London Stock Exchange International Main Market and, since October 2020, on the Moscow Exchange. Furthermore, Russian Rouble denominated bonds, issued by the Company’s subsidiary New Forwarding Company, АО, for a total amount of RUB 10 billion, out of a RUB 100 billion registered program, are listed on the Moscow Exchange. Principal activities The principal activities of the Group, which are unchanged from last year, are the provision of railway transportation services, using own and leased rolling stock and fleet engaged from third party rail operators, as well as the operating lease of rolling stock. 2. Basis of preparation The consolidated financial statements of Globaltrans Investment PLC 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 authorization of these financial statements, all International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) that are relevant to the Group’s operations and are effective as at 1 January 2020 have been adopted by the EU through the endorsement procedure established by the European Commission. The financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 7. During the current year the Group adopted all the new and amended standards that are relevant to its operations and are effective for accounting periods beginning on 1 January 2020. None of these had a significant impact on these financial statements. 4. Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Basis of consolidation (a) Subsidiaries Subsidiaries are all entities (including structured 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 consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Business combinations involving entities under common control (ultimately controlled by the same party, before and after the business combination, and that control is not transitory) are accounted using the predecessor basis of accounting. Under this method, the financial statements of the acquiree are included in the consolidated financial statements using pre-acquisition IFRS carrying amounts using uniform accounting policies, on the assumption that the Group was in existence for all periods presented. The excess of the cost of acquisition over the carrying amount of the Group’s share of identifiable net assets is recorded in equity, as “common control transaction reserve”. The acquisition method of accounting is used for the acquisitions of subsidiaries that do not involve entities or businesses under common control by the Group. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, equity instruments issued by the Group and liabilities incurred to the former owners of the acquiree. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. 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. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest or the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets 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 income statement. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020156 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 157 Notes to the consolidated financial statements Indemnification assets recognised at the acquisition date continue to be measured on the same basis as the related indemnified item subject to collectability and contractual terms until they are collected, sold, cancelled or expire in the post-combination period. The entity measures the indemnification asset on the same basis as the related item, subject to any restrictions in the contractual terms such as a ceiling on the amount payable and any adjustment for the seller creditworthiness. Measurement on the same basis includes recognising any gains or losses appropriately. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at the fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IFRS 9 in the income statement. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into compliance with those used by the Group. All inter-company transactions, balances, income, expenses and unrealised gains and losses are eliminated on consolidation. Profits and losses from intra-group transactions that are recognised in assets are also eliminated. Unrealised losses are also eliminated but considered as an impairment indicator of the asset transferred. (b) Transactions with non-controlling interests The Group treats transactions with non-controlling interests that do not result in loss of control as transactions with equity owners in their capacity as equity owners of the Group. For purchases from non-controlling interests, the difference between the 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 attributable to owners of the Company. Gains or losses on disposals to non-controlling interests are also recorded in equity attributable to the owners of the Company. (c) Disposal of subsidiaries When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in the income statement. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets and liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. 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 of the Company that makes strategic decisions. Revenue recognition Recognition and measurement. Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised goods or services to the customer, excluding amounts collected on behalf of third parties (for example, value-added taxes); the transaction price. Revenue is recognised net off discounts and estimates for rebates that are in accordance with the contracts entered into with the customers. The Group includes in the transaction price an amount of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimations for rebates and discounts are based on the Group’s experience with similar contracts and forecasted sales to the customer. The Group recognises revenue when the parties have approved the contract (in writing, orally or in accordance with other customary business practices) 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 (i.e. the risk, timing or amount of the Group’s future cash flows is expected to change as a result of the contract), 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 the customer and when specific criteria have been met for each of the Group’s contracts with customers, as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration is probable, the Group considers only the customer’s ability and intention to pay that amount of consideration when it is due. Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimates are reflected in the income statement in the period in which the circumstances that give rise to the revision become known by management. Revenues earned by the Group are recognised on the following bases: Revenue from railway transportation services — using own, leased or engaged rolling stock (i) Operator’s services The Group organises transportation services for clients using its own, leased or engaged rolling stock. There are four types of operator’s services contracts: • • The Group has a contractual relationship with the client and sets the terms of the transactions, such as selling and payment terms, bears credit risk and controls the flow of receipts and payments. The OAO “Russian Railways” tariff is borne by the Group. Total proceeds from clients are included in the Group’s revenue. The Group has a contractual relationship with the client and sets the terms of the transactions, such as selling and payment terms, bears credit risk and controls the flow of receipts and payments. The OAO “Russian Railways” tariff is borne by the Group and recharged to the customer as a reimbursement but the Group bears the variability in tariffs. Total proceeds from clients are included in the Group’s revenue. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020158 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 159 Notes to the consolidated financial statements • • The Group has a contractual relationship with the client and sets the terms of the transaction, excluding the OAO “Russian Railways” tariff, such as selling and payment terms, bears credit risk and controls the flow of receipts and payments. The OAO “Russian Railways” tariff is paid by the Group and recharged to the customer as a reimbursement. Under these arrangements the Group recognises revenue net of OAO “Russian Railways” tariff. The Group has a contractual relationship with the customer and sets the terms of the transaction, excluding the OAO “Russian Railways” tariff, such as selling and payment terms, bears credit risk and controls the flow of receipts and payments. The tariff is paid directly by the customer to OAO “Russian Railways”. Under these arrangements the Group recognises revenue net of OAO “Russian railways” tariff. (ii) Freight rail transportation services using specialised tank containers The Group provides freight rail transportation services using specialised tank containers for clients using its own, leased or engaged rolling stock (platforms). Revenue for all of the above types of contracts is recognised over time while the Group satisfies its performance obligation by transferring control over the promised services to the customer in the accounting period in which the services are rendered. In particular, revenue is recognised in accordance with the stage of completion of the transaction, determined based on the actual trip days lapsed against the total estimated number of trip days for the entire trip, since the customer receives and consumes the benefits from the services simultaneously. Customers are invoiced on a regular basis and in accordance with pre-agreed payment terms with credit periods not exceeding one year. If the services rendered by the Group exceed the payment and the Group does not have the unconditional right to consideration for the services rendered, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised. Identification of performance obligations. The Group assesses whether contracts that involve the provision of a range of goods and/or services contain one or more performance obligations (that is, distinct promises to provide a good or service) and allocates the transaction price to each performance obligation identified on the basis of its stand-alone selling price. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service, either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and the Group’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). In assessing whether two or more promises to transfer goods and/or services to a customer are separate performance obligations, the Group considers, amongst others, whether it provides a significant service of integrating the good or services with other goods or services promised in the contract into a bundle of goods or services that represent the combined output or outputs for which the customer has contracted (that is, the Group is using the goods or services as inputs to produce or deliver the combined output or outputs specified by the customer), whether one or more of the goods and/or services significantly modifies or customises, or is significantly modified or customised by, one or more of the other goods or services promised in the contract or whether the good or services are highly interdependent or highly interrelated. The Group considers that all of the above operator’s services contracts contain a single performance obligation. Financing component. In determining the transaction price, the Group adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to (either explicitly or implicitly) provides the customer or the Group with a significant benefit of financing. In these circumstances, the contract contains a significant financing element. 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. Consequently, the Group elected to use the practical expedient provided by IFRS 15 and does not adjust any of the transaction prices for the effect of the financing component for the time value of money. Contract assets and contract liabilities. In case the goods transferred or 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 goods transferred or services rendered, a contract asset is recognised. If the payments made by a customer exceed the goods transferred or services rendered under the relevant contract, a contract liability is recognised. The Group recognises any unconditional rights to consideration separately from contract assets as a trade receivable because only the passage of time is required before the payment is due. The Group assesses a contract asset for impairment in accordance with IFRS 9 using the simplified approach permitted by IFRS 9 which requires lifetime expected credit losses to be recognised from initial recognition of the contract asset. Impairments of contract assets are measured, presented and disclosed on the same basis as as for trade receivables. Contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual payments for a period of greater than 180 days past due. Costs to obtain or fulfil contracts with customers. To the extent that these are recoverable, incremental costs incurred by the Group to obtain a contract and incremental costs incurred to fulfil a contract are capitalised and amortised on a straight-line basis over the term of the specific contract — consistent with the pattern of the transfer of the goods and/ or services to which they relate to — and assessed for impairment. Incremental costs of obtaining contracts are those costs that the Group incurs to obtain a contract with a customer that would not have been incurred if the contract had not been obtained. The Group does not have any contracts where the period of transfer of the goods and/or provision of the services (that is, the period between the start and completion of a trip) exceeds one year. Accordingly, the Group recognises the incremental costs of obtaining a contract as an expense when incurred since the amortization period of the asset that it would otherwise have recognised is less than one year. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020160 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 161 Notes to the consolidated financial statements Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each entity of the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The functional currency of the Company and of the majority of its subsidiaries is the Russian Rouble (RUB). The consolidated financial statements are presented in Russian Roubles (RUB) (“the presentation currency”) because this is the currency better understood by the principal users of the financial statements. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuations where items are re-measured. 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, with the exception of foreign exchange differences that relate to qualifying cash flow hedges which are deferred in equity. Net foreign exchange differences arising from borrowings and other liabilities and from cash and cash equivalents and other monetary assets are presented on the face of the income statement in the line “net foreign transaction gains/ (losses) on financing activities”, with the appropriate disclosure of the split between the two in the note “Finance income and costs”. All other foreign exchange gains and losses are presented in the income statement within “Other gains/(losses) — net”. (c) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • • • Assets and liabilities are translated at the closing rate existing at the date of the balance sheet presented; Income and expense items at the average yearly rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and Share capital, share premium and all other reserves are translated using the historic rate. All exchange differences resulting from the above translation are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign operations, including foreign exchange differences on long-term loans receivable designated as part of the net investment in foreign operations, are recognised in other comprehensive income. When a foreign operation is disposed of or sold and control or significant influence is lost, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on disposal. On a partial disposal of a foreign operation, the proportionate share of the cumulative amount of the exchange differences recorded in equity relating to the amount disposed is reclassified in the income statement. The Group assesses whether there is a partial disposal of a foreign operation on the basis of the change in the Group’s proportionate ownership interest in the foreign operation. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income. Hedging activities The Group is exposed to foreign exchange risk arising from dividends declared in Russian Roubles and paid in US Dollar at the rate set at the date of the declaration. The Group uses foreign currency cash deposits denominated in US Dollars to hedge this foreign exchange risk exposure. In particular, the US Dollar denominated cash deposits are designated by the Group as hedging instruments in hedging the foreign exchange risk associated with the highly probable dividend payment and the resulting payable. At inception of the hedge relationship, the Group documents, amongst others, the economic relationship between the hedging instrument and hedged item, including whether changes in the cash flows of the hedging instrument are expected to offset changes in the cash flows of the hedged item. The Group documents its risk management objective and strategy for undertaking its hedge transactions. As a result of the application of hedge accounting for the first time within the year 2020, the foreign exchange difference on the hedging instrument is recognised in other comprehensive income in the “Cash flow hedge reserve” within equity. Amounts recognised in equity are reclassified to the income statement, within “Finance income and costs”, in the same period or periods during which the hedged item impacts the income statement, being once foreign exchange differences are recognised on the hedged item. Accordingly, in the cash flow statement “Dividends paid to the owners of the Company” are disclosed net-off foreign exchange differences on the relevant cash deposits (i.e. at the amounts declared) and the “Exchange gains/(losses) on cash and cash equivalents” do not include the impact from the relevant cash deposits used for hedging. In the income statement the amounts included in “Finance income and costs” (Note 14) within “Net foreign exchange transaction gains/(losses) on cash and cash equivalents and other monetary assets” and “Net foreign exchange transaction gains on borrowings and other liabilities” are disclosed after application of hedge accounting (i.e. excluding the foreign currency gains/losses arising for the hedging). Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020162 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 163 Notes to the consolidated financial statements Property, plant and equipment 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. 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. The carrying amount of the replaced cost is derecognised. Depreciation on property, plant and equipment begins when it is available for use and is calculated using the straight- line method to allocate their cost, less residual value, over their estimated useful lives, as follows: 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 profit as part of operating expenses. Buildings Rolling stock: (except locomotives) Gondola cars Rail tank cars Rail tank cars (specialised types) Hoppers Flat cars Tank containers Locomotives Mounted wheels Motor vehicles and other property, plant and equipment Number of years, range 30 22 32 30–40 15–26 20–32 20 9–45 7 3 to 10 The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. 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. 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. Borrowing costs to finance the construction of property, plant and equipment are capitalised, during the period of time that is required to complete and prepare the asset for its intended use. All other borrowing costs are expensed. Rolling stock repair and maintenance costs Repair and maintenance costs relating to periodical capital repairs of locomotives and other rolling stock and periodical middle repairs of locomotives constitute major repairs that result in enhancement of the economic benefits of the rolling stock and as such are capitalised by the Group. In particular, the cost of each major periodic capital repair is recognised in the carrying amount of the relevant item of rolling stock repaired and separately depreciated over the expected period until the next periodic capital repair or until the end of the useful economic life of the item of rolling stock, if earlier. Significant components replaced as part of periodic major capital repairs are capitalised and depreciated separately over their useful economic life. Simultaneously with the capitalisation of the costs of the new periodic major capital repair, the carrying amount of the repaired rolling stock that is attributable to the previous periodic capital repair and/or significant component replaced, if any, is derecognised and debited in ‘cost of sales’ in the income statement as ‘loss on derecognition arising on capital repairs’. If it is not practicable for the Group to determine the carrying amount of the repaired rolling stock that is attributable to the previous periodic capital repair and/or significant component replaced to be derecognised, the Group uses the cost of the current periodic major capital repair or replaced part as an indication of what the cost of the replaced part was at the time the rolling stock was acquired. Other types of repairs of rolling stock, such as current repairs and depot repairs, are viewed by the Group as routine repairs and maintenance and thus their cost is charged in the Group’s income statement as and when incurred. Upon initial recognition of rolling stock, the Group’s accounting policy is not to separately identify and depreciate the element of its cost that is reflecting the maintenance element of the periodic major capital repair of the rolling stock on initial recognition. The cost attributed to significant components, such as wheel pairs, is separately identified and depreciated over their useful economic life. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020164 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 165 Notes to the consolidated financial statements Intangible assets (a) Customer relationships Customer relationships acquired in a business combination are recognised at fair value at the acquisition date. Customer relationships relate to a transportation services contract with MMK Group. Customer relationships have a finite useful life and are carried at cost less accumulated amortisation. Customer relationships are being amortised using the straight-line method over an estimated useful life from five to seven years from the date of their acquisition. The useful lives of the customer relationships are reviewed, and adjusted if appropriate, at the end of each reporting period. (b) Computer software The costs of acquiring computer software for internal use are capitalised as intangible assets where the software supports a significant business system and the expenditure leads to the creation of a durable asset. Computer software is capitalised at cost and amortised over three years, which reflects its estimated useful life, using straight- line method commencing when the asset is available for its intended use. Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Impairment of non-financial assets Assets that have indefinite useful life and goodwill are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash- generating units). Non-financial assets, other than goodwill, that have suffered impairment are reviewed for possible reversal of impairment whenever there is an indication that an impairment recognised in prior periods may no longer exist or may have decreased. The Group is the lessee Leases (a) 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, with limited exceptions as set out below. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. 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: • • • • • fixed payments (including in-substance fixed payments), less any lease incentives receivable; variable lease payments that are based on an index or a rate; amounts expected to be payable by the Group under residual value guarantees; the exercise price of a purchase option, if the Group is reasonably certain to exercise that option; and payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. Contracts may contain both lease and non-lease components. The Group accounts for each lease component within such contracts as a lease separately from the non-lease components. The consideration in the contract is allocated to each lease component on the basis of the relative standalone price of the lease component and the aggregate standalone price of the non-lease components. The consideration for non-lease components relating to services is recognised as an expense in the income statement. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms and conditions. To determine the incremental borrowing rate, the Group, where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received. The Group is exposed to potential future increases in variable lease payments based on an index or a rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against 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. Any remeasurement of the lease liability arising if the cash flows change based on the original terms and conditions of the lease results in a corresponding adjustment to the right-of-use asset. The adjustment can be positive or negative. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight- line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. In determining the lease term, the Group 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). Right-of-use assets are reviewed for impairment in accordance with the Group’s accounting policy for impairment of non-financial assets. As an exception to the above, the Group accounts for short-term leases and leases of low value assets by recognising the lease payments as an expense on a straight-line basis in the income statement. Short-term leases are leases with a lease term of 12 months or less. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 166 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 167 Notes to the consolidated financial statements Right-of-use assets and associated lease liabilities are presented as separate lines on the face of the balance sheet, except for right-of-use assets and associated lease liabilities arising from leases with financial institutions that include purchase options that are reasonably certain to be exercised due to the exercise price being a nominal amount compared to the fair value of the leased asset on the exercise date. The latter are presented within the same line item as the corresponding underlying assets would be presented if they were owned and within borrowings, respectively. Management believes that this presentation best reflects the substance of the leases with financial institutions, being similar to that of purchases via collateralised borrowings. Impairment of lease receivables The Group recognises credit loss allowance on lease receivables in accordance with IFRS 9 using the simplified approach permitted by the standard, which requires expected credit losses to be recognised from initial recognition of the lease receivable at an amount equal to lifetime ECL. The ECL is determined in the same way as for trade receivables and is recognised through an allowance account to write down the lease receivables’ net carrying amount to the present value of expected cash flows discounted at the interest rates implicit in the leases. The estimated future cash flows reflect the cash flows that may result from obtaining and selling the assets subject to the lease. Sale and leaseback A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset. The accounting of a sale and leaseback transaction depends on whether the transfer of the asset qualifies as a sale. In making this assessment, the Group assesses whether the buyer-lessor obtained control of the underlying asset. If the transfer qualifies as a sale of the asset, the Group measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained by the Group. Accordingly, the Group recognises only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. If the fair value of the consideration for the sale of the asset does not equal the fair value of the asset, or if the payments for the lease are not at market rates, the Group accounts for any below-market terms as a prepayment of lease payments; and any above-market terms as additional financing provided by the buyer-lessor to the Group. This is measured on the basis of the more readily determinable of the difference between the fair value of the consideration for the sale and the fair value of the asset; and the difference between the present value of the contractual payments for the lease and the present value of payments for the lease at market rates. If the transfer does not qualify as a sale, the Group continues to recognise the transferred asset and recognises a financial liability equal to the transfer proceeds. The Group is the lessor (b) Finance leases Where the Group is a lessor in a lease which transfers substantially all the risks and rewards incidental to ownership to the lessee, the assets leased out are presented as a finance lease receivable and carried at the present value of the future lease payments. Finance lease receivables are initially recognised at commencement (when the lease term begins) using a discount rate determined at inception (the earlier of the date of the lease agreement and the date of commitment by the parties to the principal provisions of the lease). The difference between the gross receivable and the present value represents unearned finance income. The income is recognised over the term of the lease using the net investment method (before income tax and other taxes) which reflects a constant periodic rate of return. Incremental costs directly attributable to negotiating and arranging the lease are included in the initial measurement of the finance lease receivable and reduce the amount of income recognised over the lease term. Finance income from leases is recorded within interest income in the income statement. Operating leases Assets leased out under operating leases are included in property, plant and equipment in the balance sheet based on the nature of the asset. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Revenues from operating leasing Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term. Financial assets Financial instruments (a) 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; being the date on which the Group commits to purchase or sell the asset. All other purchases and sales are recognised when the entity 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. Any gain or loss arising upon their derecognition is recognised directly in the income statement. Classification. The classification depends on the Group’s business model for managing the financial assets and the contractual cash flow characteristics of the assets. Management determines the classification of financial assets at initial recognition. The Group classifies its financial assets at amortised cost. Financial assets at amortised cost are held for collection of contractual cash flows and their cash flows represent solely payments of principal and interest. They are included in current assets, except for maturities greater than twelve months after the balance sheet date. These are classified as non-current assets. The Group’s financial assets at amortised cost comprise of trade receivables, loans and other receivables and cash and cash equivalents on the balance sheet. Reclassification. Financial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020168 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 169 Notes to the consolidated financial statements Measurement. At initial recognition, the Group measures financial assets classified at amortised cost at their fair value plus incremental transaction costs that are directly attributable to the acquisition of the financial assets. Subsequently, these are measured at amortised cost. Interest income. Interest income on financial assets at amortised cost is recognised using the effective interest rate method and is included within “finance income” in the income statement. In particular, 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, the effective interest rate is applied to the net carrying amount of the financial asset; that is after deduction of the loss allowance. The Group’s definition of credit-impaired assets is explained in Note 6, Credit risk section. Impairment. The Group assesses on each reporting date and on a forward looking basis the expected credit losses (“ECL”) associated with its debt financial assets carried at amortised cost. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money, and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions. 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 “selling and marketing costs”. Subsequent recoveries of amounts for which loss allowance was previously recognised are credited against the same line item. The impairment methodology applied by the Group for calculating expected credit losses depends on the type of financial asset assessed for impairment. Specifically: • • For trade receivables the Group applies the simplified approach permitted by IFRS 9 for calculating expected credit losses, which requires lifetime expected losses to be recognised from initial recognition of the financial assets. The assessment is done on an individual basis. For all its other debt financial assets carried at amortised cost, the Group applies the general approach. In particular, the Group applies the three stage model for calculating impairment, which is based on changes in the credit quality of the financial asset since initial recognition. A financial instrument that is not credit -impaired on initial recognition is classified in Stage 1. The ECL of financial assets in Stage 1 is 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. 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 its contractual maturity but considering expected prepayments, if any. Refer to Note 6, 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. The Group’s definition of credit impaired assets and definition of default is explained in Note 6, Credit risk section. Write-off. Financial assets are written-off, in whole or in part, when the Group has concluded that there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual payments for a period of greater than 180 days past due. The Group may write-off financial assets that are still subject to enforcement activity when the Group seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery. Subsequent recoveries of amounts previously written off are credited against ‘selling and marketing costs’ in the income statement. Classification as trade receivables. Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less (or in a normal operating cycle of the business, if longer than one year) they are classified as current assets, if not, they are presented as non-current assets. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Group holds its trade receivables with the objective to collect the contractual cash flows and their contractual cash flows represent solely payments of principal and interest and therefore measures them subsequently at amortised cost using the effective interest method, less provision for impairment. Classification as loans and other receivables. These amounts generally arise from transactions outside the usual operating activities of the Group. These are held with the objective to collect their contractual cash flows and their contractual cash flows represent solely payments of principal and interest. Accordingly, these are measured at amortised cost using the effective interest method, less provision for impairment. Loans and other receivables are classified as current assets if they are due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current assets. Classification as cash and cash equivalents. In the cash flow statement, cash and cash equivalents include cash in hand and deposits held at call with banks with original maturity of three months or less, less bank overdrafts, if any. Cash and cash equivalents are carried at amortised cost using the effective interest method, less provision for impairment. Bank overdrafts are shown within borrowings in the current liabilities on the balance sheet. Financial liabilities (b) Classification. The Group’s financial liabilities are initially recognised at fair value and classified as subsequently measured at amortised cost. Derecognition of financial liabilities. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 income statement as other income or finance costs. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts, including costs or fees incurred for the modification, is recognised in profit or loss within finance costs. When the terms of the existing Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 170 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 171 Notes to the consolidated financial statements financial liability are not substantially modified, the existing liability is not derecognised and the gain/loss arising on the modification, including costs or fees incurred for the modification, is recognised in the income statement within finance costs. Borrowing costs. Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed in the period in which they are incurred. Modifications. 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. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified 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, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners. Borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised over the period of the borrowings using the effective interest method. 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 draw down occurs. To the extent 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 pre-payment for liquidity services and amortised over the period of the facility to which it relates. 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. Borrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires). 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 the income statement as other income or finance costs. Trade and other payables. Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Inventories Group entities usually maintain a store of spare parts and servicing equipment. These are carried as inventory and recognised in the income statement as consumed, unless they meet the definition of property, plant and equipment in which case they are classified as such. Major spare parts are also recognised within property, plant and equipment when they meet the definition of property, plant and equipment. Spare parts in inventory as well as other inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. Net realisable value is the estimated selling price in the ordinary course of business less the cost of completion and applicable variable selling expenses and takes into account, amongst others, evidence of damage or obsolescence. Cash flow statement Cash flow statement is prepared under the indirect method. Purchases of property, plant and equipment, including prepayments for property, plant and equipment, are included within cash flows from investing activities and finance lease payments are included within cash flows from financing activities and are shown net of VAT. Related input VAT is included in movement in changes of working capital, within trade and other receivables. When the Group enters into a sale and lease back arrangement which constitutes collateralised borrowing, the proceeds received are included within cash flows from financing activities. Receipts from finance lease receivables are included within cash flows from investing activities. Share capital, share premium and treasury shares 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 the difference between the fair value of the consideration receivable for the issue of shares and the nominal value of the shares. Share premium account can only be resorted to for limited purposes, which do not include the distribution of dividends, and is otherwise subject to the provisions of the Cyprus Companies Law on reduction of share capital. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020172 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 173 Notes to the consolidated financial statements Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders within a separate reserve ‘treasury shares’ until the shares are cancelled or re-issued. Where such ordinary shares are subsequently re-issued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders within retained earnings. The consideration initially paid for treasury shares which are subsequently re-issued is transferred from “treasury shares” to retained earnings. 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. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In accounting for the tax effects of on-balance sheet leases, the Group considers the right-of-use asset and lease liability separately and recognises deferred tax on the net temporary difference. Capital contribution Capital contribution constitutes contributions made by the Company’s shareholders other than for the issue of shares by the Company in their capacity as equity owners of the Company for which the Company has no contractual obligation to repay them. Such contributions are recognised directly in equity as they constitute transactions with equity owners in their capacity as equity owners of the Company. Provisions and contingent liabilities Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Provisions are only used to cover those expenses which they had been set up for. Other possible or present obligations that arise from past events but it is not probable that an outflow of resources embodying economic benefit will be required to settle the obligations, or the amount cannot be measured with sufficient reliability, are disclosed in the notes to the financial statements as contingent liabilities. Current and deferred income tax The tax expense for the period comprises of current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity respectively. Current income 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. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretations and establishes provisions where appropriate on the basis of amounts expected to be paid to tax authorities. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred income tax assets are recognised only 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 and associates except where the Group can control the timing of the reversal and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, when the income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities when there is an intention to settle the balances on a net basis. Russian Value Added Tax (VAT) Russian output value added tax related to sales is payable to tax authorities on the earlier of (a) collection of receivables from customers or (b) delivery of goods or services to customers. Input VAT is generally recoverable against output VAT upon receipt of the VAT invoice. The tax authorities permit the settlement of VAT on a net basis. VAT related to sales and purchases is recognised in the balance sheet on a gross basis and disclosed separately as an asset and liability. Where provision has been made for the impairment of receivables, the impairment loss is recorded for the gross amount of the debtor, including VAT. Employee benefits Wages, salaries, contributions to the state pension and social insurance funds, paid annual leave and sick leave, bonuses and other benefits (such as health services) are accrued in the year in which the associated services are rendered by the employees of the Group. These are included in staff costs and the Group has no further obligations once the contributions have been paid. The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020174 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 175 Notes to the consolidated financial statements Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the Group recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. Share based payment transactions The Group operates a cash-settled share-based compensation plan. In accordance with compensation plan, key management personnel and selected employees of the Group are entitled to receive cash compensations based on the weighted average market quotations of the fixed number of global depository receipts (“GDR”) of the Company. The fair value of the employee services received in exchange for the grant of the equivalent GDR instruments is recognised as an expense over the vesting period. At each balance sheet date, if required by the terms of the compensation plan, the Group revises its estimates of the monetary equivalent of GDRs that are expected to vest. It recognises the impact of the revision of original estimates, including number of instruments expected to vest and fair values, in profit or loss, with a corresponding adjustment to share-based payment liability. Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved and are no longer at the discretion of the Company. More specifically, interim dividends are recognised when approved by the Board of Directors whereas in case of final dividends, these are recognised at the time when they are approved by the Company’s shareholders. Prepayments Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Other prepayments are written off to profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in the income statement. Other income Other income generally represents amounts received from transactions that are outside the Group’s principal activities. This is recognised in the income statement over the period it relates to, based on the terms of the arrangement. Other income that it is not linked to the Group’s future performance and/or satisfaction of any future obligations is recognised in the period in which the Group is entitled to receive it. 5. New accounting pronouncements Certain new standards, amendments to existing standards and interpretations have been issued that are mandatory for annual periods beginning on or after 1 January 2020. Items marked with * have not been endorsed by the European Union (EU). The Group will only be able to apply the new standards, amendments to existing standards or interpretations when these are endorsed by the EU. • • • • • Classification of liabilities as current or non-current — Amendments to IAS 1 (issued on 23 January 2020 and effective for annual periods beginning on or after 1 January 2022)*. These narrow scope amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. In addition, the amendments clarify the classification requirements for debt a company might settle by converting it into equity. “Settlement” is defined as the extinguishment of a liability with cash, other resources embodying economic benefits or an entity’s own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument. Classification of liabilities as current or non-current, deferral of effective date — Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023)*. The amendment to IAS 1 on classification of liabilities as current or non-current was issued in January 2020 with an original effective date 1 January 2022. However, in response to the Covid-19 pandemic, the effective date was deferred by one year to provide companies with more time to implement classification changes resulting from the amended guidance. Proceeds before intended use, Onerous contracts — cost of fulfilling a contract, Reference to the Conceptual Framework — narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018–2020 — amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods beginning on or after 1 January 2022).* The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its intended use. The amendment also clarifies that an entity is “testing whether the asset is functioning properly” when it assesses the technical and physical performance of the asset. The amendment to IAS 37 clarifies the meaning of “costs to fulfil a contract”. IFRS 3 was amended to refer to the 2018 Conceptual Framework for Financial Reporting, in order to determine what constitutes an asset or a liability in a business combination. The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities. Costs or fees could be paid to either third parties or the lender. Illustrative Example 13 that accompanies IFRS 16 was amended to remove the illustration of payments from the lessor relating to leasehold improvements. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* IAS 1 was amended to require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendment provided the definition of material accounting policy information. Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* The amendment to IAS 8 clarified how companies should distinguish changes in accounting policies from changes in accounting estimates. None of the new standards, amendments to existing standards or interpretations is expected to have a significant effect on the consolidated financial statements. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020176 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 177 Notes to the consolidated financial statements 6. Financial risk management Financial risks factors The Group’s activities exposed 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 program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial results. Market risk (a) Foreign exchange risk Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in the currency different from the functional currency of each of the entities of the Group. As of 31 December 2020, 100% of the Group’s long-term borrowings are denominated in Russian Rouble. Further, a large proportion of the Group’s expenses and revenues are denominated and settled in Russian Roubles. Risks related to liabilities denominated in foreign currency are partly compensated by assets and income denominated in foreign currency. During the year 2020 there was increased volatility in currency markets and the Russian Rouble has depreciated against some major currencies. As of the end of December 2020 the Russian Rouble has decreased against the US Dollar from 61.9057 as of 31 December 2019 to 73.8757 Russian Roubles (19.3% revaluation) and against the Euro from 69.377 as of 31 December 2019 to 90.6824 Russia Roubles (30.7% revaluation). The Group is exposed to the effects of currency fluctuations between (i) the Russian Rouble and the US Dollars in relation to US Dollar denominated balances held in the Company and the Cypriot and Russian subsidiaries of the Group having the Russian Rouble as their functional currency; (ii) the Euro and the US Dollar for US Dollar denominated balances held in the Estonian subsidiaries of the Group which have the Euro as their functional currency and (iii) the Ukrainian Hryvnia and the US Dollar for the US Dollar denominated balances held in the Ukrainian subsidiary of the Group which has the Ukrainian Hryvnia as its functional currency. The carrying amounts of monetary assets and liabilities denominated in US Dollars as at 31 December 2020 and 31 December 2019 are as follows: Assets Liabilities 2020 2019 RUB’000 RUB’000 922,145 468,321 142,777 9,038 Had US Dollar exchange rate strengthened/weakened by 20% 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 increased/ decreased by RUB 84,057 thousand (2019: 10% change, effect RUB 21,831 thousand) and equity would have increased/ decreased by RUB 503,185 thousand (2019: 10% change, effect RUB 210,073 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of cash and cash equivalents and accounts payable denominated in US Dollars for the Group entities with Russian Rouble being their functional currency. The impact on equity is mainly due to foreign exchange gains and losses arising upon retranslation of intercompany loans being recognised as part of net investment in the foreign operation denominated in US Dollars for the Ukrainian subsidiary of the Group. Had Euro exchange rate strengthened/weakened by 30% against the US Dollar and all other variables remained unchanged, the post-tax profit of the Group for the year ended 31 December 2020, would have increased /decreased by RUB 86,122 thousand (2019: 10% change, effect RUB 20,698 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of payable balances and cash and cash equivalents and accounts receivable denominated in US Dollars for the Estonian subsidiaries of the Group. Had US Dollar exchange rate strengthened/weakened by 20% against the Ukrainian Hryvnia and all other variables remained unchanged, the post-tax profit of the Group would have remained unchanged (2019: 10% change, no effect on post-tax profit) and the equity of the Group for the year ended 31 December 2020, would have decreased/ increased by RUB 503,185 thousand (2019: 10% change, effect RUB 210,073 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of intercompany loans being recognised as part of net investment in the foreign operation denominated in US Dollars for the Ukrainian subsidiary of the Group. The Group does not have formal arrangements for hedging foreign exchange risk, with the exception of application of hedge accounting to hedge foreign currency risk associated with highly probable dividend payments and associated dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these financial statements. The impact of application of hedge accounting has been to disclose in the cash flow statement “Dividends paid to the owners of the Company” net-off RUB 475,042 thousand foreign exchange losses and the “Exchange gains/(losses) on cash and cash equivalents” does not include the equivalent impact from the relevant cash deposits used for hedging. Furthermore, in the income statement the amounts included in “Finance income and costs” within “Net foreign exchange transaction gains/(losses) on cash and cash equivalents and other monetary assets” and “Net foreign exchange transaction gains on borrowings and other liabilities” are disclosed after application of hedge accounting (i.e. excluding the foreign currency gains/losses arising for the hedging of RUB 475,042 thousand). (b) Cash flow and fair value interest rate risk The Group’s income and operating cash flows are exposed to changes in market interest rates arising mainly from floating rate borrowings. In addition, the Group is exposed to fair value interest rate risk through market value fluctuations of borrowings and bank deposits with fixed interest rates. However, any potential change in the market rates of interest will not have an impact on the carrying amount of the fixed rate financial instruments and hence on the Group’s post tax profit or equity as these instruments are carried at amortised cost. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020178 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 179 Notes to the consolidated financial statements Long-term borrowing contracts of the Group are concluded to finance the purchase of rolling stock. While analysing new investment projects and concluding credit facility agreements, loan agreements and lease contracts, issues of bonds and various scenarios are developed taking into account terms of refinancing and alternative financing sources. Based on these scenarios the Group measures the impact of a definite change in interest rate on profit or loss and selects the financing model that allows maximizing the estimated future profit. As at 31 December 2020 and 31 December 2019, the Group did not have any Russian Rouble or US Dollar credit facilities at floating interest rates, therefore any reasonably possible change in market interest rates would not have any significant impact on the post-tax profit or equity of the Group. The Group obtains borrowings at current market interest rates and does not use any hedging instruments to manage interest rate risk. Management monitors changes in interest rates and takes steps to mitigate these risks as far as practicable. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Credit risk arises from cash and cash equivalents, trade receivables, loans and other receivables as well as finance lease receivables. (i) Risk management The Group has policies in place to ensure that sales of goods and services are made to customers with an appropriate credit history. Management assesses the credit quality of the Group’s customers, taking into account their financial position, past experience and other factors. These policies allow the Group to reduce its credit risk. However, the Group’s business is heavily dependent on a few large key customers, with the top ten customers accounting for 70.95% of the Group’s trade receivables as at 31 December 2020 (2019: 70.71%). For banks and financial institutions, the Group has established policies whereby the majority of bank balances are held with independently rated parties with a minimum rating of ‘Ba2’. These policies enable the Group to reduce its credit risk significantly. (ii) Impairment of financial assets The Group has four types of assets that are subject to the expected credit loss model: • • • • trade receivables; finance lease receivables; loans and other receivables; and cash and cash equivalents. The impairment methodology applied by the Group for calculating expected credit losses depends on the type of assets assessed for impairment. All assets are assessed for impairment on an individual basis. Specifically: • • For trade receivables and finance lease receivables the Group applies the simplified approach permitted by IFRS 9 for calculating expected credit losses, which requires lifetime expected credit losses to be recognised from initial recognition of the financial assets. For loans and other receivables and cash and cash equivalents, the Group applies the general approach. In particular, the Group applies the three-stage model for calculating impairment, which is based on changes in the credit quality of the financial asset since initial recognition. A financial instrument that is not credit- impaired on initial recognition is classified in Stage 1. The ECL of financial assets in Stage 1 is 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. If the Group identifies a significant increase in credit risk 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 its contractual maturity but considering expected prepayments, if any. 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. Significant increase in credit risk. The Group considers the probability of default upon initial recognition of an 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. In making this assessment, the Group considers available reasonable and supportive forwarding-looking information. Especially the following indicators are incorporated: • • • • • • • internal credit rating external credit rating (as far as available) 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 significant increases in credit risk on other financial instruments of the same borrower/counterparty significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements significant changes in the expected performance and behaviour of the borrower/counterparty, including changes in the payment status of counterparty in the group and changes in the operating results of the borrower. Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the internal rating model. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivable balances. Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 180 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 181 Notes to the consolidated financial statements Default and credit-impaired. A default on a financial asset is when the financial asset meets one or more of the following criteria: (i) the borrower is more than 90 days past due on its contractual payments, (ii) the borrower is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due, (iii) the Group, for economic or contractual reasons relating to the borrower’s financial difficulty, granted to the borrower a concession(s) that it would not otherwise consider. The Company considers defaulted assets to be credit-impaired so that Stage 3 represents all debt financial assets which are considered defaulted. Write-off. Assets are written-off, in whole or in part, when the Group has concluded that there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual payments for a period of greater than 180 days past due. The Group may write-off financial assets that are still subject to enforcement activity when the Group seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery. Subsequent recoveries of amounts previously written off are credited against ‘selling and marketing costs’ in the income statement. The Group does not have any material debt financial assets that are subject to the impairment requirements of IFRS 9 and their contractual cash flows have been modified. The Group’s exposure to credit risk for each class of asset subject to the expected credit loss model is set out below: Trade receivables and finance lease receivables The Group assesses, on an individual basis, its exposure to credit risk arising from trade receivables and finance lease receivables. This assessment is based on the credit history of the customers with the Group as well as the period the trade receivable or finance lease receivable is past due (in days). The following table contains an analysis of the gross carrying amount of the Group’s trade receivables and finance lease receivables by reference to the days past due. This basis is aligned with the Group’s internal credit risk grades for these assets. As at 31 December 2020 Current (not past due) 1–30 days past due 31–90 days past due more than 90 days past due Total As at 31 December 2019 Current (not past due) 1–30 days past due 31–90 days past due more than 90 days past due Total Trade receivables Finance lease receivables RUB’000 RUB’000 2,444,086 422,972 693,461 304,793 394,330 — — — 3,836,670 422,972 2,184,210 741,905 76,027 346,339 3,348,481 279,070 — - - 279,070 The gross carrying amounts, as per above, represent the Group’s maximum exposure to credit risk on these assets as at 31 December 2020 and as at 31 December 2019 without taking into account any collateral held. The Group does not hold any collateral as security for any trade receivable balances. Finance lease receivables are effectively secured as the rights to the leased asset revert to the Group in the event of default. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 182 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 183 Notes to the consolidated financial statements The movement in the credit loss allowance for trade receivables during the years 2020 and 2019 is presented in the table below: The following table contains an analysis of the credit risk exposure other receivables on the basis of the Group’s internal credit risk rating grades. The gross carrying amounts below represent the Group’s maximum exposure to credit risk on these assets as at 31 December 2020 and 2019: Opening balance as at 1 January New assets originated or purchased Net loss allowance of financial assets at the start of the year Receivables modified during the year Assets written off during the year as uncollectible Recoveries Other Trade receivables 2020 2019 RUB’000 RUB’000 (138,915) (146,042) (11,643) (4,739) (1,625) 18,583 9,510 (6,295) (4,461) (5,269) (9,300) 13,791 9,196 3,170 Closing balance as at 31 December (135,124) (138,915) The estimated expected credit loss allowance on finance lease receivables as at 31 December 2020 and as at 31 December 2019 was immaterial. This assessment takes into consideration the presence of the leased asset, which acts as a collateral for the finance lease receivable. Loans and other receivables The Group assesses, on an individual basis, its exposure to credit risk arising from loans and other receivables. This assessment takes into account, amongst others, the period the loan receivable or other receivable balance is past due (in days) and history of defaults in the past, adjusted for forward looking information. Internal credit risk rating grade Company definition of category Performing Stage 1 — Counterparties have a low risk of default and a strong capacity to meet contractual cash flows Under-performing Stage 2 — Customers for which there is a significant increase in credit risk; as significant increase in credit risk is presumed if interest and/or principal repayments are 30 days past due 2020 2019 RUB’000 RUB’000 32,612 20,071 14,872 20,107 Non-performing or Credit-impaired Stage 3 — Interest and/or principal repayments are more than 90 days past due 20,194 29,341 The gross carrying amounts, as per above, represent the Group’s maximum exposure to credit risk on these assets as at 31 December 2020 and as at 31 December 2019 without taking into account any collateral held. The Group does not hold any collateral as security for any loans receivable or other receivable balances. The movement in the credit loss allowance for other receivables during the years 2020 and 2019 is presented in the table below: Opening balance as at 1 January Assets written off during the year as uncollectible Other Closing balance as at 31 December Non-performing 2020 2019 RUB’000 RUB’000 (29,341) (49,652) 6,195 2,951 13,358 6,953 (20,195) (29,341) The estimated expected credit loss allowance on loans receivable as at 31 December 2020 and as at 31 December 2019 was immaterial. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 184 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 185 Notes to the consolidated financial statements Cash and cash equivalents The Group assesses, on an individual basis, its exposure to credit risk arising from cash at bank based on ratings from external credit rating institutions and internal ratings if external are not available. Liquidity risk The Group has an excess of current liabilities over current assets of RUB 2,842,697 thousand as at 31 December 2020 (2019: excess of current assets over current liabilities RUB 4,848,317 thousand). The following table contains an analysis of the gross carrying amount of the Group’s cash at bank by reference to the credit risk ratings assigned by external credit rating agencies. The gross carrying amounts below represent the Group’s maximum exposure to credit risk on these assets as at 31 December 2020 and 2019: Moody’s1 Moody’s1 Moody’s1 Moody’s1 Standard & Poor’s2 Fitch3 Other external non-rated banks — satisfactory credit quality (performing) Rating 2020 2019 RUB’000 RUB’000 A3 – Aaa 1,225,758 1,021,969 Ba1 – Baa1 3,704,823 5,462,852 B1 16,204 Caa1 - Caa3 — — — B - BB+ 30,831 31,373 BBB- BBB+ 37 295 619 4,628 Total cash at bank and bank deposits4 4,977,948 6,521,441 1 International rating agency Moody’s Investors Service 2 International rating agency Standard & Poor’s 3 International rating agency Fitch Rating 4 The rest of the balance sheet item ‘cash and cash equivalents’ is cash on hand. The Group does not hold any collateral as security for any of the above balances. The estimated expected credit loss allowance on cash and cash equivalents as at 31 December 2020 and as at 31 December 2019 based on the general approach of IFRS 9, was immaterial. All cash and cash equivalents were performing (Stage 1) as at 31 December 2020 and as at 31 December 2019. The Group has predictable cash flows which allow the Group to repay its liabilities when they fall due. The Group also has successful credit and refinancing history and maintains enough flexibility ensuring the ability to attract necessary funds through committed credit facilities. Due to availability of committed credit lines amounting to RUB 29,449,091 thousand as of 31 December 2020 (2019: RUB 4,665,000 thousand), together with long-term borrowings (Note 28) the Group has the ability to meet its liabilities as they fall due and mitigate risks of adverse changes in the financial markets environment. Management controls current liquidity based on expected cash flows and expected revenue receipts. In the long-term perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new credit, loan or lease agreements and by budgeting procedures. The table below summarises the analysis of financial liabilities of the Group by maturity as of 31 December 2020 and 31 December 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. Less than one month Between one month and three months Between three and six months Between 6 months and less than one year Between 1 and 2 years Between 2 and 5 years Total RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 31 December 2020 Borrowings 628,404 2,197,010 2,831,036 6,836,340 12,720,064 10,163,762 35,376,616 Trade and other payables Lease liabilities with financial institutions 989,317 41,546 78,802 — — — — — — — — 1,109,665 — — Other lease liabilities 71,618 116,864 186,957 376,826 508,047 248,577 1,508,889 1,689,339 2,355,420 3,096,795 7,213,166 13,228,111 10,412,339 37,995,170 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    186 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 187 Notes to the consolidated financial statements Less than one month Between one month and three months Between three and six months Between 6 months and less than one year Between 1 and 2 years Between 2 and 5 years Total RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 31 December 2019 Borrowings 360,617 1,691,040 2,280,662 4,605,615 9,955,939 13,748,473 32,642,346 Trade and other payables Lease liabilities with financial institutions 849,725 29,986 28,251 78,922 — — 986,884 59,219 104,168 154,532 302,194 573,499 781,441 1,975,053 Other lease liabilities 63,280 130,273 213,761 346,615 409,252 578,619 1,741,800 1,332,841 1,955,467 2,677,206 5,333,346 10,938,690 15,108,533 37,346,083 Note: statutory liabilities are excluded as the analysis is provided for financial liabilities only. (a) 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 required profitability of the Group, maintain optimum equity structure and reduce its cost of capital. Defining capital, the Group uses the amount of net assets attributable to the Company’s equity owners and the Group’s borrowings. The Group manages the capital based on borrowings to total capitalisation ratio. Borrowings include loan liabilities. To maintain or change its equity structure, the Company may vary the amount of dividend paid or sell assets in order to reduce debts. Total capitalisation is calculated as the sum of the total Group borrowings and total equity attributable to the equity owners of the Company. The management does not currently have any specific target for the rate of borrowings to total capitalisation. The rate of borrowings to total capitalisation as at 31 December 2020 and 31 December 2019 are as follows: Total borrowings Total capitalisation 2020 2019 RUB’000 RUB’000 32,015,239 30,095,218 78,862,447 80,974,053 Total borrowings to total capitalisation ratio (percentage) 40.60% 37.17% External requirements are imposed on the capital of the Group as defined by management in relation to long- term loans provided by financial institutions to the Company and certain subsidiaries of the Company. The Group analyses compliance with external requirements to the capital at each reporting date and when entering into new loan agreements and lease contracts. There were no instances of non-compliance with externally imposed capital requirements during 2020 and 2019. Management believes that the Group will be able to comply with its external requirements to the capital during the whole term of agreements. Fair value estimation Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is price in an active market. An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The estimated fair values of financial instruments have been determined by the Group, using available market information, where it exists, appropriate valuation methodologies and assistance of experts. However, judgement 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. Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable market data (that is, unobservable inputs). Management applies judgement in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    188 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 189 Notes to the consolidated financial statements The fair values in level 2 and level 3 of fair value hierarchy were estimated using discounted cash flows valuation techniques. The fair value of unquoted fixed and floating interest rate instruments which are not quoted in an active market was estimated based on estimated future cash flows expected to be received discounted at current interest rates for new instruments with similar credit risk and remaining maturity. Financial assets at amortised cost. 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 new instruments with similar credit risk and remaining maturity. Discount rates used depend on credit risk of the counterparty. The fair values of financial assets do not materially differ from their carrying amounts as the impact of discounting is not significant. Financial liabilities carried at amortised cost. Fair values of borrowings and other liabilities were determined using valuation techniques. As at 31 December 2020 and 31 December 2019 there were no fixed or floating interest rate instruments with stated maturity denominated in a currency other than the Russian Rouble. The fair value as at 31 December 2020 and 31 December 2019 of fixed interest rate instruments with stated maturity denominated in Russian Rouble was estimated based on expected cash flows discounted using the rate of similar Russian Rouble denominated instruments entered into by the Group close to 31 December 2020 and 31 December 2019, respectively. The discount rate used was 6.3% p.a. (2019: 7.5% p.a.) (Note 28). The fair value as at 31 December 2020 and 31 December 2019 of the fixed interest rate non-convertible bonds was equal to their quoted price and the resulting fair value measurement is within level 1. The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as the amount payable on demand, discounted from the first date on which the amount could be required to be paid. 7. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (a) Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Tax legislation i) Russian tax, currency and customs legislation is subject to varying interpretations (Note 33). (b) Critical judgements in applying in Group’s accounting policies The Group also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below: Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020190 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 191 Notes to the consolidated financial statements Revenue recognition The assessment of the accounting treatment of certain of the Group’s revenue contracts requires management to make certain critical judgments. The judgments that had the most significant effect on management’s conclusion are the following: • • Identification of performance obligations Operator’s services contracts involve the provision by the Group of a wide range of services. Management believes that, although some of these services can be obtained by the clients from the market separately and different combinations of services can be provided to different customers, in the context of each individual contract with a customer, the services provided by the Group are highly dependent and interrelated with each other and, therefore, are not distinct. In making this assessment, management noted that, despite the fact that the Group’s contracts contain a promise to deliver multiple services, the nature of the promise within the context of the contracts and the economic substance of the transaction is that the customers are purchasing integrated operator’s services to which the individual services promised are inputs rather than separate services and consequently this is considered to constitute a single performance obligation. Assessment as to whether the Group is acting as an agent or principal for certain operator’s services contracts Operator’s services are rendered using own or leased rolling stock. In those cases when the Group’s customers do not interact with OAO “Russian Railways”, a full service is charged by the Group to its customers and the OAO “Russian Railways” tariff is borne by the Group with or without further recharge to its customers. There are certain characteristics indicating that the Group is acting as an agent in these arrangements, particularly the fact that OAO “Russian Railways” tariffs are available to the public and therefore are known to the customer. However, the services are rendered with the use of own or leased rolling stock and the Group bears the OAO “Russian Railways” tariff to bring the rolling stock back or to the next destination. The Group is independent in its pricing policy and considers its potential loss for empty run tariff. Management’s position is that the Group acts as a principal in these arrangements and the Group accounts for full receipts from customers as sales revenue and the OAO “Russian Railways” tariff is also included in cost of sales. Management believes that the Group is acting as a principal in these arrangements as it is the party that controls the services prior these are transferred to the customers and, through separate arrangements with OAO “Russian Railways”, obtains the right to direct them to provide services on its behalf. Had OAO “Russian Railways” tariff directly attributable to such services been excluded from revenues and cost of sales for the year ended 31 December 2020 both would have decreased by RUB 10,957,305 thousand (2019: RUB 22,019,963 thousand). 8. Segmental information The chief operating decision-maker has been identified as the Board of Directors of the Company. The Board reviews the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports. The Board considers the business from two perspectives: by type of activity and by type of rolling stock used. From a type of activity perspective, the Board reviews revenues with no further analysis of the underlying cost components. From the type of rolling stock used perspective, the Board assesses the performance of each type of rolling stock at the level of adjusted revenue. In particular, the Board reviews discrete financial information for gondola cars and rail tank cars, whereas all other types of rolling stock (such as hopper cars and platforms) are reviewed together. Adjusted revenue for reportable segments is the measure of profit looked at by the chief operating decision-maker and this includes the revenues derived from the relating type of rolling stock used less infrastructure tariff paid for the loaded trips of the relevant rolling stock and services provided by other transportation organisations. Further, the Board receives information in respect of depreciation charges for rolling stock and right-of-use assets relating to rolling stock, amortisation charges for customer relationships, impairment charges/reversals of impairment in respect of rolling stock, right-of-use assets relating to rolling stock and customer relationships and loss on derecognition arising on capital repairs. All other information provided to the Board is measured in a manner consistent with that in the financial statements. The Board also reviews additions to segment assets. Segment assets consist of rolling stock, right-of-assets relating to rolling stock and customer relationships. Unallocated assets comprise all the assets of the Group except for rolling stock, right-of-assets relating to rolling stock and customer relationships, as included within segment assets. Liabilities are not segmented since they are not reviewed from that perspective by the chief operating decision maker. Capital expenditure comprises additions of rolling stock to property, plant and equipment and additions of right-of-use assets relating to rolling stock. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020192 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 193 Notes to the consolidated financial statements The Group does not have transactions between different business segments. Gondola cars Rail tank cars Other railcars Total RUB’000 RUB’000 RUB’000 RUB’000 Gondola cars Rail tank cars Other railcars Total RUB’000 RUB’000 RUB’000 RUB’000 Year ended 31 December 2020 Year ended 31 December 2019 Total revenue — operator’s services 39,043,539 24,050,218 774,017 63,867,774 Total revenue — operator’s services 62,009,387 27,955,714 1,194,311 91,159,412 Total revenue — operating lease 28,857 1,747,274 156,136 1,932,267 Total revenue — operating lease 148,207 1,434,219 51,340 1,633,766 Inter-segment revenue — — — — Inter-segment revenue — — — — Revenue (from external customers) 39,072,396 25,797,492 930,153 65,800,041 Revenue (from external customers) 62,157,594 29,389,933 1,245,651 92,793,178 less Infrastructure and locomotive tariffs — loaded trips (5,757,613) (4,789,170) (177,087) (10,723,870) less Infrastructure and locomotive tariffs — loaded trips (14,596,983) (6,856,635) (566,345) (22,019,963) less Services provided by other transportation organisations (2,460,601) (4,373) — (2,464,974) less Services provided by other transportation organisations (4,046,206) (85,793) (2,243) (4,134,242) Adjusted revenue for reportable segments 30,854,182 21,003,949 753,066 52,611,197 Adjusted revenue for reportable segments 43,514,405 22,447,505 677,063 66,638,973 Depreciation and amortisation (5,114,046) (1,644,343) (421,989) (7,180,378) Depreciation and amortisation (4,958,834) (1,259,444) (302,671) (6,520,949) Loss on derecognition arising on capital repairs  (135,742) (284,224) (16) (419,982) Impairment of property, plant and equipment — — 64,889 64,889 Additions to non-current assets (included in reportable segment assets) 6,177,481 1,676,870 835,829 8,690,180 Loss on derecognition arising on capital repairs  (133,987) (336,103) (1,656) (471,746) Reportable segment assets 53,059,2761 24,740,326 4,072,741 81,872,343 1 Includes RUB Nil thousand of intangible assets representing customer relationships. Additions to non-current assets (included in reportable segment assets) 6,720,628 4,760,126 2,215,587 13,696,341 Reportable segment assets 52,534,3591 21,925,369 3,769,887 78,229,615 1 Includes RUB 57,903 thousand of intangible assets representing customer relationships. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020194 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 195 Notes to the consolidated financial statements A reconciliation of total adjusted revenue to total profit before income tax is provided as follows: Segment assets and liabilities are reconciled to the Group assets and liabilities as follows: Adjusted revenue for reportable segments Other adjusted revenues Total adjusted revenue Cost of sales (excl. Infrastructure and locomotive tariffs — loaded trips, services provided by other transportation organisations, reversal of impairment of property, plant and equipment, depreciation of property, plant and equipment and right-of-use assets, amortisation of intangible assets and loss on derecognition arising on capital repairs) Selling, marketing and administrative expenses (excl. depreciation, amortisation and impairments) Depreciation and amortisation Net impairment losses on trade and other receivables Reversal of impairment of property, plant and equipment Loss on derecognition arising on capital repairs Other income Other gains/(losses) — net Finance income Finance costs (3,365,169) (3,894,885) (7,683,620) (6,915,857) (5,511) — (12,699) 64,889 (419,982) (471,746) 1,000,232 107,765 133,508 (99,322) 18,811,071 32,119,830 263,968 533,857 (2,510,495) (2,529,098) Net foreign exchange transaction gains/(losses) on financing activities 147,008 (379,824) Profit before income tax 16,711,552 29,744,765 2020 2019 RUB’000 RUB’000 52,611,197 66,638,973 2020 2019 Assets Liabilities Assets Liabilities RUB’000 RUB’000 RUB’000 RUB’000 2,322,516 2,200,696 Segment assets/ liabilities 81,872,343 — 78,229,615 — 54,933,713 68,839,669 Unallocated: (25,756,357) (25,523,727) Deferred tax liabilities — 8,862,587 — 7,592,182 Current income tax assets/liabilities 266,024 100,226 501,087 127,694 Property, plant and equipment Right-of-use assets Intangible assets Assets classified as held for sale Other assets Trade receivables Loans and other receivables Inventories Cash and cash equivalents Borrowings Other lease liabilities Trade and other payables Contract liabilities 3,078,585 550,428 1,460 10 3,136,086 3,701,546 51,370 691,033 4,978,322 — — — — — — — — — 3,187,618 583,763 3,413 40,224 5,526,920 3,209,566 48,019 1,722,781 6,521,543 — — — — — — — — — — 32,015,239 — — — 1,404,596 2,197,994 972,752 — — — — 30,095,218 1,530,883 2,446,614 1,255,893 Total 98,327,207 45,553,394 99,574,549 43,048,484 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020196 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 197 Notes to the consolidated financial statements Geographic information Revenues from external customers The revenue information above is based on the location where the sale has originated, i.e. on the location of the respective subsidiary of the Group. Revenue Russia Estonia Ukraine 2020 2019 RUB’000 RUB’000 66,460,662 93,365,285 1,732,640 1,288,712 174,102 339,877 68,367,404 94,993,874 Non-current assets Russia Estonia Ukraine Cyprus In the periods set out below, certain customers, included within the revenue generated in Russia, accounted for greater than 10% of the Group’s total revenues: Revenue Customer A — rail tank cars segment Customer B — gondola cars segment Customer C — gondola cars segment 2020 2019 RUB’000 % revenue RUB’000 % revenue 15,073,614 12,582,629 8,730,718 22 18 13 17,913,115 11,684,413 28,837,359 19 12 30 The table below presents the Group’s non-current assets, other than financial instruments, deferred tax assets, post- employment benefit assets, and rights arising under insurance contracts: 2020 2019 RUB’000 RUB’000 72,389,098 71,440,343 12,822,936 10,163,687 530,449 524,024 13,311 11,716 85,755,794 82,139,770 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020198 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 199 Notes to the consolidated financial statements 9. Non-IFRS financial information In addition to financial information under IFRS, the Group also use certain measures not recognised by EU IFRS or IFRS (referred to as “non-IFRS measures”) as supplemental measures of the Group’s operating and financial performance. The management believes that these non-IFRS measures provide valuable information to readers, because they enable them to focus more directly on the underlying day-to-day performance of the Group’s business. These might not be consistent with measures (of similar description) used by other entities. Adjusted Revenue Adjusted Revenue is defined as “Total revenue” adjusted for “pass through” items: “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”. “Infrastructure and locomotive tariffs: loaded trips” comprises revenue resulting from tariffs that customers pay to the Group and the Group pays on to OAO “Russian Railways”, which are reflected in equal amounts in both the Group’s Total revenue and Cost of sales. “Services provided by other transportation organisations” is revenue resulting from the tariffs that customers pay to the Group and the Group pays on to third-party rail operators for subcontracting their rolling stock, which are reflected in equal amounts in both the Group’s Total revenue and Cost of sales. The following table provides details of Adjusted revenue for 2020 and 2019 and its reconciliation to Total revenue. Total revenue Minus “pass through” items 2020 2019 RUB’000 RUB’000 68,367,404 94,993,874 Total Operating Cash Costs and Non-cash Costs In order to show the dynamics and nature of the Group’s cost base, individual items of Total cost of sales, selling and marketing costs and administrative expenses have been regrouped into Operating cash costs and Operating non-cash costs. Total Operating Cash Costs represent operating cost items payable in cash and calculated as “Total cost of sales, selling and marketing costs and administrative expenses” less the “pass through” items: “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations” and non-cash items: “Depreciation of property, plant and equipment”, “Depreciation of right-of-use assets”, “Amortisation of intangible assets”, “Net impairment losses on trade and other receivables”, “Reversal of impairment/(impairment) of property, plant and equipment”, “Net loss/(gain) on sale of property, plant and equipment” and “Loss on derecognition arising on capital repairs”. Total Operating Non-cash Costs include cost items such as “Depreciation of property, plant and equipment”, “Depreciation of right-of-use assets”, “Amortisation of intangible assets”, “Loss on derecognition arising on capital repairs”, “Net impairment losses on trade and other receivables” “Reversal of impairment/(impairment) of property, plant and equipment” and “Net loss/(gain) on sale of property, plant and equipment”. Other Operating Cash Costs include cost items such as “Advertising and promotion”, “Auditors’ remuneration”, “Communication costs”, “Information services”, “Legal, consulting and other professional fees”, “Expense relating to short-term leases — office”, “Expense relating to short-term leases — tank containers”, “Taxes (other than income tax and value added taxes)” and “Other expenses”. Infrastructure and locomotive tariffs: loaded trips (10,957,305) (22,019,963) Services provided by other transportation organisations (2,476,386) (4,134,242) “Pass through” cost items Adjusted Revenue 54,933,713 68,839,669 Infrastructure and locomotive tariffs: loaded trips (10,957,305) (22,019,963) Services provided by other transportation organisations (2,476,386) (4,134,242) Total cost of sales, selling and marketing costs and administrative expenses (adjusted for “pass through” cost items) (37,230,639) (36,754,025) Total Operating Cash Costs (29,121,210) (29,408,565) Infrastructure and locomotive tariffs — empty runs and other tariffs (16,797,608) (15,739,194) Repairs and maintenance Employee benefit expense (4,261,067) (4,403,342) (4,153,507) (4,483,225) 2020 2019 RUB’000 RUB’000 (13,433,691) (26,154,205) Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020200 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 201 Notes to the consolidated financial statements Expense relating to short-term leases — rolling stock (824,487) (721,529) Fuel and spare parts — locomotives Engagement of locomotive crews Other Operating Cash Costs Advertising and promotion Auditors’ remuneration Communication costs Information services Legal, consulting and other professional fees Expense relating to short-term leases — tank containers Expense relating to short-term leases — office Taxes (other than on income and value added taxes) Other expenses Total Operating Non-Cash Costs Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortisation of intangible assets Loss on derecognition arising on capital repairs Net impairment losses on trade and other receivables Reversal of impairment of property, plant and equipment Net loss on sale of property, plant and equipment (1,629,874) (1,914,447) (420,905) (774,990) (1,033,762) (1,371,838) (34,814) (55,262) (26,375) (15,506) (38,992) (54,780) (34,776) (18,666) (69,055) (48,469) (23,572) — (109,482) (139,214) (24,687) 9,031 (675,009) (1,045,972) (8,109,429) (7,345,460) (6,968,694) (5,794,912) (655,070) (424,220) (59,856) (696,725) (419,982) (471,746) (5,511) — (316) (12,699) 64,889 (10,047) Adjusted EBITDA Adjusted EBITDA represents EBITDA excluding “Net foreign exchange transaction gains/(losses) from financing activities”, “Share of loss of associate”, “Other gains/(losses) - net”, “Net loss/(gain) on sale of property, plant and equipment”, “Reversal of impairment/(impairment) of property, plant and equipment”, “Loss on derecognition arising on capital repairs” and “Reversal of impairment of intangible assets”. EBITDA represents “Profit for the period” before “Income tax expense”, “Finance costs - net” (excluding “Net foreign exchange transaction gains/(losses) on financing activities), “Depreciation of property, plant and equipment”, “Depreciation of right-of-use assets” and “Amortisation of intangible assets”. The following table provides details on Adjusted EBITDA for 2020 and 2019 and its reconciliation to EBITDA and Profit for the year: Profit for the year Plus (Minus) Income tax expense Finance costs — net 2020 2019 RUB‘000 RUB‘000 12,186,847 22,653,332 4,524,705 7,091,433 2,099,519 2,375,065 Net foreign exchange transaction gains/(losses) on financing activities 147,008 (379,824) Amortisation of intangible assets Depreciation of right-of-use assets Depreciation of property, plant and equipment EBITDA Plus (Minus) 59,856 696,725 655,070 424,220 6,968,694 5,794,912 26,641,699 38,655,863 Loss on derecognition arising on capital repairs 419,982 471,746 Total cost of sales, selling and marketing costs and administrative expenses (50,664,330) (62,908,230) Net foreign exchange transaction gains/(losses) on financing activities (147,008) 379,824 Other gains/(losses) — net Net loss on sale of property, plant and equipment Reversal of impairment of property, plant and equipment Adjusted EBITDA (107,765) 316 — 99,322 10,047 (64,889) 26,807,224 39,551,913 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020202 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 203 Notes to the consolidated financial statements Free Cash Flow Free Cash Flow is calculated as “Cash generated from operations” (after “Changes in working capital”) less “Tax paid”, “Interest paid on bank borrowings and non-convertible unsecured bonds”, “Interest paid on leases with financial institutions”, “Interest paid on other lease liabilities”, “Purchases of property, plant and equipment”, “Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired” and “Principal elements of lease payments for other lease payments”. Total CAPEX calculated on a cash basis as the sum of “Purchases of property, plant and equipment”, “Purchases of intangible assets” and “Acquisition of subsidiary undertakings - net of cash acquired”. The Attributable Free Cash Flow means Free Cash Flow less Adjusted profit attributable to non-controlling interests. Adjusted Profit Attributable to Non-controlling Interests is calculated as “Profit attributable to non-controlling interests” less share of “Impairment of property, plant and equipment” and “Impairment of intangible assets” attributable to non-controlling interests. The following table sets out details on Free Cash Flow and Attributable Free Cash Flow for 2020 and 2019, and its reconciliation to Cash generated from operations. Cash generated from operations Tax paid 2020 2019 RUB’000 RUB’000 28,644,415 35,422,218 (3,051,888) (6,018,371) Interest paid on bank borrowings and non-convertible unsecured bonds (2,314,937) (2,017,915) Interest paid on leases with financial institutions Interest paid on other lease liabilities Purchases of property, plant and equipment Principal elements of other lease payments Purchases of intangible assets Total CAPEX Free Cash Flow Attributable Free Cash Flow (80,813) (167,048) (113,771) (111,911) (6,941,159) (13,515,985) (672,432) (339,597) — (832) 6,941,159 13,516,817 15,103,243 13,250,559 13,502,931 11,404,878 Net Debt and Net Debt to Adjusted EBITDA Net Debt is defined as the sum of total borrowings (including interest accrued) less “Cash and cash equivalents”. Total Debt is defined as total borrowings (including interest accrued) The following table sets out the details on the Group’s Net Debt and Net Debt to Adjusted EBITDA at 31 December 2020 and 2019, and reconciliation of Net Debt to Total Debt. Total debt Minus Cash and cash equivalents Net Debt Net Debt to Adjusted EBITDA 2020 2019 RUB’000 RUB’000 32,015,239 30,095,218 4,978,322 6,521,543 27,036,917 23,573,675 1.01x 0.60x Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020204 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 205 Notes to the consolidated financial statements 10. Revenue (a) Disaggregation of revenue (b) Liabilities related to contracts with customers The Group has recognised the following liabilities related to contracts with customers as of 31 December 2019 and 31 December 2020: Railway transportation — operator’s services (tariff borne by the Group) 27,197,234 49,141,357 Railway transportation — operator’s services (tariff borne by the client) 36,670,540 42,018,055 Revenue from specialised container transportation 2,167,613 1,814,551 Contract liabilities relating to railway transportation contracts (current) Contract liabilities relating to railway transportation contracts (non-current) 2020 2019 RUB’000 RUB’000 31 December 2020 31 December 2019 1 January 2019 RUB’000 964,042 RUB’000 RUB’000 1,244,702 2,673,467 8,710 11,191 — Other 399,750 386,145 Total contract liabilities 972,752 1,255,893 2,673,467 Total revenue from contracts with customers recognised over time 66,435,137 93,360,108 Operating lease of rolling stock Total revenue 1,932,267 1,633,766 68,367,404 94,993,874 Note: Revenue from railway transportation — operators services (tariff borne by the Group) includes infrastructure and locomotive tariffs for loaded trips for the year ended 31 December 2020 amounting to RUB 10,957,305 thousand (for the year ended 31 December 2019: RUB 22,019,963 thousand) and the cost of engaging the fleet from third parties recharged to clients of the Group amounting to RUB 2,476,386 thousand (2019: RUB 4,134,242 thousand). Contract liabilities represent advances from customers for transportation services. (c) Revenue recognised in relation to contract liabilities The Group’s revenue for the year ended 31 December 2020 includes the entire contract liability balance of RUB 1,230,616 thousand as of 1 January 2020 (year ended 31 December 2019: RUB 2,673,467 as of 1 January 2019). The Group does not have any contracts where the period of provision of the services (that is, the period between the start and completion of a trip) exceeds one year. As permitted under IFRS 15, the transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations as of the balance sheet date is not disclosed. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020206 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 207 Notes to the consolidated financial statements 11. Expenses by nature 2020 2019 RUB’000 RUB’000 Cost of sales Selling, marketing and administrative expenses Infrastructure and locomotive tariffs: loaded trips 10,957,305 22,019,963 Depreciation of property, plant and equipment Infrastructure and locomotive tariffs: empty run trips and other tariffs 16,797,608 15,739,194 Depreciation of right-of-use assets Services provided by other transportation organisations 2,476,386 4,134,242 Amortisation of intangible assets Expense relating to short-term leases (rolling stock) 824,487 721,529 Gain on sale of property, plant and equipment Expense relating to short-term leases — tank containers 23,572 — Employee benefit expense Employee benefit expense Repairs and maintenance 1,517,573 1,511,766 Net impairment losses on trade and other receivables 4,261,067 4,403,342 Expense relating to short-term leases (office) Depreciation of property, plant and equipment 6,888,459 5,735,069 Auditors’ remuneration Depreciation of right-of-use assets Loss on derecognition arising on capital repairs Amortisation of intangible assets Fuel and spare parts — locomotives Engagement of locomotive crews 507,671 419,982 316,818 471,746 Legal, consulting and other professional fees Advertising and promotion 59,839 696,707 Communication costs 1,629,874 1,914,447 Information services 420,905 774,990 Taxes (other than income tax and value added taxes) Loss/(gain) on sale of property, plant and equipment 6,585 11,495 Other expenses (Reversal of impairment)/impairment of property, plant and equipment — (64,889) Total selling, marketing and administrative expenses Other expenses Total cost of sales 274,686 446,964 47,065,999 58,833,383 2020 2019 RUB’000 RUB’000 80,235 147,399 17 59,843 107,402 18 (6,269) (1,448) 2,635,934 2,971,459 5,511 109,482 55,262 69,055 34,814 26,375 15,506 24,687 12,699 139,214 54,780 48,469 38,992 34,776 18,666 (9,031) 400,323 599,008 3,598,331 4,074,847 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020208 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 209 Notes to the consolidated financial statements 2020 2019 Services provided by other transportation organisations 2,476,386 4,134,242 Total expenses Auditors’ remuneration Depreciation of property, plant and equipment (Note 17) 6,968,694 5,794,912 Legal, consulting and other professional fees RUB’000 RUB’000 Expense relating to short-term leases — tank containers Depreciation of right-of-use assets (Note 18) Loss on derecognition arising on capital repairs (Note 17) Amortisation of intangible assets (Note 19) Reversal of impairment of property, plant and equipment (Note 17) Net loss on sale of property, plant and equipment (Note 17) Employee benefit expense (Note 13) Net impairment losses on trade and other receivables Expense relating to short-term leases (rolling stock) Expense relating to short-term leases (office) Repairs and maintenance Fuel and spare parts — locomotives Engagement of locomotive crews 655,070 424,220 419,982 471,746 59,856 696,725 — 316 (64,889) 10,047 4,153,507 4,483,225 5,511 824,487 109,482 12,699 721,529 139,214 4,261,067 4,403,342 1,629,874 1,914,447 420,905 774,990 23,572 55,262 69,055 34,814 26,375 15,506 24,687 — 54,780 48,469 38,992 34,776 18,666 (9,031) Advertising and promotion Communication costs Information services Taxes (other than income tax and value added taxes) Other expenses 675,009 1,045,972 Total cost of sales, selling and marketing costs and administrative expenses 50,664,330 62,908,230 1 Depreciation of property, plant and equipment for the year ended 31 December 2020 includes RUB 90,047 thousand (2019: RUB 216,114 thousand) relating to depreciation of right-of-use assets presented within property, plant and equipment (Note 17). The entire amount is recognised within ‘Cost of sales’. Note: The auditors’ remuneration stated above includes fees of RUB 18,486 thousand (2019: RUB 16,398 thousand) for statutory audit services and RUB 5,139 thousand (2019: RUB 4,762 thousand) for other assurance services charged by the Company’s statutory audit firm. The rest of the auditors’ remuneration relates to fees for audit services charged by the auditors of the subsidiaries of the Company. Infrastructure and locomotive tariffs: loaded trips 10,957,305 22,019,963 Infrastructure and locomotive tariffs: empty run trips and other tariffs 16,797,608 15,739,194 Legal, consulting and other professional fees include RUB 737 thousand for the year 2020 (RUB 502 thousand for the year 2019) in relation to fees paid to the Company’s statutory audit firm for tax consultancy services. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020210 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 211 Notes to the consolidated financial statements 12. Other gains/(losses) — net 14. Finance income and costs Other gains Other losses Net foreign exchange gains (Note 16) Total other gains/(losses) — net 2020 2019 RUB’000 RUB’000 350,475 37,245 Interest expense: (323,683) (217,289) Bank borrowings 80,973 80,722 Non-convertible bonds 107,765 (99,322) Interest expenses on loans Other interest expense 2020 2019 RUB’000 RUB’000 (1,482,228) (1,456,246) (808,258) (743,298) (5,193) (1,887) (5,207) (9,039) Total interest expense calculated using the effective interest rate method (2,297,566) (2,213,790) 13. Employee benefit expense Leases with financial institutions Wages and salaries Termination benefits Bonuses Share based payment expense (Note 21) Social insurance costs Total employee benefit expense 2020 2019 RUB’000 RUB’000 2,392,160 2,199,520 7,238 5,212 998,505 1,454,292 28,931 83,319 726,673 740,882 4,153,507 4,483,225 Other lease liabilities Total interest expense Other finance costs Total finance costs Interest income: Bank balances Short term deposits Loans to third parties (74,468) (165,242) (113,099) (117,589) (2,485,133) (2,496,621) (25,362) (32,477) (2,510,495) (2,529,098) 189,505 122,278 27,083 374,302 120 616 Average number of employees during the year 1,664 1,569 Total interest income calculated using the effective interest rate method 216,708 497,196 Finance leases — third parties Total finance income 47,260 36,661 263,968 533,857 Net foreign exchange transaction (losses)/gains on borrowings and other liabilities (5,509) 206,966 Net foreign exchange transaction gains/(losses) on cash and cash equivalents and other monetary assets 152,517 (586,790) Net foreign exchange transaction gains/(losses) on financing activities (Note 16) 147,008 (379,824) Net finance costs — net (2,099,519) (2,375,065) Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 212 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 213 Notes to the consolidated financial statements 15. Income tax expense The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the applicable tax rates as follows: Current tax: Corporation tax Withholding tax on dividends Defence contribution Total current tax Deferred tax (Note 30): Origination and reversal of temporary differences Total deferred tax Income tax expense 2020 2019 RUB’000 RUB’000 2,185,948 4,767,114 1,073,231 1,017,005 2 — 3,259,181 5,784,119 1,265,524 1,307,314 1,265,524 1,307,314 4,524,705 7,091,433 Profit before tax Tax calculated at domestic tax rates applicable to profits in the respective countries Tax effects of: Expenses not deductible for tax purposes Allowances and income not subject to tax 2020 2019 RUB’000 RUB’000 16,711,552 29,744,765 3,599,477 6,484,368 63,554 234,253 (120,269) (3,476) Tax effect of tax losses for which no deferred tax asset was recognised (84,724) (14,427) Defence contribution Withholding taxes: Estonian income tax arising on distribution1 Dividend withholding tax provision in relation to intended dividend distribution of subsidiaries Tax charge 2 — 260,929 23,656 805,736 367,059 4,524,705 7,091,433 (1) Estonian tax law calls for profits to be taxed at the time of distribution and not during the year in which they arise. During the years 2020 and 2019, the Group incurred taxes on distributions from Estonian subsidiaries. The Company is subject to income tax on taxable profits at the rate 12.5%. Brought forward losses of the Company of only five years may be utilised. Under certain conditions, interest may be exempt from income tax and be subject only to special contribution for defence at the rate of 30%. In certain cases dividends received from abroad may be subject to special contribution for defence at the rate of 17%. Further, in certain cases dividends received by the Company from other Cyprus tax resident companies may also be subject to special contribution for defence. Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon etc.) are exempt from Cyprus income tax. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020214 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 215 Notes to the consolidated financial statements For Russian subsidiaries, the annual profit is taxed at 20%. Withholding tax is applied to dividends distributed to the Company by its Russian subsidiaries at the rate of 5% on gross dividends declared; such tax is withheld at source by the respective subsidiary and is paid to the Russian tax authorities at the same time when the payment of dividend is effected. Dividend withholding tax provision is recognised in the respective periods for the withholding taxes that would be payable by subsidiaries where there is an intention that earnings will be distributed to the Company in the form of dividends. For subsidiaries in Estonia, the annual profit earned by enterprises is not taxed and thus no income tax arise. Instead of taxing the net profit, the distribution of statutory retained earnings is subject to a tax rate of 20% of net dividend paid which, under certain conditions, can decrease to 14%. For the subsidiary in Ukraine the annual profit was taxed at a tax rate of 18%. The Group has not recognised any tax in relation to other comprehensive income as all elements of other comprehensive income are not subject to tax. 16. Net foreign exchange losses The exchange differences credited to the income statement are included as follows: Finance income and costs (Note 14) Other gains/(losses) — net (Note 12) 2020 2019 RUB’000 RUB’000 147,008 (379,824) 80,973 80,722 227,981 (299,102) 17. Property, plant and equipment At 1 January 2019 Cost Rolling stock Land and buildings Motor vehicles Other Total RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 107,436,162 347,949 201,242 2,662,667 110,648,020 Accumulated depreciation (35,169,174) (91,009) (103,276) (519,658) (35,883,117) Net book amount 72,266,988 256,940 97,966 2,143,009 74,764,903 Year ended 31 December 2019 Opening net book amount 72,266,988 256,940 97,966 2,143,009 74,764,903 Additions Disposals Assets classified as held for sale 13,179,785 4,133 59,192 892,686 14,135,796 (92,175) (40,224) — — (3,025) (6,496) (101,696) — — (40,224) Depreciation charge (Note 11) (5,546,150) (12,446) (34,022) (202,294) (5,794,912) Transfers Reversal of impairment charge (Note 11) Transfer to inventories 4,526 64,889 (523,000) Derecognition arising on capital repairs (471,746) 103 (2,704) (1,925) — — — — — (432) — — (87) — 64,889 (523,519) (471,746) Currency translation differences (1,497,866) (1,652) (1,062) (266) (1,500,846) Closing net book amount 77,345,027 247,078 115,913 2,824,627 80,532,645 At 31 December 2019 Cost 113,371,461 349,562 218,066 3,491,879 117,430,968 Accumulated depreciation (36,026,434) (102,484) (102,153) (667,252) (36,898,323) Net book amount 77,345,027 247,078 115,913 2,824,627 80,532,645 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020   216 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 217 Notes to the consolidated financial statements At 1 January 2020 Cost Rolling stock Land and buildings Motor vehicles Other Total RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 113,371,461 349,562 218,066 3,491,879 117,430,968 Accumulated depreciation (36,026,434) (102,484) (102,153) (667,252) (36,898,323) Net book amount 77,345,027 247,078 115,913 2,824,627 80,532,645 Year ended 31 December 2020 Opening net book amount 77,345,027 247,078 115,913 2,824,627 80,532,645 Additions Disposals Assets classified as held for sale 8,389,050 19,375 53,531 163,834 8,625,790 (63,288) 40,214 — — (18,927) — (916) — (83,131) 40,214 Depreciation charge (Note 11) (6,652,230) (14,683) (37,204) (264,577) (6,968,694) Transfers Transfer to inventories 10,391 (381,070) Derecognition arising on capital repairs (419,982) — — — — (10,391) — (5,150) (96) (386,316) Currency translation differences 3,074,244 3,484 2,070 The table below shows the movement in the said right-of-use assets within the years 2020 and 2019: Opening net book amount Transfer to owned rolling stock Depreciation charge (Note 11) Closing net book amount 2020 2019 RUB’000 RUB’000 3,198,262 3,414,376 (3,108,215) — (90,047) (216,114) — 3,198,262 Useful lives of rolling stock The estimation of the useful lives of items of rolling stock is a matter of judgment based on the experience with similar assets. The future economic benefits embodied in the assets are consumed principally through use. However, other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of the economic benefits embodied in the assets. The Group assesses the remaining useful lives of its rolling stock as of each balance sheet date taking into account the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group. The following primary factors are considered: (a) the expected usage of the assets; (b) the expected physical wear and tear, which depends on operational factors and maintenance programme; and (c) the technical or commercial obsolescence arising from changes in market conditions. — — 617 (419,982) 3,080,415 Based on management’s assessment, the useful economic life of the Group’s rolling stock as of 31 December 2020 is considered appropriate. Closing net book amount 81,342,356 255,254 110,233 2,713,098 84,420,941 At 31 December 2020 Cost 123,222,340 374,471 207,796 3,642,951 127,447,558 Accumulated depreciation (41,879,984) (119,217) (97,563) (929,853) (43,026,617) Net book amount 81,342,356 255,254 110,233 2,713,098 84,420,941 The net carrying amount of rolling stock as at 1 January 2020 and for the year ended 31 December 2020 includes right- of-use assets relating to rolling stock held under leases with financial institutions that include purchase options that are reasonably certain to be exercised, in accordance with the Group’s accounting policy for leases, as disclosed in Note 4. Impairment assessment of rolling stock as of 31 December 2020 The Group assesses at each balance sheet date whether there are indications for impairment of the Group’s property, plant and equipment, in accordance with its accounting policy for impairment of non-financial assets, as set out in Note 4. As of 31 December 2020, the management considered the deterioration of the economic environment, the weak prevailing industry conditions and the COVID-19 pandemic related uncertainties, as these are set out in Note 33, as indications of impairment of the Group’s cash generating units (“CGUs”) and proceeded to perform impairment assessments to determine if there is an impairment loss. As a result of the impairment assessment, no impairment losses were noted. The impairment testing for all the CGUs, other than the Estonian rail tank cars/operating leasing CGU, indicated a significant headroom in the recoverable amount over the carrying amount of these CGUs. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 218 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 219 Notes to the consolidated financial statements Estonian rail tank cars/operating leasing CGU The recoverable amount of the Estonian rail tank cars/operating leasing CGU amounting to RUB 12,786,087 million was determined based on market approach using level 2 inputs.  The fair value less cost to sell was determined based on the prices quoted in RUB by major retailers of rail cars dealing in the second hand market of the specific rolling stock held by the CGU in the Russian Federation (being the primary market for these assets), adjusted to take into account the age of each specific asset in the possession of the CGU and expenses necessary to bring the assets to the location and condition that enables their current use, assessed by management as being their highest and best use. If the selling price of the rolling stock had been 10% lower the recoverable amount would decrease resulting into an impairment loss of RUB 259 million to be recognised in respect of the rolling stock of this CGU. If the year end exchange rate between RUB and EUR had devalued by 20%, the recoverable amount would decrease resulting into an impairment loss of RUB 1,175 million to be recognised in respect of the rolling stock of this CGU. In the cash flow statement, proceeds from sale of property, plant and equipment comprise: Net book amount Loss on sale of property, plant and equipment (Note 11) Consideration from sale of property, plant and equipment The consideration from sale of property, plant and equipment is further analysed as follows: Cash consideration received within year Amount receivable Movement in advances received for sales of property, plant and equipment 2020 2019 RUB’000 RUB’000 83,131 101,696 (316) (10,047) 82,815 91,649 2020 2019 RUB’000 RUB’000 66,765 91,649 1,300 14,750 82,815 — — 91,649 The total net book value of pledged property, plant and equipment (included above) which are held as collateral for the borrowings and loans are as follows (Note 28): Rolling stock Other (tank-containers) 2020 2019 RUB’000 RUB’000 8,084,292 15,190,536 1,387,955 1,516,212 9,472,247 16,706,748 Depreciation expense of RUB 6,888,459 thousand in 2020 (2019: RUB 5,735,069 thousand) has been charged to “cost of sales” and RUB 80,235 thousand in 2020 (2019: RUB 59,843 thousand) has been charged to “selling, marketing and administrative expenses”. Reversal of impairment charge of RUB 64,889 thousand in 2019 has been charged to “cost of sales”. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020  220 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 221 Notes to the consolidated financial statements 18. Right-of-use assets Rolling stock Land and buildings Other Total RUB’000 RUB’000 RUB’000 RUB’000 Year ended 31 December 2019 Opening net book amount 590,656 27,421 102,803 720,880 Additions Disposals through subleases 516,556 685,589 — (85,474) — — 1,202,145 (85,474) Depreciation charge (Note 11) (279,984) (107,939) (36,297) (424,220) Currency translation differences Other — (543) (2,340) — — — (2,340) (543) Summarised information for the Group’s right-of-use assets In accordance with the Group’s accounting policy for leases as disclosed in Note 4, right-of-use assets and associated lease liabilities are presented as separate lines on the face of the balance sheet, except for right-of-use assets and associated lease liabilities arising from leases with financial institutions that that include purchase options that are reasonably certain to be exercised due to the exercise price being a nominal amount compared to the fair value of the leased asset on the exercise date. The latter are presented within the same line item as the corresponding underlying assets would be presented if they were owned and within borrowings, respectively. Management believes that this presentation best reflects the substance of the leases with financial institutions, being similar to that of purchases via collateralised borrowings. The net carrying amount of the Group’s right-of-use assets as at 31 December 2019 and 31 December 2020 is as follows: Rolling stock Land and buildings Other Total RUB’000 RUB’000 RUB’000 RUB’000 As at 31 December 2019 826,685 517,257 66,506 1,410,448 31 December 2019 Rolling stock Land and buildings Other Total RUB’000 RUB’000 RUB’000 RUB’000 Net book amount 31 December 2020 Year ended 31 December 2020 Opening net book amount Additions Disposals 826,685 301,130 (30,996) 517,257 66,506 1,410,448 Net book amount — recognised on the face of the balance sheet 99,050 303,152 703,332 (30,996) 4,024,947 517,257 66,506 4,608,710 529,987 529,987 480,306 70,122 1,080,415 480,306 70,122 1,080,415 — recognised on the face of the balance sheet 826,685 517,257 66,506 1,410,448 — included within property, plant and equipment 3,198,262 — — 3,198,262 Disposals through subleases — (255,447) (255,447) Change of terms of leases (96,587) 9,195 (7,737) (95,129) Depreciation charge (Note 11) (470,245) (148,473) (36,352) (655,070) Currency translation differences — 3,277 — 3,277 As at 31 December 2020 529,987 480,306 70,122 1,080,415 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020            222 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 223 Notes to the consolidated financial statements The additions to the Group’s right-of-use assets and depreciation charge during the year ended 31 December 2019 and 31 December 2020 are as follows: 19. Intangible assets Year ended 31 December 2019 Additions — recognised on the face of the balance sheet Total Depreciation charge Rolling stock Land and buildings Other Total RUB’000 RUB’000 RUB’000 RUB’000 516,556 516,556 685,589 685,589 — — 1,202,145 1,202,145 — recognised on the face of the balance sheet (279,984) (107,939) (36,297) (424,220) — included within property, plant and equipment (216,114) — — (216,114) Total (496,098) (107,939) (36,297) (640,334) Year ended 31 December 2020 Additions — recognised on the face of the balance sheet Total Depreciation charge 301,130 301,130 99,050 99,050 303,152 703,332 303,152 703,332 — recognised on the face of the balance sheet (470,245) (148,473) (36,352) (655,070) — included within property, plant and equipment (90,047) — — (90,047) Total (560,292) (148,473) (36,352) (745,117) The total cash outflow for leases in 2020 was RUB 2,897,814 thousand (2019: RUB 2,110,197 thousand). At 1 January 2019 Cost Accumulated amortisation Net book amount Year ended 31 December 2019 Opening net book amount Amortisation charge (Note 11) Additions Closing net book amount At 31 December 2019 Cost Accumulated amortisation Net book amount Year ended 31 December 2020 Opening net book amount Amortisation charge (Note 11) Closing net book amount At 31 December 2020 Cost Accumulated amortisation Net book amount Computer software Customer relationships Total RUB’000 RUB’000 RUB’000 10,934 (6,443) 4,491 4,491 (1,910) 832 3,413 4,863,734 4,874,668 (4,111,016) (4,117,459) 752,718 757,209 752,718 757,209 (694,815) (696,725) — 832 57,903 61,316 11,766 4,863,734 4,875,500 (8,353) (4,805,831) (4,814,184) 3,413 57,903 61,316 3,413 (1,953) 1,460 11,766 (10,306) 1,460 57,903 61,316 (57,903) (59,856) — — — — 1,460 11,766 (10,306) 1,460 Amortisation of RUB 59,839 thousand (2019: RUB 696,707 thousand) has been charged to cost of sales’ in the income statement and RUB 17 thousand (2019: RUB 18 thousand) to ‘administrative expenses’. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020              224 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 225 Notes to the consolidated financial statements 20. Principal subsidiaries The Group had the following subsidiaries at 31 December 2020 and 31 December 2019: Name Place of business/ country of incorporation Principal activities Proportion of ordinary shares held by the Company (%) Proportion of ordinary shares held by the Group (%) Proportion of ordinary shares held by non- controlling interest (%) New Forwarding Company, АО Russia GTI Management, OOO Russia Ural Wagonrepair Company, AO Russia Ukrainian New Forwarding Company OOO Ukraine Railway transportation Railway transportation Repair and maintenance of rolling stock Railway transportation 2020 2019 2020 2019 2020 2019 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 — — — — — — — — BaltTransServis, OOO Russia Railway transportation 60 60 60 60 40 40 BTS-Locomotive Solutions OOO1 Russia RemTransServis, OOO2 Russia SyntezRail LLC3 Russia SyntezRail Ltd Cyprus Spacecom AS Estonia Ekolinja Oy4 Finland Support activities for locomotive traction Repair and maintenance of rolling stock Railway transportation Intermediary holding company Operating lease of rolling stock and provision of forwarding services Operating sub-lease of rolling stock — — — 60 — 60 60 40 40 — 59.4 59.4 40.6 40.6 — 60 60 60 60 60 40 40 40 40 65.25 65.25 65.25 65.25 34.75 34.75 — — — 65.25 65.25 34.75 34.75 — 65.25 65.25 34.75 34.75 Spacecom Trans AS4 Estonia Operating lease of rolling stock 1 BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis. 2 RemTransServis, OOO is a 99% subsidiary of BaltTransServis, OOO. 3 SyntezRail LLC is a 100% subsidiary of SyntezRail Ltd. 4 Ekolinja Oy and Spacecom Trans AS are 100% subsidiaries of Spacecom AS. All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020226 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 227 Notes to the consolidated financial statements The accumulated non-controlling interest as of 31 December 2020 and 31 December 2019 comprised the following: BaltTransServis, OOO (including RemTransservis, OOO and BTS-Locomotive Solutions, OOO) 2020 2019 RUB’000 RUB’000 1,289,933 1,931,282 Spacecom AS (including Spacecom Trans AS and Ekolinja Oy) 4,422,878 3,544,360 SyntezRail, OOO; SyntezRail Limited Total 213,794 171,588 5,926,605 5,647,230 Transactions with non-controlling interests During the year 2018, Spacecom AS acquired 100% of the shares of Spacecom Trans AS from the Company and the non-controlling shareholders, for a total consideration of Eur 30,100 thousand (equivalent to RUB 2,391,761 thousand), out of which RUB 837,116 thousand were attributed to the non-controlling interest. An amount of RUB 180,281 thousand was paid within 2020 (2019: RUB 450,934 thousand), which includes interest accrued on the balance payable, resulting in the full settlement of the amount due. Significant restrictions There are no significant restrictions, statutory, contractual, regulatory, or arising from protective rights of non-controlling interests, on the ability of the Group to access or use the assets and settle the liabilities of the Group. Summarised financial information of subsidiaries with material non-controlling interests Set out below are the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. The financial information of Spacecom AS includes Spacecom Trans AS and Ekolinja Oy the financial information of BaltTransServis, OOO includes RemTransServis, OOO. No summarised financial information is presented for SyntezRail, OOO and SyntezRail Limited as their operations and financial position are not material to the Group. SUMMARISED BALANCE SHEET Current Assets Liabilities BaltTransServis OOO Spacecom AS 2020 2019 2020 2019 RUB’000 RUB’000 RUB’000 RUB’000 2,619,117 4,015,712 282,965 261,333 5,187,101 3,130,804 557,944 483,347 Total current net assets (2,567,984) 884,908 (274,979) (222,014) Non-current Assets Liabilities 8,682,673 8,345,817 13,006,551 10,368,791 2,889,856 4,402,519 60,302 7,879 Total non-current net assets 5,792,817 3,943,298 12,946,249 10,360,912 Net assets 3,224,833 4,828,206 12,671,270 10,138,898 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020        228 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 229 Notes to the consolidated financial statements SUMMARISED INCOME STATEMENT SUMMARISED CASH FLOW STATEMENTS BaltTransServis OOO Spacecom AS 2020 2019 2020 2019 RUB’000 RUB’000 RUB’000 RUB’000 BaltTransServis OOO Spacecom AS 2020 2019 2020 2019 RUB’000 RUB’000 RUB’000 RUB’000 Revenue 23,841,123 27,994,828 1,732,640 1,288,712 Cash flows from operating activities Profit before income tax 4,169,195 5,170,098 959,753 578,549 Cash generated from operations 6,119,365 6,194,775 1,594,194 1,007,302 Income tax expense (832,568) (1,063,438) (312,459) (23,656) Income tax paid (830,980) (810,307) (174,215) Post-tax profit from continuing operations 3,336,627 4,106,660 647,294 554,893 Net cash generated from operating activities 5,288,385 5,384,468 1,419,979 (18,592) 988,710 Other comprehensive income - - 3,099,987 (1,278,787) Total comprehensive income 3,336,627 4,106,660 3,747,281 (723,894) Total comprehensive income allocated to non-controlling interests 1,334,651 1,642,664 224,935 192,825 Net cash generated from/(used in) investing activities (1,085,015) (3,324,236) (539,000) (982,034) Dividends paid to non-controlling interest (1,976,000) (1,560,000) (411,652) (42,237) Net cash used in financing activities (5,256,854) (1,163,927) (837,055) (145,235) Net increase/(decrease) in cash and cash equivalents (1,053,484) 896,305 43,924 (138,559) Cash and cash equivalents at beginning of year 1,891,351 995,046 Exchange differences on cash and cash equivalents - - 38,288 12,656 195,513 (18,666) Cash and cash equivalents at end of year 837,867 1,891,351 94,868 38,288 The information above includes the amounts before inter-company eliminations. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 230 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 231 Notes to the consolidated financial statements 21. Share-based payments The Group maintains a remuneration program for some of the members of management, including members of key management of the Group. This includes, amongst other things, a three-year compensation scheme in accordance to which, members of management receive a yearly cash compensation calculated based on the weighted average market quotations of the GDRs of the Company. This compensation is set for a three-year period that matured by 31 December 2020 and is divided on three instalments to be paid after the end of each assessment period which equals to one year. The award is conditional on the performance of the participants and on meeting certain key performance indicators (“KPIs”) each year during the three years vesting period. 22. Financial assets (a) Trade receivables Trade receivables — third parties Less: Provision for impairment of trade receivables The scheme falls within the scope of IFRS 2 “Share-based payment” and has therefore been classified as a cash-settled share-based payment arrangement. Trade receivables — net In accordance with the terms of the remuneration program, the compensation is calculated based on the weighted average fair value of the Company’s GDRs, quoted in US Dollar multiplied by the weighted average RUB/USD exchange rate for each period. The Group recognised an employee benefit expense of RUB 28,931 thousand in this respect for the year ended 31 December 2020 (2019: RUB 83,319 thousand) and the Group’s liability in respect of this amounted to RUB 104,366 thousand as of 31 December 2020 (2019: RUB 205,604 thousand). The share-based payment liability as of 31 December 2020 and 31 December 2019 was determined based on the assumption that all participants will remain with the Group and all KPIs will be met and that there will be no significant fluctuation in the value of the Company’s GDRs during the vesting period. The significant inputs into the valuation were the weighted average fair value of the Company’s GDRs and the weighted average USD/RUB exchange. Less non-current portion: Trade receivables — third parties Less: Provision for impairment of trade receivables Total non-current portion Current portion 2020 2019 RUB’000 RUB’000 3,836,670 3,348,481 (135,124) (138,915) 3,701,546 3,209,566 261,437 218,392 (25,272) (21,108) 236,165 197,284 3,465,381 3,012,282 Trade receivables amounting to RUB 261,437 thousand as of 31 December 2020 (2019: RUB 218,392 thousand) related to a receivable from Georgian Railways for services rendered by the Group prior to 1 April 2015. The amount receivable is under dispute and the Group initiated a claim to the Georgian Court demanding the repayment of the entire balance due. Based on assessment performed as at 31 December 2020, the Group recognised a provision for impairment of RUB 25,272 thousand (2019: RUB 21,108 thousand) in order to account for the expected time until receipt of the amount due (Note 33). Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020232 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 233 Notes to the consolidated financial statements The carrying amounts of the Group’s trade receivables are denominated in the following currencies: The carrying amounts of the Group’s loans and other receivables are denominated in the following currencies: Currency: US Dollar Russian Roubles Euro Ukrainian Hryvnia 2020 2019 RUB’000 RUB’000 248,633 209,094 3,306,199 2,820,759 138,184 177,080 8,530 2,633 3,701,546 3,209,566 Currency: US Dollar Russian Roubles Ukrainian Hryvnia Euro Other 2020 2019 RUB’000 RUB’000 440 — 46,451 39,760 591 1 3,887 416 2 7,841 51,370 48,019 According to the management’s estimates, the fair values of trade receivables do not materially differ from their carrying amounts as the impact of discounting is not significant. (b) Loans and other receivables According to the management’s estimates, the fair values of loans and other receivables do not materially differ from their carrying amounts as the impact of discounting is not significant. Loans receivables — third parties Other receivables Less: Provision for impairment of other receivables Loans and other receivables — net Less non-current portion: Loans receivables — third parties Other receivables — third parties Total non-current portion Current portion 2020 2019 RUB’000 RUB’000 3,887 67,678 7,841 69,519 (20,195) (29,341) 51,370 48,019 3,887 — 3,887 47,483 7,820 2,554 10,374 37,645 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    234 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 235 Notes to the consolidated financial statements 23. Other assets Prepayments — third parties Finance leases to third parties VAT recoverable Other assets Less non-current portion: Finance leases to third parties Prepayments for property, plant and equipment Total non-current portion Current portion 2020 2019 RUB’000 RUB’000 1,760,966 3,805,346 422,972 279,070 952,148 1,442,504 3,136,086 5,526,920 296,525 252,968 549,493 241,279 95,137 336,416 2,586,593 5,190,504 The Group’s finance leases as at 31 December 2020 and 31 December 2019 are denominated in Russian Roubles. The finance lease receivables are scheduled as follows: Less than one year Between 1 to 5 years Over 5 years Total RUB’000 RUB’000 RUB’000 RUB’000 At 31 December 2020 Minimum lease receivable 146,532 327,222 Less: Unearned finance income (20,085) (30,697) Present value of minimum lease receivables 126,447 296,525 At 31 December 2019 Minimum lease receivable 64,499 297,795 Less: Unearned finance income (26,708) (56,516) Present value of minimum lease receivables 37,791 241,279 — — — — — — 473,754 (50,782) 422,972 362,294 (83,224) 279,070 According to the management’s estimates, the fair values of finance lease receivables do not materially differ from their carrying amounts as the impact of discounting is not significant. The effective interest rates on finance lease receivables at the balance sheet were as follows: Finance leases to third parties 2020 2019 % 12.61 % 10.4 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020  236 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 237 Notes to the consolidated financial statements 24. Inventories Cash and cash equivalents are denominated in the following currencies: Russian Rouble US Dollar Euro Ukrainian Hryvnia Total cash and cash equivalents The carrying value of cash and cash equivalents approximates their fair value. 2020 2019 RUB’000 RUB’000 3,615,107 5,884,983 673,073 257,799 650,786 338,802 39,356 39,959 4,978,322 6,521,543 Raw materials, spare parts and consumables All inventories are stated at cost. 25. Cash and cash equivalents Cash at bank and in hand Short term bank deposits Total cash and cash equivalents 2020 2019 RUB’000 RUB’000 691,033 1,722,781 691,033 1,722,781 2020 2019 RUB’000 RUB’000 4,898,862 4,333,201 79,460 2,188,342 4,978,322 6,521,543 The weighted average effective interest rate on short-term deposits was 2.27-4.85% in 2020 (2019: 4.20-5.80%) and these deposits have a maturity of 1 to 21 days (2019: 1 to 30 days). Cash and cash equivalents include the following for the purposes of the cash flow statement: Cash and cash equivalents Total cash and cash equivalents 2020 2019 RUB’000 RUB’000 4,978,322 6,521,543 4,978,322 6,521,543 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020238 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 239 Notes to the consolidated financial statements 26. Share capital, share premium and treasury shares 27. Dividends At 1 January 2019 /31 December 2019 / 1 January 2020 / 31 December 2020 Number of shares Share capital Share premium Total USD’000 USD’000 USD’000 178,740,916 17,875 949,471 967,346 In April 2019, the shareholders of the Company approved the payment of a dividend for the financial year ended 31 December 2018 in the amount of 46.50 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,311,453 thousand, including final dividend for 2018 in the amount of RUB 1,429,927 thousand or RUB 8.00 per ordinary share/GDR and a special final dividend in the amount of RUB 6,881,526 thousand or RUB 38.50 per ordinary share/GDR (US Dollar equivalent of US$ 129,727 thousand). At 1 January 2019 /31 December 2019 / 1 January 2020 / 31 December 2020 Number of shares Share capital Share premium Total RUB’000 RUB’000 RUB’000 178,740,916 516,957 27,929,478 28,446,435 The total authorised number of ordinary shares at 31 December 2020 was 233,918,128 shares with a par value of US$0.10 per share (31 December 2019: 233,918,128 shares with a par value of US$0.10 per share). All issued shares are fully paid. In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company started a GDRs buyback program. The buyback programme is for the Company’s Global Depositary Receipts (“GDRs) and will run till the earlier of the close of the Annual General Meeting of the Company to be held in 2021 and May 2021. The total number of purchased GDRs shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046 shares, with each GDR representing oxne ordinary share). As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand). In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.  In August 2019, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in the amount of RUB 3,548,007 thousand or RUB 19.85 per ordinary share/GDR and a special interim dividend in the amount of RUB 4,772,382 thousand or RUB 26.70 per ordinary share/GDR (US Dollar equivalent of US$ 124,655 thousand). In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31 December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary share/GDR (US Dollar equivalent of US$ 110,787 thousand). In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend in the amount of RUB 5,327,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293 thousand). During the years ended 31 December 2020 and 2019, the Group declared and paid dividends in favour of the equity holders of the Company and the non-controlling interests as detailed in the table below. Dividends declared to equity holders of the Company1 Dividends paid to equity holders of the Company1 Dividends declared to non-controlling interest Dividends paid to non-controlling interest 2020 2019 RUB’000 RUB’000 16,637,178 16,631,842 16,637,178 16,631,842 2,387,652 1,602,237 2,271,815 1,602,237 1 Dividends declared and paid to the equity holders of the Company within the year 2020 as per the table above excludes RUB 3,601 thousand relating to dividend declared and paid on the treasury shares. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020240 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 241 Notes to the consolidated financial statements 28. Borrowings Current Bank borrowings Non-convertible unsecured bonds Loans from third parties Lease liabilities with financial institutions Total current borrowings Non-current Bank borrowings Non-convertible unsecured bonds Loans from third parties Lease liabilities with financial institutions Total non-current borrowings Total borrowings Maturity of non-current borrowings (excluding lease liabilities with financial institutions) Between 1 and 2 years Between 2 and 5 years 2020 2019 RUB’000 RUB’000 9,388,591 7,013,856 1,542,581 290,000 — — 355 496,093 10,931,172 7,800,304 12,339,674 10,959,851 8,744,393 9,989,017 — — 120,000 1,226,046 21,084,067 22,294,914 32,015,239 30,095,218 11,554,709 8,528,123 9,529,358 12,540,745 21,084,067 21,068,868 Bank borrowings Bank borrowings mature by 2025 (2019: by 2024) and bear average interest of 6.25% per annum (2019: 8.07% per annum). There were no defaults or breaches of loan terms during the years ended 31 December 2020 and 31 December 2019. The current and non-current bank borrowings amounting to RUB 4,522,381 thousand and RUB 4,916,838 thousand respectively (2019: RUB 5,501,805 thousand and RUB 8,797,604 thousand respectively) are secured by pledge of rolling stock and tank-containers with a total carrying net book value of RUB 9,472,247 thousand (2019: RUB 16,706,748 thousand) (Note 17). Non-convertible bonds New Forwarding Company AO issued non-convertible Russian Rouble denominated bonds for amount of RUB 5 billion in 2018, priced at a coupon rate of 7.25% p.a. and with maturity in 2023 and for amount of RUB 5 billion in 2019, priced at a coupon rate of 8.8% p.a. and with maturity in 2024 out of a total RUB 100 billion registered program. The Company acts as the guarantor for the bond issue. The exposure of the Group’s borrowings to interest rate changes and the contractual re-pricing dates at the balance sheet dates are as follows: 6 months or less 6 to 12 months 1 to 5 years 2020 2019 RUB’000 RUB’000 4,983,084 3,917,181 5,948,087 3,875,216 21,084,068 22,302,821 32,015,239 30,095,218 Note: The amounts above are based on the earliest of their contractual re-pricing dates and maturity dates Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    242 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 243 Notes to the consolidated financial statements Movements in borrowings are analysed as follows: Bank borrowings and loans (excl. overdrafts) Lease liabilities with financial institutions Other lease liabilities Non- convertible unsecured bonds Total RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 Interest charged 1,487,421 74,468 113,099 808,258 2,483,246 Net foreign exchange Other lease liability Other — — (167) — — — 9,716 668,622 (131,521) — — — 9,716 668,622 (131,688) Closing amount as at 31 December 2020 21,728,265 — 1,404,596 10,286,974 33,419,835 Year ended 31 December 2019 The carrying amount and fair value of current and non-current borrowings are as follows: Opening amount as at 1 January 2019 18,399,624 2,212,668 678,695 5,116,619 26,407,606 Cash flows: Amounts advanced 10,408,000 — — 5,000,000 15,408,000 Repayments of borrowings (10,736,723) (488,723) (339,597) — (11,565,043) (1,437,015) (167,048) (111,911) (580,900) (2,296,874) Carrying amount Fair value 2020 2019 2020 2019 RUB’000 RUB’000 RUB’000 RUB’000 Interest paid Non-cash changes: Interest charged Net foreign exchange Other lease liability Other 1,461,453 165,242 117,589 743,298 2,487,582 Non-convertible unsecured bonds 10,286,974 10,279,017 10,440,500 10,317,500 (394) — (883) (10,956) 1,197,063 — — — — — — (11,350) 1,197,063 (883) Loans from third parties Lease liabilities with financial institutions — — 120,355 1,722,139 — 125,833 1,635,779 32,015,239 30,095,218 32,224,511 28,615,619 Bank borrowings 21,728,265 17,973,707 21,784,011 16,536,507 Closing amount as at 31 December 2019 18,094,062 1,722,139 1,530,883 10,279,017 31,626,101 Year ended 31 December 2020 Opening amount as at 1 January 2020 18,094,062 1,722,139 1,530,883 10,279,017 31,626,101 Cash flows: The fair value as at 31 December 2020 and 31 December 2019 of fixed interest rate instruments with stated maturity denominated in Russian Rouble was estimated based on expected cash flows discounted using the rate of similar Russian Rouble denominated instruments entered into by the Group close to 31 December 2020 and 31 December 2019. The discount rate was 6.3% p.a. (2019: 7.5% p.a.). The fair value measurements are within level 2 of the fair value hierarchy (2019: level 2). The fair value as at 31 December 2020 and 31 December 2019 of the fixed interest rate non-convertible bonds was equal to their quoted price and the resulting fair value measurement is within level 1. Amounts advanced 23,265,000 — — — 23,265,000 Repayments of borrowings (19,603,415) (1,715,794) (672,432) — (21,991,641) The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as the amount payable on demand, discounted from the first date on which the amount could be required to be paid. Interest paid Non-cash changes: (1,514,636) (80,813) (113,771) (800,301) (2,509,521) Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020      244 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 245 Notes to the consolidated financial statements The carrying amounts of the Group’s borrowings are denominated in the following currencies: 29. Other lease liabilities Russian Rouble The Group has the following undrawn borrowing facilities: Fixed rate: Expiring within one year Expiring beyond one year The weighted average effective interest rates at the balance sheet were as follows: Bank borrowings Non-convertible unsecured bonds Loans from third parties Lease liabilities with financial institutions 2020 2019 RUB’000 RUB’000 32,015,239 30,095,218 32,015,239 30,095,218 2020 2019 RUB’000 RUB’000 7,609,091 2,320,000 21,840,000 2,345,000 29,449,091 4,665,000 2020 2019 % 6.3 8.1 — — % 8.1 8.1 9.0 8.4 Other lease liabilities Current lease liabilities Non-current lease liabilities Total lease liabilities Maturity of other lease liabilities Between 1 and 2 years Between 2 and 5 years Over 5 years 2020 2019 RUB’000 RUB’000 684,109 649,177 720,487 881,706 1,404,596 1,530,883 2020 2019 RUB’000 RUB’000 475,112 340,021 239,943 535,144 5,432 6,541 720,487 881,706 Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020      246 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 247 Notes to the consolidated financial statements 30. Deferred income tax 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 taxable entity and fiscal authority. The gross movement on the deferred income tax account is as follows: Beginning of year Income statement charge (Note 15) Exchange differences End of year 2020 2019 RUB’000 RUB’000 7,592,182 6,284,868 1,265,524 1,307,314 4,881 — 8,862,587 7,592,182 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: Deferred tax liabilities At 1 January 2019 Charged/(credited) to: Income statement (Note 15) At 31 December 2019 Charged/(credited) to: Property, plant and equipment1 Withholding tax provision Intangible assets Total RUB’000 RUB’000 RUB’000 RUB’000 6,865,556 485,136 150,326 7,501,018 1,156,002 8,021,558 30,308 (138,958) 1,047,352 515,444 11,368 8,548,370 Income statement (Note 15) 445,194 153,433 (11,578) 587,049 Translation differences At 31 December 2020 — 4,881 — 4,881 8,466,752 673,758 (210) 9,140,300 1 The deferred tax liability arising from property, plant and equipment as at 31 December 2019 includes RUB 639 652 thousand relating to temporary differences arising from right-of-use assets recognised within property, plant and equipment (Note 17). Tax losses Trade and other payables Lease liabilities with financial institutions Other assets/ liabilities Total Deferred tax assets RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 At 1 January 2019 (59,012) (186,470) (823,341) (147,327) (1,216,150) Charged/(credited) to: Income statement (Note 15) 10 (119,591) 108,990 270,553 259,962 At 31 December 2019 (59,002) (306,061) (714,351) 123,226 (956,188) Charged/(credited) to: Income statement (Note 15) 5,586 108,696 593,783 (29,590) 678,475 At 31 December 2020 (53,416) (197,365) (120,568) 93,636 (277,713) Deferred tax assets are recognised for tax losses carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. The Group has not recognised deferred tax assets in the amount of RUB 272,614 thousand (2019: RUB 312,221 thousand) for tax losses amounting to RUB 1,543,418 thousand (2019: RUB 1,668,111 thousand) available to be carried forward as it is not probable that future taxable profits will be available against which these tax losses can be utilised. Withholding tax at the rate of 5% is applied to the dividends distributed by the Russian subsidiaries of the Group to the Company. In case the dividends are distributed by the Estonian subsidiaries the tax of 20% or, under certain conditions, 14% will be applied to gross amount of such distributions. The Group recognises provisions for such taxes based on management’s estimates and intention for future dividend distribution by each respective subsidiary out of profits of subsidiaries as of 31 December 2020. Deferred income tax liabilities of RUB 1,446,802 thousand (2019: RUB 2,575,594 thousand) have not been recognised for the withholding taxes that would be payable in case unremitted earnings of certain subsidiaries are distributed to the Company in the form of dividends as it is the current intention of the management of the Group that such amounts are reinvested. Unremitted earnings on which no deferred tax liability was recognised totalled to RUB 13,093,858 thousand as at 31 December 2020 (2019: RUB 22,679,368 thousand). Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    248 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 249 Notes to the consolidated financial statements 31. Trade and other payables 33. Contingencies Current Trade payables to third parties Other payables to third parties VAT payable and other taxes Accrued expenses 2020 2019 RUB’000 RUB’000 843,703 659,891 380,438 462,021 534,738 561,393 79,680 133,482 Accrued key management compensation, including share-based payment (Note 35) 359,435 539,085 Non-current Accrued key management compensation, including share-based payment (Note 35) Accrued expenses 2,197,994 2,355,872 — — — 82,256 8,486 90,742 The fair value of trade and other payables approximates their carrying amount at the balance sheet date. 32. Earnings per share Basic and diluted Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding treasury shares. Profit attributable to equity holders of the company (RUB thousand) 10,586,535 20,807,651 Weighted average number of ordinary shares in issue (thousand) Basic and diluted earnings per share (expressed in RUB per share) attributable to the equity holders of the Company during the year 178,705 59.24 178,741 116.41 2020 2019 Operating environment The year 2020 was marked by the COVID-19 pandemic, widespread national lockdowns and sharp decline in economic conditions across the globe. Measures taken by various governments to contain the virus have severely impacted and could continue to negatively impact economic activity and supply chains, both globally and in the Russian Federation and the other territories in which the Group operates for an unknown period of time. Management has taken and continues to take necessary measures to ensure minimum disruption to and sustainability of the Group’s operations and support the Group’s employees, customers and suppliers. The overall economic weakness and the spread of COVID-19 impacted the Russian freight rail transportation market which experienced weak and volatile demand along with weak pricing conditions especially in the gondola segment. Although the Group’s operations and financial results were inevitably impacted by these unprecedented economic conditions, the Group was able to swiftly navigate the challenges and responded quickly to the market volatility by migrating between different cargoes, increasing the Group’s freight rail turnover and focusing on cost optimisation measures. The future effects of the COVID-19 pandemic and of the above measures on businesses, market participants, clients of the Group, as well as global economy and the Group’s operating environment are difficult to predict. Consequently, the future financial performance, cash flows and financial position of the Group, are difficult to predict and management’s current expectations and estimates could differ from actual results. The Group’s management believes that it is taking all the necessary measures to maintain the viability of the Group and the development of its business in the current economic environment. The management has analysed these economic conditions and concluded that these represent indications of impairment of the Group’s cash generating units and proceeded to perform impairment assessments to determine if there is an impairment loss, as further set out in Note 17. The Group and its subsidiaries mainly operate in the Russian Federation, Estonia, Finland and Ukraine. Russian Federation. 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. The operating environment has a significant impact on the Group’s operations and financial position. Management is taking necessary measures to ensure sustainability of the Group’s operations. However, the future effects of the current economic situation are difficult to predict and management’s current expectations and estimates could differ from actual results. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    250 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 251 Notes to the consolidated financial statements Tax contingencies. 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 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 decisions 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 (OECD) but has specific characteristics. This legislation provides the possibility for tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of controlled transactions (transactions with related parties and some types of transactions with unrelated parties), provided that the transaction price is not arm’s length. Management has implemented internal controls to be in compliance with this transfer pricing legislation. Management believes that its pricing policy used in 2020 and 2019 and preceding years is arm’s length and it has implemented internal controls to be in compliance with this transfer pricing legislation. Tax liabilities arising from transactions between companies within the Group are determined using actual transaction prices. It is possible, with the evolution of the interpretation of the transfer pricing rules, that such transfer prices could be challenged. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the overall operations of the Group. The Group includes companies incorporated in Cyprus, Russia, Ukraine, Estonia and Finland. The tax liabilities of the Group are determined on the assumption that these companies are tax residents in the countries where they are incorporated and are not subject to profits tax of other tax jurisdictions, because they do not have permanent establishments in other jurisdictions. The Company and the non-controlling shareholding companies holding interests in the Company’s Russian subsidiaries are the only and full beneficial owners of the equity interests held directly and indirectly in these subsidiaries. This interpretation of relevant legislation may be challenged but the impact of any such challenge cannot be reliably estimated currently; however, it may be significant to the financial position and/or the overall operations of the Group. As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of such uncertain areas that reduce the overall tax rate of the Group. While management currently estimates that the tax positions and interpretations that it has taken can probably be sustained, there is a possible risk that an outflow of resources will be required should such tax positions and interpretations be challenged by the tax authorities. Management will vigorously defend the positions and interpretations applied in determining taxes recognised in these financial statements if these are challenged by the 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. Estonia and Finland. Estonia and Finland represent well-developed markets and economies with stable political systems and developed legislation based on EU requirements and regulations. Ukraine. Starting in 2013, the political situation in Ukraine has experienced instability with numerous protests and continued political uncertainty that has led to deterioration of the state’s finances, volatility of financial markets and sharp depreciation of the national currency against major foreign currencies. The ratings of Ukrainian sovereign debt were downgraded by international rating agencies with negative outlooks for the future. The central bank of Ukraine, among other measures, imposed certain restrictions on processing of client payments by banks and on the purchase of foreign currency on the inter-bank market. Despite certain improvements in recent years, the final resolution and the ongoing effects of the political and economic situation are difficult to predict, but they may have further severe effects on the Ukrainian economy and the Group’s business. Compliance with covenants The Group is subject to certain covenants related primarily to its borrowings. Non-compliance with such covenants may result in negative consequences for the Group including claims for early repayment. The Group is in compliance with covenants as of 31 December 2020 and 31 December 2019 (Note 28). Insurance policies The Group holds insurance policies in relation to all vehicles (rolling stock and motor vehicles) and in respect of public third-party liability. The Group does not have full insurance for business interruption or third-party liability in respect of environmental damage. Environmental matters The enforcement of environmental regulation in the countries in which the Group operates is evolving and the enforcement posture of government authorities is continually being reconsidered. The Group periodically evaluates its obligations under environmental regulations. As obligations are determined, they are recognised immediately. Potential liabilities, which might arise as a result of changes in existing regulations, civil litigation or legislation, cannot be estimated but could be material. In the current enforcement climate under existing legislation, management believes that there are no significant liabilities for environmental damage. Legal proceedings During the years ended 31 December 2020 and 31 December 2019, the Company’s subsidiaries were involved as a claimants and defendants in a number of court proceedings. Georgian Railways case In March 2016, Georgian Railways initiated a claim of approximately GEL 16,122 thousand against a subsidiary of the Company claiming compensation for storage costs incurred for wagons leased out to Georgian Railways that remained in Georgia for a period after 1 April 2015. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 252 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 253 Notes to the consolidated financial statements As explained in Note 22, as at 31 December 2020 the Group has an outstanding receivable amounting to EUR 2,883 thousand/RUB 261,437 thousand (2019: EUR 3,150 thousand/RUB 218,392 thousand) from Georgian Railways relating to invoices issued for services rendered prior to 1 April 2015. The Group also issued invoices of EUR 1,555 thousand to Georgian Railways; the revenue of which has not been recognised as it was not assessed as probable at that time that future economic benefits would flow to the Group. The Georgian Railways dispute the tariffs applied in computing the outstanding balance and thus have not proceeded with the repayment of the amount which remains outstanding. The Group has initiated a claim to the Georgian Court demanding the repayment of the entire balance. Based on assessment performed as at 31 December 2020, management recognised a loss allowance of EUR 279 thousand/ RUB 25,272 thousand (2019: EUR 304 thousand/ RUB 21,108 thousand). In March 2018, the Georgian Court ruled in favor of the Group an amount of US$10 million. Both parties have appealed this decision. The Group has not recognised a receivable for the amount awarded as this might not constitute a final decision on the matter. Claim in relation to sale of rolling of stock In February 2018, the Group received a claim from a third party in relation to a sale of rolling stock. In March 2018, the third party initiated legal action claiming from the Group an amount of RUB 996 million. In May 2018, there was a court decision against the Group for an amount of RUB 684 million. Both parties appealed this decision and on 27 September 2018 the 2nd instance court cancelled the penalty in full amount. On 15 February 2019 the Moscow Arbitrary court cancelled all court decisions made and announced a new court hearing in September 2019. The amount of claim was decreased to RUB 727 million. Based on the results of the re-examination of the case in September 2019, the court of 1st instance ruled to partially satisfy the requirements of the third party in the amount of RUB 554 million, plus penalties in amount of RUB 27 million. Both parties appealed this decision and on 12 March 2019 the court appointed an independent expert to determine the current value of the disputed rolling stock. No provision was recognised in respect of this claim as the Group has received an unconditional irrevocable guarantee for the entire amount of this claim. In September 2020, both parties agreed to voluntarily settle the dispute. This was approved by the Court within the year 2020 and as a result all legal proceedings were terminated. The Group did not suffer any loss as the Group had received an unconditional irrevocable guarantee for the entire amount of this claim. In the opinion of management, there are no other legal proceedings or other claims outstanding, as of 31 December 2020 and 2019 which could have a material effect on the results of operations or financial position of the Group and which have not been accrued or disclosed in these financial statements. 34. Commitments (a) Capital commitments Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows: Property, plant and equipment 2020 2019 RUB’000 RUB’000 308,173 21,419 (b) Operating lease commitments — Group as lessor The Group leases out rolling stock and locomotives under cancellable and non-cancellable operating lease agreements. The future aggregate minimum lease payments receivable under non-cancellable operating leases in which the Group is acting as the lessor are as follows: Not later than 1 year Later than 1 year not later than 5 years 2020 2019 RUB’000 RUB’000 402,676 368,888 156,395 — 559,071 368,888 There were no contingent-based rents to be recognised in the income statement for the year ended 31 December 2020 and 31 December 2019. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020   254 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 255 Notes to the consolidated financial statements 35. Related party transactions (b) Year-end balances arising from sale of shares/purchases of services Litten Investments Ltd, controlled by a Director of the Company, has a shareholding in the Company of 5.1% as at 31 December 2020 (31 December 2019: 5.1%). Goldriver Resources Ltd, controlled by a member of key management personnel of the Group, has a shareholding in the Company of 4.0% as at 31 December 2020 (31 December 2019: 4.0%). As at 31 December 2020, another 0.2% (2019: 0.2%) of the shares of the Company is controlled by Directors and key management of the Company. For the purposes of these financial statements, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operational decisions as defined by IAS 24 “Related Party Disclosures”. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter into transactions, which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties. The following transactions were carried out with related parties: (a) Key management compensation Key management salaries and other short-term employee benefits Share based compensation (Note 21) 2020 RUB’000 1,139,297 28,931 2019 RUB’000 1,417,535 83,319 1,168,228 1,500,854 The key management compensation above includes directors’ remuneration paid to the directors of the Company both by the Company and by subsidiaries of the Company in respect of services provided to such subsidiaries amounting to RUB 433,063 thousand (2019: RUB 507,802 thousand) and analysed as follows: Non-executive directors’ fees Emoluments in their executive capacity Share based compensation in their executive capacity 2020 2019 RUB’000 RUB’000 25,535 406,144 1,384 433,063 20,868 474,950 11,984 507,802 Accrued key management remuneration — current (Note 31): Accrued salaries and other short-term employee benefits Share based payment liability (Note 21) Accrued key management remuneration — non-current (Note 31): Share based payment liability (Note 21) 2020 2019 RUB’000 RUB’000 255,069 104,366 359,435 415,737 123,348 539,085 2020 2019 RUB’000 RUB’000 — — 82,256 82,256 36. Events after the balance sheet date On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020 in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021 inclusive. There were no other material post balance sheet events which have a bearing on the understanding of these consolidated financial statements. Independent Auditor’s Report on pages 138 to 145. Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020  256 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 257 Management report and parent company financial statements for the year ended 31 December 2020 Board of Directors and other officers ...................................................... 258 Management Report ................................................................................ 260 Directors’ responsibility ...........................................................................278 Independent Auditor’s Report ................................................................. 280 Income statement ................................................................................... 286 Statement of comprehensive income .....................................................287 Balance sheet .......................................................................................... 288 Statement of changes in equity .............................................................. 290 Cash flow statement .................................................................................292 Notes to the parent company financial statements ................................ 294 1. General information .....................................................................................................294 2. Basis of preparation ....................................................................................................295 3. Adoption of new or revised standards and interpretations ...........................295 4. Summary of significant accounting policies ......................................................296 5. New accounting pronouncements ....................................................................... 309 6. Financial risk management ........................................................................................ 310 7. Critical accounting estimate and judgements .................................................... 325 8. Revenue .......................................................................................................................... 325 9. Other gains — net .........................................................................................................326 10. Expenses by nature ......................................................................................................326 11. Employee benefit expense ........................................................................................ 327 12. Finance costs — net .....................................................................................................328 Income tax expense .....................................................................................................329 13. 14. Net foreign exchange gains/(losses) ..................................................................... 330 15. Dividends ..........................................................................................................................331 16. Property, plant and equipment ................................................................................332 17. Right-of-use assets .......................................................................................................333 18. Investments in subsidiary undertakings................................................................334 19. Loans and other receivables ..................................................................................... 337 20. Other assets ...................................................................................................................339 21. Cash and cash equivalents ....................................................................................... 340 22. Share capital, share premium and treasury shares ............................................341 23. Borrowings ......................................................................................................................342 24. Other lease liabilities ....................................................................................................345 25. Payables and accrued expenses .............................................................................346 26. Related party transactions ........................................................................................ 347 27. Contingencies ................................................................................................................353 28. Events after the balance sheet date .......................................................................355 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020258 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 259 Board of Directors and other officers Mr. Sergey Maltsev Chairman of the Board of Directors Executive Director Alternate director: Mr. Yuri Isaev Mr. Sergey Tolmachev Executive Director Mr. Alexander Storozhev Executive Director Alternate Director: Ms. Elia Nicolaou Mr. Konstantin Shirokov Executive Director Mr. Alexander Eliseev Non-executive Director Alternate Director: Ms Ekaterina Golubeva Mr. Andrey Gomon Non-executive Director Alternate Director: Ms. Melina Pyrgou Mr. Alexander Tarasov Non-executive Director Board of Directors Dr. Johann Franz Durrer Senior Independent Non-Executive Director Chairman of the Remuneration Committee Chairman of the Nomination Committee Mr. Vasilis Hadjivassiliou Independent Non-Executive Director Member of the Audit Committee (since January 2021) Mr. John Carroll Colley Independent Non-Executive Director Chairman of the Audit Committee Member of Remuneration Committee Member of Nomination Committee Member of ESG Committee (since January 2021) Mr. George Papaioannou Independent Non-Executive Director Member of the Audit Committee Ms. Elia Nicolaou Non-executive Director Chairwoman of the ESG Committee (since January 2021) Member of the Audit Committee (until January 2021) Company Secretary Secretary of the Board Alternate Director: Mr. Marios Tofaros Mr. Michalakis Thomaides Non-Executive Director Ms. Melina Pyrgou Non-executive Director Mr. Marios Tofaros Non-executive Director Board support The Company Secretary is available to advise all Directors to ensure compliance with the Board procedures. Also a procedure is in place to enable Directors, if they so wish, to seek independent professional advice at the Company’s expense. Company Secretary Ms. Elia Nicolaou Dimitriou Karatasou, 15 Anastasio Building, 6th floor, Office 601 Strovolos, 2024, Nicosia, Cyprus Assistant secretary: Mr. Marios Tofaros Registered office 20 Omirou Street Agios Nicolaos CY-3095 Limassol, Cyprus Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020260 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 261 Management Report The Board of Directors presents its report together with the audited parent company financial statements for the year ended 31 December 2020. The parent company’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the requirements of Cyprus Companies Law, Cap. 113. Principal activities Environmental matters Rail is one of the most environmentally friendly modes of transport. Nonetheless, any commercial activity has an environmental impact and Globaltrans strives to minimise those from its operations where possible. To this end, the Group ensures that its activities fully comply with local environmental regulations. It also aims to help business and nature co-exist by focusing on applying modern technology in its operations and using natural resources rationally. In January 2021, the Board established the ESG Committee to analyse and oversee risks related to the environmental, social and governance issues. The principal activities of the Company, which are unchanged from last year, are the holding of investments and provision of financing to other Group companies. Human resources Review of developments, position and performance of the Company’s business The Company’s profit for the year increased to RUB 21,883,710 thousand compared to RUB 18,773,265 thousand for the year ended 31 December 2019. This was mainly the result of the increase in the dividend income earned from the subsidiaries from RUB 20,417,895 thousand during the year ended 31 December 2019 to RUB 22,283,992 thousand in the current year. The net asset position of the Company has increased as of 31 December 2020 compared to 31 December 2019, with net assets as of 31 December 2020 amounting to RUB 48,194,373 thousand compared to RUB 42,979,337 thousand as of 31 December 2019. The financial position, development and performance of the Company as presented in the financial statements is considered satisfactory. Changes in group structure There were no changes in the group structure of the Company during the year ended 31 December 2020. For the principal subsidiaries of the Company, refer to Note 18 of the financial statements. Non-Financial Information and Diversity Statement The Group will be publishing its Non-Financial Information and Diversity Statement within its Annual report that will be issued within four months after the balance sheet date and will be available on the Company’s website, www.globaltrans.com Globaltrans considers the wellbeing of employees central to its success and strives to maintain exemplary working standards, ensure job satisfaction and create opportunities for professional growth. The Group’s personnel policy focuses on creating a positive atmosphere at all offices and facilities to maximise productivity. As part of this, it offers medical insurance, support for education, opportunities to obtain additional qualifications and training, and financial aid in particularly difficult times. The Group’s future success will partly depend on its ability to continue to attract, retain and motivate key employees and qualified personnel, in particular an experienced management team. Competition in Russia for such personnel with relevant expertise is intense due to the small number of qualified individuals with suitable practical experience in the rail industry. Adequate remuneration packages, which are in line with or in excess of market levels, are offered to all employees and key managers and remuneration is linked to the Group’s financial results. The Human Resource function regularly monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages are adequate. Principal risks and uncertainties The Company faces a number of diverse potential and actual risks to its business. The Board has adopted a formal process to identify, evaluate and manage principal risks and uncertainties faced by the Company and its subsidiaries. To identify, evaluate and mitigate these, the Company has established an in-house system to monitor and control uncertainties and threats throughout its activities. This is overseen by a dedicated Risk Management function, which works directly with the Board of Directors in this area. The Company has grouped the risks that it considers to be significant into key categories — strategic, operational, compliance and financial — and they are presented below. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 262 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 263 Management Report Strategic risks The strategic risks faced by the Company and its subsidiaries, together referred to as “Group”, that pose risks that influence the Group’s ability to achieve its strategy include the general economic situation and operating environment in Russia, Kazakhstan, Ukraine, CIS and Baltic countries in which the Group operates; the regulatory risk relating to the operation of the Russian railway transportation market including railway tariff regulation and technical requirements for fleet maintenance; the highly competitive Russian rail transportation market with unregulated operators’ services tariffs; the significant concentration of the Group’s customer base with the top 10 customers (including their affiliates and suppliers) accounting for around 72% of the Group’s Net Revenue from the operation of rolling stock in 2020; cost of borrowing and/or deterioration in market conditions with potential impacts on the profitability and recoverability of investments; and reliance on RZD for issuing permits allowing the Group to operate locomotives. The Group operates mainly in Russia, other emerging markets and Estonia. Emerging markets, such as Russia, Kazakhstan and Ukraine, are subject to greater risks than more developed markets, including significant economic, political, social, legal and legislative uncertainties. Moreover, the Group’s business depends on the demand in the Russian freight rail transportation market, which in turn depends on certain key commodity sectors and, accordingly, on economic conditions in Russia, Europe and elsewhere. A decrease in production and demand for key commodities in Russia, or in adjacent countries where the commodities of the Group’s key customers are shipped by rail, as a result of a technological shift, economic downturn, political crisis or other event in Russia or another relevant country, negatively impacts the Group’s business and growth prospects. The management of the Group constantly monitors the developments in the operating environment and regulatory regime of the railway transportation market in the countries in which the Group operates. The Group’s business model is to maintain a balanced fleet between universal gondola cars, adaptable to the demand for transportation of various bulk cargoes and rail tank cars, which are used for the transportation of oil products and oil. Further, the Group has long-term, established relationships with its key customers and their affiliates and suppliers and in some cases, the Group becomes an integrated part of its customers’ operations. Around 64% of the Group’s Net Revenue from the Operation of Rolling Stock in 2020 was covered by long-term service contracts with several large clients. Such contracts provide additional stability and greater certainty regarding transport volumes for the Group. In addition, the Group’s marketing function regularly monitors competitors’ strategies, their use of technology, their price strategies and industry trends. In addition to the human impact, the spread of Coronavirus (COVID-19) continues to affect global businesses and may lead to further and/or continued lockdowns, trade wars and turbulence in different currencies. The Group’s outlook for 2021 may be further impacted by the Coronavirus outbreak, which continues to cause uncertainty. The freight rail market may experience reduced demand stemming from the effects of COVID-19. The Company cannot predict the full impact of COVID-19 on its markets, business or prospects although they may be materially adversely impacted by the rapidly evolving situation. In addition, the appearance of new pandemics or other dangerous illnesses could seriously affect the global and local business environment and lead to negative consequences for Group’s business. Significant levels of COVID-19 illness in the Group or its key clients could interfere with stability of Group’s operations. Management is closely monitoring the implications of the global outbreak of COVID-19 and acts depending on the development of the situation. The Group constantly evaluates and implements options for distant work for its workforce to mitigate risks of spreading and catching COVID-19 illness. Operational risks The operational risks faced by the Group that could influence the Group’s operational efficiency include the physical state of the Russian, Ukrainian, CIS and Baltic countries railway infrastructure which may negatively impact the condition of the Group’s rolling stock and the performance of the Group; the impact of inflation in Russia on the Group’s costs with limited opportunities to increase tariffs to customers; the competition for personnel with relevant expertise and experience in Russia and the impact on the Group’s ability to continue to attract, retain and motivate key employees and qualified personnel; reliance on RZD for locomotive traction and infrastructure usage and the impact of this on the quality of the Group’s freight transportation services and therefore customer satisfaction; IT availability and continuity considerations due to reliance on specialised trail transport and logistics software for ensuring efficient and effective logistics, dispatching and rolling stock tracking services; and risks of terrorist attacks, natural disasters or other catastrophic events beyond the Group’s control. The Group is managing operational risk by ensuring that practically all of the Group’s rolling stock is insured against damage. Further, the Group monitors its rolling stock through the Group’s dispatch centre on a 24/7 basis and plans routes accordingly to minimise the risks of disruption. The Group monitors FAS initiatives with the aim of detecting possible changes in tariff-setting methodology and tries to reflect respective changes in contracts with customers. Among the Group’s key objectives are to increase operational efficiency and to focus on control and reduction of costs. The Group continuously monitors its costs to maintain efficiency. The Human Resource function regularly monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages are adequate. Customer satisfaction is one of the key metrics that the Group’s management monitors, with customer feedback being analysed and appropriate follow-up actions being taken. Local IT specialists have introduced solutions to maintain the availability of IT services and ensure their recovery in case of disruption. The IT function and Internal Audit function monitor all IT-related activities and performance for compliance with IT policies and procedures. Further the Group permanently monitors any disruptive events and applies a Business Continuity Policy to ensure the safety of employees and human life; maintain continuity of time-critical services; minimise disruptions to clients and partners; and minimise operational, financial and reputational impact. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020264 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 265 Management Report Compliance risks The Group is also subject to compliance risk, being the risks that influence the Group’s adherence to relevant laws and regulations, including the regulations of the London Stock Exchange (“LSE”) and the Moscow Exchange (“MOEX”), where Company’s GDR are admitted to trading. The Group is involved in legal actions from time to time. Some of it may have an adverse effect on the Group. The ambiguity of the law in Russia and CIS countries creates regulatory uncertainty and might result in claims from different government authorities. Local tax, currency and customs legislation, especially in Russia, other emerging markets and Cyprus, may be subject to varying interpretations, inconsistencies between federal laws, regional and local laws, rules and regulations, frequent changes and a lack of judicial and administrative guidance on interpreting legislation. The Group runs its operations in compliance with tax, currency, labour, customs, antimonopoly and other applicable legislation and constantly monitors any changes in the regulatory environment as well as compliance with the terms of its agreements. Standard forms of agreements are used for transportation services, and various controls are in place to ensure that the terms of agreements are adhered to. All contracts are subject to rigorous review by all of the Group functions concerned and a formal approval process prior to execution. The Group has controls in place, including highly qualified and experienced personnel, to monitor changes in legislation and determine the appropriate action needed to minimise the risk of a challenge to such treatments by the authorities. For complex matters, the Group retains external consultants. Financial risks The Company’s activities exposed 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 Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial results. Foreign exchange risk Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency different from the functional currency of the Company. The fluctuations in the exchange rate between (i) US Dollar and Russian Rouble and (ii) Euro and Russian Rouble expose the Company to foreign exchange risk. The Company’s current policy is not to hedge foreign exchange risk, with the exception of application of hedge accounting to hedge foreign currency risk associated with highly probable dividend payments and associated dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these financial statements. Cash flow and fair value interest rate risk The Company holds interest bearing financial instruments at fixed interest rates. Financial assets and liabilities issued at fixed rates expose the Company to fair value interest rate risk. The Company’s current policy is not to hedge interest rate risk. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Credit risk arises from cash and cash equivalents, loans and other receivables and financial guarantees issued by the Company for borrowings of subsidiaries. Liquidity risk As at 31 December 2020, the Company has an excess of current assets over current liabilities of RUB 2,485,452 thousand. Management believes that the Company will be able to meet its obligations as they fall due. Management controls current liquidity based on expected cash flows, expected dividend and interest income receipts, expected dividend payments and advancements under borrowings from subsidiaries. In the long-term perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new loans and by budgeting procedures. Further details on the Company’s exposure to financial risks are presented in Note 6 to the financial statements. Contingencies The Company’s contingencies are disclosed in Note 27 to the financial statements. Future developments The Board of Directors does not expect any significant changes in the activities of the Company in the foreseeable future. The Company’s strategic objective is to strengthen the position of the Group as a leading private freight rail group in Russia. Results The Company’s results for the year are set out on pages 286 and 287. The Board of Directors recommends the payment of a dividend as detailed below and the remaining net profit for the year is retained. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020266 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 267 Management Report Dividends Treasury shares Pursuant to its 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 (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 declare dividends in Russian Roubles and pay such dividends in US Dollars. If dividends are not paid in US Dollars, except as otherwise described under “Terms and Conditions of the Global Depositary Receipts — Conversion of Foreign Currency”, they will be converted into US Dollars by the Depositary and paid to holders of GDRs net of currency conversion expenses. In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company started a GDRs buyback program. The buyback programme is for the Company’s GDRs, each representing one ordinary share of the Company with a par value of US$0.10 per share, and will run till the earlier of the close of the Annual General Meeting of the Company to be held in 2021 and May 2021. The total number of purchased GDRs shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046 shares, with each GDR representing one ordinary share). The buyback programme allows the Company to take advantage of opportunities, if any, when its return criteria are better met by way of a GDR buyback than through investment in fleet expansion. The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries to pay dividends to the Company in accordance with relevant legislation and contractual restrictions. The payment of such dividends by its subsidiaries is contingent upon the sufficiency of their earnings, cash flows and distributable reserves. The maximum dividend payable by the Company’s subsidiaries is restricted to the total accumulated retained earnings of the relevant subsidiary, determined according to the law. In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31 December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary share/GDR (US Dollar equivalent of US$ 110,787 thousand). In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend in the amount of RUB 5,237,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293 thousand). On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020 in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021 inclusive. Share capital As at 31 December 2020 the issued share capital of the Company, which remains unchanged from the prior year, comprised 178,740,916 ordinary shares with a par value of US$0.10 per share. As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand). In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.  Research and development activities The Company has not undertaken any research and development activities during the year ended 31 December 2020. Events after the balance sheet date The events after the balance sheet date are disclosed in Note 28 to the financial statements. Branches The Company does not operate through any branches. Going concern Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going concern basis in preparing the financial statements based on the fact that, after making enquiries and following a review of the Group’s budget for 2020, including cash flows and borrowing facilities, the Directors consider that the Company has adequate resources to continue in operation for the foreseeable future. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020268 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 269 Management Report Auditors Members of the Board of Directors The Independent Auditor, PricewaterhouseCoopers Limited, has expressed their willingness to continue in office. A resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting. Corporate governance Globaltrans’ Board of Directors adopted the Company’s Code of Corporate Governance (the “Code”), guaranteeing that the interests of all shareholders are given due consideration. Although the Code is based on principles recommended by the UK Corporate Governance Code (formerly the Combined Code), this does not constitute voluntary compliance with such governance code. Globaltrans’ corporate governance policies and practices are designed to ensure that the Group upholds its responsibilities to shareholders. As such, all employees are required to comply with these guidelines and the Group’s management team takes responsibility for ensuring that all departments adhere to these standards. These key principles are promoted and applied across all levels of the Group in order to establish effective and transparent corporate governance. In January 2010, the Board supplemented its Code of Corporate Governance with a corporate policy on the treatment of the rights of its non-controlling shareholders; this aims to ensure fair treatment of the rights of non-controlling shareholders of the Company. Full details of our governance policies can be found at https://globaltrans.com/governance/corporate-documents. The role of the Board of Directors The Company is managed by the Board of Directors which is collectively responsible to the shareholders for the success of the Group. The Board sets the strategic objectives and ensures that the necessary resources are in place to enable these objectives to be met. The Board is fully involved in decision making in the most important areas of business and conducts regular reviews of the Group’s operational and financial performance. One of the Board’s key responsibilities is to ensure that there is in place a system of prudent and effective risk controls that enable risks to be identified, assessed and managed appropriately. As at 31 December 2020 and at the date of this report, the Board comprises 15 members (2019: 15 members), 11 (2019: 11 members) of whom are non-executive directors. Four (2019: four) of the non-executive directors are independent, they have no relationship with the Company, its related companies or their officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the best interests of the Company, and they are able to exercise objective judgment on corporate affairs independently from management. The members of the Board of Directors at 31 December 2020 and at the date of this report are shown on page 258. All of them were members of the Board throughout the year 2020. There were no significant changes in the assignment of responsibilities of the Board of Directors during the year 2020. There is no provision in the Company’s Articles of Association for retirement of Directors by rotation; however, in accordance with the Terms of reference of the Board of Directors all board members are required to submit for re-election at least once every three years. Should a non-executive Director serve any term beyond six years, his/her re-election would be subject to particularly rigorous review. In practice, all current appointments are for one year and all directors will stand for re-election at the forthcoming Annual General Meeting of shareholders of the Company. The total gross remuneration of the members of the Board of Directors incurred by the Company in 2020 amounted to RUB 310,758 thousand (2019: RUB 352,881 thousand). Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020270 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 271 Management Report Board performance The Board Committees The Board held 18 meetings in 2020. The Directors’ attendance is presented in the table below. Eligible Attended Johann Franz Durrer Carroll Colley George Papaioannou Alexander Eliseev Melina Pyrgou Konstantin Shirokov Alexander Storozhev Marios Tofaros Elia Nicolaou Sergey Tolmachev Sergey Maltsev (Chairman) Andrey Gomon Alexander Tarasov Vasilis P. Hadjivassiliou Michael Thomaides 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 17 18 18 18 18 18 18 18 18 18 18 17 During 2020 the Board had three committees: the Audit Committee, the Nomination Committee and the Remuneration Committee. In January 2021 the Board has established the ESG Committee. A brief description of the terms of reference of the committees is set out below. Audit Committee The Audit Committee comprises of three Directors and meets at least four times each year. As of 31 December 2020 two members Audit Committee were independent and the Audit Committee was chaired by Mr. J. Carroll Colley and was also attended by Mr. Papaioannou and Ms. Nicolaou. In January 2021 Mr. Vasilis Hadjivassiliou became a member of the Audit Committee and Ms. Nicolaou resigned from the Audit Committee and was appointed to the ESG Committee, as a result since January 2021 the Audit Committee comprises of three independent Directors. The Audit Committee is responsible for considering, among other matters: the integrity of the Company’s financial statements, including its annual and interim accounts, and the effectiveness of the Company’s internal controls and risk management systems; auditors’ reports and the terms of appointment and remuneration of the auditor. The Committee supervises, monitors and advises the Board on risk management and control systems and the implementation of codes of conduct. In addition, the Audit Committee supervises the submission by the Company of financial information and a number of other audit-related issues. The Audit Committee is also responsible for assessing the efficiency of the performance of the Chairman of the Board. The Audit Committee manages the relationship with the external auditor on behalf of the Board. It considers the reappointment of the external auditor each year, as well as remuneration and other terms of engagement, and makes a recommendation to the Board. Shareholders are asked to approve the reappointment of the auditor each year at the Annual General Meeting. The Internal Audit function is carried out internally by the Group’s Internal Audit Service (“IAS”). IAS is responsible for testing the systems of risk management, internal control and corporate governance of the Group. Nomination Committee The Nomination Committee comprises of two Independent Directors and meets at least once a year. The Nomination Committee is chaired by Dr. Durrer and Caroll Colley is the other member. The Committee’s remit is to prepare selection criteria and appointment procedures for members of the Board and to review on a regular basis the structure, size and composition of the Board. In undertaking this role, the Committee refers to the skills, knowledge and experience required of the Board, given the Company’s stage of development, and makes recommendations to the Board as to any changes. The Committee also considers future appointments in respect of the Board’s composition and makes recommendations regarding the membership of the Audit and Remuneration Committees. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020  272 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 273 Management Report Remuneration Committee The Remuneration Committee comprises of two Independent Directors and meets at least once a year. The Remuneration Committee is chaired by Dr. Durrer and Caroll Colley is the other member. The Committee’s responsibility is the determination and review of, among other matters, the remuneration of Executive Directors, and the review of the Company’s remuneration policies. The remuneration of Independent Directors is a matter for the Chairman of the Board and the Executive Directors. No Director or manager may be involved in any decisions as to his/ her own remuneration. ESG Committee In January 2021 the Board of Directors established an ESG Committee to lead its thinking on ESG matters and ensure that ESG issues are integrated into the Group’s long-term strategy. The ESG Committee will also monitor the development of the Group’s sustainability strategy, review and recommend ESG disclosures for Board approval and approve the Group’s sustainability reports. The ESG Committee is comprised of two Board members: Elia Nicolaou, Non-executive Director, who serves as the Chair, and John Carroll Colley, Independent Non-executive Director. The ESG Committee will meet at least two times a year. Diversity policy The Company does not have a formal Board diversity policy to aspects such as age, gender or educational and professional backgrounds, but following best practice, while making the new appointments and considering the current composition of the Board of Directors, these aspects are taken into account. As of the date of publication of these financial statements the Board has 2 females representing approximately 13% from the total number of directors. The age of the members of the Board of Directors starts from over 40 with the average age of directors being 52.5 years. The Board members have the following educational backgrounds: transportation and ports industry, accounting, economics and financial, banking sector and legal, engineering and mechanics, biophysics and mathematics, history, international affairs and risk management. The Board has a necessary balance of skills and expertise to run the Company and the Group. Further details of the corporate governance regime of the Company can be found on the website: https://globaltrans.com/governance/corporate-documents Board and Management Remuneration Regulations with regards to the amendment of the article of association Non-executive directors serve on the Board pursuant to the letters of appointment which are subject to approval by the shareholders at the Annual General Meeting. Such letters of appointment specify the terms of appointment and the remuneration of non-executive directors. Appointments are for one year. Levels of remuneration for Non-Executive Directors reflect the time commitment, responsibilities of the role and membership of the respective committees of the Board. Directors are also reimbursed for expenses associated with discharge of their duties. The shareholders of the Company approved the remuneration of the members of the Board of Directors at the Annual General Meeting of shareholders held on 30 April 2020. Refer to Note 26 of the financial statements for details of remuneration of directors and other key management personnel. The Articles of Association of the Company may be amended from time to time by special resolution at the General Meeting of the Shareholders. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020274 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 275 Management Report Company’s internal control and risk management systems in relation to the financial reporting process Significant direct or indirect holdings (including indirect shareholding though structures or cross shareholdings) The Board of Directors is responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. The Board is primarily responsible for establishing a framework of prudent and effective controls that enables risks to be assessed and managed. The Audit Committee assists the Board in this task by reviewing and assessing the Group’s internal control and risk management processes in relation to Group’s financial reporting process. The issued share capital of the Company consists of 178,740,916 ordinary shares with a nominal value of USD 0.10 each, a certain portion of which is held in the form of Global Depositary Receipts (GDRs). The GDRs represent one ordinary share each and are listed and traded on the Main Market of the London Stock Exchange and, from October 2020, in the Moscow Exchange, under the ticker GLTR. The free float of Globaltrans amounts to approximately 56.9%1 of the issued share capital. In June 2020 the Company changed the depositary bank for the GDR programme of the Company from the Bank of New York Mellon to Citibank N.A.. The shareholder structure of the Company as at 31 December 2020 was follows: Onyx Investments Ltd2 Marigold Investments Ltd2 Maple Valley Investments Ltd2 Litten Investments Ltd3 Goldriver Resources Ltd4 Controlled by Directors and management of Globaltrans 11.5% 11.5% 10.8% 5.1% 4.0% 0.2% 56.9% The system of controls is designed to manage rather than eliminate the risks relevant to the Group’s operations and, therefore, can only provide reasonable, and not absolute, assurance against material errors, losses, fraud or breaches of laws and regulations. Free float1 At Globaltrans, the body responsible for internal audit is the Internal Audit Service (IAS). It tests the Group’s systems of risk management, internal control and corporate governance to obtain a reasonable assurance that: The risk management system functions efficiently; • • Material financial, management and operating information is accurate, reliable and up-to-date; • The actions of employees and management bodies are in compliance with the Group’s policies, standards and procedures and the applicable laws; Resources are procured reasonably and used efficiently and their safekeeping is fully guaranteed; and • • Group companies conduct their business in compliance with applicable laws. Each year, the Audit Committee approves an internal audit plan, which is developed by identifying the audit universe, performing a risk analysis and obtaining input from management relative to risks, controls and governance processes. The internal auditor regularly reports to the Audit Committee on the progress of planned audits. If any material internal control deficiencies are identified, they are communicated to the Audit Committee, and consequently to the Board, at once. 1 For these purposes, the free float consists of the ordinary shares and GDRs held by investors not affiliated or associated with the Company. 2 Nikita Mishin, Andrey Filatov and Konstantin Nikolaev are co-founders of the Company and beneficiaries with regard to 11.5%, 11.5% and 10.8% respectively of Globaltrans’ ordinary share capital each through their respective SPVs (Onyx Investments Ltd, Marigold Investments Ltd and Maple Valley Investments Ltd). 3 Beneficially owned by Alexander Eliseev, Non-executive Director and co-founder of the Company. 4 Beneficially owned by Sergey Maltsev, Chairman of the Board, Executive Director, Chief strategy officer and co-founder of the Company.  Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 276 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 277 Management Report Directors’ interests The holders of special titles that provide special control rights and description of such rights The interests in the share capital of Globaltrans Investment PLC, both direct and indirect, of those who were Directors of the Company as at 31 December 2020 and 31 December 2019 are shown below: The Company does not have any titles with special rights. Name Type of holding 2020 2019 Any restrictions in exercising of voting rights of shares Alexander Eliseev Indirect holding of ordinary shares and GDRs 9,065,790 9,065,790 Sergey Maltsev Indirect holding of ordinary shares and GDRs 7,099,725 7,099,725 Johann Franz Durrer Holding of GDRs 160,606 160,606 There are no restrictions in the exercising of voting rights of shares issued by the Company. By Order of the Board .................................................. Sergey Tolmachev Director Limassol, 26 March 2021 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020278 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 279 Directors’ responsibility The Company’s Board of Directors is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap.113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 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 financial statements, the Board of Directors is also responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Further, each of the Directors confirms that, to the best of their knowledge: (i) adequate accounting records have been maintained which disclose with reasonable accuracy the financial position of the Company and explain its transactions; (ii) all information of which they are aware that is relevant to the preparation of the financial statements, such as accounting records and all other relevant records and documentation, has been made available to the Company’s auditors; (iii) the financial statements disclose the information required by the Cyprus Companies Law, Cap.113 in the manner so required; (iv) the Management Report has been prepared in accordance with the requirements of the Cyprus Companies Law, (v) Cap.113, and the information given therein is consistent with the financial statements; the information included in the corporate governance statement in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which is included as a specific section of the Management Report, have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap, 113, and is consistent with the financial statements; 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. Directors’ confirmations Each of the directors, whose names and functions are listed in page 258 confirms that, to the best of his or her knowledge: By order of the Board (a) the financial statements, which are presented on pages 286 and 355, 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  (b) the Management Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. .............................................. Sergey Tolmachev Director Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020280 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 281 Independent Auditor’s Report To the Members of Globaltrans Investment PLC Report on the Audit of the Parent Company Financial Statements Our audit approach Our opinion In our opinion, the accompanying parent company financial statements give a true and fair view of the financial position of parent company Globaltrans Investment PLC (the “Company”) as at 31 December 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113. Overview As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the parent company 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. What we have audited We have audited the parent company financial statements which are presented in pages 286 and 355 and comprise: Materiality • the balance sheet as at 31 December 2020; • the income statement for the year then ended; • the statement of comprehensive income for the year then ended; • the statement of changes in equity for the year then ended; • the cash flow statement for the year then ended; and • the notes to the parent company financial statements, which include a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the parent company 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 Parent Company Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the Company 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 parent company financial statements in Cyprus and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Overall materiality: RUB 800,300 thousand, which represents 5% of profit before tax as adjusted for non-recurring items and limited to the overall group materiality determined for the purposes of the audit of the Company’s consolidated financial statements for the year ended 31 December 2020 (rounded). Key audit matters We have determined that there are no key audit matters to communicate in our report. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the parent company 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 parent company financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the parent company 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 parent company financial statements as a whole. Overall materiality RUB 800,300 thousand How we determined it 5% of profit before tax as adjusted for non-recurring items and limited to the overall group materiality determined for the purposes of the audit of the Company’s consolidated financial statements for the year ended 31 December 2020 (rounded) Rationale for the materiality benchmark applied We chose adjusted profit before tax as the benchmark, because in our view, it is the benchmark against which the performance of the Company is most commonly measured by the users of the parent company financial statements and is a generally accepted benchmark. We chose 5% which is within the range of acceptable quantitative materiality thresholds in auditing standards. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020282 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 283 Independent Auditor’s Report We agreed with the Audit Committee that we would report to them misstatements identified during our audit above RUB 40,000 thousand as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. In preparing the parent company financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of material misstatements due to fraud Those charged with governance are responsible for overseeing the Company’s financial reporting process. We have determined that there are no Key Audit Matters to communicate in our report. 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, which we obtained prior to the date of this auditor’s report, and the Company’s complete Annual Report, including the Non-Financial Information and Diversity Statement, which is expected to be made available to us after that date. Other information does not include the parent company financial statements and our auditor’s report thereon. Our opinion on the parent company 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 parent company 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 parent company financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Company’s complete Annual Report, including the Non-Financial Information and Diversity Statement, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and, if not corrected, we will bring the matter to the attention of the members of the Company at the Company’s Annual General Meeting and we will take such other action as may be required. Responsibilities of the Board of Directors and those charged with governance for the Parent Company Financial Statements The Board of Directors is responsible for the preparation of the parent company 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 parent company financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibilities for the Audit of the Parent Company Financial Statements Our objectives are to obtain reasonable assurance about whether the parent company 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 parent company financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the parent company financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors. • Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the parent company financial statements, including the disclosures, and whether the parent company financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. 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. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020284 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 285 Independent Auditor’s Report We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company financial statements of the current period and are therefore the key audit matters. Report on Other Legal and Regulatory Requirements Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on Auditing. Appointment of the Auditor and Period of Engagement We were first appointed as auditors of the Company in 2005 by shareholders’ resolution for the audit of the financial statements for the year ended 31 December 2004. Our appointment has been renewed annually, since then, by shareholders’ resolution. In 2008 the Company was listed in the Main Market of the London Stock Exchange and accordingly the first financial year that the Company qualified as a European Union Public Interest Entity was the year ended 31 December 2008. Since then, the total period of uninterrupted engagement appointment was 13 years. Consistency of the Additional Report to the Audit Committee We confirm that our audit opinion on the parent company financial statements expressed in this report is consistent with the additional report to the Audit Committee of the Company, which we issued on 25 March 2021 in accordance with Article 11 of the EU Regulation 537/2014. Provision of Non-audit Services We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which were provided by us to the Company and which have not been disclosed in the parent company financial statements or the management report. Other Legal Requirements Pursuant to the additional requirements of the Auditors Law of 2017, we report the following: • • In our opinion, based on the work undertaken in the course of our audit, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the parent company financial statements. In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the 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 parent company financial statements. In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the corporate governance statement in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect. Other Matter This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. We have reported separately on the consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 2020. The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas. Tasos Nolas Certified Public Accountant and Registered Auditor for and on behalf of PricewaterhouseCoopers Limited Certified Public Accountants and Registered Auditors City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus 26 March 2021 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 286 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 287 Income statement Statement of comprehensive income FOR THE YEAR ENDED 31 DECEMBER 2020 FOR THE YEAR ENDED 31 DECEMBER 2020 Note 2020 2019 RUB’000 RUB’000 8 22,327,855 20,470,164 Profit for the year Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Losses on cash flow hedging instrument Reclassification adjustment to the income statement 22,862,263 20,444,029 Total items that may be reclassified subsequently to profit or loss 2020 2019 RUB’000 RUB’000 21,883,710 18,773,265 (475,042) 475,042 — — — — — — Other comprehensive income for the year, net of tax Total comprehensive income for the year 21,883,710 18,773,265 ! The notes on pages 294 to 355 are an integral part of these financial statements. Revenue Marketing costs Administrative expenses Reversal of impairment losses on loans receivable 26 51,713 Other income Other gains — net Operating profit Finance income Finance costs Net foreign exchange transaction gains/(losses) on financing activities Finance costs — net Profit before tax Income tax expense Profit for the year 9 12 12 12 12 ! The notes on pages 294 to 355 are an integral part of these financial statements. (2,144) (3,771) (565,127) (473,657) 1,000,232 49,734 312,980 133,508 4,805 42,311 63,630 (216,510) (462,562) 268,879 (244,426) 94,680 (643,358) 22,956,943 19,800,671 13 (1,073,233) (1,027,406) 21,883,710 18,773,265 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020288 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 289 Balance sheet AT 31 DECEMBER 2020 ASSETS Non-current assets Investments in subsidiary undertakings Property, plant and equipment Right-of-use assets Loans and other receivables Total non-current assets Current assets Loans and other receivables Other assets Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Share capital Share premium Capital contribution Treasury shares Retained earnings Total equity Note 31 December 2020 31 December 2019 Non-current liabilities 18 16 17 19 19 20 21 22 22 RUB’000 RUB’000 45,151,248 45,151,248 10,678 2,633 6,652 5,064 544,362 696,548 45,708,921 45,859,512 380,674 6,588 2,225,518 2,612,780 508,281 848 982,797 1,491,926 48,321,701 47,351,438 516,957 516,957 27,929,478 27,929,478 2,694,851 (31,496) 2,694,851 — 17,084,583 11,838,051 48,194,373 42,979,337 Borrowings Lease liabilities Total non-current liabilities Current liabilities Borrowings Lease liabilities Payables and accrued expenses Total current liabilities 23 24 23 24 25 — — — — 3,220 124,108 127,328 2,086,465 2,359 2,088,824 2,175,477 2,054 105,746 2,283,277 TOTAL LIABILITIES 127,328 4,372,101 TOTAL EQUITY AND LIABILITIES 48,321,701 47,351,438 On 26 March 2021 the Board of Directors of Globaltrans Investment PLC authorised these financial statements for issue. .............................................. .............................................. Sergey Tolmachev Director Konstantin Shirokov Director ! The notes on pages 294 to 355 are an integral part of these financial statements. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020        290 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 291 Statement of changes in equity Note Share capital Share premium Capital contribution Treasury shares Cash flow hedge reserve Retained earnings Total FOR THE YEAR ENDED 31 DECEMBER 2020 Balance at 1 January 2019 Comprehensive income Profit for the year Total comprehensive income for 2019 Transactions with owners Dividend to owners of the Company 15 Total distributions to owners of the Company Total transactions with owners RUB’000 516,957 RUB’000 27,929,478 RUB’000 2,694,851 — — — — — — — — — — — — — — — Balance at 31 December 2019/1 January 2020 516,957 27,929,478 2,694,851 Comprehensive income Profit for the year Other comprehensive income Losses on cash flow hedging instrument Reclassification adjustment to the income statement Total comprehensive income for 2020 Transactions with owners Dividend to owners of the Company Total distributions to owners of the Company Purchase of treasury shares Total transactions with owners Balance at 31 December 2020 15 22 ! The notes on pages 294 to 355 are an integral part of these financial statements. — — — — — — — — — — — — — — — — — — — — — — — — 516,957 27,929,478 2,694,851 RUB’000 RUB’000 — — — — — — — — — — — — — (31,496) (31,496) (31,496) — — — — — — — (475,042) 475,042 — — — — — — RUB’000 9,696,628 18,773,265 18,773,265 RUB’000 40,837,914 18,773,265 18,773,265 (16,631,842) (16,631,842) (16,631,842) (16,631,842) (16,631,842) (16,631,842) 11,838,051 42,979,337 21,883,710 21,883,710 — — (475,042) 475,042 21,883,710 21,883,710 (16,637,178) (16,637,178) (16,637,178) (16,637,178) — (31,496) (16,637,178) (16,668,674) 17,084,583 48,194,373 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020292 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 293 Cash flow statement FOR THE YEAR ENDED 31 DECEMBER 2020 Cash flows from operating activities Profit before tax Adjustments for: Depreciation of property, plant and equipment Depreciation of right-of-use assets Interest on loans to related parties Bank interest income Interest income on other receivables from related parties Interest expense Reversal of impairment losses on loans receivable Profit from sale of property, plant and equipment Net foreign exchange transaction (gains)/losses on financing activities Note 2020 RUB’000 2019 RUB’000 Cash flows from investing activities Proceeds from sale of subsidiary Contribution into the capital of subsidiary Purchases of property, plant and equipment 22,956,943 19,800,671 Proceeds from sale of property plant and equipment 16 17 8 12 12 12 26 10 12 1,768 2,431 (43,863) (39,048) (3,263) 216,510 (51,713) (1,029) (268,879) 2,586 2,228 (52,269) (46,696) (16,934) 462,562 (312,980) (1,028) 244,426 Loans granted to related parties Loan repayments received from related parties Bank interest received Net cash generated from investing activities Cash flows from financing activities Repayments of bank borrowings Principal elements of lease payments Interest paid on bank borrowings Interest paid on lease liabilities Purchase of treasury shares Dividends paid to the Company’s shareholders Net cash used in financing activities 18 18 16 26 26 23 23 23 23 22 15 315,967 528,127 — (300,089) (6,528) 1,763 — 400,299 39,048 750,549 (6,666) — (180,000) 779,817 46,696 867,885 (4,242,424) (3,199,576) (2,358) (2,031) (235,720) (473,296) (308) (31,496) (265) — (16,637,178) (16,631,842) (21,149,484) (20,307,010) Net increase/(decrease) in cash and cash equivalents Exchange gains/(losses) on cash and cash equivalents Cash and cash equivalents at beginning of year 1,093,697 149,024 982,797 Cash and cash equivalents at end of year 21 2,225,518 (170,705) (114,547) 1,268,049 982,797 ! The notes on pages 294 to 355 are an integral part of these financial statements. Operating cash flows before working capital changes 22,769,857 20,082,566 Changes in working capital: Dividend income not received Other assets Payables and accrued expenses (251,377) (5,740) 18,749 — (6,088) 33,126 Net cash generated from operations 22,531,489 20,109,604 Interest received from loans from related parties 34,374 175,821 Tax paid (1,073,231) (1,017,005) Net cash generated from operating activities 21,492,632 19,268,420 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020294 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 295 Notes to the parent company financial statements 1. General information 2. Basis of preparation Country of incorporation Globaltrans Investment Plc (“the Company”) is incorporated and domiciled in Cyprus as a limited liability company in accordance with the provisions of the Cyprus Companies Law, Cap. 113 and converted into a public company on 15 April 2008. The address of its registered office is 20 Omirou Street, Limassol, Cyprus. Approval of the parent company financial statements These parent company financial statements were authorised for issue by the Board of Directors of the Company on 26 March 2021. The parent company financial statements of Globaltrans Investment PLC 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 authorization of the financial statements, all International Financial Reporting Standards issued by International Accounting Standards Board (IASB) that are relevant to the Company’s operations and are effective as at 1 January 2020 have been adopted by the EU through the endorsement procedure established by the European Commission. Global Depositary Receipts Global Depositary Receipts, each representing one ordinary share of the Company, are listed on the London Stock Exchange International Main Market and, since October 2020, on the Moscow Exchange. Principal activities The principal activities of the Company, which are unchanged from last year, are the holding of investments and provision of financing to other Group companies. Consolidated financial statements The Company has also prepared consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap. 113 for the Company and its subsidiaries (“the Group”). These consolidated financial statements can be obtained from the Company’s website at www.globaltrans.com. The financial statements have been prepared under the historical cost convention. The Company has prepared these parent company financial statements for compliance with the requirements of the Cyprus Companies Law, Cap. 113 and disclosure rules as issued by the Financial Conduct Authority of the United Kingdom. Users of these parent company financial statements should read them together with the Company’s consolidated financial statements as at and for the year ended 31 December 2020 in order to obtain a proper understanding of the financial position, the financial performance and cash flows of the Company and the Group. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 7. 3. Adoption of new or revised standards and interpretations During the current year the Company adopted all the new and amended International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2020. None of these had a significant impact on these financial statements. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020296 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 297 Notes to the parent company financial statements 4. Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Foreign currency translation (a) Functional and presentation currency Items included in the Company’s financial statements are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The Company’s functional currency is the Russian Rouble. The financial statements are also presented in Russian Roubles (“the presentation currency”) because this is the currency better understood by the principal users of the financial statements. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the spot exchange rates prevailing at the dates of the transactions or valuations where items are re-measured. 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, with the exception of foreign exchange differences that relate to qualifying cash flow hedges which are deferred in equity. Net foreign exchange differences arising from borrowings and other liabilities and from cash and cash equivalents and other monetary assets are presented on the face of the income statement in the line “net foreign transaction gains/(losses) on financing activities”, with the appropriate disclosure of the split between the two in the note “Finance costs — net”. All other foreign exchange gains and losses are presented in the income statement within “Other gains — net”. Hedging activities The Company is exposed to foreign exchange risk arising from dividends declared in Russian Roubles and paid in US Dollar at the rate set at the date of the declaration. The Company uses foreign currency cash deposits denominated in US Dollars to hedge this foreign exchange risk exposure. In particular, the US Dollar denominated cash deposits are designated by the Company as hedging instruments in hedging the foreign exchange risk associated with the highly probable dividend payment and the resulting payable. At inception of the hedge relationship, the Company documents, amongst others, the economic relationship between the hedging instrument and hedged item, including whether changes in the cash flows of the hedging instrument are expected to offset changes in the cash flows of the hedged item. The Company documents its risk management objective and strategy for undertaking its hedge transactions. As a result of the application of hedge accounting for the first time within the year 2020, the foreign exchange difference on the hedging instrument is recognised in other comprehensive income in the “Cash flow hedge reserve” within equity. Amounts recognised in equity are reclassified to the income statement, within “Finance income and costs”, in the same period or periods during which the hedged item impacts the income statement, being once foreign exchange differences are recognised on the hedged item. Accordingly, in the cash flow statement “Dividends paid to the Company’s shareholders” are disclosed net-off foreign exchange differences on the relevant cash deposits (i.e. at the amounts declared) and the “Exchange gains/(losses) on cash and cash equivalents” do not include the impact from the relevant cash deposits used for hedging. In the income statement the amounts included in “Finance income and costs” (Note 12) within “Net foreign exchange transaction gains/(losses) on cash and cash equivalents, loans and other receivables and dividends receivable” and “Net foreign exchange transaction gains on other liabilities” are disclosed after application of hedge accounting (i.e. excluding the foreign currency gains/losses arising for the hedging). Dividend income Dividend income is recognised when the right to receive payment is established. Employee benefits Wages, salaries, contributions to the state pension, the national health system 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 Company. These are included in staff costs and the Company has no further obligations once the contributions have been paid. The Company recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020298 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 299 Notes to the parent company financial statements Share based payment transactions The Company operates a cash-settled share-based compensation plan. In accordance with compensation plan, key management personnel of the Company are entitled to receive cash compensations based on the weighted average market quotations of the fixed number of global depository receipts (“GDR”) of the Company. The fair value of the employee services received in exchange for the grant of the equivalent GDR instruments is recognised as an expense over the vesting period. At each balance sheet date, if required by the terms of the compensation plan, the Company revises its estimates of the monetary equivalent of GDRs that are expected to vest. It recognises the impact of the revision of original estimates, including number of instruments expected to vest and fair value in the income statement with a corresponding adjustment to share-based payment liability. Current and deferred income tax The tax expense for the period comprises of current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity respectively. Current income 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. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations is subject to interpretations and establishes provisions where appropriate on the basis of amounts expected to be paid to 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 financial statements. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred income tax assets are recognised only 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 except where the Company can control the timing of the reversal and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, when the income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities when there is an intention to settle the balances on a net basis. Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved and are no longer at the discretion of the Company. More specifically, interim dividends are recognised when approved by the Board of Directors whereas in case of final dividends, these are recognised at the time when they are approved by the Company’s shareholders. Leases 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 Company, with limited exceptions as set out below. Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Company’s incremental borrowing rate is used, being the rate that the Company 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. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost. Any remeasurement of the lease liability arising if the cash flows change based on the original terms and conditions of the lease results in a corresponding adjustment to the right-of-use asset. The adjustment can be positive or negative. Right-of-use assets are reviewed for impairment in accordance with the Company’s accounting policy for impairment of non-financial assets. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight- line basis. In determining the lease term, the Company 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). As an exception to the above, the Company accounts for short-term leases and leases of low value assets by recognising the lease payments as an expense on a straight-line basis in the interim income statement. Short-term leases are leases with a lease term of 12 months or less. Right-of-use assets and associated lease liabilities are presented as separate lines on the face of the balance sheet. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020300 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 301 Notes to the parent company financial statements Property, plant and equipment Property, plant and equipment are recorded at purchase cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. 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: Investments in subsidiary undertakings Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Motor vehicles Number of years 3–5 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 Company and the cost of the item can be measured reliably. Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds with carrying amount and these are included within operating profit as part of administrative expenses. The Company carries the investments in subsidiaries at cost less any impairment in its separate financial statements. Investments in subsidiaries 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 income statement 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. 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. The cost of investments in subsidiaries includes the fair value of any asset or liability arising from a contingent consideration arrangement. The subsequent remeasurement of any asset/liability arising from a contingent consideration arrangement is adjusted against the cost of the investment in subsidiary. In cases of acquisitions of subsidiaries from entities under common control or subsidiaries of the Company, the cost of acquisition is determined to be the fair value of the investment acquired as opposed to the transaction price. Any differences between the transaction price and the fair value of the investment acquired reflect notional contributions/ distributions from entities under common control or subsidiaries and are recognised as such, i.e. directly in equity in cases of transactions with common control entities and as an additional contribution to or distribution from the subsidiary transferring the investment to the Company. Group reorganisations resulting into an exchange of non-financial assets and where the future cash inflows before and after the reorganisation do not change as a result of the reorganisation are considered to lack commercial substance and no gains or losses are recognised relating to such restructurings. Indemnification assets received for contingent liabilities of the investments in subsidiaries that existed at the time of acquisition of such subsidiaries are recognised against the cost of the relevant investment. Deferred consideration Deferred consideration arises when settlement of all or any part of the cost of an acquisition is deferred. Deferred consideration is stated at fair value at the date of acquisition, which is determined by discounting the amounts due to present value using market interest rates at the date of initial recognition. Interest is accrued on the fair value of deferred consideration at the original effective interest rate and is recognised in finance costs. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020302 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 303 Notes to the parent company financial statements Impairment of non-financial assets Assets that have indefinite useful life and goodwill are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets, other than goodwill, that have suffered impairment are reviewed for possible reversal of impairment whenever there is an indication that an impairment recognised in prior periods may no longer exist or may have decreased. Financial assets 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; being the date on which the Company commits to purchase or sell the asset. All other purchases and sales are recognised when the entity becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. Any gain or loss arising upon their derecognition is recognised directly in the income statement. Classification. The Company classifies its financial assets at amortised cost. The classification depends on the Company’s business model for managing the financial assets and the contractual cash flow characteristics of the assets. Management determines the classification of financial assets at initial recognition. Financial assets at amortised cost are held for collection of contractual cash flows and their cash flows represent solely payments of principal and interest. They are included in current assets, except for maturities greater than twelve months after the balance sheet date. These are classified as non-current assets. The Company’s financial assets at amortised cost comprise of loans and other receivables and cash and cash equivalents on the balance sheet. Interest income. Interest income on financial assets at amortised cost is recognised using the effective interest rate method. Interest income on loans granted to related parties is recognised within “Revenue” in the income statement. All other interest income recognised on debt financial assets carried at amortised cost is included within “finance income” in the income statement. 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, the effective interest rate is applied to the net carrying amount of the financial asset; that is after deduction of the loss allowance. The Company’s definition of credit-impaired assets is explained in Note 6, Credit risk section. Impairment. The Company assesses on each reporting date, and on a forward-looking basis, the expected credit losses (“ECL”) associated with its debt financial assets carried at amortised cost. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money, and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions. The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of the loss is recognised on the face of the income statement. Subsequent recoveries of amounts for which loss allowance was previously recognised are credited against the same line item. For all its debt financial assets carried at amortised cost, the Company applies the general approach. In particular, the Company applies the three stage model for calculating impairment, which is based on changes in the credit quality of the financial asset since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. The ECL of financial assets in Stage 1 is 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. If the Company identifies a significant increase in credit risk since initial recognition (“SICR”), the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until its contractual maturity but considering expected prepayments, if any. Refer to Note 6, Credit risk section for a description of how the Company determines when a SICR has occurred. If the Company determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Company’s definition of credit impaired assets and definition of default is explained in Note 6, Credit risk section. Reclassification. Financial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change. Measurement. At initial recognition, the Company measures financial assets classified at amortised cost at their fair value plus incremental transaction costs that are directly attributable to the acquisition of the financial assets. Subsequently, these are measured at amortised cost. Write-off. Financial assets are written-off, in whole or in part, when the Company has concluded that there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Company and a failure to make contractual payments for a period of greater than 180 days past due. The Company may write-off financial assets that are still subject to enforcement activity when the Company seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery. Subsequent recoveries of amounts previously written off are recognised directly on the face of the income statement. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020304 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 305 Notes to the parent company financial statements Modification. The Company sometimes renegotiates or otherwise modifies the contractual terms of its financial assets, The Company assesses whether the modification of the contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset (e.g. profit share or equity-based return), significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties. If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Company derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in the income statement, unless the substance of the difference is attributed to a capital transaction with owners. In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised expected cash flows to assess whether the risks and rewards of the asset are substantially different because of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets) and recognises a modification gain or loss in the income statement. Following a renegotiation or otherwise modification of the contractual cash flows of a financial asset, the Company assesses whether the financial asset ceased to meet the definition of credit-impaired and, in such case, should be transferred out of Stage 3. In a situation where the modification involved only the deferral of the contractual payments (rather than waiver) and interest accrues on the unpaid deferred amounts, with the result that there is not a detrimental impact on the estimated future cash flows of the loan, the borrower has demonstrated consistently good payment behaviour over a period of time and there are no significant concerns regarding the repayment of the exposure, the Company considers that the financial asset is not credit-impaired. At the time the financial asset exits Stage 3, the Company compares the risk of default occurring on the asset to that at origination. If the risk of default is lower than or equal to the risk of default as at the date of initial recognition it is transferred to Stage 1, otherwise it is transferred to Stage 2. Classification as loans and other receivables. These amounts are held with the objective to collect their contractual cash flows and their contractual cash flows represent solely payments of principal and interest. Accordingly, these are measured at amortised cost using the effective interest method, less provision for impairment. Loans and other receivables are classified as current assets if they are due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current assets. Classification as cash and cash equivalents. In the cash flow statement, cash and cash equivalents include cash in hand and deposits held at call with banks or with original maturity of three months or less, less bank overdrafts, if any. Cash and cash equivalents are carried at amortised cost using the effective interest method, less provision for impairment. Bank overdrafts are shown within borrowings in the current liabilities on the balance sheet. Financial liabilities Classification. The Company’s financial liabilities are initially recognised at fair value and classified as subsequently measured at amortised cost. Derecognition of financial liabilities. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 income statement as other income or finance costs. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts, including costs or fees incurred for the modification, is recognised in profit or loss within finance costs. When the terms of the existing financial liability are not substantially modified, the existing liability is not derecognised and the gain/loss arising on the modification, including costs or fees incurred for the modification, is recognised in the income statement within finance costs. Modifications of financial liabilities. An exchange between the Company 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. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified 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 the income statement, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners and is recognised directly to equity. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020306 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 307 Notes to the parent company financial statements Borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised over the period of the borrowings using the effective interest method. Share capital, share premium and treasury shares Ordinary shares are classified as equity. 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 draw down occurs. To the extent 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 pre-payment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date. Borrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires). 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 the income statement within “finance costs-net”. Other payables. Other payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Financial guarantees. Financial guarantee contracts are contracts that require the Company to make specified payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of debt instrument. Financial guarantees are recognised, when material, as a financial liability at the time the guarantee is issued. Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received. This amount is amortised on a straight line basis over the life of the guarantee in “other gains — net” in the income statement. At the end of each reporting period, the guarantee is measured at the higher of (i) the amount of the loss allowance determined in accordance with the expected credit loss model under IFRS 9 and (ii) the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 “Revenue from Contracts with Customers”. The fair values of financial guarantees issued in relation to obligations of subsidiaries, where such guarantees are provided for no compensation, are accounted for as contributions and are recognised as part of the cost of the investment in the respective subsidiary in the financial statements of the Company. Incremental costs directly related to the issue of new shares are shown 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 the difference between the fair value of the consideration receivable for the issue of shares and the nominal value of the shares. Share premium account can only be resorted to for limited purposes, which do not include the distribution of dividends, and is otherwise subject to the provisions of the Cyprus Companies Law on reduction of share capital. Where the Company purchases its own equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity within a separate reserve “treasury shares” until the shares are cancelled or re-issued. Where such ordinary shares are subsequently re-issued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity within retained earnings. The consideration initially paid for treasury shares which are subsequently re-issued is transferred from “treasury shares” to retained earnings. Capital contribution Capital contribution constitutes contributions made by the Company’s shareholders other than for the issue of shares by the Company in their capacity as equity owners of the Company for which the Company has no contractual obligation to repay them. Such contributions are recognised directly in equity as they constitute transactions with equity owners in their capacity as equity owners of the Company. Provisions and contingent liabilities Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligation as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Provisions are only used to cover those expenses which they had been set up for. Other possible or present obligations that arise from past events but it is not probable that an outflow of resources embodying economic benefit will be required to settle the obligations; or the amount cannot be measured with sufficient reliability are disclosed in the notes to the financial statements as contingent liabilities. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020308 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 309 Notes to the parent company financial statements Transactions with equity owners/subsidiaries The Company enters into transactions with its shareholders and subsidiaries. When consistent with the nature of the transaction, the Company’s accounting policy is to recognise (a) any gains or losses with equity holders, directly through equity and consider these transactions as the receipt of additional capital contribution or the payment of dividends; and (b) any losses with subsidiaries as cost of investment in subsidiaries. Similar transactions with non-equity holders, or subsidiaries, are recognised through the income statement in accordance with IFRS 9 “Financial Instruments”. Prepayments Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Company has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Company. Other prepayments are written off to the income statement 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 the income statement. Other income Other income generally represents amounts received from transactions that are outside the Company’s principal activities. This is recognised in the income statement over the period it relates to, based on the terms of the arrangement. Other income that it is not linked to the Company’s future performance and/or satisfaction of any future obligations is recognised in the period in which the Company is entitled to receive it. Cash flow statement Cash flows arising from dividend income and interest income on loans granted to related parties, which form part of the revenue of the Company, are reported as part of operating activities in the cash flow statement. Interest income received on other balances, which form part of the Company’s finance income, are reported within cash flows from investing activities in the cash flow statement. Interest expense arising from deferred consideration for acquisition of subsidiaries is recognised within financing activities. Principal payments of deferred consideration are recognised as acquisition of subsidiaries within cash flows from investing activities. 5. New accounting pronouncements Certain new standards, amendments to existing standards and interpretations have been issued that are mandatory for annual periods beginning on or after 1 January 2021. Items marked with * have not been endorsed by the European Union (EU). The Company will only be able to apply the new standards, amendments to existing standards or interpretations when these are endorsed by the EU. • • • • • Classification of liabilities as current or non-current — Amendments to IAS 1 (issued on 23 January 2020 and effective for annual periods beginning on or after 1 January 2022)*. These narrow scope amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. In addition, the amendments clarify the classification requirements for debt a company might settle by converting it into equity. “Settlement” is defined as the extinguishment of a liability with cash, other resources embodying economic benefits or an entity’s own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument. Classification of liabilities as current or non-current, deferral of effective date — Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023)*. The amendment to IAS 1 on classification of liabilities as current or non-current was issued in January 2020 with an original effective date 1 January 2022. However, in response to the Covid-19 pandemic, the effective date was deferred by one year to provide companies with more time to implement classification changes resulting from the amended guidance. Proceeds before intended use, Onerous contracts — cost of fulfilling a contract, Reference to the Conceptual Framework — narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018- 2020 — amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods beginning on or after 1 January 2022).* The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its intended use. The amendment also clarifies that an entity is “testing whether the asset is functioning properly” when it assesses the technical and physical performance of the asset. The amendment to IAS 37 clarifies the meaning of “costs to fulfil a contract”. IFRS 3 was amended to refer to the 2018 Conceptual Framework for Financial Reporting, in order to determine what constitutes an asset or a liability in a business combination. The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities. Costs or fees could be paid to either third parties or the lender. Illustrative Example 13 that accompanies IFRS 16 was amended to remove the illustration of payments from the lessor relating to leasehold improvements. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* IAS 1 was amended to require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendment provided the definition of material accounting policy information. Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* The amendment to IAS 8 clarified how companies should distinguish changes in accounting policies from changes in accounting estimates. None of the new standards, amendments to existing standards or interpretations is expected to have a significant effect on the parent company financial statements. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 310 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 311 Notes to the parent company financial statements 6. Financial risk management Financial risk factors The Company’s activities exposed 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 Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial results. Market risk (a) Foreign exchange risk Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency different from the functional currency of the Company. During the year 2020 there was increased volatility in currency markets and the Russian Rouble has depreciated against some major currencies. As of the end of December 2020 the Russian Rouble has decreased against the US Dollar from 61.9057 as of 31 December 2019 to 73.8757 Russian Roubles (19.3% revaluation) and against the Euro from 69.377 as of 31 December 2019 to 90.6824 Russia Roubles (30.7% revaluation). The fluctuations in the exchange rate between (i) US Dollar and Russian Rouble and (ii) between Euro and Russian Rouble expose the Company to foreign exchange risk. The carrying amounts of monetary assets denominated in US dollars as at 31 December 2020 and 31 December 2019 are as follows: Assets Liabilities 2020 2019 RUB’000 RUB’000 812,110 581,734 15,647 7,429 The carrying amounts of monetary assets and liabilities denominated in Euro as at 31 December 2020 and 31 December 2019 are as follows: Assets Liabilities 2020 2019 RUB’000 RUB’000 873,485 583,204 75,460 72,598 Had US Dollar exchange rate strengthened/weakened by 20% (2019: 10% change) against the Russian Rouble and all other variables remained unchanged, the post-tax profit of the Company for the year ended 31 December 2020 would have increased/decreased by RUB 139,381 thousand (2019: RUB 50,252 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of US Dollar denominated loans receivable and cash and cash equivalents as of 31 December 2020 and as of 31 December 2019. Had Euro exchange rate strengthened/weakened by 30% (2019: 10% change) against the Russian Rouble and all other variables remained unchanged, the post-tax profit of the Company for the year ended 31 December 2020 would have increased/decreased by RUB 209,482 thousand (2019: by RUB 44,678 thousand). This is mainly due to foreign exchange gains and losses arising upon retranslation of Euro denominated other receivables, cash and cash equivalents and payables as of 31 December 2020 and as of 31 December 2019. The Company’s current policy is not to hedge foreign exchange risk, with the exception of application of hedge accounting to hedge foreign currency risk associated with highly probable dividend payments and associated dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these financial statements. The impact of application of hedge accounting has been to disclose in the cash flow statement “Dividends paid to the Company’s shareholders” net-off RUB 475,042 thousand foreign exchange losses and the “Exchange gains/ (losses) on cash and cash equivalents” does not include the equivalent impact from the relevant cash deposits used for hedging. Furthermore, in the income statement the amounts included in “Finance income and costs” within “Net foreign exchange transaction gains/(losses) on cash and cash equivalents, loans and other receivables and dividends receivable” and “Net foreign exchange transaction gains on other liabilities” are disclosed after application of hedge accounting (i.e. excluding the foreign currency gains/losses arising for the hedging of RUB 475,042 thousand). Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020312 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 313 Notes to the parent company financial statements (b) Cash flow and fair value interest rate risk The Company holds interest bearing financial instruments at fixed interest rates. Financial assets and liabilities issued at fixed rates expose the Company to fair value interest rate risk. However, as all of the Company’s fixed interest rate financial instruments are carried at amortised cost, any reasonably possible change in the interest rates as of 31 December 2020 and 31 December 2019 would not have any impact on the Company’s post tax profit or equity. Financial assets and liabilities issued at floating rate expose the Company to cash flow interest rate risk. As of 31 December 2020 and 31 December 2019 the Company did not have any material floating interest rate financial instruments, therefore was not exposed to significant cash flow interest rate risk. The Company’s current policy is not to hedge interest rate risk. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Credit risk arises from cash and cash equivalents, loans and other receivables and financial guarantees issued by the Company for borrowings of subsidiaries. (i) Risk management For banks and financial institutions, the Company has established policies whereby the majority of bank balances are held with independently rated parties with a minimum rating of ‘Ba2’. These policies enable the Company to reduce its credit risk significantly. (ii) Impairment of financial assets The Company has three types of financial instruments that are subject to the expected credit loss model: • • • loans and other receivables; cash and cash equivalents; and financial guarantees. The Company applies the general approach, prescribed in IFRS 9, for assessing expected credit losses on all its debt financial assets and financial guarantees issued. In particular, the Company applies the three stage model for calculating impairment, which is based on changes in the credit quality of the financial instrument since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. The ECL of financial assets in Stage 1 is 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. If the Company identifies a significant increase in credit risk 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 its contractual maturity but considering expected prepayments, if any. If the Company determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. Significant increase in credit risk. The Company considers the probability of default upon initial recognition of an 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 Company 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: • • • • • • • internal credit rating external credit rating (as far as available) 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 significant increases in credit risk on other financial instruments of the same borrower/counterparty significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements significant changes in the expected performance and behaviour of the borrower/counterparty, including changes in the payment status of counterparty in the group and changes in the operating results of the borrower. Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the internal rating model. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the counterparties to settle the receivables. Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment. Default and credit-impaired. A default on a financial asset is when the financial asset meets one or more of the following criteria: (i) the borrower is more than 90 days past due on its contractual payments, (ii) the borrower is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due amount or of the number of days past due, (iii) the Company, for economic or contractual reasons relating to the borrower’s financial difficulty, granted to the borrower a concession(s) that it would not otherwise consider. The Company considers defaulted assets to be credit-impaired so that Stage 3 represents all debt financial assets which are considered defaulted. Write-off. Assets are written-off, in whole or in part, when the Company has concluded that there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Company and a failure to make contractual payments for a period of greater than 180 days past due. The Company may write-off financial assets that are still subject to enforcement activity when the Company seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery. Subsequent recoveries of amounts previously written off are recognised directly on the face of the income statement. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 314 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 315 Notes to the parent company financial statements The Company calculates expected credit losses based on a probability-weighted estimate of the present value of future cash shortfalls (i.e., the weighted average of credit losses, with the respective risks of default occurring in a given time period used as weights). An ECL measurement is unbiased and is determined by evaluating a range of possible outcomes. The Company calculates ECL using the following three components: exposure at default (EAD), probability of default (PD) and loss given default (LGD). EAD is an estimate of exposure at a future default date, taking into account expected changes in the exposure after the reporting period, including repayments of principal and interest, and expected drawdowns on committed facilities. PD is an estimate of the likelihood of default to occur over a given time period and LGD is an estimate of the loss arising on default. The Company’s exposure to credit risk for each class of financial instruments subject to the expected credit loss model is set out below: Loans receivable and other receivables The Company assesses, on an individual basis, its exposure to credit risk arising from loans and other receivables. This assessment takes into account, amongst others, the period the loan receivable or other receivable balance is past due (in days), expectations around changes in business, financial or economic conditions as well as expectations around the performance of the counterparty. The following table contains an analysis of the credit risk exposure for loans receivable and other receivables by reference to the Company’s internal credit risk rating grades. The gross carrying amounts below represent the Company’s maximum exposure to credit risk on these assets as at 31 December 2019: Internal credit risk rating grade Company definition of category Gross carrying amount The gross carrying amounts below represent the Company’s maximum exposure to credit risk on these assets as at 31 December 2020: Internal credit risk rating grade Company definition of category Performing Stage 1 — Counterparties have a low risk of default and a strong capacity to meet contractual cash flows Gross carrying amount Loans receivable Other receivables RUB’000 RUB’000 — 266,307 Underperforming Stage 2 — Counterparties for which there is a significant increase in credit risk; as significant increase in credit risk is presumed if interest and/or principal repayments are 30 days past due 212,185 Non-performing or Credit-impaired Stage 3 — Interest and/or principal repayments are 90 days past due 2,048,016 — — The gross carrying amounts, as per above, represent the Company’s maximum exposure to credit risk on these assets as at 31 December 2020 and 31 December 2019, without taking account of any collateral held. The Company does not hold any collateral as security for any loans receivable or other receivable balances. The movement in the credit loss allowance for loans receivable during the years 2020 and 2019 is presented in the table below: Performing Stage 1 — Counterparties have a low risk of default and a strong capacity to meet contractual cash flows Underperforming Stage 2 — Counterparties for which there is a significant increase in credit risk; as significant increase in credit risk is presumed if interest and/or principal repayments are 30 days past due Non-performing or Credit-impaired Stage 3 — Interest and/or principal repayments are 90 days past due Loans receivable Other receivables RUB’000 RUB’000 180,533 277,246 382,384 1,749,986 — — Opening balance Recoveries Foreign exchange difference Closing balance Loans Receivable Non-performing 2020 2019 RUB’000 RUB’000 (1,385,320) (1,901,961) 51,713 312,980 (267,865) 203,661 (1,601,472) (1,385,320) Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 316 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 317 Notes to the parent company financial statements During the year 2020, the only movement in the gross carrying amount of the credit impaired loans receivable were recoveries and foreign exchange differences. The impact of these on the credit loss allowance is reflected in the table above. The estimated credit loss allowance on the performing and underperforming loans receivable and other receivable balances as at 31 December 2020 and 31 December 2019 was not material. During the years 2020 and 2019, the contractual cash flows of the Company’s credit-impaired loans receivable as at 1 January 2020 and 1 January 2019, respectively, were modified so as to extend the maturity of the loans. No other changes to the terms of the loans were made. As the modification was driven by financial difficulties of the counterparties and inability to make the originally agreed payments and the risks and rewards of the loans did not change, the modification did not result in derecognition of the said loans. In addition, these modifications did not significantly impact the ECL on these loans. On 31 December 2019, the Company transferred a modified credit-impaired loan receivable with a carrying amount of RUB 212,185 thousand out of Stage 3 to Stage 2 as this ceased to meet the definition of credit-impaired since the modification involved only the deferral of the contractual payments (rather than waiver) and interest accrues on the unpaid deferred amounts, with the result that there is not a detrimental impact on the estimated future cash flows of the loan, the borrower has demonstrated consistently good payment behaviour over a period of time and there are no significant concerns regarding the repayment of the exposure. During the year 2020, the maturity of the said loan was further extended and the contractual interest rate was decreased. The impact of these modifications was not material. Cash and cash equivalents The Company assesses, on an individual basis, its exposure to credit risk arising from cash at bank based on ratings from external credit rating institutions and internal reviews, if external are not available. The following table contains an analysis of the gross carrying amount of the Company’s cash at bank by reference to the credit risk ratings assigned by external credit rating agencies. The gross carrying amounts below represent the Company’s maximum exposure to credit risk on these assets as at 31 December 2020 and 31 December 2019: Gross carrying amount Rating 2020 2019 Moody’s1 Moody’s1 Moody’s1 Moody’s1 Moody’s1 Total A3 Aa2 B3 Ba1 RUB’000 RUB’000 881,308 886,446 233,924 94,662 8,969 1,100,000 Baa3 1,317 937 — 752 2,225,518 982,797 1 International rating agency Moody’s Investors Service The Company does not hold any collateral as security for any of the above balances. The estimated expected credit loss allowance on cash and cash equivalents as at 31 December 2020 and 31 December 2019, based on the general approach of IFRS 9, was immaterial. All cash and cash equivalents were performing (Stage 1) as at 31 December 2020 and 31 December 2019. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020318 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 319 Notes to the parent company financial statements Financial Guarantees The primary purpose of these instruments is to ensure that funds are available to a borrower, as required. Guarantees, which represent irrevocable assurances that the Company will make payments in the event that a counterparty cannot meet its obligations to third parties, carry the same credit risk as loans receivable. The Company has issued financial guarantees on the borrowings of its subsidiaries and quoted bonds issued by its subsidiaries (Note 26). As a result, the Company is exposed to credit risk arising from potential risk of default of the Company’s subsidiaries on their external debt. As of 31 December 2020 and 31 December 2019, none of the Company’s subsidiaries had defaulted on or breached any covenants on their borrowings/bonds. The following table contains an analysis of the exposure to credit risk on financial guarantees by reference to the Company’s internal credit risk rating grades. The amounts below represent the Company’s maximum exposure to credit risk on these financial instruments as at 31 December 2020 and 31 December 2019. — Performing — Underperforming — Non-performing Stage 1 2020 2019 RUB’000 RUB’000 23,584,105 18,966,840 — — — — Total unrecognised gross amount 23,584,105 18,966,840 The amounts, as per above, represent the Company’s maximum exposure to credit risk on these financial instruments as at 31 December 2020 and 31 December 2019, without taking account of any collateral held. The Company does not hold any collateral as security for any guarantees issued to its subsidiaries. The estimated provision as at 31 December 2020 and 31 December 2019 for free of charge financial guarantees issued by the Company for obligations of its subsidiaries in accordance with loan agreements with financial institutions where such obligations are also secured by a pledge of property, plant and equipment and the distressed sale value of such pledge exceeds the amount of the obligation of the respective subsidiary was estimated at RUB Nil, since, in case of default, the Company will be able to recover its losses under the issued guarantees from the respective subsidiaries in full. The estimated provision as at 31 December 2020 and 31 December 2019 for free of charge financial guarantees issued by the Company for unsecured or underpledged obligations of its subsidiaries in accordance with loan agreements with financial institutions and quoted bonds issued by subsidiaries was estimated using a probability adjusted discounted cash flow analysis, using probability of default, as implied by the market rate of the borrowings obtained by the subsidiaries, and loss given default, as estimated by considering the distressed value of the net assets of the subsidiaries which are not pledged at the time of the assessment. This was assessed as RUB Nil, since, in case of default, the Company will be able to recover its losses under the issued guarantees from the respective subsidiaries in full. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020320 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 321 Notes to the parent company financial statements Liquidity risk As at 31 December 2020, the Company has an excess of current assets over current liabilities of RUB 2,485,452 thousand (2019: excess of current liabilities over current assets of RUB 791,351 thousand). Management believes that the Company will be able to meet its obligations as they fall due. Management controls current liquidity based on expected cash flows, expected dividend and interest income receipts, expected dividend payments and advancements under borrowings from subsidiaries. In the long-term perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new loans and by budgeting procedures. The table below summarizes the analysis of financial liabilities of the Company by maturity as of 31 December 2020 and 31 December 2019. The amounts in the table are contractual undiscounted cash flows. Non-interest bearing trade and other payables balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Less than one month Between one month and three months Between three and six months Between 6 months to 1 year Between 1 and 2 years Between 2 and 5 years Total RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 RUB’000 31 December 2020 Payables and accrued expenses1 — 20,479 Other lease liabilities 268 537 Financial guarantee contracts2 11,776,425 11,807,680 — 805 — — 1,610 — 11,776,693 11,828,696 805 1,610 31 December 2019 Payables and accrued expenses1 Borrowings Other lease liabilities Financial guarantee contracts2 — — 171 15,408 — — 398,726 677,453 1,342,418 2,159,476 342 1,027 2,359 514 — 7,299,169 11,667,671 — — — 18,966,840 7,299,340 12,082,147 677,967 1,343,445 2,161,835 — 23,564,734 1 Payables and accrued expenses exclude statutory liabilities as the analysis is provided for financial liabilities only. 2 The maximum possible amount of obligation under financial guarantee contracts is disclosed at the earliest time it may be called. — — — — — — — 20,479 3,220 — 23,584,105 — 23,607,804 — — — 15,408 4,578,073 4,413 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 322 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 323 Notes to the parent company financial statements Capital risk management The Company’s main objective when managing capital is to maintain the ability to continue as a going concern in order to ensure the required profitability of the Company, maintain optimum equity structure and reduce its cost of capital. For defining capital, the Company uses the amount of net assets attributable to the Company’s shareholders and the Company’s borrowings. The Company manages the capital based on borrowings to total capitalization ratio. Borrowings include loan liabilities. To maintain or change capital structure the Company may vary the amount of dividend paid in order to reduce debts. Management believes that the current equity is sufficient to fund current projects and further development of the Company. Total capitalisation is calculated as the sum of the total borrowings and net assets at the date of calculation. The management does not currently have any specific target on the rate of borrowings to total capitalization. The rate of borrowings to total capitalisation as at 31 December 2020 and 31 December 2019 are as follows: Total borrowings Total capitalisation 2020 2019 RUB’000 RUB’000 — 4,261,942 48,194,373 47,241,279 Total borrowings to total capitalisation ratio (percentage) 0.00% 9.02% External requirements are imposed on the capital of the Company as defined by management in relation to long- term loans provided by financial institutions to the Company. The Company analyses compliance with external requirements to the capital at each reporting date and when entering into new loan agreements. There were no instances of non-compliance with externally imposed capital requirements during 2020 and 2019. Management believes that the Company will be able to comply with its external requirements to the capital during the whole term of agreements. Fair value estimation Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is price in an active market. An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The estimated fair values of financial instruments have been determined by the Company, using available market information, where it exists, appropriate valuation methodologies and assistance of experts, where relevant. However, judgement is necessarily required to interpret market data to determine the estimated fair value. The Russian Federation continues to display some characteristics of an emerging market and economic conditions continue to limit the volume of activity in the financial markets. Market quotations may be outdated or reflect distress sale transactions and therefore do not always represent the fair values of financial instruments. The Company has used all available market information in estimating the fair value of financial instruments. Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one measurements are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable market data (that is, unobservable inputs). Management applies judgement in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety. The fair values in level 2 and level 3 of fair value hierarchy were estimated using discounted cash flows valuation techniques. The fair value of unquoted fixed interest rate instruments was estimated based on estimated future cash flows expected to be received/paid discounted at current interest rates for new instruments with similar credit risk and remaining maturity. Financial assets carried at amortised cost. 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 new instruments with similar credit risk and remaining maturity. Discount rates used depend on credit risk of the counterparty. Refer to Note 19. The fair value as at 31 December 2020 and 31 December 2019 of fixed interest rate instruments with stated maturity with subsidiary entities was estimated based on expected cash flows discounted using the rate of similar instruments, denominated in the same currency, entered into by the subsidiaries of the Company on their bank borrowings close to the year-end. In the absence of similar instruments entered into by a subsidiary of the Company with non-related parties close to the year-end the estimated fair value was estimated based on expected cash flows discounted at an estimated rate that reflects management’s best estimate of the current interest rate of new instruments, denominated in a similar currency and with similar credit risk and remaining maturity. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020324 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 325 Notes to the parent company financial statements The discount rate used for US Dollar denominated loans to related parties as at 31 December 2020 was 8% (31 December 2019: 8%) and for Russian Rouble denominated loans to related parties as at 31 December 2020 was 17.7% (31 December 2019: 9% and 17.7%). The discount rate used for other receivables from related parties as at 31 December 2019 was 3%. The fair value measurements of loans to related parties and other receivables from related parties as at 31 December 2020 and 31 December 2019 are within level 3 of the fair value hierarchy. Refer to Note 19. The fair value of financial assets receivable on demand approximates their carrying amount. The fair value of current other receivables from related parties as at 31 December 2020 approximates their carrying amount. Liabilities carried at amortised cost. Fair values of borrowings and other liabilities were determined using valuation techniques. As at 31 December 2019, the fair value of fixed interest rate instruments with stated maturity denominated in Russian Rouble was estimated based on expected cash flows discounted using the rate of similar Russian Rouble denominated instruments entered into by the Company or the subsidiaries of the Company on their bank borrowings close to 31 December 2019. The discount rate used for Russian Rouble denominated bank borrowings as at 31 December 2019 was 7.5% (Note 23). There were no US Dollar denominated borrowings as at 31 December 2020 and 31 December 2019. The fair value measurements of liabilities as at 31 December 2019 were within level 2 of the fair value hierarchy. The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as the amount payable on demand, discounted from the first date on which the amount could be required to be paid. 7. Critical accounting estimate and judgements Estimates and judgements are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Critical accounting estimates The Company 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: • Income taxes Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain. The Company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. Refer to Note 28. 8. Revenue Interest on loans to related parties calculated using the effective interest rate method (Note 26) Dividend income (Note 26) Total 2020 2019 RUB’000 RUB’000 43,863 52,269 22,283,992 20,417,895 22,327,855 20,470,164 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020326 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 327 Notes to the parent company financial statements 9. Other gains — net 11. Employee benefit expense Salaries Bonuses Share based compensation Social security costs Total employee benefit expense 2020 2019 RUB’000 RUB’000 227,855 160,035 149,291 188,705 19,309 — 11,977 9,535 408,431 358,275 Average number of staff employed during the year 8 7 Net foreign exchange transaction gains/(losses) on non-financing activities (Note 14) Other gains — net 10. Expenses by nature Statutory auditor’s remuneration for statutory audit services Statutory auditor’s remuneration for other assurance services Advertising and marketing expenses Expenses relating to short-term leases Depreciation of property, plant and equipment (Note 16) Depreciation of right-of-use assets (Note 17) Profit on sale of property, plant and equipment Employee benefit expense (Note 11) Legal, consulting and other professional services1 Bank charges Non-executive directors’ fees (Note 26) Travel expenses Stock exchange and financial regulator fees Taxes other than on income Other expenses 2020 2019 RUB’000 RUB’000 49,734 49,734 4,805 4,805 2020 2019 RUB’000 RUB’000 18,053 16,026 5,139 2,144 272 1,768 2,431 (1,029) 4,762 3,771 325 2,586 2,228 — 408,431 358,275 55,349 10,540 25,441 2,019 25,535 20,868 1,043 6,743 10,531 20,321 15,163 4,054 8,173 13,737 Total marketing costs and administrative expenses 567,271 477,428 1 Includes RUB 638 thousand for the year 2020 (RUB 502 thousand for the year 2019) in fees paid to the Company’s statutory audit firm for tax consultancy services. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020328 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 329 Notes to the parent company financial statements 12. Finance costs — net 13. Income tax expense 2020 2019 RUB’000 RUB’000 Included in finance costs: Interest expense on bank borrowings (Note 23) (216,202) (462,297) Current tax: Corporation tax Total interest expense calculated using the effective interest rate method (216,202) (462,297) Withholding tax on dividends receivable Interest expense on other lease liabilities (Note 23) (308) (265) Defence contribution Total finance costs (216,510) (462,562) Total tax expense 2020 2019 RUB’000 RUB’000 — 10,401 1,073,231 1,017,005 2 1,073,233 1,027,406 Included in finance income: Interest income on bank balances Interest income on other receivables from related parties (Note 26) 39,048 46,696 3,263 16,934 Total interest income calculated using the effective interest rate method 42,311 63,630 Total finance income 42,311 63,630 Profit before tax Net foreign exchange transaction gains/(losses) on cash and cash equivalents, loans and other receivables and dividends receivable 268,879 (442,416) Net foreign exchange transaction gains on other financial liabilities — 197,990 Net foreign exchange transactions gains/(losses) from financing activities (Note 14) 268,879 (244,426) Finance costs — net 94,680 (643,358) The tax on the Company’s results before tax differs from the theoretical amount that would arise using the applicable tax rates as follows: 2020 2019 RUB’000 RUB’000 22,956,943 19,800,671 2,869,618 2,475,084 90,549 152,154 Tax calculated at the applicable tax rate Tax effect of expenses not deductible for tax purposes Tax effect of allowances and income not subject to tax (2,960,167) (2,616,837) Defence contribution Foreign withholding tax on dividends receivable Tax charge 2 — 1,073,231 1,017,005 1,073,233 1,027,406 The Company is subject to income tax on taxable profits at the rate of 12.5%. Brought forward losses of only five years may be utilised. Under certain conditions, interest may be exempt from income tax and be subject only to special contribution for defence at the rate of 30%. In certain cases dividends received from abroad may be subject to special contribution for defence at the rate of 17%. Further, in certain cases dividends received from other Cyprus tax resident companies may also be subject to special contribution for defence. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020330 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 331 Notes to the parent company financial statements Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon etc) are exempt from Cyprus income tax. 15. Dividends Withholding tax is applied to dividends distributed to the Company by its Russian subsidiaries at the rate of 5% on gross dividends declared; such tax is withheld at source by the respective subsidiary and is paid to the Russian tax authorities at the same time when the payment of dividend is effected. 14. Net foreign exchange gains/(losses) Finance costs — net (Note 12) Other gains — net (Note 9) Total foreign exchange gains/(losses) 2020 2019 RUB’000 RUB’000 268,879 (244,426) 49,734 4,805 318,613 (239,621) In April 2019, the shareholders of the Company approved the payment of a dividend for the financial year ended 31 December 2018 in the amount of 46.50 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,311,453 thousand, including final dividend for 2018 in the amount of RUB 1,429,927 thousand or RUB 8.00 per ordinary share/GDR and a special final dividend in the amount of RUB 6,881,526 thousand or RUB 38.50 per ordinary share/GDR (US Dollar equivalent of US$ 129,727 thousand). In August 2019, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in the amount of RUB 3,548,007 thousand or RUB 19.85 per ordinary share/GDR and a special interim dividend in the amount of RUB 4,772,382 thousand or RUB 26.70 per ordinary share/GDR (US Dollar equivalent of US$ 124,655 thousand). In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31 December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary share/GDR (US Dollar equivalent of US$ 110,787 thousand). In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend in the amount of RUB 5,327,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293 thousand). During the years ended 31 December 2020 and 31 December 2019, the Company declared and paid as detailed in the table below. Dividends declared1 Dividends paid1 2020 2019 RUB’000 RUB’000 16,637,178 16,631,842 16,637,178 16,631,842 1 Dividends declared and paid within the year 2020 as per the table above excludes RUB 3,601 thousand relating to dividend declared and paid on the treasury shares. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020332 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 333 Notes to the parent company financial statements 16. Property, plant and equipment 17. Right-of-use assets At 1 January 2019 Cost Accumulated depreciation Net book amount Year ended 31 December 2019 Additions Depreciation charge (Note 10) Closing net book amount At 31 December 2019 / 1 January 2020 Cost Accumulated depreciation Net book amount Year ended 31 December 2020 Additions Disposals Depreciation charge (Note 10) Closing net book amount At 31 December 2020 Cost Accumulated depreciation Net book amount Motor vehicles Total RUB’000 RUB’000 11,470 11,470 (8,898) (8,898) 2,572 2,572 6,666 6,666 (2,586) (2,586) 6,652 6,652 15,475 15,475 (8,823) (8,823) 6,652 6,652 6,528 (734) (1,768) 10,678 6,528 (734) (1,768) 10,678 13,193 13,193 (2,515) (2,515) 10,678 10,678 At 1 December 2019 Cost Accumulated depreciation Net book amount Year ended 31 December 2019 Depreciation charge (Note 10) Closing net book amount At 31 December 2019 / 1 January 2020 Cost Accumulated depreciation Net book amount Year ended 31 December 2020 Depreciation charge (Note 10) At 31 December 2020 Cost Accumulated depreciation Net book amount Offices Total RUB’000 RUB’000 7,292 7,292 — — 7,292 7,292 (2,228) (2,228) 5,064 5,064 7,292 7,292 (2,228) (2,228) 5,064 5,064 (2,431) (2,431) 7,292 7,292 (4,659) (4,659) 2,633 2,633 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    334 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 335 Notes to the parent company financial statements 18. Investments in subsidiary undertakings At beginning of year At end of year 2020 2019 RUB’000 RUB’000 45,151,248 45,151,248 45,151,248 45,151,248 Details of the direct and indirect investments in the subsidiary undertakings are as follows: Name Country of incorporation Principal activities New Forwarding Company, АО GTI Management, OOO Ural Wagonrepair Company, AO Russia Russia Russia Ukrainian New Forwarding Company OOO Ukraine BaltTransServis, OOO Russia RemTransServis, OOO1 Russia Railway transportation Railway transportation Repair and maintenance of rolling stock Railway transportation Railway transportation Repair and maintenance of rolling stock Proportion of ordinary shares held by the Company Proportion of ordinary shares held by the Group (%) (%) Proportion of ordinary shares held by non- controlling interest (%) 2020 2019 2020 2019 2020 2019 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 — — — — — — — — 60 — 60 60 60 40 40 — 59.4 59.4 40.6 40.6 BTS-Locomotive Solutions OOO2 Russia SyntezRail Ltd Cyprus SyntezRail LLC3 Russia Spacecom AS Estonia Ekolinja Oy4 Finland Spacecom Trans AS4 Estonia Support activities for locomotive traction Intermediary holding company Railway transportation Operating lease of rolling stock and provision of forwarding services Operating sub-lease of rolling stock Operating lease of rolling stock — — 60 60 40 40 60 60 60 60 40 40 — — 60 60 40 40 65.25 65.25 65.25 65.25 34.75 34.75 — — — 65.25 65.25 34.75 34.75 — 65.25 65.25 34.75 34.75 1. RemTransServis, OOO is a 99% subsidiary of BaltTransServis, OOO. 2. BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis, OOO. 3. SyntezRail LLC is a 100% subsidiary of SyntezRail Ltd. 4. Ekolinja Oy and Spacecom Trans AS are 100% subsidiaries of Spacecom AS. Contribution to subsidiary during the year 2018 During the year 2018, the Company subscribed to newly issued share capital of SyntezRail Ltd for an amount of RUB 300,090 thousand. The amount remained payable to the subsidiary as of 31 December 2018 and was settled within the year 2019. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 336 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 337 Notes to the parent company financial statements Disposal of subsidiary during the year 2018 During the year 2018, Spacecom AS acquired 100% of the shares of Spacecom Trans AS from the Company and the non-controlling shareholders. Out of the total consideration payable by Spacecom AS for this transaction, Eur 19,565 thousand (equivalent of RUB 1,536,316 thousand) was payable to the Company, of which of Eur 8,450 thousand (equivalent to RUB 671,441 thousand) was received by the Company within the year 2018. The receivable balance carried contractual interest of 3% per annum and was payable by the subsidiary in instalments. During the year 2019, interest of Eur 233 thousand (equivalent to RUB 16,934 thousand) was accrued on the balance receivable (Note 12) and an amount of Eur 7,350 thousand (equivalent to RUB 528,127 thousand) was received by the subsidiary. The balance receivable as at 31 December 2019 equaled to Eur 3,998 thousand (equivalent to RUB 277,246 thousand) (Note 19). During the year 2020, interest of Eur 43 thousand (equivalent to RUB 3,263 thousand) was accrued on the balance receivable (Note 12) and an amount of Eur 4,041 thousand (equivalent to RUB 315,967 thousand) was received by the subsidiary resulting into the full settlement of the receivable. The following amounts are included in the statement of cash flows in relation to acquisitions and disposals of subsidiaries: Contribution to the share capital of SyntezRail Ltd Proceeds from sale of Spacecom Trans AS Total cash inflow 2020 2019 RUB’000 RUB’000 — (300,089) 315,967 528,127 315,967 228,038 Assessment of impairment of the investments in the subsidiary undertakings The Company assesses at each balance sheet date whether there are indicators for impairment of its subsidiary undertakings in accordance with its accounting policy for impairment of non-financial assets, as set out in Note 4. As of 31 December 2020, the management considered the deterioration of the economic environment, the weak prevailing industry conditions and the COVID-19 pandemic related uncertainties, as these are set out in Note 27, as indicators of impairment of the Company’s investments in subsidiary undertakings and performed impairment assessments to determine if there is an impairment loss As a result of the impairment assessment, no impairment losses were noted. The impairment testing for all the subsidiary undertakings indicated a significant headroom in the recoverable amount over the carrying amount. 19. Loans and other receivables Loans to related parties Less: Provision for impairment of loans to related parties Loans to related parties — net (Note 26) Other receivables — related party (Note 26) Total loans and other receivables — net Less non-current portion: Loans to related parties (Note 26) Total non-current portion 2020 2019 RUB’000 RUB’000 2,260,201 2,312,903 (1,601,472) (1,385,320) 658,729 927,583 266,307 277,246 925,036 1,204,829 544,362 696,548 544,362 696,548 Current portion 380,674 508,281 The weighted average contractual interest rate on loans receivable from related parties was 5.1% at 31 December 2020 (31 December 2019: 6.8%). The weighted average effective interest rate on loans receivables from related parties was 11.1% at the 31 December 2020 (31 December 2019: 12.19%). The contractual interest rate and effective interest rate on other receivables from related parties at 31 December 2019 was 3%. The other receivables from related parties at 31 December 2020 carry no contractual interest. The carrying value of loans and other receivables at the reporting date approximates their fair value. As at 31 December 2020, the fair values of US Dollar denominated loans to related parties are based on cash flows discounted using a rate of 8% (31 December 2019: 8%). The discount rate used for Russian Rouble denominated loans to related parties as at 31 December 2020 was 17.7% (31 December 2019: 6.5% and 17.7%). The fair value measurements of loans to related parties and other receivables from related parties as at 31 December 2020 and 31 December 2019 are within level 3 of the fair value hierarchy. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020338 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 339 Notes to the parent company financial statements The carrying amounts of the Company’s loans and other receivables are denominated in the following currencies: 20. Other assets US Dollars Russian Roubles Euro Total loans and other receivables 2020 2019 RUB’000 RUB’000 446,544 364,665 212,185 562,918 266,307 277,246 925,036 1,204,829 Prepayments — third parties VAT recoverable Total other assets Current portion 2020 2019 RUB’000 RUB’000 6,588 — 6,588 846 2 848 6,588 848 Assessment of credit losses on loans receivable from subsidiaries At 31 December 2020 and 31 December 2019, the Company assessed, on a forward-looking basis, the expected credit losses associated with its loans receivable from subsidiaries carried at amortised cost, in accordance with the accounting policy stated in Note 4. The assessment performed resulted in the recognition of reversal of impairment losses of RUB 51,713 thousand as at 31 December 2020 (31 December 2019: RUB 312,980 thousand). The assessment of expected credit losses on the loans receivable from Ukrainian New Forwarding Company, AO, with a carrying amount of RUB 446,544 thousand as at 31 December 2020 (31 December 2019: RUB 364,665 thousand), classified as credit-impaired (Stage 3) as of that date, required management to use estimates and projections of future cash flows. The expected credit losses were determined based on multiple forward-looking recovery scenarios to measure the expected cash shortfalls, discounted using the loans’ original effective interest rate method, weighted based on the probability of each scenario occurring. In making this assessment, the Company considered all reasonable and supportable forward-looking information available without undue cost and effort. The cash flow projections were determined by reference to management’s cash flow estimates, which were based on historical financial performance of the subsidiary, as adjusted to take into consideration the impact of forecasted industry and market conditions. As with any forecast, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty, and therefore the actual outcomes may be significantly different to those projected. The Company considered these forecasts to represent its best estimate of the possible outcomes and that the chosen scenarios are appropriately representative of the range of possible scenarios. The key input in this assessment were the recovery rates assigned to each scenario. Any reasonable change in these would not result in a material increase/decrease in the reversal of impairment losses recognised in the income statement for the years ended 31 December 2019 and 31 December 2020. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020340 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 341 Notes to the parent company financial statements 21. Cash and cash equivalents 22. Share capital, share premium and treasury shares Cash at bank Total cash and cash equivalents 2020 2019 RUB’000 RUB’000 2,225,518 982,797 2,225,518 982,797 At 1 January 2019 /31 December 2019 / 1 January 2020 / 31 December 2020 Number of shares Share capital Share premium Total USD’000 USD’000 USD’000 178,740,916 17,875 949,471 967,346 Cash and cash equivalents include the following for the purposes of the cash flow statement: Cash and cash equivalents Cash and cash equivalents are denominated in the following currencies: US Dollars Russian Roubles Euro Total cash and cash equivalents The carrying value of cash and cash equivalents approximates their fair value. 2020 2019 RUB’000 RUB’000 2,225,518 982,797 2,225,518 982,797 2020 2019 RUB’000 RUB’000 365,566 217,069 1,252,774 459,770 607,178 305,958 2,225,518 982,797 At 1 January 2019 /31 December 2019 / 1 January 2020 / 31 December 2020 Number of shares Share capital Share premium Total RUB’000 RUB’000 RUB’000 178,740,916 516,957 27,929,478 28,446,435 The total authorised number of ordinary shares at 31 December 2020 was 233,918,128 shares with a par value of US$0.10 per share (31 December 2019: 233,918,128 shares with a par value of US$0.10 per share). All issued shares are fully paid. In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company started a GDRs buyback program. The buyback programme is for the Company’s Global Depositary Receipts (“GDRs) and will run till the earlier of the close of the Annual General Meeting of the Company to be held in 2021 and May 2021. The total number of purchased GDRs shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046 shares, with each GDR representing one ordinary share). As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand). In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.  Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020342 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 343 Notes to the parent company financial statements 23. Borrowings Current Bank borrowings Total current borrowings Non-current Bank borrowings Total non-current borrowings Total borrowings Maturity of non-current borrowings Between 1 and 2 years 2020 2019 RUB’000 RUB’000 — — — — — — — 2,175,477 2,175,477 2,086,465 2,086,465 4,261,942 2,086,465 2,086,465 The exposure of the Company’s borrowings to interest rate changes and the contractual re-pricing dates at the balance sheet dates are as follows: 6 months or less 6 to 12 months 1 to 5 years 2020 2019 RUB’000 RUB’000 — — — — 966,689 1,208,788 2,086,465 4,261,942 Note: The amounts disclosed are based on the earliest of the contractual re-pricing dates and the maturity date. The Company’s borrowings as of 31 December 2019 were secured by pledge of rolling stock held by its subsidiaries New Forwarding Company, AO and GTI Management, OOO with a market value of not less than RUB 4,133,290 thousand and RUB 3,300,075, respectively. The weighted average effective interest rates at the balance sheet are as follows: Bank borrowings The carrying amount and fair value of current and non-current borrowings are as follows: 2020 % — 2019 % 7.31 Bank borrowings Carrying amount Fair value 2020 2019 2020 2019 RUB’000 RUB’000 RUB’000 RUB’000 — — 4,261,942 4,261,942 — — 4,267,653 4,267,653 The fair value of borrowings and other liabilities were determined using valuation techniques. As at 31 December 2019, the fair value of fixed interest rate instruments with stated maturity denominated in Russian Rouble was estimated based on expected cash flows discounted using the rate of similar Russian Rouble denominated instruments entered into by the Company or its subsidiaries on their bank borrowings close to 31 December 2019. The discount rate used was a level 2 discount rate of 7.50% as at 31 December 2019. The carrying amounts of the borrowings are denominated in the following currencies: Russian Roubles Total borrowings 2020 2019 RUB’000 RUB’000 — — 4,261,942 4,261,942 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020            344 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 345 Notes to the parent company financial statements The Company has the following undrawn borrowing facilities: Fixed rate: Expiring within one year Expiring beyond one year Reconciliation of liabilities arising from financing activities: 2020 2019 RUB’000 RUB’000 3,000,000 9,000,000 12,000,000 — — — Opening balance 1 January 2020 4,261,942 4,413 4,266,355 Bank borrowings Other lease liabilities Total liabilities from financing activities RUB’000 RUB’000 RUB’000 Cash flows: Repayment of principal Interest paid Non-cash changes: Interest expense Foreign exchange losses At end of year 2020 (4,242,424) (2,358) (4,244,782) (235,720) (308) (236,028) Current lease liabilities 216,202 — — 308 1,165 3,220 216,510 1,165 3,220 Non-current lease liabilities Total lease liabilities Maturity of other lease liabilities Between 1 and 2 years Opening balance 1 January 2019 7,472,517 7,292 7,479,809 Bank borrowings Other lease liabilities Total liabilities from financing activities RUB’000 RUB’000 RUB’000 Cash flows: Repayment of principal Interest paid Non-cash changes: Interest expense Foreign exchange gains At end of year 24. Other lease liabilities (3,199,576) (2,031) (3,201,607) (473,296) (265) (473,561) 462,297 — 4,261,942 265 (848) 4,413 462,562 (848) 4,266,355 2020 2019 RUB’000 RUB’000 3,220 — 3,220 2,054 2,359 4,413 2020 2019 RUB’000 RUB’000 — — 2,359 2,359 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020    346 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 347 Notes to the parent company financial statements 25. Payables and accrued expenses 26. Related party transactions 2020 2019 RUB’000 RUB’000 Current Accrued key management personnel compensation, including share based payment (Note 26) 103,629 90,338 Accrued expenses Other payables to third parties Total current trade and other payables 10,877 13,863 9,602 1,545 124,108 105,746 The fair value of payables, which are due within one year approximates, their carrying amount at the balance sheet date. The carrying amounts of the Company’s payables and accrued expenses are denominated in the following currencies: Litten Investments Ltd, controlled by a Director of the Company, has a shareholding in the Company of 5.1% as at 31 December 2020 (31 December 2019: 5.1%). Goldriver Resources Ltd, which has a shareholding in the Company of 4.0% as at 31 December 2020 (2019: 4.0%), is controlled by a member of key management personnel of the Company. As at 31 December 2020, another 0.2% (2019: 0.2%) of the shares of the Company is controlled by Directors and key management of the Company. For the purposes of these financial statements, parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operational decisions as defined by IAS 24 “Related Party Disclosures”. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter into transactions, which unrelated parties might not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties. Euro Russian Roubles US dollar Other 2020 2019 RUB’000 RUB’000 75,460 33,000 15,647 1 72,598 25,698 7,429 21 Total payables and accrued expenses 124,108 105,746 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020348 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 349 Notes to the parent company financial statements The following transactions were carried out with related parties: (b) Other receivables from related parties (a) Loans to related parties Loans to subsidiaries: At beginning of year Loan advances Interest charged (Note 8) Loan repaid during the year Interest repaid during the year Reversal of impairment Net foreign exchange At end of year Consists of: Non-current portion Current portion At end of year 2020 2019 RUB’000 RUB’000 927,583 1,372,547 — 180,000 43,863 52,269 (400,299) (779,817) (34,374) (175,821) 51,713 312,980 70,243 (34,575) 658,729 927,583 544,362 696,548 114,367 231,035 658,729 927,583 Loans to related parties — gross amount 2,260,201 2,312,903 Less: Provision for impairment of loans to related parties (1,601,472) (1,385,320) Loans to related parties — net 658,729 927,583 The balances at the 31 December 2020 carry a weighted average contractual interest rate of 5.1% (2019: 6.8%) per annum. The weighted average effective interest rate at the 31 December 2020 was 11.1% (2019: 12.19%). Other receivables for the sale of shares Subsidiaries At end of year Consists of: Non-current portion Current portion At end of year 2020 2019 RUB’000 RUB’000 266,307 266,307 277,246 277,246 — 270,449 270,449 — 277,246 277,246 The balance at 31 December 2019 carried a contractual interest rate of 3% per annum. The weighted average effective interest rate at the 31 December 2019 was 3%. The balance at 31 December 2020 carries no interest and is repayable by August 2021. (c) Dividend income from related parties Dividend income from related parties: Subsidiaries (Note 8) Total 2020 2019 RUB’000 RUB’000 22,283,992 20,417,895 22,283,992 20,417,895 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020350 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 351 Notes to the parent company financial statements (d) Interest income Interest income: Interest on loans to subsidiaries (Note 8) Interest on other receivables from subsidiary (Note 12) 2020 2019 RUB’000 RUB’000 43,863 52,269 3,263 16,934 Total interest income calculated using the effective interest rate method 47,126 69,203 (e) Guarantees in favour of subsidiaries Guarantees are irrevocable assurances that the Company will make payments in the event that another party cannot meet its obligations. The Company has guaranteed the following obligations: Subsidiaries1 Total guaranteed obligations 2020 2019 RUB’000 RUB’000 23,584,105 18,966,840 23,584,105 18,966,840 1 Represents the maximum amount of obligation under each contract, being the contractual undiscounted cash flows under the loan agreements as at 31 December 2020 and 2019. During the years ended 31 December 2020 and 31 December 2019 the Company has acted as the guarantor for the obligation of its subsidiaries for loan agreements entered into with financial institutions and quoted bonds issued by subsidiaries. The fair values of such guarantees are amortised through the income statement. Management assessed that as at 31 December 2020 and 31 December 2019 no need for provision arises in relation to any of the guarantees issued by the Company. Management estimated the fair value of the free of charge guarantees issued by the Company to secure the liabilities of its subsidiaries based on the best estimate of expenditure required to settle the obligation. Specifically, the fair values on initial recognition and the expected credit losses as at 31 December 2020 of guarantees issued by the Company for obligations of its subsidiaries in accordance with loan agreements with financial institutions and quoted bonds issued by subsidiaries were estimated using a probability adjusted discounted cash flow analysis, using probability of default, as implied by the market rate of the borrowings obtained by the subsidiaries and loss given default. The loss given default for the financial guarantees issued by the Company for the obligations of its subsidiaries in accordance with loan agreements with financial institutions where such obligations are also secured by a pledge of property, plant and equipment and the distressed sale value of such pledge exceeds the amount of the obligation of the respective subsidiary has been estimated at RUB Nil, since, in case of default, the Company will be able to recover its losses under the issued guarantees from respective subsidiaries in full. The loss given default for guarantees issued by the Company for unsecured or underpledged obligations of its subsidiaries in accordance with loan agreements with financial institutions and quoted bonds issued by subsidiaries was estimated by considering the distressed value of the net assets of the subsidiaries which were not pledged at the time of the assessment. The loss given default as estimated at RUB Nil, since, in case of default, the Company will be able to recover its losses under the issued guarantees from respective subsidiaries in full. At 31 December 2020 and 31 December 2019, the Company assessed whether any ECL provision is needed for the guarantees in issue as of each reporting date. Management assessed that no need for provision arises in relation to any of the guarantees issued by the Company on the basis that, in case of default, the Company will be able to recover its losses under the issued guarantees from respective subsidiaries in full. (f) Impairment losses Reversal of impairment losses of loans to subsidiaries (Note 19) 51,713 312,980 2020 2019 RUB’000 RUB’000 (g) Key management personnel compensation 2020 2019 RUB’000 RUB’000 Key management salaries and other short-term employee benefits1 384,200 352,881 Share based compensation2 19,309 — 403,509 352,881 1 ‘key management salaries and other short term employee benefits’ include directors’ remuneration amounting to RUB 310,758 thousand (2019: RUB 352,881 thousand) 2 the Company’s share based compensation plan matured by 31 December 2020 Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020  352 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 353 Notes to the parent company financial statements (h) Directors’ remuneration 27. Contingencies Directors’ fees (Note 10) Emoluments in their executive capacity Total directors’ remuneration (i) Year-end balances arising from payables to key management Accrued key management remuneration (Note 25): Accrued salaries and other short-term employee benefits Share based payment liability 2020 2019 RUB’000 RUB’000 25,535 20,868 285,223 332,013 310,758 352,881 2020 2019 RUB’000 RUB’000 84,320 90,338 19,309 — 103,629 90,338 Operating environment of the Company The year 2020 was marked by the COVID-19 pandemic, widespread national lockdowns and sharp decline in economic conditions across the globe. Measures taken by various governments to contain the virus have severely impacted and could continue to negatively impact economic activity and supply chains, both globally and in the Russian Federation and the other territories in which the Company’s subsidiaries operate for an unknown period of time. Management has taken and continues to take necessary measures to ensure minimum disruption to and sustainability of the operations of the Company and its subsidiaries and support their employees, customers and suppliers. The overall economic weakness and the spread of COVID-19 impacted the Russian freight rail transportation market which experienced weak and volatile demand along with weak pricing conditions especially in the gondola segment. Although the operations and financial results of the Company’s subsidiaries for the year 2020 were inevitably impacted by these unprecedented economic conditions, the Company’s profit for the year increased to RUB 21,883,710 thousand compared to RUB 18,773,265 thousand for the year ended 31 December 2019 and the net cash generated from operations increased to RUB 21,492,632 thousand compared to RUB 19,268,420 thousand for the year ended 31 December 2019. This was mainly the result of the increase in the dividend income earned from the subsidiaries from RUB 20,417,895 thousand during the year ended 31 December 2019 to RUB 22,283,992 thousand in the current year as part of the dividend income related to profits of year 2019. The future effects of the COVID-19 pandemic and of the above measures on businesses, market participants, clients of the Company’s subsidiaries, as well as global economy and the operating environment of the Company and its subsidiaries are difficult to predict. Consequently, the future financial performance, cash flows and financial position of the Company, are difficult to predict and management’s current expectations and estimates could differ from actual results. The Company’s management believes that it is taking all the necessary measures to maintain the viability of the Company and the development of its business and that of its subsidiaries in the current economic environment. The management has analysed these economic conditions and concluded that these represent indications of impairment of the Company’s subsidiaries and proceeded to perform impairment assessments to determine if there is an impairment loss, as further set out in Note 18. The Company’s subsidiaries operate in the Russian Federation, Estonia, Ukraine and Finland. Russian Federation. 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. The operating environment has a significant impact on the operations and financial position of the Company and its subsdiaries operating in the Russian Federation. Management is taking necessary measures to ensure sustainability of the operations of the Company and its subsdiaries operating in the Russian Federation. However, the future effects of the current economic situation are difficult to predict and management’s current expectations and estimates could differ from actual results. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020354 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 355 Notes to the parent company financial statements Estonia and Finland. Estonia and Finland represent well-developed markets and economies with stable political systems and developed legislation based on EU requirements and regulations. 28. Events after the balance sheet date Ukraine. Starting in 2013, the political situation in Ukraine has experienced instability with numerous protests and continued political uncertainty that has led to deterioration of the state’s finances, volatility of financial markets and sharp depreciation of the national currency against major foreign currencies. The ratings of Ukrainian sovereign debt were downgraded by international rating agencies with negative outlooks for the future. The central bank of Ukraine, among other measures, imposed certain restrictions on processing of client payments by banks and on the purchase of foreign currency on the inter-bank market. The Company’s exposure to Ukraine comprises loans receivable of RUB 446,544 thousand (2019: RUB 364,665 thousand) from Ukrainian New Forwarding Company, AO (Note 19). The final resolution and the ongoing effects of the political and economic situation are difficult to predict but they may have further severe effects on the Ukrainian economy and the business of the Company’s subsidiary. Tax contingencies. Cypriot tax legislation is subject to varying interpretations. There are transactions and calculations for which the ultimate tax determination is uncertain. The Company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. The Company is incorporated outside Russia. Tax liabilities of the Company are determined on the assumption that it is not subject to Russian profits tax because it does not have a permanent establishment in Russia. The Company is a tax resident of Cyprus only and full beneficial owner of the equity interest held directly and indirectly in its subsidiaries. This interpretation of relevant legislation may be challenged but the impact of any such challenge cannot be reliably estimated currently; however, it may be significant to the financial position and/or the overall operations of the Company. On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020 in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021 inclusive. There were no other material events after the balance sheet date that which have a bearing on the understanding of these financial statements. Independent Auditor’s Report on pages 280 to 285. Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020356 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 357 Additional Information Selected Operational Information Definitions Presentation of Financial and Other Information GRI Content Index Contacts 358 364 368 370 374 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020358 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 359 Selected Operational Information for the year ended 31 December 2020 Fleet (incl. rolling stock and specialised containers) 31 December 2020 31 December 2019 Change Change, % 31 December 2020 31 December 2019 Change Change, % Owned Fleet Gondola cars Tank cars Locomotives Flat cars Other railcars (incl. hopper cars, etc) Specialised containers (incl. petrochemical and other) Total Owned Fleet as % of Total Fleet Leased-in Fleet Gondola cars Tank cars Flat cars Other railcars (incl. hopper cars, etc) Specialised containers (incl. petrochemical and other) Total Leased-in Fleet as % of Total Fleet Total Fleet (Owned Fleet and Leased-in Fleet) Gondola cars Tank cars Locomotives Flat cars Other railcars (incl. hopper cars, etc) Specialised containers (incl. petrochemical and other) Total 45,483 17,697 74 1,604 90 2,814 67,762 95% 164 2,720 443 79 520 3,926 5% 45,647 20,417 74 2,047 169 3,334 71,688 45,516 17,767 75 1,407 90 2,814 67,669 96% 104 1,969 466 132 380 3,051 4% 45,620 19,736 75 1,873 222 3,194 70,720 (33) (70) (1) 197 0 0 93 - 60 751 (23) (53) 140 875 - 27 681 (1) 174 (53) 140 968 0% 0% -1% 14% 0% 0% 0% - 58% 38% -5% -40% 37% 29% - 0% 3% -1% 9% -24% 4% 1% Total Fleet by type, % Gondola cars Tank cars Locomotives Flat cars Other railcars (incl. hopper cars, etc) Specialised containers (incl. petrochemical and other) 64% 28% 0.1% 3% 0.2% 5% 65% 28% 0.1% 3% 0.3% 5% Total 100% 100% Average age of Owned Fleet Gondola cars Tank cars Locomotives Flat cars Other railcars (incl. hopper cars, etc) Specialised containers (incl. petrochemical and other) 11.9 15.9 13.2 3.0 13.4 2.9 10.9 14.9 12.2 5.1 12.4 1.9 - - - - - - - - - - - - - - - - - - - - - - - - - - Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020                                                                      360 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 361 Operation of rolling stock (excl. Engaged Fleet)1 2020 2019 Change Change, % 2020 2019 Change Change, % Freight Rail Turnover, billion tonnes-km Metallurgical cargoes Ferrous metals Scrap metal Iron ore Oil products and oil Coal (incl. coke) Construction materials Crushed stone Cement Other construction materials Other Total Freight Rail Turnover by cargo type, % Metallurgical cargoes (incl. ferrous metal, scrap metal and iron ore) Oil products and oil Coal (incl. coke) Construction materials (incl. cement) Other Total Transportation Volume, million tones Metallurgical cargoes Ferrous metals Scrap metal Iron ore Oil products and oil Coal (incl. coke) Construction materials Crushed stone Cement Other construction materials Other Total 68.2 29.7 2.9 35.5 19.1 42.2 9.7 7.9 0.3 1.4 11.2 150.3 45% 13% 28% 6% 7% 73.1 28.0 3.3 41.8 22.0 33.8 6.3 5.3 0.2 0.9 11.8 147.1 50% 15% 23% 4% 8% 100% 100% 39.0 13.8 3.0 22.2 18.6 14.5 10.2 9.0 0.2 1.0 6.6 88.9 43.9 14.9 2.9 26.0 21.9 11.4 7.1 6.3 0.1 0.6 7.3 91.6 (5.0) 1.8 (0.4) (6.3) (2.9) 8.4 3.3 2.7 0.1 0.5 (0.6) 3.2 - - - - - - (4.9) (1.1) 0.1 (3.8) (3.3) 3.1 3.1 2.7 0.1 0.3 (0.7) (2.7) -7% 6% -12% -15% -13% 25% 52% 51% 75% 54% -5% 2% - - - - - - -11% -8% 2% -15% -15% 27% 44% 42% 53% 54% -10% -3% 1 Excluding operational and financial information of the specialised container transportation business. Average Rolling Stock Operated, units Gondola cars Rail tank cars Locomotives Other railcars Total Average Number of Loaded Trips per Railcar Gondola cars Rail tank cars Other railcars Total Average Distance of Loaded Trip, km Gondola cars Rail tank cars Other railcars Total 43,669 13,550 55 210 43,486 12,968 51 340 57,484 56,845 23.9 22.7 82.3 23.8 1,898 1,025 269 1,681 23.6 27.8 87.0 25.0 1,834 993 502 1,591 183 583 3 (130) 639 0.3 (5.1) (4.7) (1.1) 64 33 (233) 90 0% 4% 7% -38% 1% 1% -18% -5% -5% 4% 3% -46% 6% Average Price per Trip, RUB 36,909* 45,807* (8,898) -19% Net Revenue from Operation of Rolling Stock by cargo type, RUB million Metallurgical cargoes Ferrous metals Scrap metal Iron ore Oil products and oil Coal (incl. coke) Construction materials (incl. cement) Other Total 17,124* 8,908* 1,398* 6,818* 19,257* 8,834* 1,973* 3,338* 26,467* 11,141* 1,901* 13,425* 21,009* 9,380* 3,105* 5,034* (9,343) (2,233) (502) (6,607) (1,752) (546) (1,132) (1,695) 50,527* 64,994* (14,467) Net Revenue from Operation of Rolling Stock by cargo type, % Metallurgical cargoes (incl. ferrous metal, scrap metal and iron ore) Oil products and oil Coal (incl. coke) Construction materials (incl. cement) Other Total 34% 38% 17% 4% 7% 41% 32% 14% 5% 8% 100% 100% - - - - - - -35% -20% -26% -49% -8% -6% -36% -34% -22% - - - - - - Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020                                                                            362 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 363 Net Revenue from Operation of Rolling Stock by largest clients (incl. their affiliates and suppliers), % Transportation Volume, million tones 2020 2019 Change Change, % 2020 2019 Change Change, % Rosneft MMK Metalloinvest Gazprom Neft TMK EVRAZ UGMK-Trans TAIF SDS-Ugol ChelPipe Other (incl. small and medium enterprises) Empty Run Ratio, % Gondola cars Rail tank cars and other railcars Total Empty Run Ratio, % 25% 14% 13% 7% 4% 3% 2% 2% 1% 1% 28% 45% 89% 51% 23% 12% 21% 5% 3% 2% 2% 3% 0.5% 1% 26% 42% 90% 49% - - - - - - - - - - - - - - Empty Run Costs, RUB million 15,799* 14,752* 1,047 Share of Empty Run Kilometres Paid by Globaltrans, % 99% 89% - Operation of rolling stock (incl. Engaged Fleet) - - - - - - - - - - - - - - 7% - Metallurgical cargoes Ferrous metals Scrap metal Iron ore Oil products and oil Coal (incl. coke) Construction materials Crushed stone Cement Other construction materials Other Total Specialised container segment Net Revenue from Specialised Container Segment, RUB million Engaged Fleet Net Revenue from Engaged Fleet, RUB million 43.4 15.2 3.3 24.9 18.6 16.1 10.3 9.1 0.2 1.0 6.8 95.2 2020 1,923* 2020 152* 50.3 16.5 3.0 30.8 22.1 12.3 7.1 6.4 0.1 0.6 7.5 99.4 (6.9) (1.4) 0.3 (5.9) (3.4) 3.8 3.1 2.7 0.1 0.3 (0.8) (4.2) -14% -8% 10% -19% -16% 31% 44% 43% 53% 54% -10% -4% 2019 1,623* Change Change, % 299.4 18% 2019 202* Change Change, % (50) -25% Freight Rail Turnover, billion tonnes-km Metallurgical cargoes Ferrous metals Scrap metal Iron ore Oil products and oil Coal (incl. coke) Construction materials Crushed stone Cement Other construction materials Other Total 2020 2019 Change Change, % Operating leasing of rolling stock 76.7 32.9 3.3 40.5 19.1 45.2 9.8 8.1 0.3 1.4 11.4 162.1 85.2 30.7 3.4 51.2 22.2 35.9 6.4 5.3 0.2 0.9 11.9 161.5 (8.5) 2.2 (0.1) (10.6) (3.0) 9.3 3.4 2.8 0.1 0.5 (0.6) 0.6 -10% 7% -3% -21% -14% 26% 53% 52% 75% 54% -5% 0% Leased-out Fleet Gondola cars Tank cars Locomotives Other railcars (incl. flat, hopper cars, etc) Total Leased-out Fleet as % of Total Fleet Employees 31 December 2020 31 December 2019 Change Change, % 68 6,597 0 367 7,032 10% 152 6,568 0 122 6,842 10% (84) 29 0 245 190 - -55% 0% 0% 201% 3% - Total 1,697 1,640 57 3% 31 December 2020 31 December 2019 Change Change, % Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020                                                                                                                     364 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 365 Definitions Terms that require definitions are marked with capital letters in this Annual Report and their definitions are provided below in alphabetical order: Adjusted EBITDA (a non-IFRS financial measure) represents EBITDA excluding “Net foreign exchange transaction (gains)/ losses on financing activities”, “Share of profit/(loss) of associate”, “Other losses/(gains) - net”, “Net (gain)/loss on sale of property, plant and equipment”, “Impairment/(reversal of impairment) of property, plant and equipment”, “Impairment of intangible assets”, “Loss on derecognition arising on capital repairs” and “Reversal of impairment of intangible assets”. Adjusted EBITDA Margin (a non-IFRS financial measure) is calculated as Adjusted EBITDA divided by Adjusted Revenue. Adjusted Profit Attributable to Non-controlling Interests (a non-IFRS financial measure) is calculated as “Profit attributable to non-controlling interests” less share of “Impairment of property, plant and equipment” and “Impairment of intangible assets” attributable to non-controlling interests. Adjusted Revenue (a non-IFRS financial measure) is calculated as “Total revenue” less the following “pass through” items “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”. Attributable Free Cash Flow (a non-IFRS financial measure) means Free Cash Flow less Adjusted Profit Attributable to Non-controlling Interests. Average Distance of Loaded Trip is calculated as the sum of the distances of all loaded trips for a period divided by the number of loaded trips for the same period. Average Number of Loaded Trips per Railcar is calculated as total number of loaded trips in the relevant period divided by Average Rolling Stock Operated. Average Price per Trip is calculated as Net Revenue from Operation of Rolling Stock divided by the total number of loaded trips during the relevant period in the respective currency. Average Rolling Stock Operated is calculated as the average weighted (by days) number of rolling stock available for operator services (not including rolling stock in maintenance, purchased rolling stock in transition to its first place of commercial utilisation, rolling stock leased out, Engaged Fleet, flat cars and containers used in specialised container transportation). EBITDA (a non-IFRS financial measure) represents “Profit for the period” before “Income tax expense”, “Finance costs - net” (excluding “Net foreign exchange transaction (gains)/losses on financing activities”), “Depreciation of property, plant and equipment”, “Amortisation of intangible assets” and “Depreciation of right-of-use assets”. Empty Run or Empty Runs means the movement of railcars without cargo for the whole or a substantial part of the journey. Empty Run Costs (a non-IFRS financial measure meaning costs payable to RZD for forwarding empty railcars) is derived from management accounts and presented as part of the “Infrastructure and locomotive tariffs: empty run trips and other tariffs” component of “Cost of sales” reported under EU IFRS. Empty Run Costs do not include costs of relocation of rolling stock to and from maintenance, purchased rolling stock in transition to its first place of commercial utilisation, rolling stock leased in or leased out, Engaged Fleet, flat cars and containers used in specialised container transportation. Empty Run Ratio is calculated as the total of empty trips in kilometres by respective rolling stock type divided by total loaded trips in kilometres of such rolling stock type. Empty trips are only applicable to rolling stock operated (not including rolling stock in maintenance, purchased rolling stock in transition to its first place of commercial utilisation, rolling stock leased out, Engaged Fleet, flat cars and containers used in specialised container transportation). Engaged Fleet is defined as rolling stock subcontracted or otherwise engaged from a third-party rail operator for a loaded trip from the point of origination to the cargo’s destination, at which point the railcar is then released to such third-party. Free Cash Flow (a non-IFRS financial measure) is calculated as “Cash generated from operations” (after “Changes in working capital”) less “Tax paid”, “Purchases of property, plant and equipment” (which includes maintenance CAPEX), “Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired”, “Principal elements of lease payments for leases with financial institutions”, “Principal elements of lease payments for other lease liabilities”, “Interest paid on other lease liabilities”, “Interest paid on bank borrowings and non-convertible unsecured bonds” and “Interest paid on leases with financial institutions”. Freight Rail Turnover is a measure of freight carriage activity over a particular period calculated as the sum of tonnage of each loaded trip multiplied by the distance of each loaded trip, expressed in tonnes-km. It excludes volumes transported by Engaged Fleet (unless otherwise stated) and the performance of the specialised container transportation business. Infrastructure and Locomotive Tariffs – Other Tariffs (a non-IFRS financial measure, derived from management accounts) is presented as part of the ‘‘Infrastructure and locomotive tariffs: empty run trips and other tariffs’’ component of “Cost of sales” reported under EU IFRS. This cost item includes the costs of relocation of rolling stock to and from maintenance, transition of purchased rolling stock to its first place of commercial utilisation, and relocation of rolling stock in and from lease operations as well as other expenses including the empty run costs attributable to the specialised container transportation business. Leased-in Fleet is defined as fleet leased in under operating leases, including railcars, locomotives and specialised containers. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 366 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 367 Definitions Leased-out Fleet is defined as fleet leased out to third parties under operating leases (excluding flat cars and containers used in specialised container transportation). Owned Fleet is defined as the fleet owned and leased in under finance lease as at the end of the reporting period. It includes railcars, locomotives and specialised containers, unless otherwise stated, and excludes Engaged Fleet. Leverage Ratio or Net Debt to Adjusted EBITDA (a non-IFRS financial measure) is the ratio of Net Debt on the last day of a particular financial period to Adjusted EBITDA in respect of the twelve months to the end of that same period. Market Share is calculated using the Group’s own information as the numerator and information published by the Federal State Statistics Service of Russia ("Rosstat") as the denominator. It is defined as a percentage of the overall Russian freight rail transportation volume and includes volumes transported by Engaged Fleet, unless otherwise stated. Net Debt (a non-IFRS financial measure) is defined as the sum of total borrowings (including interest accrued) less “Cash and cash equivalents”. Net Revenue from Engaged Fleet (a non-IFRS financial measure, derived from management accounts) represents the net sum of the price charged for transportation to clients by the Group utilising Engaged Fleet less the loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”) less the cost of attracting fleet from third-party operators (included in the EU IFRS line item “Services provided by other transportation organisations”). Net Revenue from Operation of Rolling Stock is a non-IFRS financial measure, derived from management accounts, describing the net revenue generated from freight rail transportation services which is adjusted for respective “pass through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”). Net Revenue from Specialised Container Transportation is a non-IFRS financial measure, derived from management accounts, that represents the revenue generated from the specialised container operations (included in the EU IFRS line item: “Revenue from specialised container transportation”) less the respective “pass through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”). Net Working Capital (a non-IFRS financial measure) is calculated as the sum of the current portions of “Inventories”, “Current income tax assets”, “Trade receivables - net”, “Other receivables - net” (“Other receivables - third parties” and “Other receivables - related parties” net of “Provision for impairment of other receivables”), “Prepayments - third parties”, “Prepayments - related parties” and “VAT recoverable”, less the sum of the current portions of “Trade payables to third parties”, “Trade payables to related parties”, “Other payables to third parties”, “Other payables to related parties”, "Accrued expenses", “Accrued key management compensation, including share based payment”, “VAT payable and other taxes”, “Contract liabilities” and “Current tax liabilities”. Other Operating Cash Costs (a non-IFRS financial measure) include the following cost items: “Advertising and promotion”, “Auditors’ remuneration”, “Communication costs”, “Information services”, “Legal, consulting and other professional fees”, “Expense relating to short-term leases - tank containers”, “Expense relating to short-term leases - office”, “Taxes (other than income tax and value added taxes)” and “Other expenses”. Share of Empty Run Kilometres paid by Globaltrans is defined as the percentage of empty run kilometres paid by Globaltrans divided by the total amount of empty run kilometres incurred by the fleet operated by Globaltrans (not including relocation of rolling stock to and from maintenance, purchased rolling stock in transition to its first place of commercial utilisation, and rolling stock leased-out, Engaged Fleet, flat cars and containers used in specialised container transportation) in the relevant period. Total CAPEX (a non-IFRS financial measure) calculated on a cash basis as the sum of “Purchases of property, plant and equipment” (which includes maintenance CAPEX), “Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired” and “Principal elements of lease payments for leases with financial institutions” (as part of the capital expenditures was financed with a finance lease). Total Empty Run Ratio is calculated as total kilometres travelled empty divided by the total kilometres travelled loaded by the rolling stock fleet operated by Globaltrans (not including the relocation of rolling stock to and from maintenance, purchased rolling stock in transition to its first place of commercial utilisation, or rolling stock leased out, Engaged Fleet, flat cars and containers used in specialised container transportation) in the relevant period. Total Fleet is defined as the fleet owned and leased in under finance and operating leases as at the end of reporting period. It includes railcars, locomotives and specialised containers, unless otherwise stated, and excludes Engaged Fleet. Total Operating Cash Costs (a non-IFRS financial measure) represent operating cost items payable in cash and calculated as “Total cost of sales, selling and marketing costs and administrative expenses” less the “pass through” items: “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations” and non-cash items: “Depreciation of property, plant and equipment”, “Amortisation of intangible assets”, “Depreciation of right-of-use assets”, “Loss on derecognition arising on capital repairs”, “Net impairment losses on trade and other receivables”, “Impairment/(reversal of impairment) of property, plant and equipment” and “Net (gain)/loss on sale of property, plant and equipment”. Total Operating Non-Cash Costs (a non-IFRS financial measure) include the following cost items: “Depreciation of property, plant and equipment”, “Amortisation of intangible assets”, “Depreciation of right-of-use assets”, “Loss on derecognition arising on capital repairs”, “Net impairment losses on trade and other receivables”, “Impairment/ (reversal of impairment) of property, plant and equipment ” and “Net (gain)/loss on sale of property, plant and equipment”. Transportation Volume is a measure of freight carriage activity over a particular period, measuring weight of cargo carried in tonnes. It excludes volumes transported by Engaged Fleet (unless otherwise stated) and volumes related to the specialised container transportation business. Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020368 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 369 Presentation of Financial and Other Information Financial information Non-IFRS financial information All financial information presented in this Annual Report is derived from the Consolidated Management Report and Consolidated Financial Statements of Globaltrans Investment PLC (the “Company” and, together with its consolidated subsidiaries, “Globaltrans” or the “Group”) and prepared in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of Cyprus Companies Law, Cap. 113 (EU IFRS). The Group’s Consolidated Management Report and Consolidated Financial Statements and the parent company financial statements for the year ended 31 December 2020 are included in the Financial Statements section of this Annual Report. Financial statements for prior years can be found on Globaltrans corporate website (www.globaltrans.com). Certain financial information derived from the management accounts is marked in this Annual Report with an asterisk (*). The presentational currency of the Group’s financial results is Russian roubles (RUB), which is the functional currency of the Company as well as of its Cypriot and Russian subsidiaries. In this Annual Report, the Group has used certain measures not recognised by EU IFRS or IFRS (referred to as “non-IFRS measures”). The management believes that these non-IFRS measures provide valuable information to readers because they enable them to focus more directly on the underlying day-to-day performance of the Group’s business and are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the freight rail transportation sector. Further explanations of the reasons for presenting such measures are included in the Financial Review section of this Annual Report. The non-IFRS measures that have been used in this Annual Report as supplemental measures of the Group’s operating performance. All non-IFRS financial information is calculated on the basis of EU IFRS financial statements and/or management accounts. Reconciliations to the closest IFRS measures are included in the Financial Review section of this Annual Report. Non-IFRS measures requiring additional explanation or definitions appear with initial capital letters and the definitions and explanations are provided in the Definitions section of this Annual Report. Other companies in the freight rail transportation sector may calculate the above non-IFRS measures differently or may use each of them for different purposes than the Group, limiting their usefulness as comparative measures. All non-IFRS financial information presented in this Annual Report should be used only as an analytical tool and investors should not consider such information, in isolation or in any combination, as a substitute for analysis of the Group’s Consolidated Financial Statements reported under EU IFRS and included in the Financial Statements section of this Annual Report. Operational and market information Globaltrans reports certain operational information to illustrate the changes in the Group’s operational and financial performance during the reporting periods. This operational information is derived from management accounts. The Group’s selected operational information for the year ended 31 December 2020 is provided in the Additional Information section of this Annual Report. Selected operational information for prior years can be found on Globaltrans’ corporate website (www.globaltrans.com). Terms referring to such operational information appear with initial capital letters with definitions or explanations provided in the Definitions section of this Annual Report. occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in forward-looking statements of the Group. Among others, these include general economic conditions, the competitive environment, risks associated with operating in Russia, market change in the Russian freight rail market and many other risks specifically related to the Group and its operations. This Annual Report has been prepared to assist shareholders to assess the Group’s financial condition, results of operations, business, strategies and prospects and for no other purpose. The Group, its Directors, employees, agents and advisers do not accept or assume responsibility for any other purpose or to any other person to whom this Annual Report is shown or who may have access to it, and any such responsibility or liability is expressly disclaimed. The Group has obtained certain statistical, market and pricing information that is presented in this announcement on such topics as the Russian freight rail transportation market and related subjects from the following third-party sources: Federal State Statistics Service of Russian Federation (“Rosstat”), JSC Russian Railways (“RZD”) and the Federal Antimonopoly Service (“FAS”). The Group has accurately reproduced such information and, as far as it is aware and can ascertain from information published by such third-party sources, no facts have been omitted that would render the reproduced information inaccurate or misleading. The Group has not independently verified this third-party information. In addition, the official data published by Russian governmental agencies may be substantially less complete or researched than that of more developed countries. Cautionary note This Annual Report, including its appendices, may contain forward- looking statements regarding future events or the future financial performance of the Group. You can identify forward-looking statements by terms such as expect, believe, estimate, anticipate, intend, will, could, may or might, the negative of such terms or other similar expressions. These forward-looking statements include matters that are not historical facts and statements regarding the Group’s intentions, beliefs or current expectations concerning, among other things, the Group’s results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which the Group operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Group cautions that forward-looking statements are not guarantees of future performance and that the Group’s actual results of operations, financial condition, liquidity, prospects, growth and strategies, and the development of the industry in which the Group operates, may differ materially from those described in or suggested by the forward-looking statements contained in this Annual Report. In addition, even if the Group’s results of operations, financial condition, liquidity, prospects, growth and strategies and the development of the industry in which the Group operates are consistent with the forward-looking statements contained in these materials, those results or developments may not be indicative of results or developments in future periods. The Group does not intend to update these statements to reflect events and circumstances Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 370 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 371 GRI Content Index Indicator Definition General disclosures Report section / Notes Annual Report page 102-1 102-2 102-3 102-4 102-5 102-6 102-7 102-8 102-9 102-10 Name of the organisation Corporate Structure Activities, brands, products, and services At a Glance Financial and Operational Review Location of headquarters Key Contacts Location of operations Corporate Structure Number of countries where the organisation operates Market Review Our Industry Ownership and legal form Corporate Structure Markets served Our Industry Scale of the organisation Financial and Operational Review Information on employees and other workers Sustainability Report Supply chain Financial and Operational Review Significant changes to the organisation and its supply chain No significant changes in the supply chain. p. 109 p. 8 p. 38-39 p. 374 p. 109 p. 32-35 p. 16-17 p. 109 p. 16-17 p. 36-39 p. 74-77 p. 36-39 102-11 Precautionary Principle or approach 102-12 External initiatives. A list of externally developed economic, environmental and social charters, principles, or other initiatives to which the organisation subscribes or which it endorses The Group does not explicitly use the precautionary principle. The Group does not have membership in external initiatives. 102-13 Membership of associations. Sustainability Report p. 66-83 A list of the main memberships of industry or other associations, and national or international advocacy organisations Union of Railway Transport Operators - SOZHT (AO New Forwarding Company) Council of Russian Transport Workers – STR (AO New Forwarding Company) Railway Engineering Association – OPZHT (AO Ural Wagonrepair Company) Estonian Chamber of Commerce and Industry (AS Spacecom (Estonia) and AS Spacecom Trans (Estonia) Indicator Definition Report section / Notes 102-14 Statement from senior decision-maker Chairman’s Statement CEO Review 102-15 Key impacts, risks opportunities Risk Management 102-16 Values, principles, standards, and norms of behaviour Sustainability Report Sustainability Report 102-18 Governance structure Corporate Governance Report 102-35 Remuneration policies Corporate Governance Report - Remuneration of the Board of Directors and Management 102-40 List of stakeholder groups Sustainability Report 102-41 Collective bargaining agreements As at 31.12.2020, 39% of total employees in OOO BaltTransServis were covered by collective bargaining agreements. In other Group subsidiaries there were no collective bargaining agreements. Identifying and selecting stakeholders with whom to engage Sustainability Report The organisation’s approach to stakeholder engagement Sustainability Report Key topics and concerns that have been raised through stakeholder engagement Sustainability Report 102-42 102-43 102-44 102-45 102-46 Defining report content and topic boundaries Sustainability Report 102-47 List of the material topics Sustainability Report 102-48 102-49 Restatements of information given in previous reports No restatements of information given in the previous report were made. Significant changes from previous reporting periods in the list of material topics and topic boundaries No significant changes. 102-50 Reporting period Calendar year 2020 102-51 Date of most recent report 102-52 Reporting cycle April 2020 Annual Annual Report page p. 20 p. 28 p. 56 p. 66 p. 70-73 p. 85 p. 101 p. 68-69 p. 68-69 p. 68-69 p. 68-69 p. 66 p. 67 Entities included in the consolidated financial statements Notes to the Consolidated Financial Statements p. 224-225 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 372 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 373 GRI Content Index Indicator Definition 102-53 Contact point for questions regarding the report Report section / Notes Investor Relations Phone: +357 25 328 860 Email: irteam@globaltrans.com Annual Report page 102-54 Claims of reporting in accordance with the GRI standards The Report was prepared in accordance with the GRI Standards – Core option. 102-55 GRI content index GRI Content Index p. 370 102-56 External assurance Management External assurance for the Group’s Sustainability Report was not conducted in the reporting period. 103-1 103-2 Explanation of the material topic and its boundary Sustainability Report The management approach and its components Sustainability Report 103-3 Evaluation of the management approach Sustainability Report Economic impact Economic performance 201-1 Direct economic value generated and distributed Financial and Operational Review Sustainability Report Indirect economic impacts 203-2 Significant indirect economic impacts Sustainability Report Anti-corruption p. 66-83 p. 66-83 p. 66-83 p. 36-37 p. 83 p. 66-83 205-3 Confirmed incidents of corruption and actions taken Sustainability Report p. 72 Environmental impact Materials 301-1 301-2 Energy 302-1 Materials used by weigh or volume Sustainability Report Recycled input materials used Sustainability Report Energy consumption within the organisation Sustainability Report Water and effluents1 303-5 Water consumption Sustainability Report Emissions 305-2 Direct (Scope 1) GHG emissions Sustainability Report p. 78 p. 79 p. 79 p. 79 p. 81 1 This excludes data from AS Spacecom and BaltTransServis (except for data from the BTS railcar repair depot in Ivanovo which is included). Indicator Definition Environmental compliance 307-1 Non-compliance with environmental laws and regulations Report section / Notes Annual Report page Sustainability Report p. 78 No incidents of non-compliance with environmental laws and regulations occurred in the reporting period Social impact Employment p. 75 p. 76 401-1 401-2 New employee hires and employee turnover Sustainability Report Benefits provided to full-time employees that are not provided to temporary or part-time employees Sustainability Report Notes to the Consolidated Financial Statement p. 210 Occupational health and safety 403-1 403-5 Occupational health and safety management system Sustainability Report Worker training on occupational health and safety Sustainability Report 403-9 Work-related injuries Sustainability Report Training and education 404-1 Average hours of training per year per employee by gender and employee category Sustainability Report Diversity and equal opportunity 405-1 Diversity of governance bodies and employees Sustainability Report Corporate Governance Report Consolidated Management Report Management Report p. 77 p. 77 p. 77 p. 76 p. 74 p. 99 p. 130 p. 273 Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020374 01 Overview 02 Strategic Report 03 Governance 04 Financial Statements 05 Additional Information 375 Contacts General contacts Globaltrans Investment PLC Depositary Bank Citibank, N.A. Legal address Omirou 20, Agios Nikolaos, CY-3095 Limassol, Cyprus Postal address Office 201, 4 Profiti Ilia Street, Germasogeias, CY-4046 Limassol, Cyprus Phone: +357 25 212 382 Fax: +357 25 503 155 Website: www.globaltrans.com For investors and shareholders Investor Relations Mikhail Perestyuk Phone: +357 25 328 860 Mobile: +7 985 998 3009 E-mail: irteam@globaltrans.com Daria Plotnikova Phone: +357 25 328 860 E-mail: irteam@globaltrans.com Company Secretary Elia Nicolaou Anastasio Building, 6th Floor, 15 Dimitriou Karatasou Street, CY-2024 Strovolos, Nicosia, Cyprus Phone: +1 212 723 5435 / +44 207 500 2030 Email: citiadr@citi.com Website: www.citi.com/adr Stock Exchange London Stock Exchange plc 10 Paternoster Square, London EC4M 7LS, UK Phone: +44 20 7797 1000 Website: www.londonstockexchange.com Moscow Exchange 125009 Moscow, Vozdvizhenka Str, 4/7, Bld 1 Phone: +7 (495) 363-3232, +7 (495) 232-3363 Website: www.moex.com Auditors PricewaterhouseCoopers Limited City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus Phone: +357 25 555 000 Fax: +357 25 555 001 For media Russian Media Anna Vostrukhova Head of Media Relations Phone: +357 25 328 863 Email: media@globaltrans.com International Media Laura Gilbert Lightship Consulting Phone: +44 7799 413351 Email: laura.gilbert@lightshipconsulting.co.uk www.globaltrans.com Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 

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