Global Ports Investments : FY 2020 Results (Global Ports (Finance) Plc)

Management Report and financial statements 31 December 2020

Contents

Board of Directors and other officers ............................................................................. 1

Management Report ........................................................................................................ 2

Directors' Responsibility Statement ............................................................................... 7

Statement of comprehensive income for the year ended 31 December 2020 ............. 8

Balance sheet at 31 December 2020 ............................................................................... 9

Statement of changes in equity for the year ended 31 December 2020 ..................... 10

Statement of cash flows for the year ended 31 December 2020 ................................. 11

Notes to the financial statements ................................................................................. 12

• 1. General information ............................................................................................ 12

• 2. Summary of significant accounting policies ........................................................ 13

• 3. Financial risk management ................................................................................. 17

• 4. Interest income ................................................................................................... 22

• 5. Interest expenses ............................................................................................... 22

• 6. Administrative expenses .................................................................................... 22

• 7. Income tax expense ........................................................................................... 23

• 8. Financial instruments by category ...................................................................... 23

• 9. Credit quality of financial assets ......................................................................... 24

• 10. Loans receivable ................................................................................................ 24

• 11. Share capital ...................................................................................................... 25

• 12. Borrowings ......................................................................................................... 25

• 13. Derivative financial instruments .......................................................................... 27

• 14. Related party transactions .................................................................................. 27

• 15. Events after the balance sheet date ................................................................... 29

Independent auditor's report ........................................................................................ 30

BOARD OF DIRECTORS AND OTHER OFFICERS

Board of Directors

Alexander Iodchin Michalakis Thomaidis

Company Secretary

Team Nominees Limited 20 Omirou Street

Agios Nikolaos CY-3095 Limassol Cyprus

Registered office

20 Omirou Street Agios Nikolaos CY-3095 Limassol Cyprus

MANAGEMENT REPORT

• 1. The Board of Directors presents the management report together with the audited company financial statements of Global Ports (Finance) Plc (hereafter also referred to as "GPF" or the "Company") for the year ended 31 December 2020. The Company's financial statements have been prepared in accordance with International Financial Reporting Standards (hereafter also referred as "IFRS") as adopted by the European Union ("EU") and the requirements of Cyprus Companies Law, Cap. 113.

  Principal activities and nature of operations of the Company

• 2. The principal activities of the Company, which are unchanged from the previous year, are provision of loans to entities under control of the ultimate controlling party from the proceeds raised from issuance of non-convertible guaranteed Eurobonds. The company is a member of Global Ports Group of Companies (the Group).

  Review of Developments, Position and Performance of the Company's Business

• 3. The net loss of the Company for the year ended 31 December 2020 was US$1,035 thousand (2019: net loss of US$10,522 thousand) mostly at the expense of loss on extinguishment of financial liabilities in the amount of US$(557) thousand, and foreign exchange loss on loans receivable from related parties in the amount of US$19,478 thousand compensated by gain on fair value measurement of derivative instruments of US$17,344 thousand. On 31 December 2020 the total assets of the Company were US$490,808 thousand and the net liabilities were US$(14,495) thousand. On 31 December 2019 the total assets of the Company were US$523,973 thousand and the net assets were US$718 thousand.

• 4. The Russian container market demonstrated resilience in 2020 declining by only 0.8%, supported by continuing growth in containerised export by 5.2%. However, this growth was not sufficient to offset the decline of containerised import by a moderate 1.8% due to the global and local macroeconomic impact of COVID-19. Outperforming the market in both export and import, the Group's Consolidated Marine Container Throughput increased by 6.6% to 1,553 thousand TEU with growth of full export containers of 16.8% and full import containers of 3.6%. As a result, share of full export containers in the Groups' Consolidated Marine Container Throughput increased from 40% in 2019 to 44% in 2020. Consolidated Marine Bulk Throughput increased by 38.7%, driven by strong growth in coal handling at VSC and ULCT as well as growth of fertilisers and steel handling at PLP. The Group reduced Net Debt by USD 134.9 million over the year and continues to prioritise deleveraging over dividend distribution. In line with the Group's focus on deleveraging, Net Debt to Adjusted EBITDA decreased from 3.3x as of 31 December 2019 to 2.9x as at the end of the reporting period, achieving the lowest level since 2012.

• 5. Adjusted EBITDA (a non-IFRS financial measure) for Global Ports Group is defined as profit for the period before income tax expense, finance income/(costs)-net, depreciation, write-off and impairment of property, plant and equipment, depreciation and impairment of right-of-use assets, amortisation, write-off and impairment of intangible assets, share of profit/(loss) of joint ventures accounted for using the equity method, other gains/(losses)-net.

• 6. Consolidated Marine Container Throughput is defined as combined marine container throughput by consolidated marine terminals: PLP, VSC, FCT and ULCT. Consolidated Marine Bulk Throughput is defined as combined marine bulk throughput by consolidated terminals: PLP, VSC, FCT and ULCT. Net Debt (a non-IFRS financial measure) is defined as the sum of current borrowings, non-current borrowings, current and non-current lease liabilities (following adoption of IFRS 16) and swap derivatives less cash and cash equivalents and bank deposits with maturity over 90 days.

Management Report (continued)

Principal Risks and Uncertainties and Use of Financial Instruments by the Company

7.

The Company's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk), credit risk and liquidity risk. The Company's financial risk management and financial risks and exposures are disclosed in Note 3 to the financial statements.

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

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

• 9. The internal control and risk management systems relating to financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and to ensure compliance with applicable laws and regulations.

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

• 11. The Audit and Risk committee of the Board of Directors of Global Ports Investments PLC (the ultimate parent company of the Company) reviews certain high-risk areas at least once a year, including the following:

  -Significant accounting estimates; and -Material changes to the accounting policies.

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

  Future Developments of the Company

• 13. The Board of Directors does not expect any significant changes in the activities of the Company in the foreseeable future.

  Results

• 14. The Company's results for the year ended 31 December 2020 are set out on page 8.

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