Corporate Social Responsibility Report 2018

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

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

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

Key Strengths1

№1 323 hectares 7 container terminal of land marine container operator in (equivalent to more than 450 football fields) and multipurpose terminals1 Undisputed industry leader in Russia and 5 km of quay wall in key in Russia and , in terms of container throughput and sea basins covering 2 major sea basins3 capacity, handling almost one in every three containers coming in and out of the country2

1.35 mln TEU 3.1 mln tonnes Consolidated Marine Container of Consolidated Marine Bulk Throughput Throughput in 2018 A record result for the Group

2018 Results 8% 12% 0.7x increase in Adjusted EBITDA increase in Consolidated Marine reduction in the Group’s Container Throughput financial leverage in 2018 (3.6x as of 31.12.2018)4

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

Corporate Social Responsibility Report 2018 02 Global Ports Investments PLC Overview Strategy Corporate Social Risk Additional Responsibility Management Information

Overview Strategy Corporate Social Risk Additional Responsibility Management Information

04 08 10 14 20 Directors’ Responsibility Statement

21 Definitions

24 For more information, Shareholder Information and Key Contacts please, visit our corporate website: http://www.globalports.com

224 16% LTIFR 1.28 basis point – increase increase in the Group’s close to 5 year low in Adjusted EBITDA Margin Consolidated Bulk Throughput

Corporate Social Responsibility Report 2018 03 Global Ports Investments PLC Overview 

About Us – Performance

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

Ownership Structure2 Consolidated Financial and Operating Data 2017 2018 Change 9% Selected IFRS Financial Information USD million USD million USD million Change, % 20.5% 9% Revenue 330.5 343.6 13.1 4% Cost of sales and administrative, selling and (191.2) (174.9) 16.3 (9%) marketing expenses

Gross profit 182.0 207.6 25.6 14%

Operating profit/(loss) (5.3) 131.6 137.0 (2,569%)

Net profit/(loss) (52.9) (58.3) (5.4) 10% 30.75% 30.75%

Free-float (LSE listing)

Delo Group Selected operating information 2017 2018 Change Change, % USD million USD million USD million APM Terminals Consolidated Marine Container Throughput, mln 1.2 1.4 0.1 12.2% Ilibrinio Establishment Ltd TEU

Polozio Enterprises Ltd Consolidated Marine Bulk Throughput, mln 2.7 3.1 0.4 15.9% tonnes

APM Terminals operates a global terminal Ro-Ro, thousand units 23.9 20.3 (3.6) (14.9%) network of 22,000 professionals with Cars, thousand units 95.4 121.1 25.6 26.9% 74 operating facilities and 117 Inland Services operations in 58 countries around the globe. APM Terminals is a part of A.P. Moller-Maersk, the world’s largest integrator of container and ports logistics. 2017 2018 Change Change, % Balance sheet and cash flow statement USD million USD million USD million

Delo Group is one of the largest private Total assets 1,655.6 1,288.3 (367.2) (22.2%) transportation and logistics holding Cash and cash equivalents 130.4 91.6 (38.8) (29.8%) companies in Russia. The Group offers a full range of services in the port of Net cash from operating activities 173.9 174.3 0.4 0.2% Novorossiysk, including stevedoring, tug boats and vessels bunkering (DeloPorts). Delo Group also offers multimodal freight forwarding services using own inland terminals, warehouses, flatcars (RUSCON). 2017 2018 Change Change, % Delo Group operates two marine terminals Selected non-IFRS financial information USD million USD million USD million and five inland terminals and employs Total Operating Cash Costs (128.9) (126.3) 2.6 (2.0%) a workforce of over 2,000 people. Adjusted EBITDA 201.6 217.3 15.7 7.8%

Adjusted EBITDA Margin 61.0% 63.2% Ilibrinio Establishment Limited and Polozio Enterprises Limited (former owners of NCC Net debt 865.9 780.3 (85.6) (9.9%) Group) each own 9% of the share capital Net debt to Adjusted EBITDA 4.3 3.6 (0.7) (16.4%) of Global Ports.

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

Corporate Social Responsibility Report 2018 04 Global Ports Investments PLC Overview Strategy Corporate Social Risk Additional Responsibility Management Information

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

KEY MILESTONES

April April July September Delo Group, one of the largest Unique portfolio of services Vladimir Bychkov appointed PLP celebrates the 10th private transportation and makes FCT and PLP the only as CEO of Global Ports. anniversary of its car handling logistics holding companies in Russian ports of call for the Mr. Bychkov has twenty years terminal. Almost 900,000 cars Russia, becomes a co-controlling world’s largest ice class container of experience in the logistics and have been handled at PLP over shareholder of Global Ports. vessels operated by Maersk. transportation industry. its ten years of operations. Through its subsidiary DeloPorts, Delo owns and operates marine container and grain terminals in the (Black Sea basin) alongside operating agency, tugboat and bunkering services. The board is re-elected in May to reflect new composition of shareholders.

September September December December 2018 – PLP becomes the first Baltic port Global Ports completes the ULCT delivers its inaugural January 2019 of call for Venta Maersk during sale of JSC Logistika-Terminal, shipment of coal-handling On 1st January 2019, Global its historic first ever container one of its two inland facilities. services. ULCT has excellent rail Ports launched a new ERP vessel voyage via Artic Route. The 1.9 billion rouble sale connectivity and the capability system in all of the marine proceeds are put towards to support up to 1.0 million terminals in Russia, as well as in further financial deleveraging. tonnes of coal shipments per certain other companies across year. The first coal deliveries the Group. This will result in began arriving at ULCT in better management and further November 2018, with the integration of business processes inaugural shipment completed and therefore improved levels on 27 December. The container of efficiency and productivity. handling capacity of the terminal remains unchanged at 440 thousand TEU per annum.

Corporate Social Responsibility Report 2018 05 Global Ports Investments PLC Overview 

Strong presence in Russia’s key container and bulk gateways1

Baltic Sea Basin The Group’s container and multipurpose terminals in the Basin offer direct access to the most St. Petersburg populous and economically developed

regions of the European part of Russia, including Moscow and St. Petersburg. Ekaterinburg

Cargo from the Americas FINLAND 7 8 52 6 Baltic Sea 4 1 RUSSIA

LATVIJA By Sea By rail By road

By Rail The Basin is the fastest route for transporting containers from Asia to the European part of Russia and many CIS countries 51% and transit to EU. The shorter transit time is a key advantage for Share of Baltic Basin terminals customers shipping high-value and time-sensitive cargo. in the overall container throughput of Russian terminals. By Sea The Baltic Sea Basin’s container terminals are close to key transhipment hubs for Russia’s inbound and outbound containers, such as Hamburg 2 and Rotterdam. The basin has a strong customer base due to its 2.0 mteu economic development, access to Russia’s most populous regions and Global Ports marine terminal capacity. cost-effective transportation of containers to major Russian cities.

1 2 3 4 5 6

First Container Petrolesport (PLP) Vostochnaya UST-LUGA Container Moby Dik (MD) Yanino (YLP) Terminal (FCT) Stevedoring Terminal (ULCT) Location: Company (VSC) Location: Location: Location: St. Petersburg Location: St. Petersburg Location: Nakhodka Ust-Luga port cluster (St. Petersburg) St. Petersburg Cargo handled: Cargo handled: Cargo handled: Containers, Ro-Ro, Cargo handled: Cargo handled: Cargo handled: Containers, bulk cargo bulk and general cargo Containers Containers, Ro-Ro, Containers, bulk cargo Containers, Ro-Ro, Container throughput Container throughput Container throughput bulk cargo (coal) Container throughput bulk and general cargo capacity3: 3 berth/yard capacity3: berth/yard capacity : Container throughput berth/yard capacity3: Container throughput 0.2m TEU per year 1.25m/0.95m TEU 1m/0.35m TEU per berth/yard capacity3: 0.44m/0.44m TEU berth/yard capacity3: per year year 0.65m/0.65m TEU per year 0.4m/0.28m TEU per Land total 51.2 ha per year year Land total 88.6 ha Land total 119.0 ha Land total 38.9 ha Ownership: 75% Land total 76.6 ha Land total 12.9 ha Ownership: 100% Ownership: 100% Ownership: 80% Ownership: 100% Ownership: 75%

Fully consolidated in IFRS

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

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

RUSSIA

CHINA

3

DPRK

Cargo from the Americas

57%4 323 30% of land freehold hectares of land Share of Far East Basin terminals (more than 450 football pitches) in the overall container throughput of Russian terminals. 2.7 mteu 5 km 0.65 mteu2 capacity of quay Global Ports marine terminal capacity.

7 8 Our Partners: MLT Kotka MLT Russian Ports segment: Location: Helsinki and Location: Helsinki and PLP, VSC, FCT, ULCT, Moby Dik, Entity: Moby Dik, Finnish Ports, Yanino Kotka, Finland Kotka, Finland Yanino Partner: Container Finance Ltd Oy Cargo handled: Cargo handled: Finnish Ports segment: Share: 25% in each Containers, Ro-Ro, Containers, Ro-Ro, MLT Kotka and MLT Helsinki bulk cargo bulk cargo Entity: UCLT Container throughput Container throughput Partner: Eurogate capacity3: capacity3: 0.15m TEU per year 0.27m TEU per year Share: 20%

Land total 0.5 ha Land total 7 ha Ownership: 75% Ownership: 75% 1. Numbers for the Group are presented on a consolidated basis. 2. Based on yard capacity. Company data. 3. Company estimates based on annual potential berth and yard throughput capacity. To maximise the efficiency of its operations, the Group may choose to flex headcount, working hours and used equipment at its terminals. As a result, current actual capacity may differ from the published numbers based on annual potential berth and yard throughput capacity. 4. On consolidated basis.

Corporate Social Responsibility Report 2018 07 Global Ports Investments PLC Strategy 

Strategy

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

STRATEGIC PRIORITIES STRATEGIC OBJECTIVES 2018 ACTIONS 2018 OUTCOMES

EFFICIENTLY UTILISE >> Prioritise safety operations >> Harness recovery in container market >> Consolidated Marine Container Throughput +12% to 1.35 m TEU CORE ASSETS >> Focus on core (maritime) activities >> Focus on customer service and improving response times in vessel, >> Record 3.1 million tonnes of marine bulk throughput, up 16% year-on-year AND EXISTING yard, and gate operation >> Maximise value from assets >> Car volumes up 27% year-on-year INFRASTRUCTURE >> Continued focus on bulk cargoes to better utilise idle terminal space >> Generate new revenue streams >> Coal handling launched at ULCT in December 2018 >> Coal handling facility launched at ULCT. Supports 1.0 million tonnes >> Improve value proposition >> Non-container revenue grew strongly to 26% of total revenue (2017: 23%) of coal shipments per annum to customers >> Unified Client Service Centre created across all GPI terminals >> Client satisfaction survey conducted >> Comprehensive set of behavioural-change measures introduced to: embed >> Investment in IT systems safety culture; improve reporting and monitoring; incentivise staff; align >> Considering a rise in LTIF rate in 2018, full safety review conducted at external contractor policies more closely with GPI’s own safety protocols all terminals. We thoroughly reviewed the occurrences and enacted and greater leadership participation in safety corrective measures to reduce the likelihood of repeat incidents

MAXIMISE >> Implementing continuous cost >> Stringent cost controls maintained >> Total Operating Cash Costs decreased by 2% despite 12% increase in cargo savings measures through volumes and 16% increase in bulk cargo throughput EFFICIENCY AND >> Optimizing the equipment fleet, standardizing procurement and increasing efficiency COST CONTROL repair procedures, and servicing opportunity cargo in between peak >> Adjusted EBITDA margin increased to 63% (2017: 61%) >> Focus on improving productivity demands to create steady workloads >> As of the beginning of 2019 ERP launched at all marine terminals in Russia >> Optimised workforce scheduling

>> ERP implementation and further centralisation of core fuctions

FOCUS ON CASH >> Optimise CAPEX >> Capital expenditure focused on planned maintenance requirements >> Total CAPEX limited to USD 41 million; ULCT coal-handling facility is main and attractive growth projects with high IRR and short payback periods recipient of non-maintenance CAPEX FLOW AND >> Debt repayment DELEVERAGING and deleveraging >> Reviewing equipment relocation opportunities to drive optimal usage >> Maintenance CAPEX target in line with guidance of USD 25-35 million per and reduce new purchase needs annum

>> Accelerated debt reduction – net debt levels fell further >> Healthy Free Cash Flow of USD 134 million

>> Generated significant positive cash flow >> Net Debt reduced by an additional USD 86 million

>> Proceeds from LT sale used for further deleveraging >> Net Debt/Adjusted EBITDA of 3.6x, its lowest level since 2014

Corporate Social Responsibility Report 2018 08 Global Ports Investments PLC Strategy Corporate Social Risk Additional Overview Responsibility Management Information

STRATEGIC PRIORITIES STRATEGIC OBJECTIVES 2018 ACTIONS 2018 OUTCOMES

EFFICIENTLY UTILISE >> Prioritise safety operations >> Harness recovery in container market >> Consolidated Marine Container Throughput +12% to 1.35 m TEU Increase in Consolidated CORE ASSETS >> Focus on core (maritime) activities >> Focus on customer service and improving response times in vessel, >> Record 3.1 million tonnes of marine bulk throughput, up 16% year-on-year Marine Container Throughput AND EXISTING yard, and gate operation >> Maximise value from assets >> Car volumes up 27% year-on-year INFRASTRUCTURE >> Continued focus on bulk cargoes to better utilise idle terminal space >> Generate new revenue streams >> Coal handling launched at ULCT in December 2018 >> Coal handling facility launched at ULCT. Supports 1.0 million tonnes >> Improve value proposition >> Non-container revenue grew strongly to 26% of total revenue (2017: 23%) +12% of coal shipments per annum to customers >> Unified Client Service Centre created across all GPI terminals >> Client satisfaction survey conducted Increase in Marine >> Comprehensive set of behavioural-change measures introduced to: embed >> Investment in IT systems Consolidated Bulk Throughput safety culture; improve reporting and monitoring; incentivise staff; align >> Considering a rise in LTIF rate in 2018, full safety review conducted at external contractor policies more closely with GPI’s own safety protocols all terminals. We thoroughly reviewed the occurrences and enacted and greater leadership participation in safety corrective measures to reduce the likelihood of repeat incidents +16%

MAXIMISE >> Implementing continuous cost >> Stringent cost controls maintained >> Total Operating Cash Costs decreased by 2% despite 12% increase in cargo Adjusted EBITDA Margin savings measures through volumes and 16% increase in bulk cargo throughput EFFICIENCY AND >> Optimizing the equipment fleet, standardizing procurement and increasing efficiency COST CONTROL repair procedures, and servicing opportunity cargo in between peak >> Adjusted EBITDA margin increased to 63% (2017: 61%) >> Focus on improving productivity demands to create steady workloads >> As of the beginning of 2019 ERP launched at all marine terminals in Russia % >> Optimised workforce scheduling 63 >> ERP implementation and further centralisation of core fuctions

FOCUS ON CASH >> Optimise CAPEX >> Capital expenditure focused on planned maintenance requirements >> Total CAPEX limited to USD 41 million; ULCT coal-handling facility is main Reduction in Group and attractive growth projects with high IRR and short payback periods recipient of non-maintenance CAPEX FLOW AND >> Debt repayment Net Debt DELEVERAGING and deleveraging >> Reviewing equipment relocation opportunities to drive optimal usage >> Maintenance CAPEX target in line with guidance of USD 25-35 million per and reduce new purchase needs annum >> Accelerated debt reduction – net debt levels fell further >> Healthy Free Cash Flow of USD 134 million USD 86 m >> Generated significant positive cash flow >> Net Debt reduced by an additional USD 86 million

>> Proceeds from LT sale used for further deleveraging >> Net Debt/Adjusted EBITDA of 3.6x, its lowest level since 2014

Corporate Social Responsibility Report 2018 09 Global Ports Investments PLC Corporate Social Responsibility 

Corporate Social Responsibility

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

Introduction As a company, our goal is to build and Our CSR activity embraces 5 key objectives embed a sustainable safety culture that that support delivery of the Group’s overall changes the way our people think about Being a responsible business is a critical component of commercial strategy. As a sustainable and health and safety, that is easy for our how we operate at Global Ports and responsible organisation, our objectives people to understand and that is simple to fundamental to our delivering long- are to: implement, based on three core principles: term sustainable growth.

>> Follow responsible business practices >> Providing a safe working environment; Britta Dalunde especially with regard to Health, Safety Chairman of the Audit and Environment; >> Providing comprehensive implementation and Risk Committee plans built around best practice safety Senior Independent >> Deliver economic and social benefit to and compliance standards; Director the communities we serve; >> Offering comprehensive training programs >> Build employee advocacy for the Group focused on risk awareness and reduction. and its role in the community; Ensuring a safe working >> Manage the environmental impacts of our environment business operations; and We expect our people to put safety first in everything they do. To achieve this, we >> Communicate our commitment to invest in Safety, providing suitable resources, corporate responsibility openly and training and time with priority given to transparently. addressing behavioural and cultural attitudes. >> Through regular safety and risk awareness training for our staff and contractors. Safety At the same time, we recognise that the Health & Safety forms part of the work place is a dynamic environment so we induction process for new employees Introduction constantly review our working processes and for any new visitors visiting our Safety remains the highest priority for to ensure they are the safest they can be. production areas. We conduct regular the business. Nothing is more important safety-training exercises for staff covering than the health and safety of our people The Group has put in place a focused general safety issues including, but not and we view their well-being as a primary safety management framework that covers limited to: fire drills, first aid, electrical responsibility of any company. all aspects of performance monitoring, safety, traffic rules around facilities and benchmarking, target-setting, training and safe working at height; The nature of our industry means our development. people are regularly exposed to activities >> In addition, the Group runs regular that put them at risk. Therefore our ultimate We ensure a safe working environment specialised training programmes for its safety goal is zero-harm, with all our people in a number of ways: employees that need more specialised returning home safely every day. training for example in the safe operation >> By establishing critical minimum of hazardous production facilities or Strong leadership and management safety standards in line with industry handling of hazardous materials; involvement is critical to building a best practice (Global Minimum responsible safety culture. At Global Requirements, GMR); >> Through regular monitoring of the health Ports, our Board and senior executives and wellbeing of our employees aimed understand that the tone is set from the >> Through regular safety audits that at improving and maintaining their top and are fully committed to driving benchmark our facilities’ compliance wellbeing and reducing the incidence forward our safety agenda. in implementing our GMRs; of occupational illnesses.

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Governance Framework a listed company. It also means that in 2019 LTIFR The Board is responsible for setting the we will not reach our goal of zero fatalities. Group’s health and safety strategy, and for 2018 1.28 creating the overarching policies and safety The Board instigated a full investigation into standards that set the guidelines for safety the circumstance surrounding the fatal incident 2017 1.1 throughout all of Global Ports’ operations. at PLP, as required under our safety rules. This has resulted in an immediate review of all our 2016 1.51 The Senior Executives of the Group and its safety programmes and procedures, and the companies oversee implementation of the implementation of measures to reinforce 2015 2.3 strategy and run the initiatives across all our our safety culture and further strenghen our 2014 2. 13 businesses. They regularly review Business safety programmes and procedures. Unit commentary and performance reports in order to monitor the safety performance Our priorities in 2019 Training & Development of individual business units. The Board is determined to transform the In 2018, we conducted our first ever complex safety ethos of the company, and our 2019 (incl. questionnaire, interviews with managers The Senior Executives supply the Board with focus will concentrate on: and meeting with all employees) employee quarterly performance reports for discussion. survey among the staff of our Management The Board conducts a regular review of the >> Improving our monitoring, reporting and Company because we wanted to hear our Group’s safety performance and agrees with reviewing of safety including adopting employees’ views on life at Global Ports and the Senior Executives a plan of action and a more rigorous approach to incident to identify the issues that they think are most targets for the coming months. reporting and follow-up; important to them. Thanks to a great response rate, we have a much better understanding of How We Performed in 2018 >> Developing Safety Improvement strategy; what our staff feel and think about their life The Group has delegated to the Chief in the company in all aspects and about the Operational Officer of Global Ports >> Implementing a comprehensive business. The feedback from the survey has Management Company the monitoring behavioural-change package of been incorporated into a series of action plans and measurement of health and safety measures including greater leadership and initiatives that are prioritising: performance through a number of metrics. involvement in safety initiatives; >> Improving information-sharing about the Over the last three years, our safety record >> Reviewing cargo handling to reduce Company’s activities, and increasing the has been on an improving trend with the or eliminate manual handling of cargo; level of management communication with frequency rate of injuries suffered at our all team members; facilities LTIFR steadily reducing. In 2018, >> Developing an employee rewards we expanded our general cargo operations programme that focuses on safety >> Building a shared sense of unity and into new services. As many of these cargo embracing safety champions in dealing teamwork among employees; operations are more manual in nature, with unsafe situations; this creates an increased exposure to >> Building cross-functional working and potential minor injuries. Unfortunately, we >> Increasing risk awareness training for reducing complexity; experienced an increase in reportable injuries stevedores and dockers; in this area last year. Consequently, our Lost >> Reviewing rewards and benefit packages; Time Injury Frequency Rate (LTIFR) increased >> Implementing our External Contractor to 1.28 in 2018 (2017: 1.10). Every reported safety programme to align contractor >> Improving development and career growth. injury case was thoroughly reviewed and selection more closely to our internal corrective measures enacted to reduce the safety policies. Employee development is a significant part likelihood of repeat incidents. of what we offer to our people. We want to Employee Engagement provide a dynamic and exciting workplace Tragically, although the Group suffered no that is attractive to both existing employees fatalities in 2018 (0 fatalities / thousand We employ more than 2,700 people1 and and new recruits. employees), we have to report that we our success depends on our ability to hire experienced one fatality after the year the best people at every level across the We provide career opportunities across end at our PLP terminal. This is a matter business, provide their well-being at work the Group for our high potential employees. of greatest concern for the Board and and look after them so that they are inspired And we place a strong emphasis on management team, as it is the first fatality to perform. This is core to the success of the identifying and nurturing the next the Group has suffered since it became business and our competitive position. generation of leaders in the business.

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

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Recognising and rewarding our employees Diversity data in a fair and transparent way ensures Diversity: females as a percentage of total staff that our people feel incentivised to succeed, that outstanding performance 33% 67% is recognised, and that individuals are differentiated based on abilities and results. The Group has performance Diversity: females as a percentage of department staff management systems in place throughout roction its operations to ensure that corporate and individual goals are clearly aligned. 27% 73%

inistration Diversity While our industry has traditionally 65% 35% employed many more men than women, Female Male women are represented at all levels in the business including the Board, senior Our approach to human rights and diversity The Group aims to comply strictly with all management, production and administration. is based on our Code of Conduct and applicable requirements of environmental underpinned by our values. We support laws in the regions where it operates. As of 31 December 2018, females the standards of fair treatment and non- Responsibility towards the environment is represented 33%1 of all employees, broken discrimination, and we work to prevent and embedded in all of Global Ports’ investment down into 27% of production staff, 13% mitigate adverse human rights impacts in our programmes. of executive management and 65% of operations. We implement our employees’ administrative staff 2. Women make up human rights protections through our Code Across our port terminals we continue to 27% of the entire Board and 2 out of the of Conduct. Through our CSR and HR teams prioritise schemes that reduce our energy 3 independent directors are female. The we monitor and work to address any alleged and water usage and improve our waste importance of equality is set out in our Code human rights complaints or concerns, whether management performance. The Group of Conduct and underpinned by our values. from our employees or third-parties. regularly invests in energy efficiency and environmental protection related projects. Diversity: length of service (years) Engaging with our people These projects include: construction and We believe that open and transparent upgrading of waste water treatment facilities, 21% communication is vital to a successful installation of energy efficient lighting, 26% workplace. We recognise that regular renovation and renewal of storm water engagement with our workforce helps drainage systems, construction of new coal to motivate them to perform. dust protection facilities and the installation of energy-efficient heating systems. We provide updates on our strategic priorities and business performance through a variety Waste Management 30% 23% of communication channels including Global Ports aims to reduce the amount management briefings, internal emails and our of waste that its port terminals produce, Less than 5 years recently launched intranet portal. renewable resources where possible and disposed of waste in a way that minimises 5-10 years We also seek regular feedback from our the environmental impact while maximising 11-20 years employees to measure engagement and operational and financial efficiency. gather important insights about our business. More than 20 year We conduct regular staff surveys and all Generally the activities of the Group do feedback is reviewed, and any important not lead to the formation of any solid or Human Rights issues identified for further review. dangerous waste products. However, the We believe all people are entitled Group does monitor and analyse its waste to fundamental rights and freedoms Environmental management activities, and each facility and creating an equal fair and diverse regularly reviews opportunities for waste workplace is a priority for the Group. Global Ports is committed to protecting the recycling and reuse of materials. Global Therefore we are committed to upholding environment and improving the quality of life Ports is also working with its industry the rights of everyone who works for the of the local communities wherever it operates. partners to reduce the impact of shipping Group and those who have dealings with it. Being good neighbours to the communities and port operations on water quality at its where we operate also means continuing to port terminals. 1. 36% in 2017. The decrease was primarily driven by sale of LT. reduce our impact on the environment. 2. On a consolidated basis.

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Energy Usage1 issued by the organization. Our procurement

Unit 2016 2017 2018 team is also able to access information and Electricity consumption per 1 tonne of kWh 2.46 2.15 2.14 advice on global best practice through its cargo handled by Russian Ports’ marine terminals involvement with the APM Terminals global Fuel consumption per 1 tonne of cargo handled l/t 0.47 0.44 0.45 networks. by Russian Ports’ marine terminals Energy intensity of Russian Ports’ marine terminals USD 120 117 119 (MWh per million of sales revenue in USD) Our Communities Electricity Used Thousand MWh 42.8 41.3 41.9 Fuel Used (diesel, petrol) Thousand m3 8.2 8.4 9.1 The Group believes that good community relations are important to the long term development and sustainability of its We are working to reduce our environmental Ports’s Anti-Corruption Policy sets out the goals operations. Global Ports is committed footprint. Specifically, we are examining ways and objectives, the defining principles and the to supporting the local communities where to increase our energy efficiency and also role of the Board and executive management in it operates and improving the quality of life reduce air emissions. For instance, we are executing the Group’s zero tolerance approach for its employees and their communities working with our customers to find ways to to these matters. through supporting community-driven social reduce the impact that visiting vessels have investment. This is the philosophy that on the ports’ air quality. All non-recyclable The Group has an anti-corruption compliance underpins the Group’s approach to social waste such as waste oil is carefully stored framework in place as a part of its risk investment. in ways designed to prevent any harmful management arrangements. It is based on the substances escaping into the environment. Group’s Code of Conduct which sets out how Global Ports funds a variety of social and we should conduct our business. charitable projects. These are focused around Global Ports also makes strenuous efforts the themes of Health, Education, Culture, to manage water resources effectively and Employees are encouraged to approach and Welfare. Under the Health banner, to minimise the impact of negative water management and legal department whenever the Group supports a variety of sports quality on the environment. As a part they have questions about what to do in programmes in its communities. The Group of our natural resource management, difficult situations and Internal audit and also backs various educational programmes all accumulated rainwater and waste Independent Board Members when they want and funds welfare projects, principally those water is treated before being returned to voice concerns about known violations of dealing with vulnerable adults and children. to waterways. We do not recycle waste the Group’s policy. The Group also prioritises support for social water so in 2018 the Group recycled zero infrastructure, sponsoring socially important per cent of its waste water. The Group’s whistleblowing service projects in the regions where it operates, enables employees, contractors, suppliers for instance funding heritage restoration VSC continue to implement the terms and members of the public to report any projects. As a matter of policy, entities of the tri-partite agreement signed with significant concerns about the business, and representatives of legislative, executive administrations of city of Nakhodka and or behaviour of individuals. The new system or judiciary authorities, political parties, Primorsk Territory in 2017. According to was established in 2017. The Group aims to commercial entities, and individuals or legal its terms approximately 670 million RUR provide anti-corruption training to all line entities associated with them are not eligible will be invested in 2018-2021 into various managers, including those working in central for charity and sponsor support. environmental protection measures office functions. including additional water treatment In 2018, via its social programmes the Group facilities, coal dust suspension systems, The Group enjoys good relations with its provided support for a number of projects: air and water pollution monitoring suppliers and is working closely with our systems and other initiatives. key suppliers to establish high operating >> VSC, FCT, ULCT and PLP supported the standards and ensure accountability through Life Line Charitable Foundation which helps Governance & Ethics the supply chain. The Group operates to to support seriously ill children; a strict set of guidelines that are covered by The Group recognises that its reputation and its Procurement policy. As a matter of policy, >> VSC sponsored the purchase of medical good name are amongst its most valuable all procurement for the largest port terminals equipment for Vostochny Hospital in the assets, which could easily be lost by actual is centralised and actioned at Group level by city of Nakhodka; or suspected corrupt or unethical behaviour. the corporate centre. All tenders are conducted via publication of RFQ on open website, >> ULCT supported various groups including We maintain a strict stance against bribery creating transparency and equal rights for all a children’s football club and a singing and corruption and operate a zero tolerance potential suppliers. The process is conducted team and also paid for the renovation regime to all forms of corruption. Global in accordance with the Procurement Standard of a military cemetery at Kingisepp.

1. Data for consolidated terminals: FCT, ULCT, VSC, PLP and LT unless otherwise stated.

Corporate Social Responsibility Report 2018 13 Global Ports Investments PLC Risk Management 

Risk Management

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

Risk Management Process, Principal it systematically monitors and assesses Global Ports is exposed to a variety of risks Risks and Uncertainties the risks attributable to the Group’s which are listed below. The order in which performance and delivery of the GPI the risks are presented is not intended Global Ports bases its risk management strategy. After identifying and assessing to be an indication of the probability of activities on a series of well-defined risk a risk, the Group selects and deploys the their occurrence or the magnitude of their management principles, derived from appropriate risk response aimed at reducing potential effect. experience, leading practice, and corporate the likelihood of its occurrence and/or governance regimes. Global Ports has an potential adverse impact. Not all of these risks are within the Group’s enterprise risk management system (the control, and the list cannot be considered ERM) that is designed to identify, assess, The Board delegates to the Chief Executive to be exhaustive, as other risks and respond, monitor and, where possible, Officer of LLC Global Ports Management uncertainties may emerge in a changing mitigate or eliminate threats to the responsibility for effective and efficient external and internal environment that business caused by changes in the external implementation and maintenance of the could have a material adverse effect on and internal business, financial, regulatory risk management system. Day-to-day the Group’s ability to achieve its business and operating environment. responsibility for the risk management lies objectives and deliver its overall strategy. with the management team. The Audit The Board has overall oversight and Risk Committee is authorized by Further information on our risk responsibility for the GPI’s risk management the Board to monitor, review and report management system including a detailed and the establishment of the framework on the organization, functionality and description of identified risk factors is of prudent and effective controls and effectiveness of the Group’s ERM system. contained in the notes to the Financial Statements attached to this report.

Risk factor Risk management approach Strategic risks Market conditions: Global Ports’ operations are dependent on the global The Group has reacted to the volatility of throughput in the macroeconomic environment and resulting trade flows, including container market by: in particular container volumes. >> Focusing on quality and value-driven services (getting closer to Container market throughput is closely correlated with the volume the customer); of imported goods, which in turn is driven by domestic consumer >> Greater focus on export container flows; demand, combined with volatility of the Russian rouble against >> Offering operational flexibility to all clients; USD/Euro. >> Effective cost containment; The Group remains exposed to the risk of contraction in the >> Adopting new revenue streams and attracting new cargo. Russian economy which if it were to occur could further dampen consumer demand and lead to a deterioration in the container market which could have a materially adverse impact on the Group.

Regaining forward momentum 14 Global Ports Investments PLC Overview Strategy Corporate Social Risk Additional Responsibility Management Information

Risk factor Risk management approach Competition: Barriers to entry are typically high in the container terminal The Group actively monitors the competitive landscape and industry due to the capital-intensive nature of the business. adjusts its commercial strategy accordingly, i.e. the Group However, challenging market conditions mean that competition prioritises building close long-term relationships with leading from other container terminals continues to be a significant factor. customers (locally, regionally and with headquarters) based Further consolidation between container terminal operators and on a global approach to account management and contractual container shipping companies, introduction of new/upgraded agreements incentivizing growth of throughput and/or share capacity and carrier consolidation could result in greater price of business. competition, lower utilisation, and a potential deterioration The Group’s focus on service quality is a key differentiator from in profitability. its competition and the Group believes this is one of its key In recent years, the Russian market has witnessed the introduction competitive advantages. of significant new container handling capacity, an example being The Group has made long-term investments in its terminals the new terminal at Bronka, which competes with the Group’s and modern equipment to ensure competitive levels of service. ports in the Baltic Sea Basin. It operates on a long-term horizon and its terminals represent Additionally, strategic international investors may develop or core infrastructure in Russia that will continue to operate for acquire stakes in existing competing Russian container terminals, the next 10-20 years and beyond. Because the Group possesses which could bring new expertise into the market and divert clients well-invested facilities with available berth capacity and sufficient and cargoes away from the Group. land plots it has flexibility to balance minimal capital expenditure to maintain capacity at the existing level and its efficient Given the historically high margins in the Russian container development should the market require it. handling industry, this trend may continue.

Political, economic and social stability: Instability in the Russian economy as well as social and political In light of the macroeconomic challenges faced by the ports instability could create an uncertain operating environment and industry in recent years, the Group has focused on improving affect the Group’s ability to sell its services due to significant its resilience, in particular its ability to withstand short-term economic, political, legal and legislative risks. economic shocks/fluctuations in Russia, as well as the wider regional and global environment. This has included a strong focus Certain government policies or the selective and arbitrary on cost containment measures, and strengthening its financial enforcement of such policies could make it more difficult for position through a series of measures designed to derisk the the Group to compete effectively and/or impact its profitability. Group’s balance sheet, including refinancing all its debt switching The Group may also be adversely affected by US, EU and other to longer maturities at fixed rates. In addition, the Group has authorities sanctions against Russian business/companies whose broadened its growth strategy to include exports as well as new measures have had and may continue to have an adverse effect revenue streams to counteract any lows in consumer sentiment on the Russian economy and demand for commodities. Ongoing and any macro-economic downturn. sanctions could also adversely impact the Group’s ability to obtain The Group has developed a system to monitor compliance with financing on favourable terms and to deal with certain persons restrictions posed by international sanctions and fend off the risk and entities in Russia or in other countries. of secondary sanctions.

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

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

Corporate Social Responsibility Report 2018 15 Global Ports Investments PLC Risk Management 

Risk factor Risk management approach Operational risks Leases of terminal land: The Group leases a significant amount of the land and quays The Group believes it has a stable situation at present regarding required to operate its terminals from government agencies. its land leases and its terminals have been in operation for Any revision or alteration of the terms of these leases or the a number of years. The Group owns the freehold on 66% of the termination of these leases, or changes to the underlying property total land of its terminals and 70% of the land of its container and rights under these leases, could adversely affect the Group’s inland terminals in Russia. The remainder is held under long-term business. leases (up-to 54 years and usually renewable at immaterial costs).

Customer Profile and Concentration: The Group is dependent on a relatively limited number of major The Group conducts extensive and regular dialogue with key customers (shipping lines, etc.) for a significant portion of its customers and actively monitors changes that might affect our business. customers’ demand for our services.

These customers are affected by conditions in their market sector The Group has a clear strategy to reduce its dependence on its which can result in contract changes and renegotiations as well major customers, by targeting new potential customers, increasing as spending constraints, and this is further exacerbated by carrier the share of business from other existing global customers, and consolidation. from new cargo segments. The Group is also steadily growing its share of non-container revenues through building its presence in marine bulk cargo such as coal (share of non-container revenue was 26% and 23% in 2018 and 2017 respectively).

Reliance on third parties: The Group is dependent on the performance of services by third The Group strives to maintain a continuous dialogue with third parties outside its control, including the performance by all other parties across the supply chain. In addition, its geographic participants in the logistics chain, such as customs inspectors, diversification provides it with some flexibility in its logistics, supervisory authorities and others, and the performance of should bottlenecks develop in one area. security procedures carried out at other port facilities and by its shipping line customers.

Tariff regulation: Tariffs for certain services at certain of the Group’s terminals Changes to tariff legislation (as of 14 August 2018) now require have been in the past regulated by the Russian Federal that all tariffs are set in Russian roubles. The Group believes Antimonopoly Service (FAS). As a result, the tariffs charged for it is in full compliance with the new legislation. such services were, and may potentially in the future be, subject The Group continues to monitor any legislative proposals and to a maximum tariff rate and/or fixed in Russian roubles as PLP, regulatory actions that could lead to changes to the existing VSC, and FCT, like many other Russian seaport operators, tariff regulations. It seeks a proactive dialogue with the relevant are classified as natural monopolies under Russian law. Russian federal authorities. It believes it is as well placed as any market participant to adapt to any future changes in tariff regulation.

Regaining forward momentum 16 Global Ports Investments PLC Overview Strategy Corporate Social Risk Additional Responsibility Management Information

Risk factor Risk management approach Human resources management: The Group’s competitive position and prospects depend on The Group offers competitive salaries and benefits to employees the expertise and experience of its key management team and at all levels to foster and retain skilled labour and provide yearly its ability to continue to attract, retain and motivate qualified indications or revision of salaries. personnel. The Group invests in the professional development of its staff, Industrial action or adverse labour relations could disrupt the including international best practices implementation and internal Group’s operating activities and have an adverse effect on “learning effect” programmes realization. performance results. The Group engages in socially responsible business practices and support of local communities.

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

Health, safety, security and environment: Accidents involving the handling of hazardous materials and oil The Group has implemented clear environmental and safety products at the Group’s terminals could disrupt its business and policies designed around international best practices and operations and/or subject the Group to environmental and other benchmark using such measures as GPI Global Minimum liabilities. Requirements.

The risk of safety incidents is inherent in the Group’s businesses. Safety is one of the Group’s top priorities. A safety strategy and annual action plan have been developed, to build a sustainable The Group’s operations could be adversely affected by terrorist safety culture across the whole Group. The detailed roadmap attacks, natural disasters or other catastrophic events beyond its is designed to ensure sustainable implementation of safety culture control. over the medium term.

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

Regulatory risks Regulatory compliance: The Group is subject to a wide variety of regulations, standards The Group strives to be in compliance at all times with all and requirements and may face substantial liability if it fails to regulations governing its activities and devotes considerable comply with existing regulations applicable to its businesses. management and financial resources to ensure such compliance.

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

Changes in regulations: Changes to existing regulations or the introduction of new The Group maintains a constructive dialogue with relevant regulations, procedures or licensing requirements are beyond federal, regional and local authorities regarding existing and the Group’s control and may be influenced by political or planned regulations. The Group does not have the power to block commercial considerations not aligned with the Group’s interests. any or all regulations it may judge to be harmful, but this dialogue Any expansion of the scope of the regulations governing the should ensure it has time to react to changes in the regulatory Group’s environmental obligations, in particular, would likely environment. involve substantial additional costs, including costs relating to maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of its ability to address environmental incidents or external threats.

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Risk factor Risk management approach Compliance and shareholder risk Conflict of interests: The Group’s controlling beneficial shareholders may have interests The Group’s corporate governance system is designed to that conflict with those of the holders of the GDRs or notes. maximise the company’s value for all shareholders and ensure the interests of all stakeholders are taken into account. The Group’s The major implications of this risk are that (i) co-controlling LSE listing ensures our compliance with the highest international shareholders pursue other businesses not related to GPI and standards. In addition, the Board has highly experienced members, hence may not be deeply involved with developing GPI and (ii) including strong independent directors. one of the major shareholders is also a major customer of the Group.

Legal and tax risks: Adverse determination of pending and potential legal actions The Group maintains a strong and professional legal function involving the Group’s subsidiaries could have an adverse designed to monitor legal risks, avoid legal actions where possible effect on the Group’s business, revenues and cash flows and and carefully oversee any legal actions that may occur. the price of the GDRs. Weaknesses relating to the Russian The Group performs ongoing monitoring of changes in relevant legal and tax system and appropriate Russian law create an tax legislation and court practice in the countries where its uncertain environment for investment and business activity and companies are located and develops the Group’s legal and tax legislation may not adequately protect against expropriation and position accordingly. nationalisation. The lack of independence of certain members of the judiciary, the difficulty of enforcing court decisions and governmental discretion claims could prevent the Group from obtaining effective representation in court proceedings.

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

Regaining forward momentum 18 Global Ports Investments PLC Overview Strategy Corporate Social Risk Additional Responsibility Management Information

Risk factor Risk management approach Credit risk: The Group may be subject to credit risk due to its dependence The Group closely tracks its accounts receivables overall and on key customers and suppliers. the creditworthiness of key customers and suppliers.

Debt, leverage and liquidity: The Group’s indebtedness or the enforcement of certain The Group has been able to reduce its total debt level in 2018, provisions of its financing arrangements could affect its as planned, and continued reduction of the debt above and business or growth prospects. beyond minimum repayment requirements which remains a management priority in 2019. Failure to promptly monitor and forecast compliance with debt covenants both at the Group and individual terminal levels Liquidity risk is carefully monitored, with regular forecasts may result in covenant breaches and technical defaults. prepared for the Group and its operating entities. If the Group is unable to access funds (liquidity) it may be Although the risk of liquidity shortfalls within the following unable to meet financial obligations when they fall due, 18-24 months has been significantly reduced via extensions or on an ongoing basis, to borrow funds in the market at of debt maturities through public debt issuances in 2016, an acceptable price to fund its commitments. the liquidity position is carefully monitored in case of further deterioration of financial performance. The Group regularly stress tests scenarios when different negative trends that could affect cash flows are identified.

Information technology and security: The Group’s container terminals rely on IT and technology The Group has centralised its IT function in recent years systems to keep their operations running efficiently, prevent and believes this is an important step in ensuring both the disruptions to logistic supply chains, and monitor and control efficiency and consistency of the Group’s security protocols all aspects of their operations. implementation. We are in the process of alignment of our IT strategy with the business objectives. Any IT glitches can create major disruptions for complex logistic supply chains. We regularly review, update and evaluate all software, applications, systems, infrastructure and security. Any prolonged failure or disruption of these IT systems, whether a result of a human error, a deliberate data breech All software and systems are upgraded or patched regularly or an external cyber threat could create major disruptions to ensure that we have minimised our vulnerabilities. in terminal operations. This could dramatically affect the Each of our business units has an IT disaster recovery plan. Group’s ability to render its services to customers, leading to reputational damage, disruption to business operations Our security policies and infrastructure tools are updated or and an inability to meet its contractual obligations. replaced regularly to keep pace with changing and growing threats. Our security infrastructure is updated regularly and employs multiple layers of defence. Connectivity to our partners’ systems is controlled, monitored and logged.

Corporate Social Responsibility Report 2018 19 Global Ports Investments PLC Additional Information  Directors’ Responsibility Statement / Definitions / Shareholder Information and Key Contacts Directors’ Responsibility Statement

We confirm that to the best of our knowledge:

This Report includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Board of Directors of Global Ports Investments Plc

Corporate Social Responsibility Report 2018 20 Global Ports Investments PLC Overview Strategy Corporate Social Risk Additional Responsibility Management Information Definitions

Terms that require definitions are marked with capital letters and the definitions of which are provided below in alphabetical order.

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

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

ASOP is Association of Sea Commercial Ports (www.morport.com).

Baltic Sea Basin is the geographic region of northwest Russia, Estonia and Finland surrounding the Gulf of Finland on the eastern Baltic Sea, including St. Petersburg, Ust-Luga, Tallinn, Helsinki and Kotka.

Cash Administrative, Selling and Marketing Expenses (a non-IFRS financial measure) are defined as administrative, selling and marketing expenses, adjusted for depreciation and impairment of property, plant and equipment, amortisation and impairment of intangible assets.

Cash Costs of Sales (a non-IFRS financial measure) are defined as cost of sales, adjusted for depreciation and impairment of property, plant and equipment, amortisation and impairment of intangible assets.

CD Holding group consists of Yanino Logistics Park (an inland terminal in the vicinity of St. Petersburg) and CD Holding. The results of CD Holding group are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown below Adjusted EBITDA).

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

Consolidated Inland Bulk Throughput is defined as combined bulk throughput by consolidated inland terminals: LT.

Consolidated Inland Container Throughput is defined as combined container throughput by consolidated inland terminals: LT.

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

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

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

Container Throughput in the Russian Federation Ports is defined as total container throughput of the ports located in the Russian Federation, excluding half of cabotage cargo volumes. Respective information is sourced from ASOP (Association of Sea Commercial Ports, www.morport.com).

Far East Basin is the geographic region of southeast Russia, surrounding the Peter the Great Gulf, including Vladivostok and the Nakhodka Gulf, including Nakhodka on the Sea of Japan.

First Container Terminal (FCT) is located in the St. Petersburg harbour, Russia’s primary gateway for container cargo and is one of the first specialised container terminals to be established in the USSR. The Global Ports Group owns a 100% effective ownership interest in FCT. The results of FCT are fully consolidated.

Corporate Social Responsibility Report 2018 21 Global Ports Investments PLC Additional Information  Directors’ Responsibility Statement / Definitions / Shareholder Information and Key Contacts

Finnish Ports segment consists of two terminals in Finland, MLT Kotka and MLT Helsinki (in the port of Vuosaari), in each of which Container Finance currently has a 25% effective ownership interest. The results of the Finnish Ports segment are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

Free Cash Flow (a non-IFRS financial measure) is calculated as Net cash from operating activities less Purchases of PPE.

Functional Currency is defined as the currency of the primary economic environment in which the entity operates. The functional currency of the Company and certain other entities in the Global Ports Group is US dollars. The functional currency of the Global Ports Group’s operating companies for the years under review was (a) for the Russian Ports segment, the Russian rouble, (b) for Oil Products Terminal segment, and for the Finnish Ports segment, the Euro.

Gross Container Throughput represents total container throughput of a Group’s terminal or a Group’s operating segment shown on a 100% basis. For the Russian Ports segment it excludes the container throughput of the Group’s inland container terminals – Yanino and Logistika Terminal.

Group is Global Ports Investments Plc and its subsidiaries and joint ventures. In April 2019 the Group sold its effective share ownership in AS Vopak E.O.S. (VEOS).

Logistika Terminal (LT) is an inland container terminal providing a comprehensive range of container freight station and dry port services at one location. The terminal is located to the side of the St. Petersburg – Moscow road, approximately 17 kilometres from FCT and operates in the Shushary industrial cluster. In September 2018 the Group completed the previously announced1 sale of its holding in JSC Logistika-Terminal, one of the Group’s two inland terminals, to PJSC TransContainer for a consideration of 1.9 billion Russian roubles.

MLT Group consists of Moby Dik (a terminal in the vicinity of St. Petersburg) and Multi-Link Terminals Oy (terminal operator in Vuosaari (near Helsinki, Finland) and Kotka, Finland), MLT-Ireland and some other entities. The results of MLT group are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

Moby Dik (MD) is located on the St. Petersburg ring road, approximately 30 kilometers from St. Petersburg, at the entry point of the St. Petersburg channel. It is the only container terminal in Kronstadt. The Global Ports Group owns a 75% effective ownership interest in MD, Container Finance LTD currently has a 25% effective ownership interest. The results of MD are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

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

Oil Products Terminal segment consists of the Group’s 50% ownership interest in Vopak E.O.S. (in which Royal Vopak currently has a 50% effective ownership interest). The results of the Oil Products Terminal segment are consolidated in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA). In April 2019 the Group sold its effective share ownership in AS Vopak E.O.S. (VEOS).

Petrolesport (PLP) is located in the St. Petersburg harbour, Russia’s primary gateway for container cargo. The Group owns a 100% effective ownership interest in PLP. The results of PLP are fully consolidated.

Revenue per TEU is defined as the Global Ports Group’s Consolidated Container Revenue divided by total Consolidated Container Marine Throughput.

Ro-Ro, roll on-roll off is cargo that can be driven into the belly of a ship rather than lifted aboard. Includes cars, buses, trucks and other vehicles.

Russian Ports segment consists of the Global Ports Group’s interests in PLP (100%), VSC (100%), FCT (100%), Logistika Terminal (100%) (prior to its disposal), ULCT (80%) (in which Eurogate currently has a 20% effective ownership interest), Moby Dik (75%), Yanino (75%) (in each of Moby Dik and Yanino Container Finance currently has a 25% effective ownership interest), as well as certain other entities. The results of Moby Dik and Yanino are accounted in the Global Ports’ consolidated financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

1. See Group’s release dated 16 August 2017.

Corporate Social Responsibility Report 2018 22 Global Ports Investments PLC Overview Strategy Corporate Social Risk Additional Responsibility Management Information

TEU is defined as twenty-foot equivalent unit, which is the standard container used worldwide as the uniform measure of container capacity; a TEU is 20 feet (6.06 metres) long and eight feet (2.44 metres) wide and tall.

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

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

Ust Luga Container Terminal (ULCT) is located in the large multi-purpose Ust-Luga port cluster on the Baltic Sea, approximately 100 kilometres westwards from St. Petersburg city ring road. ULCT began operations in December 2011. The Global Ports Group owns an 80% effective ownership interest in ULCT, Eurogate, the international container terminal operator, currently has a 20% effective ownership interest. The results of ULCT are fully consolidated.

Vopak E.O.S. includes AS V.E.O.S. and various other entities (including an intermediate holding) that own and manage an oil products terminal in Muuga port near Tallinn, Estonia. The Group owns a 50% effective ownership interest in Vopak E.O.S. The remaining 50% ownership interest is held by Royal Vopak. The results of Vopak E.O.S. are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA). In April 2019 the Group sold its effective share ownership in AS Vopak E.O.S. (VEOS).

Vostochnaya Stevedoring Company (VSC) is located in the deep-water port of Vostochny near Nakhodka on the Russian Pacific coast, approximately eight kilometers from the Nakhodka-Vostochnaya railway station, which is connected to the Trans-Siberian Railway. The Group owns a 100% effective ownership interest in VSC. The results of VSC are fully consolidated.

Weighted average effective interest rate is the average of interest rates weighted by the share of each loan in the total debt portfolio.

Yanino Logistics Park (YLP) is the first terminal in the Group’s inland terminal business and is one of only a few multi-purpose container logistics complexes in Russia providing a comprehensive range of container and logistics services at one location. It is located approximately 70 kilometres from the Moby Dik terminal in Kronstadt and approximately 50 kilometres from PLP. The Global Ports Group owns a 75% effective ownership interest in YLP, Container Finance LTD currently has a 25% effective ownership interest. The results of YLP are accounted in the Global Ports’ financial information using equity method of accounting (proportionate share of net profit shown below EBITDA).

Corporate Social Responsibility Report 2018 23 Global Ports Investments PLC Additional Information  Directors’ Responsibility Statement / Definitions / Shareholder Information and Key Contacts Shareholder Information and key Contacts

Global Ports Investments PLC

Legal Address Postal Address Omirou 20 BG WAYWIN PLAZA, Office 302 Agios Nikolaos 62 Agiou Athanasiou Avenue CY-3095 Limassol 4102, Limassol, Cyprus Depositary Investor Relations J.P. Morgan Mikhail Grigoriev 1 Chase Manhattan Plaza, Floor 58 Head of Capital Markets New York, NY 10005 and Investor Relations +1 (866) JPM-ADRS Phone +357 25 313 475 [email protected] GSM: +7 916 991 7396 Stock Exchange Tatiana Khansuvarova London Stock Exchange PLC Investor Relations Analyst 10 Paternoster Square, Email: [email protected] London EC4M 7LS, UK Phone: +44 20 7797 1000 Media Relations Website: www.londonstockexchange.com Russian Media Anna Vostrukhova Independent Auditors Head of Media Relations PricewaterhouseCoopers Limited Phone: +357 25 313 475 City House, 6 Karaiskakis Street E-mail: [email protected] CY-3032, Limassol, Cyprus Phone: +357 25 555 000 International Media Fax: +357 25 555 001 Teneo Zoë Watt Doug Campbell +44 20 7260 2700 E-mail: [email protected]

Corporate Social Responsibility Report 2018 24 Global Ports Investments PLC