Annual Report 2020 DEMONSTRATING RESILIENCE, ACHIEVING RESULTS Global Ports Investments PLC KEY STRENGTHS No. container terminal operator in Russia1 2020 RESULTS GLOBAL PORTS marine LTIFR container The lowest on record for the Group TODAY and multipurpose terminals in Russia and Finland Despite the unparalleled challenges that both The only player with a network Russia and the world faced in 2020, Global Ports of terminals in key container gateways of Russia proved that its business is fundamentally stable, Consolidated Marine Container Throughput sustainable and cash generative. vs –0.8% Russian container market in 2020 Over the year the Group continued to deliver excellent quality of operations, launching a range Unique partnership of strategic shareholders: of new services and supporting its clients in this a global leader and a strong local player, APM uncertain time, increased its market share and Terminals and Delo Group each with decreased leverage level. In 2020 the Group outperformed the Russian Consolidated Marine Bulk Throughput increased to 5.1 million tonnes container market for the third year in a row with outstanding growth of 6.6% against a market of total share capital decline of 0.8%. The Group demonstrated strong financial results in 2020 achieving like-for-like2 Adjusted EBITDA GDR listed on the Main Market Margin growth of 65.2% and stable high Free mln of the LSE (free-float of 20.5%) Cash Flow at USD 157.1 million. The lowest level of Net Debt Adjusted EBITDA to Adjusted EBITDA in 8 years The Group continued its deleveraging strategy and decreased Net Debt / EBITDA by 0.4 to 2.9x supporting its eventual path towards resumption Sustainable and responsible of dividends once targets have been achieved. business: MSCI ESG rating at BB level, Sustainalytics Credit ratings by all rating agencies that rate estimated Global Ports' risk the Group and its financial instruments with stable of material financial impacts mln outlook were reaffirmed in 2020: Fitch Ratings driven by ESG factors Like-for-like2 Adjusted EBITDA Margin Free Cash Flow at BB+, Moody’s at Ba2, RA Expert at RuA+. at medium level 2 Like-for-like is an adjusted growth metric calculated on management accounts: cash cost and revenue for 2020 and 2019 adjusted for VSC transportation Information (including non-IFRS financial measures) services. As a result of the new terms of certain sales agreements, in 2020 VSC requiring additional explanation or terms which begin acted as a principal vs as an agent at the beginning of 2019: previously the net result of revenue from transportation services and associated costs was included with capital letters and the explanations or definitions in the consolidated revenue. Since the middle of 1H 2019 full revenue and thereto are provided at the end of this report. associated costs have been recognized in consolidated revenue and transportation expenses accordingly. This Adjusted EBITDA neutral change resulted in additional Certain financial information is derived from 1 In terms of container throughput and container handling USD 62.8 million to consolidated revenue (USD 11.4 million in 2019) and USD the management accounts. capacity, based on ASOP data for 2020. 62.8 million (USD 11.4 million in 2019) to cost of sales in 2020. 2 Global Ports Investments PLC Annual Report 2020 globalports.com 3 08 66 About Us. Performance Corporate Governance 10 72 Key Milestones Board of Directors 12 78 Strong Presence Executive Management in Russia’s Key Container and Bulk 81 Gateways Terminal Directors 85 Risk Management 16 Management Report and Consolidated Chairman’s Statement Financial Statements 20 Chief Executive Officer’s Statement 24 Delivering Quality and Leadership Management Report and Parent 25 Company Financial Statements Strategy 26 Business Model 28 Business Review 52 Environmental, Social and Governance 4 Global Ports Investments PLC Annual Report 2020 globalports.com 5 1 Global Ports at a Glance 2 GLOBAL PORTS Strategic Report 3 Corporate Governance AT A GLANCE 4 Consolidated Financial Statements 5 Parent Company Financial Statements 6 Additional Information 8 10 12 About Us. Key Strong Performance Milestones Presence in Russia’s Key Container and Bulk Gateways 6 Global Ports Investments PLC Annual Report 2020 globalports.com 7 Ownership Structure, % Consolidated Marine Container Consolidated Marine Bulk Net Debt / Adjusted EBITDA Throughput, mln TEU Throughput, mln tonnes +6.6% +38.7% 2020 1.53 5.1 1.44 X 3.7 2.9 2019 1 2 ABOUT US. X 3 4 2019 2020 2019 2020 3.3 5 PERFORMANCE 6 Key consolidated financial and operational data Delo Group 30.75% APM Terminals 30.75% 2020 2019 Change Change, % Selected IFRS financial information, USD mln In a very challenging 2020, the Group’s clear Ilibrinio Establishment Limited 9% strategy proved to be the right one enabling Revenue 384.4 361.9 22.6 6.2% Global Ports, with its well equipped terminals Polozio Enterprises Limited 9% Cost of sales and administrative, selling and ready infrastructure for handling full export and marketing expenses -225.0 -187.3 -37.7 20.1% containers, to take advantage of its strategic Free float (LSE listing) 20.5% Gross profit 184.1 210.1 -25.9 -12.4% position in the two key marine gateways Operating profit 157.4 144.8 12.6 8.7% of Russia. Delo Group is one of the largest transportation and Net profit / (loss) 50.0 67.7 -17.7 -26.1% A continued focus on driving efficiency, logistics holding companies in Russia1. The Group’s productivity, and innovation across all operations stevedore business includes DeloPorts stevedore Selected operational information was matched by a relentless focus on clients’ holding, the leading operator of port container Consolidated Marine Container throughput, mln TEU 1.53 1.44 0.1 6.6% needs through providing technological solutions terminals Global Ports and TransContainer, Consolidated Marine Bulk throughput, mln TEU 5.1 3.7 1.4 38.7% and the highest service standards in the industry. leading rail operator in Russia, owner of 38 railway Ro-Ro, thousand units 20.3 20.0 0.3 1.3% container terminals, more than 32,000 containers Supported by our co-controlling shareholders, and 86,000 flatcars. Cars, thousand units 82.0 103.3 -21.3 -20.6% a unique partnership of an international industry leader and a strong domestic player: APM APM Terminals operate a global terminal network Balance sheet and cash statement, USD mln Terminals and Delo Group each with 30.75% of 20,000 professionals with 75 operating port Total assets 1,327.2 1,454.3 -127.1 -8.7% of total share capital. facilities. APM Terminals is a part of A.P. Moller- Cash and cash equivalents 207.0 124.4 82.6 66.4% Maersk, the world’s largest integrator of container Net cash from operating activities 190.9 185.4 5.5 3.0% These attributes and strategic decisions enabled and ports logistics. the Group to demonstrate resilience, increase container and bulk throughput to protect market Ilibrinio Establishment Limited and Polozio Selected non-IFRS financial information, USD mln share as well as increase like-for-like Adjusted Enterprises Limited (former owners of NCC Group) Like-for-like Revenue* 321.7 350.5 -28.8 -8.2% EBITDA Margin and continue deleveraging. each own 9% of the share capital of Global Ports. Total Operating Cash Costs -176.0 -136.7 -39.3 28.7% Like-for-like Total Operating Cash costs* -113.2 -125.3 12.1 -9.7% Adjusted EBITDA 209.7 226.9 -17.2 -7.6% Free Cash Flow, Like-for-like Adjusted EBITDA Margin,2 Like-for-like Adjusted EBITDA Margin* 65.2% 64.8% USD mln % Free Cash Flow 157.1 158.8 -1.8 -1.1% –1.1% Net Debt 612.1 747.0 -134.9 -18.1% 158.8 157.1 64.8% 65.2% Net Debt to Adjusted EBITDA 2.9x 3.3x -0.4 -11.3% 1 According to Delo Group data. 2 As a result of the new terms of certain sales agreements, in 2020 VSC acted as a principal vs as an agent at the beginning of 2019: previously the net result of revenue from transportation services and associated cost was included in the consolidated revenue. Since the middle of 1H2019 full revenue and associated costs have been recognized in consolidated revenue and transportation expenses accordingly. This Adjusted EBITDA neutral change resulted 2019 2020 2019 2020 in additional USD 62.8 million to consolidated revenue (USD 11.4 million in 2019) and USD 62.8 million (USD 11.4 million in 2019) to cost of sales in 2020. 8 Global Ports Investments PLC Annual Report 2020 globalports.com 9 June November Global Ports launched April a service for the digital VSC handled 44.6 thousand issuance of orders for the TEU, marking the terminal’s Global Ports started the loading of export containers historical record in container 1 reporting of quarterly at FCT, making FCT the first volume over one calendar 2 KEY MILESTONES operational trading Russian terminal to transfer month, surpassing the 3 on an ongoing basis. to a fully paperless export previous highest result of 43.5 4 An important step in keeping management system. September thousand TEU that was set 5 with the Group’s continuing in April 2014. 6 focus on increasing Four new TOYOTA forklifts VSC and TransContainer transparency with the market were added to the equipment launched regular Global Ports launched and aiming to achieve best fleet at VSC as part of its weekly container train a regular container train practice communication handling equipment and shipments from Nakhodka service from VSC in the and engagement with all operating facility upgrade Vostochnaya station bound Primoriye Region to Yanino stakeholders.